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AREA FIRM OFFERS ADVICE ON COST, EFFECTIVENESS OF COMPUTER SOFTWARE

THE FIRST visit to a computer store can be intimidating. The salesmen speak a different language -- of megabytes, hard drives and modems.

Business people often feel the same confusion and frustration when they talk with the developers of computer software.

Most executives recognize that the right software will speed up various processes within a company, thereby saving money and increasing overall competitiveness. But the expensive software development process is unsettling due to a lack of understanding among all parties.

"We're making business people informed customers by eliminating the magic and mysticism" that surrounds software development, says Leonard R. White, president of Productivity Management Group Inc., based in Williamsville.

"Our clients tell us: 'Thanks to you, we can finally communicate with each other,' " he says.

The small consulting firm shows executives how to gain control of computer programming by using a new method -- known as Function Point Analysis -- to determine the cost and/or value of software.

White explains that the mathematical formula -- first developed by International Business Machines and used extensively in banking -- calculates the price of a software package by what tasks it can perform, rather than how many hours it took to develop. For years, computer programmers have billed their clients for the time it takes to write software, he says.

White compares function point analysis to building a new home. He says that the mathematical equation allows customers to determine the value of the structure based on the number of rooms, instead of how long it took to construct.

Such thinking is revolutionary in the world of computers, and potentially can save businesses that use software considerable amounts of both time and money.

Productivity Management Group shows its clients how to measure the cost of software, using function point analysis, and then what to do with the information in order to control the process.

The Williamsville-based company has assembled a team of computer engineers, data-processing experts and other professionals. And, a companion software package, called "Productivity Manager," allows executives to do their own analysis without the aid of consultants.

"Productivity Manager is the central repository for all of your measurement information," White says. "It tracks time, cost, defects and function points. It tracks the attributes about people, the tools they use, the techniques with which they use the tools, and the environment in which they do the work.

"This information will help you accelerate the software development process in order to better meet your needs and those of your customers," he adds.

Any organization that uses computers can benefit from Productivity Management Group's services. A list of past customers includes several U.S. government agencies, banks, retailers, Fortune 500 manufacturers, utilities, high-technology firms, insurance companies and universities.

Productivity Management Group is headquartered at 160 Lawrence Bell Drive, Suite 122. But the six-year-old company also has branch offices in Seattle and San Diego. Currently its customers are from the United States, Canada and New Zealand.

One large client, the Federal Home Loan Mortgage Corp. (Freddie Mac), has been working with Productivity Management Group for about a year.

"We were impressed by the knowledge and experience they had assembled in such a new company," says William R. McClellan, a project manager at Freddie Mac. "They have gained an international reputation in a short period of time."

McClellan explains that consultants from Productivity Management Group provide valuable insights into software development and readily pass along their knowledge. They want their clients to be independent, rather than dependent on them.

"A good consultant knows their business is about knowledge transfer," McClellan says. "It's like learning to fish. Some people show you how to fish; others will bring the fish to you. Productivity Management Group shows you how to fish."

Leonard White and his wife, Caroline Knight, first began thinking about starting a business in late 1986. Both were working in data processing at local banks at the time. For more than a year, they spent their vacation days and weekends attending small-business workshops, talking with entrepreneurs and reading lots of business books.

"We pursued owning a business as others would a hobby or planning a vacation," recalls Ms. Knight, who is vice president of Productivity Management Group.

The entrepreneurs also formed an advisory council consisting of an attorney, accountant and marketing expert.

In 1988, White left his data-processing job at Marine Midland Bank and began working in the couple's East Amherst home as part of a joint venture with another computer consultant based in Milwaukee. A year later, Ms. Knight left her job at Goldome, and together the couple established their own company.

In 1990, Productivity Management Group got a break when it was accepted as a tenant in the University at Buffalo Foundation's high-tech incubator on Sweet Home Road in Amherst. The facility is operated by the Western New York Technology Development Center. "TDC gave us sound advice and looked out for us. It's a good entrepreneurial casualty-care center," White says. The low-rent incubator space also allowed Productivity Management Group to spend its U.S. Small Business Administration loan on people and technology rather than furniture and lease payments.

The intervening years haven't all been easy. The small business was forced in 1993 to cut its staff in half and to focus on providing consulting services, which generate more revenue than sales of its computer software.

Today, the company is recognized as a leader in assessments of computer software. It has a dozen employees, a growing list of clients and sales that are expected to top $1 million this year.

"We have a solid foundation with an excellent group of employees," says White. "I think we can now rapidly expand this business."

Puzzled about how to handle a small business problem? Write to "Small Business Q&A," c/o the Financial News Department, The Buffalo News, P.O. Box 100, Buffalo, N.Y. 14240, or send an E-Mail message to aw118@freenet.buffalo.edu.

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