What does fishing have to do with Salesforce? #DF15

A Quick Take on News from Dreamforce 2015

Last week I set aside some time to watch some of the big keynotes from Dreamforce, Salesforce’s annual extravaganza. Like Dennis Howlett, reporting for Diginomica, I watched from what Den calls “the cheap seats.” While thousands of attendees swarmed San Francisco, I was part of the virtual audience watching the live stream. As a result I was thankful to be insulated from the chaos and gridlock of a city pushed to its limits, but also missed what appeared to be a truly electric and energizing atmosphere.

There was no shortage of announcements surrounding products and partnerships, and I am certain I missed a lot. For more thorough coverage I might recommend Diginomica’s site. They not only had Den watching from the cheap seats, but a whole team covering it onsite. But from my vantage point, what struck me were the two very different faces of Salesforce – the application side and the platform side. Anyone who follows me knows that I research and write for business leaders about enterprise applications. So you would think I would primarily be interested in the applications, right? Not this time.

The category of applications Salesforce delivers is on the periphery of what I cover. As an analyst I describe my coverage area as “enterprise applications with ERP at the core.” Here is not the time or place to debate what ERP is, or is not. Suffice to say it is a convenient label for the applications that run the business, creating a fiscal and operational system of record. While Salesforce’s (or anyone else’s) CRM solution doesn’t fit that definition, it is still important for me to watch because the footprints of ERP solutions have expanded and oftentimes include CRM. Even if they don’t (e.g. the customer uses Salesforce), the intersection of ERP and CRM is important because it is often where the back office meets the front office where competitive advantage can be gained.

So watching from the sidelines has always seemed appropriate. Lately, however, I seem to be getting dragged from the sidelines to more center stage – but not because of its CRM solution. Instead it is its Platform as a Service that is calling me.

Platform as a Service (PaaS) is a category of cloud computing services that provides developers with a platform to create software without the complexity of building and maintaining the infrastructure typically associated with developing an enterprise application. Clearly developers benefit from using the services delivered with a platform, speeding the development process. Since I don’t write for developers, but for the businessperson, how does this translate to benefits to the business? The obvious answer is in delivering more features, functions and innovation in ways that help companies keep up with the accelerating pace of change.

And that is exactly what a growing number of Salesforce partners find appealing, including ERP and accounting solution providers who fall squarely in my line of sight. It has been those partners that have lured me from the periphery to better understand how Salesforce, as a platform company, can help them deliver more value. I also think that it will be the platform, not the applications, that has the highest likelihood to propel Salesforce on the growth trajectory on which Marc Benioff has his sights.

It’s sort of like the old proverb that goes something like this – give a man a fish and he eats for a day; teach him how to fish and he eats for a lifetime. Well, maybe not exactly like that. The platform itself might be appealing to large enterprises with teams of developers on staff looking to modify or even develop their own applications (i.e. learn to fish). But for every large enterprise there are dozens, maybe even hundreds or thousands of small to midsize businesses that are just looking for a fish. Of course, they don’t buy one fish and walk away – they sign up for the “fish a day” program (a subscription). So, sure Salesforce can sell a lot of fish, but that won’t get it to the $10 billion mark – not even close.

But the platform is a “Force” multiplier (pun intended). There are also those partner solution providers who are looking to not only fish, but fish with the latest and greatest fishing tackle and equipment on the market. Using Salesforce’s platform they have proven they can not only fill their nets, but also get to the dock and the fish markets that much faster. Or maybe they don’t go after fish at all because Salesforce CRM satisfies that nutritional requirement. They might be working on the meat and potatoes, the vegetables or the dessert. Together they will have all the other dishes that go with fish in order to make a whole meal and satisfy anyone’s appetite.

The better the development platform, the more likely it will attract more developers. The more developers attracted to the platform, the more applications get developed, which ultimately can be shared. Features, functions and extensions have the potential to start to grow, if not exponentially, at least much faster than the typical linear sequence of development. This is sort of a Catch-22, but in reverse. The strong keep getting stronger, while the weak (those that attract only a few developers) will struggle to compete.

In fact today the Salesforce AppExchange is the largest online marketplace of its kind, offering products built on the platform – all 220,000 of them. All products offered on the AppExchange are 100% native to the platform and share an integrated, secure data and identity management model. All go through a rigorous security review and all are equally easy to customize using developer tools available from Salesforce.

Several vendors I follow closely have based their offerings on the Salesforce Platform.

  • Kenandy used it to develop a modern, new ERP for manufacturing from scratch in a fraction of the time it would have taken with traditional development tools. Sandy Kurtzig, Chairman of Kenandy and also the founder of ASK Computer Systems, is an inspiring entrepreneur. My favorite Sandy quote from back in the ASK days (circa 1984): when asked if she was worried about competitors springing up, she said, “No. We’re in the software business. They have to match me line for line in code. Writing software is like having a baby. You can’t put nine women on it and do it in a month.” Yet that is exactly what Sandy set out to do when she started up Kenandy and saw the Salesforce platform as the means by which she could do it.
  • Rootstock, also ERP for manufacturing, switched from NetSuite’s platform to Salesforce.
  • FinancialForce, owned jointly by Unit4 and Salesforce natively developed its accounting solution on the platform and is now expanding more into the realm of ERP.
  • Conversely, Sage has recently abandoned the ERP moniker (but supposedly not its ERP customers) and simultaneously developed Sage Live, a brand new “real time accounting solution” built on the Salesforce platform and brought to market in months, not years.

The new “Thunder and Lightning” hyped on stage at Dreamforce will only serve to make the platform more appealing to developers of all shapes and sizes. But just as in real life, while thunder and lightening add dramatic effects to a storm, it is the rain that makes the garden grow. It will be up to the software developers to capitalize on the drama from Dreamforce and make the rain (software) that makes our businesses grow.

Something tells me next year I might just have to brave the crowds at Dreamforce in San Francisco. My days of watching from the cheap seats may be numbered.

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Post-Modern ERP Meets #CommerceCloud: Infor to Acquire GT Nexus

Earlier today Infor announced it would acquire GT Nexus and its cloud-based, global commerce platform for $675 million. Pending regulatory approval, expect the deal to close within 45 days.

While at first glance this might seem to be a “me too” move following in the footsteps of SAP’s acquisition of Ariba, this is actually different in that it is all about direct (versus indirect) procurement, which is inherently more complicated because it must tie back to the sale of goods and the production process.

This is something Infor CEO Charles Phillips says he and Infor President Duncan Angove have been looking to do since coming on board in late 2010, pointing to the continued shift to contract manufacturing that moves much of the production process outside the four walls of the traditional factory. “Continued” is indeed the right adjective to use here.

This shift started decades ago when low-cost country sources made “outsourcing” very appealing. As companies have tended to become less vertically integrated, reducing costs and focusing instead on their core competencies, this necessitates new ways of doing business with each other. Through the purchase of subassemblies or finished products, the contracting of manufacturing or distribution services or the outsourcing of customer service or information technology, the value chain has lengthened and become more complicated. Yet expectations of response time and delivery performance have risen dramatically.

This is actually a topic that is near and dear to my heart. I went back and dug up something I wrote previously back in the day, before the digital age, when we talked about “E-business.” Here is what I wrote:

These new business models involve multiple companies working cooperatively and collaboratively together, in a seemingly seamless manner, as if they were a single virtually vertical enterprise. A company that can successfully interoperate in this way can claim to have reached the goal of full E-business integration.

As a result of this push toward full E-business integration, businesses face challenges that force them to push the envelope of business information systems. ERP grew from its predecessors of MRP and MRP II, constantly expanding its solution footprint to address more and more needs of the enterprise. Yet ERP was not conceived to look beyond the “four walls” of the enterprise, regardless of how expansive those walls would become, simply because the concepts of MRP and ERP were born in a time when companies were run as independent enterprises with arm’s length relationships with customers and suppliers.”

Mr. Phillips and Mr. Angove both acknowledged this situation today in announcing the proposed acquisition. They talked about “post-modern ERP” that (with the addition of GT Nexus) would push beyond those “four walls” and “provide customers with unprecedented visibility into their supply chains to manage production and monitor goods in transit and at rest.”

But none of this is really new news. That excerpt above is from my book, ERP Optimization, which was released in December 2002. Has it really taken more than a decade to deliver on this promise? Yes and no. First of all, when I look back on where we were when I wrote ERP Optimization, I realize just how far we have come. Back then “trading exchanges” weren’t much more than online dating sites for buyers and sellers, and very few offered value-added services like trade financing, logistics, electronic payment and settlement. Connecting these functions back to your ERP was difficult at best. Internet procurement was in its infancy. Most companies were still struggling with all the non-standard versions of “standardized” EDI. And the smart phone and other mobile devices (apart from the cell phone) had yet to be invented, so most of us couldn’t even dream of being as “connected” as we are today.

So yes, we have come a very long way. But through that progression, our expectations have also risen. We no longer simply “outsource.” We participate in a networked economy and we look to the cloud to keep us all connected. We also deal in a much more global economy, including emerging economies in countries that were hardly industrialized a short decade ago. The speed of business, as well as the speed of change has accelerated beyond anyone’s expectations.

So it is no wonder that the executives of Infor have wanted to fill this need since coming on board. They actually thought about building their own network. But I think they were smart in acquiring one. After all, the value of the network is largely measured by its size, scope and strength. And let’s face it, you don’t build one that is 25,000 businesses strong (like GT Nexus) overnight. And once networks like these are established and mature, it becomes harder and harder to build a brand new one. Once companies like adidas Group, Caterpillar, Columbia Sportswear, DHL, Home Depot, Levi Strauss & Co., Maersk, Pfizer, Procter & Gamble and UPS have joined, that network becomes that much more attractive with each new major brand added – hence the attraction to Infor.

GT Nexus is also a good choice because it is unique in that it includes supply chain financing partners that add even more value. Buyers and financial institutions offer pre and post export financing and payment protection. Infor admits that many of its own customers in manufacturing and retail aren’t even aware of financing options available, even though they might be struggling to finance procurement of materials and services in advance of collection of revenue. And who doesn’t want to get paid faster? Infor therefore sees a lot of opportunity to expand these offering even further. And the fact that Infor, GT Nexus and many top banks are all in Manhattan doesn’t hurt either.

The integration of GT Nexus and the Infor CloudSuites (there are several for different industries, including retail and fashion, which represents about 60% of current GT Nexus business) should be quite straightforward because both use standardized object models (Infor uses OAGIS). This is in fact one of GT Nexus’ strengths in being able to easily connect to back office solutions. Unlike traditional EDI where each connection is unique, this data model mapping allows suppliers to join the network once and talk to all buyers, avoiding custom maps and portals and invasive code development. So this leaves open the question of how the combined company will continue to work with other solution providers, including existing partners like Kinaxis.

Infor will continue to run the GT Nexus operation as a dedicated business unit. The entire management team is joining the larger corporation, a further testament to the cooperative and friendly nature of the acquisition.

All told this appears to be a win-win-win for Infor, GT Nexus and its customers. If not a match made in heaven, at least it is in the cloud.


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Sage Says ERP is Dead. What (I think) They Really Mean Is….

At Sage Summit 2015 earlier this week, new CEO Steven Kelly announced the company would drop the moniker ERP from its product names. Sage NA CTO Himanshu Pasule followed up by announcing that ERP is dead. This announcement produced a mixed response. There was some applause (ding dong the wicked witch is dead!) There were some shrugs (I don’t really care what you call it.) In conversations with clients I got some eye rolls and one actually said, “This too will pass.” My reaction? Yes, we need new ways of designing, delivering, consuming and innovating ERP. But you don’t say the automobile is dead just because there are some old clunkers still on the road.

Of course proclaiming ERP to be dead is not new news. Headlines along these lines started appearing shortly after Y2K (which proved to be somewhat of a non-event.) They were attention grabbing for a while and then they began to fade away, only to reappear periodically. So… with this revival does Sage intend to stop selling products that have been labeled “ERP?” No. It just won’t call them that anymore, explaining that instead of standing for Enterprise Resource Planning, what ERP really means is “Expense, Regret, Pain.”

Thanks to Derek du Preez of Diginomica who actually captured Mr. Kelly’s quote: “We believe ERP is a 25 year old industry term, characterised by cost overrun, and in some cases even business ruin, that has been imposed on you for the benefit of others.

“To the finance directors of the world, ERP stands for Expense, Regret, Pain. Sadly our industry has a long history of invasive, disruptive initiatives that have been carried out at the expense of their customers.”

Hearing this or reading it, you somehow get the sense that all ERP implementations are failures. I would disagree and can share some very impressive results from those I have determined to be “World Class.”

You also might get the sense Mr. Kelly was implying this involved some malicious intent – certainly not by Sage, but by all those other ERP vendors. Personally I think a lot of ERP vendors did the best they could with the technology they had available at any given time. But that technology is nothing like what is available today, just as the Model T is nothing like the Masserati, or even the Ford Taurus today.

Old, monolithic ERP solutions have been notorious for being hard to implement, harder to use and sometimes impossible to change as business conditions and businesses themselves change. Over time they have grown more complex and more unwieldy. I agree we need to fix that. Today the industry must find new ways to design, develop, implement and run these systems if they are going to keep pace with the rapid evolution of both technology and business today.

We need solutions that are easier to consume, using new ways of engaging users, over a wide range of devices. We need software that can be easily extended and/or configured without invasive customization that builds barriers to innovation. And we need more innovation, but it must be easier to consume with less disruption to the business. And finally, we need better integration capabilities.

Does any of this sound familiar? It should if you have been following me for the past couple of years. This just happens to be how I describe and define Next Generation ERP. Type that in the search box on my blog and you’ll get lots to choose from, starting with this first post. Could I have labeled it something other than ERP? Sure, I could have named it with the symbol . But if anyone referred to , they would always add, “used to be called ERP.” So I didn’t bother. Maybe we could start just calling it “the software previously known as ERP.” It seemed to work for Prince for a while, but ultimately he went back to being known as Prince.

Some are suggesting it be called Business Management Systems, although that too is far from new. Many have tried using this term in the past and it just hasn’t caught on, largely because those using the term tended not to have a complete ERP solution and were also targeting very small companies that typically lived in fear of ERP. So that sort of sets a precedent, and not one that is to Sage’s advantage.

And in an industry so enamored of acronyms, Business Management Systems would become BMS. So perhaps the reason it never caught on was in part based on the fear we would soon lose the “M” and we all know what BS stands for… again, not particularly advantageous.

In the end, ERP is simply a convenient label for software that runs your business, although I do use a more specific definition:

ERP is an integrated suite of modules that forms the operational and transactional system of record of the business.

This includes the customer order, which seems to be missing from Sage’s declared focus on the “Golden Triangle” of accounting, payroll and payment systems. Indeed it is typically the management of the customer order that sets a full ERP apart from a financial/accounting only solution. While some of Sage’s products are definitely accounting only, Sage assures me the intent was not to exclude the customer order and does include the full system of record in its Golden Triangle. So customers and prospects can feel safe in assuming at least some of the Sage products will continue to deliver on my definition of ERP.

Note also that my definition is intentionally quite broad. It needs to be, simply because the operational and transactional needs will vary quite significantly depending on the very nature of the business. You can’t run a service business like a manufacturing or distribution business. Retailers, government and non-profits all have their own unique requirements.

ERP evolved from MRP, which was originally short for material requirements planning, but later expanded to become manufacturing resource planning and then eventually grew beyond the realm of manufacturing to encompass the entire enterprise – any kind of enterprise, in any kind of industry. While some ERP vendors do have a very narrow vertical focus, others have taken a more horizontal approach. This has resulted in broader solutions designed to satisfy so many different needs that any one company winds up using only a small fraction of the full functionality. Not only are they encumbered by all that functionality they don’t use, but also there still might be gaps in meeting their specific requirements. So ERP winds up being too much and not enough, all at the same time.

This situation is also clearly exasperated by the fact that the footprint of ERP has grown to the point where it is getting more and more difficult to determine where ERP ends and other applications begin. Functions like performance management, talent and human capital management, etc, that used to sit squarely outside of ERP, today might sit either inside or outside that boundary. To be considered part of the ERP solution they must be seamlessly integrated. That used to mean tight integration that required the whole system to move forward in lock step, which made it rigid and very hard to upgrade. ERP users increasingly felt like they were steering a battleship, understandably so.

Expanding footprints, combined with a broader range of industries means complexity no longer grows linearly, but exponentially. Which I believe is the real problem Sage is attempting to solve. Changing the label won’t fix that. Taking full advantage of enabling technology and changing the way you design, develop, package and deliver it will.

I also believe Sage is making tremendous progress in making these changes, but that progress and the value actually being delivered to its customers is being overshadowed by the rhetoric around the death of ERP. Sage’s journey began several years ago under the guise of “hybrid cloud.” In a nutshell, this approach left on-premise ERP solutions in place and surrounded them with cloud-based connected services. The advantage was to allow customers to migrate pieces of their information systems to the cloud over time.

But there was yet another advantage to this approach, one that I wrote about most recently in describing Sage’s approach to Next Generation ERP. This component-based approach allows Sage to deliver more innovation by extending or complementing existing solutions rather than continually mucking around in the original code base. Today seamless integration can be delivered without old-style tight integration. A more component-based approach is typically referred to as “loosely coupled.” If you aren’t familiar with that term, you might want to read through my 4-part series on Next Generation ERP. For purposes here it is suffice to say that this approach allows you to consume more innovation, with less disruption.

Sage began to take a more component-based approach to development with its “hybrid cloud” strategy. Not only did this facilitate the addition of features and functions without invasive changes to the original code base(s), it also allowed Sage to develop new features and functions once and let different products and product lines take advantage of that effort. That means more innovation and easier integration.

This is also something Sage is getting better at in general. It began to implement rapid application development (RAD) methodologies about two years ago and is really starting to hit its stride. Its goal is to offer two upgrades each year. Of course, the real question will be whether its customers can and will pick up these new releases at an increased pace. According to the results of the 2015 Mint Jutras Enterprise Solution Study, 30% of respondents running on-premise or hosted solutions still skip releases and 11% would actually prefer to stay where they are forever.

This changes however as companies move to a SaaS deployment model (Figure 1). It is much easier to deliver more innovation, more frequently in a SaaS model. And there are fewer barriers to consumption because the SaaS provider does all the heavy lifting when it comes to upgrading the software.

Figure 1: Approach to Consuming Innovation in a SaaS Model

Fig 1 SageSource: 2015 Mint Jutras Enterprise Solution Study

After several years of promoting the concept of “hybrid cloud,” with an on-premise ERP at the core, Sage is moving more aggressively to SaaS, although it is still fully supportive on on-premise deployments. Sage X3 is a perfect example. As of its 7.0 release about a year ago, X3 became a true multi-tenant SaaS solution, although it does provide single tenancy at the data base level (which allows for portability between on-premise and cloud and supports extension of the data model). More recently it announced the official launch of Sage X3 Cloud on Amazon Web Services (AWS).

With this introduction, Sage will be competing more directly with SaaS only ERP providers. Those SaaS-only solution providers that offer multi-tenant solutions are able to deliver more innovation, with higher frequency, because they have the luxury of only having to maintain one line of code. Those that offer both cloud and on-premise versions must minimally support multiple releases (and often offer solutions on different databases and operating systems). Sage has indeed been gearing up for this and the proposed 6-month release cycle is evidence of very good progress.

Further evidence of Sage’s ability to innovate faster is the introduction of several new products including Sage Live, a brand new “real time accounting solution” built on the Salesforce1 platform and brought to market in months, not years. While existing customers don’t benefit directly from this product, they do benefit indirectly. Not only does this demonstrate Sage’s ability to apply RAD methodologies and new technologies (like those capabilities provided by the Salesforce1 development platform), but presumably other product like X3 will indirectly benefit from components developed for Sage Live that might easily be incorporated into the X3 landscape. As Himanshu described, “First the very high end, luxury cars introduce heated seats and pretty soon they become a standard feature.”


Let me repeat my initial reaction to Sage’s proclamation of the death of ERP: Yes, we need new ways of designing, delivering, consuming and innovating ERP. But you don’t say the automobile is dead just because there are some old clunkers still on the road. When it comes to solutions that help (or hinder us) in running our businesses, there are a lot of clunkers on the road today. Many were hard to implement, and are even harder to use and sometimes impossible to change as business conditions and businesses themselves change. Over time they have grown more complex and more unwieldy. I agree we need to fix that. Solution providers, including Sage, have made some great strides in doing that.

Those still driving those old clunkers should definitely think about trading them in. Those with some pretty good engines should look to turbo-charge them. ERP is a convenient label for the software that runs businesses across the globe today. Does it really need a new name? If so, I think we should call it Fred.


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Enterprise Odd Couple: Plex Systems Partners with Workday

Pre-Packaging 2-Tier ERP for Manufacturers

Last week at its annual PowerPlex user conference, Plex Systems announced Plex Connect, along with several new partnerships and packaged connections. The goal of this new open integration framework is to “make it easier for manufacturers to connect people, things and applications to the Plex Manufacturing Cloud.” One of these partnerships stands out as being somewhat unique in that it is forged with another Enterprise Resource Planning (ERP) solution provider… Workday.

At first glance these two might seem like the proverbial odd couple. As another ERP vendor, Workday would appear to be a competitor. But it is not, because Workday is not a solution that is focused on the needs of manufacturers. And companies that “make things” are the only targets for Plex Systems. So if Workday isn’t for manufacturers, why would any Plex customer be interested in connecting to it? Because typically corporate headquarters doesn’t make anything, but might have sophisticated accounting requirements to support global operations. This partnership is all about delivering a pre-packaged 2-tier ERP.

Making the Case for 2-Tier ERP

Operating across a distributed environment has become a way of life for a large percentage of manufacturers today, even smaller ones. In fact 77% of all manufacturers that participated in the 2015 Mint Jutras Enterprise Solution Study had more than one operating location served by ERP (Figure 1). And 67% operate as a multi-national company. Even those with annual revenues under $25 million average just over 2 operating locations and that average grows steadily as revenues grow. This means very few companies today are able to conduct business as a single monolithic corporation.

Each operating division will have operational needs and must then feed to corporate financials for consolidation and reporting.

Figure 1: Environments Are More Distributed and Remote

Plex WDAY Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Note In Figure 1 company size is determined by annual revenue.

  • Small: annual revenues under $25 million
  • Lower-Mid: $25 million to $250 million
  • Upper-Mid: $250 million to $1 billion
  • Large: revenues over $1 billion

In years gone by all the different operating locations depicted in Figure 1 were likely to be left on their own to evaluate, select and implement a solution to run their operations. However, that scenario is quite rare today. The vast majority (90%) has established corporate standards for enterprise applications (Figure 2).

Figure 2: Have you established corporate standards for enterprise solutions?

Plex WDAY Fig 2Source: Mint Jutras 2015 Enterprise Solution Study

But this doesn’t necessarily mean a single solution runs the whole enterprise. Very often the ERP solution installed at corporate was selected for its ability to report and consolidate across multiple divisions. Very often these corporate accounting solutions (like Workday) don’t have the necessary functionality to run the operations of its divisions, especially if those divisions are manufacturing sites. In these cases, the standard solution for these manufacturing operations is a different solution – one like the Plex Manufacturing Cloud. Hence…

The Emergence of 2-tier ERP

In fact this 2-tier standard has become quite commonplace. Of those that have established corporate standards, less than half (47%) uses a single standard where all units, including corporate headquarters, use the same solution (Figure 3). At the same time, 31% have established a 2-tier standard and another 22% have a multi-tier standard. This latter category is most typical in a diversified corporation where you might see different types of businesses at the divisional level – you might have distribution warehouses or sales and service locations in addition to manufacturing sites.

Figure 3: Is this a single, two or multi-tier standard?

Plex WDAY Fig 3Source: Mint Jutras 2015 Enterprise Solution Study

It is this middle 31% that is targeted by the Plex Systems/Workday alliance, although it might work equally well in the multi-tier scenario. In fact if the non-manufacturing sites are sales and service operations, Workday itself might be the chosen standard for those divisions, eliminating the need for more than two different ERP solutions.

Plex Systems acknowledges that its solution is not the best for non-manufacturers. In fact Plex makes that point in its bold move to implement Workday for its own operations. The initial knee-jerk reaction might be, “What? They don’t sip their own champagne?” (An analogy I much prefer to eating one’s own dog food!) But while Plex knows and serves manufacturing very well, it isn’t a manufacturer. It makes software. While software companies that deliver on-premise solutions might burn CD’s, package them with documentation and ship a physical product to a customer, as a pure cloud provider, Plex sells software only as a service. The accounting for software, services and subscriptions is very different than accounting for shipping and delivering a physical product. But at the same time, this decision also underscores the fact that Plex is not afraid to make the right business decision in managing its own business.

But getting back to the 2-tier scenario, in the past we have seen solutions from SAP and Oracle dominate the corporate scene. Yet solutions like Workday, born in the cloud, are starting to chip away at the dominance of these two major players. And an alliance like this will only serve to accelerate this erosion. Very often a decision for SAP and Oracle might have been influenced by the efforts involved in integrating and rolling up financials from the distributed sites. While these have typically not been “out of the box” in the past, popular sentiment is that if you go with one of these “giants,” you will likely find systems integrators and other service partners who have done it before. That means they have a lot of experience with SAP and Oracle. You still pay for the connection, but you are at least dealing with a higher level of expertise.

With pre-packaged connectors, the need for this prior experience goes away and the expense of forging the connection drops dramatically.

Impact on Roadmap

So after hearing about this and other partnerships (with Salesforce and DemandCaster) the first question I posed to Plex was regarding the impact these might have on their own road maps. In terms of Workday, my specific concern was over enhancements planned to make its ERP more “global.”

Plex already has customers running the Plex Manufacturing Cloud from more than 20 countries, but it has let its customers essentially “pull” them into those countries and doesn’t necessarily support all the localizations and legislative regulations required in each… or all the complexities of growing multi-national companies. About a year ago Plex Enterprise Edition made its debut at PowerPlex 2014 along with an aggressive roadmap to support complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements.

In answer to my question, Plex has assured me none of these partnerships will result in taking planned innovation off the table. It will continue to invest in these globalization efforts. Similarly, other solutions such as DemandCaster will not prevent Plex from developing its own forecasting / demand and supply planning software. The alliance with Adaptive Insights will not prevent Plex from developing more robust financial planning and budgeting offerings. But I am thinking Plex doesn’t really need to compete against Salesforce for CRM.


In the meantime and well into the future, Plex Connect should indeed make it easier for manufacturers to connect people, things and applications to the Plex Manufacturing Cloud. And in today’s connected, digital economy, isn’t that what it’s all about?

A Side Note: Is Workday ERP?

In the past I have posed the question about Workday: Is it ERP? Does it Matter? Many refer to Workday as ERP, but by my definition (an integrated suite of modules that provides the operational and transactional system of record of a business) an integrated finance and accounting solution that does not manage the “order” falls a bit short, But it does manage a contract, which for “talent intensive organizations” including software and Internet service companies like Plex) is equally, if not more important. Feel free to read my full analysis in the highlighted link above but for purposes of our discussion here in terms of 2-tier ERP, I am comfortable in referring to Workday as ERP.

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What is Unit4’s “Self-Driving” ERP?

Empowering People in Service Organizations

Today we live in a world where automobiles can drive themselves across the United States. These same cars can parallel park far more skillfully than their human drivers. Airplanes spend most of their time in flight on autopilot. Small, self-directing vacuum cleaners systematically clean our floors while we are at work or play. Fitness devices tell us when it is time to move and warn us when we are over-exerting ourselves. Some of those fitness devices are smart phones equipped with apps – the same smart phones that keep us constantly connected. We get spoiled by all this automation in our personal lives and then we go to work and wonder why the software and technology that is used to run the business doesn’t empower our work lives like consumer technology empowers our personal lives.

Enterprise applications like Enterprise Resource Planning (ERP) are meant to capture transactional data and streamline and automate business processes. Yet while ERP was originally meant to make our business lives easier, many old ERP systems just can’t seem to get out of their own way. Unit4 is setting out to change that, at least for its customers. While it has always prided itself in its modern and flexible architecture and its solutions’ ability to accommodate change, it is now taking a page from consumer technology. A revitalized Unit4 is intent on delivering “self-driving” ERP, where user interaction is minimized and limited to activities where people make the difference.

People Are at the Core of all Unit4 Does

Unit4 has always targeted people-centric businesses, where services are the primary product delivered. These targets include professional service organizations, governments, higher education, not-for-profits and real estate. In each case, the key ingredients are people; processes are fluid and dynamic. By its very nature, outcomes are unpredictable. The last thing you want is your people doing manual tasks that add no value to the service delivered.

And yet that is exactly what happens when ERP can’t get out of its own way. What do we mean by that? Legacy ERP solutions that are rigid and cannot adapt as business changes, or that don’t allow business processes to evolve, or that force people to work in very unnatural or counter-intuitive ways, are more of a hindrance than a help to your business. They get in the way.

This has never been more true than it is today as we enter the digital age. Everywhere we look we see the pace of business accelerating and business models being disrupted. This is all fueled by digital communication. And yet many ERP solutions installed today lack the ability to participate in this revolution. They still force companies to transact business the way it has been transacted for the past 50 years. And they don’t contribute much insight in how to break that cycle, or insight into how to more profitably grow the business.

Unit4’s products have always been designed for change, but now they have a new goal: to help companies transform themselves in the digital age. This new goal is actually a natural progression, but is also fueled by the transformation of the company itself. Jose Duarte, Unit4’s current Chief Executive Officer (CEO) took the reins about two years ago. He made a clean sweep of his executive committee. A few very key players remain one level down from the top, which makes the transition smoother, but in the end, the Unit4 of today is very different than it was two years ago.

Today Unit4 is clearly energized, innovative, confident and aggressive. And it is on a mission: To empower people in service organizations.

The 6 Pillars of “Self-Driving” ERP

So what is this thing called “self-driving” ERP? Can software really make business decisions to drive the business? Of course not. Even an airplane on autopilot still needs a pilot. That car driving itself across the United States still has a driver. The homeowner has to decide which room to set up the little roaming vacuum cleaner in. Those fitness devices don’t do your workout for you. But all these technological wonders have a common theme: they make people more efficient and productive. People with these devices can do more, accomplish more. That’s what self-driving ERP is all about: better productivity, improved efficiency and better, more insightful decisions.

Unit4 likes to refer to the following as the six pillars of self-driving ERP:

  • Automation of manual tasks. Don’t make the human driving ERP do repeatable, repetitive tasks if they can be automated.
  • Drastically reduce the amount of input required; eliminate it entirely if possible. Ask for input only on an exception basis.
  • Use the moment of action to ask for the input. Ask a person when that exception actually occurs, not hours or days later.
  • Sense potential problems or bottlenecks.
  • Sense potential opportunities.
  • Make intelligent and sensible recommendations.

 How Does Unit4 Do This?

If you ask Unit4 how it will deliver on the promise of these pillars, Unit4 will talk about the four layers of its People Platform, announced back in April. After you hear the folks at Unit4 describe these layers, you may still not understand, particularly if you are a businessperson and not a technologist. Don’t feel bad. It’s not you. Some of these are tough concepts. But that’s okay. It is much more important to understand what it can do for you than to understand how it does it. You didn’t know how the transporter worked on Star Trek’s USS Enterprise. But you knew exactly what would happen when Captain Kirk said, “Beam me up Scottie.” If you understand the potential conceptually, a myriad of potential use cases might immediately spring to mind.

So here are the layers, as concisely as we can present them:

Personal Experience

The very top layer is the personal experience. This is all about a new, improved and modern user experience, which Unit4 has been working on for the past two years, improving existing functions; efforts will continue as new and different ways of engaging with ERP and new functions are introduced. This includes access through mobile devices of all sorts. But Mint Jutras believes the best user interface is often no user interface, and Unit4 is also heading down this path in automating those manual, repetitive tasks. But ultimately it is all about making software easy to use.

Of course ease of use means different things to different people.

Figure 1: “Top 3” Factors Influencing Ease of Use

Unit4 Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Note on defining generations:

  • Baby Boomers: born between 1943 and 1964
  • Generation Xers: 1965 to 1981
  • Millenial: born in 1982 or after

This is most apparent when we compare what is most important across different generations participating in our 2015 Enterprise Solution Study (Figure 1). While perceptions vary, minimizing time to complete tasks is right at the very top of the list across all generations. So Unit4 is right on track in automating manual tasks and reducing the amount of input required. In fact complete automation of many of these repetitive tasks is really the ultimate goal.

Business Capabilities

The second layer is business capabilities. Mint Jutras research confirms this as an appropriate focal point. Our latest study confirms that the most important selection criterion for choosing an ERP solution today is “fit and functionality,” followed closely by “the completeness of a solution.”

Expanding the footprint of its ERP remains a priority for Unit4, but it will pay particular attention to individual vertical markets. Some of these business capabilities will be developed by Unit4, some will be acquired, and some may in fact come from partners. The recent acquisition of Three Rivers Systems is a perfect example of how Unit4 can take some giant steps in business capabilities, in this case, significantly expanding Unit4’s solution for higher education.

Who is Three Rivers Systems and what does it do?

Three Rivers Systems’ solution is called CAMS Enterprise. CAMS is short for Comprehensive Academic Management System. As the name implies, it is a comprehensive higher education solution that automates the entire student lifecycle into a single system. It can be run on-premise or hosted in the cloud.

A few facts about Three Rivers:

  • Founded in 1985
  • 55 employees
  • Serving over 200 clients in North America, South Africa, Europe, Middle East, Asia
  • Serving all institution types from under 1000 students to over 40,000

 Smart Context

The third layer is called Smart Context. This is perhaps the toughest to explain and yet its name provides some clues. “Smart” implies intelligence. So the Smart Context layer adds some intelligence, but in the context of a specific task, question or problem. Think about the following:

  • You’re preparing your expense report. Smart Context can suggest the majority of the line items (mileage, airfare, meals, etc.) You simply confirm the amounts.
  • You leave your customer’s site where you have been working on a project. Smart Context asks you if you just spent three hours working on project XYZ. A simple click on yes or no completes your timesheet.
  • You are asked to deliver a detailed project plan (for resources and costing) before the close of day. You enter several characteristics and Smart Context reveals the closest fit to previous projects. You select one as a model and create the plan in a fraction of the time it would take if you built it from scratch. And you even have a complete workforce assignment.

Smart Context is all about removing the clutter, making complex things simpler, and requiring your input only for exceptions. By making suggestions where possible, enriching data with additional context, the information you do see is more relevant and complete. This is the real engine behind the concept of “self-driving” ERP.

Unit4 delivers this type of intelligence by bringing the latest technology together through a variety of components:

  • An alerts engine to keep you up to date with smart business feeds
  • A rules engine establishes and configures the rules to be invoked during data entry, allowing for dynamically altering the UI based on conditions, or proactively assisting the user in entering consistent data. Adding machine learning even makes it self-configuring.
  • Definition of communities (defining who cares about what) and the capture of conversations within the communities (no more lost threads after you hang up the phone). This creates a social context.
  • Mobile context, through technology that can detect location with a time stamp. This allows for location-based filtering and time tracking and can push information automatically (e.g. customer configurations pushed to a field service technician arriving on-site).
  • Predictive analytics, capable of pattern detection. This can involve complex analysis, bringing together technologies such as machine learning and event stream analysis for sensing problems, bottlenecks or opportunities. Or it can be as simple as pre-populating an expense report or suggesting a project plan.
  • Cloud and crowd context through capture of peer analysis and customer sentiment.
  • A workflow engine.

The net result is filtered, contextualized data that can be presented in a simple, relevant and complete experience.

Elastic Foundation

At the base, the fourth layer is the Elastic Foundation. The concept of elasticity is commonly associated with cloud and software as a service (SaaS). Unit4 does offer a variety of cloud options, including what it calls “cloud your way,” which lets the customer choose the deployment option without compromises. Used in this context, the elasticity comes from the ability to grow and consume resources as needed, without additional purchases of hardware, middleware and the associated maintenance.

But Unit4 takes elasticity one step further and uses it in the context of the application itself, which can easily be changed and/or extended without disrupting the installed solution.

The elastic foundation has evolved from the architecture on which Unit4 Business World (formerly Agresso) was built. This is where you define your organizational structure, information requirements, and the relationship between the two. Traditionally these types of structures, relationships and processes tended to be hard-coded in solutions or embedded in codes like the general ledger account, using a “once and done” approach that made future changes difficult and costly. But reality says they need to be fluid, and that is the elasticity that the People Platform delivers.

With Unit4’s Elastic Foundation, no source code changes are required and even if it means changing the business rules, the data model and how the data is presented, this does not constitute multiple changes. You make a single change and it is permeated throughout all the necessary components of the solution. All are on the same page. No delays. Nothing can be out of sync.

Nothing Tells the Story Like an Example

While all this discussion may provide good background, nothing illustrates what Unit4 is doing better than an example. Let’s explore the project plan example mentioned earlier in a bit more depth.

Projects are common in many services organizations. For some, projects are simply internal. But in many companies, particularly in professional services organizations, these projects are core to their business. Unit4 has been listening to these types of customers as they expressed a desire for better ways of winning profitable business. When your business is project-based, that means coming up with more accurate estimates faster. This is one of the scenarios Unit4 has been working on that will showcase all the layers described above.

To better understand this endeavor, put yourself in the shoes of a project manager at a project-based business that has identified a new opportunity. You need to come up with an estimate of cost, resources and schedule in order to propose a price that is both competitive and profitable. And you need to do so quickly and efficiently or either your window of opportunity will close, or your current projects will suffer, or both. If you are smart you don’t start completely from scratch. Instead you find a similar project, hopefully one that was successful, and start from there, modifying it to reflect the current needs of your prospect.

Sounds simple, but in reality, how do you go about finding the right project to use as a starting point, especially if it was a project in which you had no personal involvement or experience? Unit4 is developing a scenario where you will be able to enter a few key characteristics of the project including the customer (if you have done business with the prospect before), type of project, time frame required, cost range, etc. Using these parameters, Unit4 will present you with potential reference projects, each assigned a rating of how closely they match your criteria. They do the legwork; you pick the closest, most profitable and start from there.

But have you ever managed a project that looked great on paper, but in reality it was the project from hell? You can’t tell everything from the numbers. So Unit4 uses sentiment analysis to assist. The solution will be able to look at conversations and pull up up the five most positive things and five most negative things said. What is the most common word used? Perhaps you find it to be “team.” It can look for certain words used in comments and conversations, including words like “complaints” or “excessive overtime.” Perhaps the team is complaining about too much overtime.

Projects under consideration may also not yet be completed; in which case, Unit4 will simulate a completion to predict schedule and cost accuracy, along with projected margins. While all of this might seem relatively simple, when done manually, there are numerous assumptions and opinions that get inadvertently filtered that can result in overlooking the best model, choosing the wrong project or making bad predictions.

By automating the process, Unit4 delivers on all of the pillars of a “self-driving” ERP, from automating manual tasks to reducing input and asking only for input at the moment of action. It can sense problems, as well as potential opportunities and give intelligent recommendations.

This is just one of many possible scenarios. Mint Jutras anticipates more and more of these types of scenarios will be identified through working with actual customers. Once some are delivered (later this year), this could have a snowball effect, with one idea generating many more. Then it will be up to Unit4 (and possibly some select partners or customers themselves) to deliver against the promise of “self-driving” ERP.

Summary and Key Take-aways

Unit4 has truly transformed itself into a new company, one that is energized, fresh, innovative, confident and aggressive. And yet it has done so by building on the strengths it has exhibited in the past. It has always targeted people-centric businesses, particularly those that are “living in change.” It has a strong, modern architecture and understands the trends rocking the world today. We are truly entering the digital age. Social, mobile, cloud and analytics all play a key role. Unit4 is leveraging all of these and delivering a solution with a simple goal: to empower people in service organizations.

But probably most importantly, Unit4 is now focused on execution. That focus is centered on:

  • Delivering vertical solutions for service industries
  • Building applications for people
  • Designing its underlying architecture for agility
  • Delivering cloud solutions “your way,” with no compromise

The recent acquisition of Three Rivers Systems is evidence it is indeed moving into major execution mode. Don’t be surprised to see others and expect some very significant partnerships to be announced soon as it aggressively builds its partner ecosystem.

During the past two years, as this transformation was underway, Unit4 was quite “quiet.” Expect the company to significantly turn up the volume, particularly in North America, where there is tremendous opportunity that has yet to be tapped.

Expect the pace of product innovation to accelerate as it starts to aggressively leverage its prior investment in architecture and technology.

If you are a services organization with an ERP solution that seems to just get in the way, Mint Jutras would agree with Unit4 when it says, “To adapt to the speed of change, ignore the old restrictions.” Perhaps you need to get into the driver’s seat of a new “self-driving” ERP.

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Divestitures: Growth Redirected. Can Cloud ERP Help?

In Cloud ERP: The Great Enabler of Growth, Mint Jutras examined how Enterprise Resource Planning (ERP) solutions delivered as software as a service (SaaS) help companies fuel and simplify growth by addressing people challenges and mitigating risk, while maintaining governance and control. Cloud solutions enable you to fail (or succeed) faster, allowing you to focus on the next and best opportunity for growth. But with the ever-increasing pace of change, sometimes growth leaves you too diversified, or with less focus and efficiency than desired. While mergers and acquisitions are quite common today, so are divestitures. These transactions have the potential of being painful and messy. The goal is to get through them as quickly and painlessly as possible. Can cloud ERP play a significant role in smoothing these transitions?

Because growth is so often hailed as the holy grail of businesses in general, a shrinking business is sometimes assumed to be a failing business. This can be very far from the truth. Growth aspirations often lead companies to expand and/or diversify and the accelerated pace of business today leads companies down many different paths. As we discussed at length in Cloud ERP: The Great Enabler of Growth, cloud solutions enable you to fail faster and allow you to move on to the next (and better) opportunity. Smart companies recognize the need for this quickly and take action to correct the course. They refocus efforts back to core competencies and redirect growth.

Some of the factors that tend to add complexity to these course corrections include the information technology (IT) infrastructure and solutions that support the entity being divested. These solutions need to stay in place right up until the actual closing of the transaction. After all, the business continues to run even as preparations for its sale are underway. And business doesn’t stop on the day of the divestiture either. Transactions continue, but must be removed from the seller’s balance sheet and profit and loss statement, and recorded on the buyer’s.

Because acquisitions and divestitures are typically cloaked in secrecy, the IT department might be one of the last to know and rarely has much time to prepare for the transition. Very often some arrangement is made for the divested business to continue to use solutions in place for some period of time after the closing. But the clock is ticking. The divesting company is anxious to be relieved of the administrative burden. For the acquiring company, it can be costly as the cost of leaving these former solutions in place is likely to escalate dramatically after a relatively short period of time.

How can cloud ERP help? That question can perhaps best be answered through the story of one of these real-life divestitures.

Case in Point: Evonik Industries

Evonik Industries is one of the world’s leading specialty chemicals companies. Headquartered in Germany, it employs about 33,000 employees in 25 countries around the world and generates sales of €12.9 billion. About 78% of sales are generated outside of Germany.

Evonik strives for sustained value creation through profitable growth and efficiency, while maintaining corporate values. Developing ideas to market readiness as quickly as possible is both a challenge and an economic necessity. The goal is to offer the maximum benefit to customers and to society. As a pioneer in specialty chemicals, Evonik actively follows high-growth megatrends, especially health, nutrition, resource efficiency and globalization. These megatrends tend to be very volatile, causing Evonik to periodically re-evaluate, re-focus and restructure.

Like most companies today, Evonik has established corporate standards for enterprise solutions. The 2015 Mint Jutras Enterprise Solution Study found those with the highest performing ERP implementations (those we define as World Class) even more likely to have both established and implemented standards (Figure 1).

Figure 1: Have you established corporate standards for ERP?

Fig 1 EvonikSource: Mint Jutras 2015 Enterprise Solution Study

Sometimes these standards are single-tier (all business units and corporate headquarters use the same ERP) and sometimes they are multi-tier (operating units run one or more standard ERP solutions that are different from that used at corporate). Evonik has established a single-tier standard, running corporate headquarters and all its divisions and subsidiaries on SAP ERP. In fact it runs the entire enterprise on a single instance and in doing so, it also imposes its “best practices” on all subsidiaries.

When Evonik decided to divest itself of some of its operating units, in order to focus purely on chemicals, it needed to carve those business units out of their SAP ERP implementation. Initially the approach had been to make a copy of SAP ERP and run the business unit from this separate instance until the new owner took responsibility or migrated the business off SAP ERP to a different solution. While on the surface that might sound fairly simple, extricating the business unit being sold from shared services added complexity and Evonik had to make sure corporate data, and data from other retained business units was not visible and available to the new owner.

Also complicating matters was the fact that once an operating unit was carved out, it became a much smaller organization and SAP ERP was actually overkill. Those “best practices” had been imposed on all subsidiaries, admittedly, whether they were truly required or not. In addition, Dr. Marcus Schiffer (heading the Research team of the Global IT & Processes department) had vision enough to realize that a cloud solution would lend itself much better to this transition, providing increased secure transparency to all parties involved. But Evonik’s SAP ERP implementation was on-premise.

These two factors combined led Evonik to consider SAP Business ByDesign as an interim solution for the units being divested. The first divestiture to take this approach was a subsidiary located in the state of Arkansas in the United States. Instead of cloning the existing SAP ERP, Evonik migrated the Arkansas subsidiary to SAP Business ByDesign and managed to have it all up and running prior to the close.

Even after paying for the user subscriptions for one year and doing the migration themselves, with the assistance of iTelligence (an SAP business partner and Business ByDesign reseller), Evonik says they saved more than half of the originally estimated (IT) cost of the transition. The savings came from freeing up resources from shared services and enormously simplifying the implementation of the solution that will be turned over to the new owner. And when they were done, the implementation could stand on its own. Evonik provided support for an additional six weeks, giving the new owner ample time to also take ownership of the implementation.

According to Dr. Schiffer, “It took three years to get management to agree to move to the cloud. Doing it was easy.” This first divestiture was an experiment. But the experiment was deemed a success and Evonik is planning to repeat the process with another divestiture. This one will be in Germany and compliance requirements will be more challenging. With even tighter time restrictions, Evonik will continue to manage and run the system for an additional two months after the closing – still an incredibly fast and efficient transition.

Was there any downside to using SAP Business ByDesign for the transition? As an admitted “SAP bigot,” Dr. Schiffer finds the solution “not very configurable,” citing that he can configure the solution in less than a day. Of course, he is comparing SAP Business ByDesign to SAP ERP, for which he projects there are 10 80 different options for configuring orders, delivery and invoicing. “And you can’t really customize the solution when [the users] might wish they could do something not supported. But on the other side, it is good – discussions are short and decisions are easier. After learning Business ByDesign, I became a fan. Most processes can be satisfied.”

Some others might see this simplicity of configuration as a plus. In The Three Dimensions of SAP Business ByDesign Set the Stage for Growth we emphasized SAP’s current mantra of “Run Simple,” noting SAP Business ByDesign can indeed help simplify the growth process through its three-dimensional design philosophy incorporating simplicity, flexibility and extensibility.

But we also cautioned that you would need to fight added complexity every step of the way. New generations of ERP, with new and improved user experiences, can help you win the battle of complexity and gain more transparency. By putting those new generations of ERP in the cloud, you can simplify: Simplify your IT; simplify your access to data; simplify your business. And now, simplify mergers and acquisitions, regardless of which side of the transaction you sit on. Whether you are buying or selling a business, consider the cloud as one way to simplify that transition.

Epicor Reevaluates Its Strategy

A year ago at Epicor Insights 2014 the Epicor community was introduced to some new management. The owners, private equity investment group Apax Partners, had brought in a new CEO (Joe Cowan), who in turn brought along a new Chief Product Officer (Janie West) and new General Managers (GMs) for the Americas for both its ERP and Retail businesses. But all in all, not much had really changed. And the promise of “Protect, Extend, Converge” was still center stage.

This has been Epicor’s mantra for many years: promising investment protection and continued innovation that would extend the footprint of its customers’ solutions, while also converging multiple product lines acquired through the years. As I wrote last year,

The “protect” and “extend” part isn’t unique. Many vendors promise the same, although some do a better job of delivering than others. However, Epicor is unique in having delivered on a convergence strategy. The result was Epicor ERP version 9, originally called Epicor 9, reflecting that it was the result of converged functionality of nine different ERP products. The “9” has now become “10,” but that is not because it has merged a 10th product, but is more reflective of a traditional “version” level.

However, even last year it appeared Epicor was diverging a bit from this convergence strategy, primarily as a result of the merger of (the original) Epicor and Activant, which focused exclusively on the wholesale distribution market.

A Little Background

The lion’s share of Epicor’s ERP products target manufacturing. While these products have some distribution, capabilities, this was largely due to the overlap of the two industries. Manufacturers often distribute their own products and more and more distributors might engage in some form of light manufacturing. But Epicor ERP is a multi-purpose ERP, focused primarily on manufacturing, and more specifically discrete manufacturing.

Activant brought multiple products to the party but each was focused squarely on distribution. Not only were Activant products purpose-built for distribution, but also over time each has become even more focused and fine-tuned to specific segments of wholesale distribution.

And then there was the SolarSoft, which Epicor acquired back in 2012. This acquisition brought along an ERP which focused on more process-oriented industries, and also a “best of breed” manufacturing execution system (MES).

And finally there is Epicor’s retail business, which has actually been kept quite separate.

Moving Forward: More Than A Few Changes

So given this state of affairs, Epicor’s CEO, Joe Cowan, has made some changes. The underlying message throughout is that the company is “totally focused on the customer.”

The company has undergone a major reorganization, including spinning off the retail business. This group tended to address a smaller number of larger customers that were very different from the rest of the Epicor customer base. This provided no real synergies and the timing was good given other changes Mr. Cowan wanted to make. Even spun off, it will remain an Apax company and as Paula Rosenblum (@paula_rosenblum) from independent research firm Retail Systems Research (RSR) notes, this is really a “win-win.”

In addition, Mr. Cowan has simplified the remaining organizational structure and centralized key functional areas. The “old” Epicor tended to be organized around products, resulting in silos within the company, along with some redundancies. For example, support systems across different products used different policies and processes. Under the new organization, they will all be moved to a common support structure headed by Ian Ashby who came to Epicor with the Solarsoft acquisition.. The reorg also consolidates more than 20 data centers down to 8. And it has brought in some new talent, including new CTO, Jeff Kissling, only 40 days into the job as of the event.

But the changes most relevant and important to customers are the changes in product strategy. While “converge” was the mantra before, Janie West told me that moving forward, Epicor will “not be a slave to consolidation.”

One slide up on the main stage seems to have summarized the new approach:

  • Converge where we can
  • Build where we should
  • Partner beyond our core
  • Acquire as required

Of course the advantage of convergence was to remove any redundancies in development. Despite serving different markets, there are core elements Epicor needs to deliver to all its customer bases. For these functions, Epicor will favor the development of external components, which can be used across different product lines. For those products using Epicor’s advanced technology architecture (ICE) this is simply a no-brainer… which is why there had been a push to get all product lines on this new architecture. But Epicor now realizes this may not be a requirement in order to share the results of development efforts to deliver web portals, dashboards, mobile apps and other new features. So it will only re-architect where necessary, and not just for the sake of re-architecting.

While I believe the convergence to Epicor 9 (which is now Epicor 10) was the right approach at the time, I would agree with this new strategy. Where future acquisitions might simply expand the customer base in markets where Epicor plays, convergence makes sense. Where acquisitions (like Activant and Solarsoft) bring Epicor into new markets, it doesn’t. Where products are limited by older technology, it makes sense to replace the underpinnings with new architecture (like ICE) but where they are already technology-enabled, it makes sense to leverage what already exists.

The prior convergence efforts, coupled with more recent acquisitions leaves Epicor in a good position, with a manageable number of product lines – enough to specialize, few enough to maintain focus…on the customer.

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SAP S/4HANA at SapphireNow

Prior to SapphireNow 2015, I anticipated that SAP S/4HANA would dominate the event. Due to scheduling conflicts I arrived late, but from what I can tell, so did S/4HANA. Of course it did make its way onto the main stage later on in the opening keynote, but not with the fanfare expected for “the biggest product launch in the history of the company.”

Formally announced in February 2015, SAP S/4HANA is described by SAP as follows:

What is SAP S/4HANA?

SAP S/4HANA is a new product fully built on the most advanced in-memory platform – SAP HANA – and modern design principles with SAP Fiori User Experience (UX). SAP S/4HANA delivers massive simplifications (customer adoption, data model, user experience, decision making, business processes and models) and innovations (Internet of Things, Big Data, business networks, and mobile-first) to help businesses run simple in a digital and networked economy.

The SAP Business Suite is SAP S/4HANA’s predecessor. The Business Suite is just that: a suite of separate (integrated) products including ERP, CRM, SRM, SCM and PLM. Like the SAP Business Suite, SAP S/4HANA is designed for the large enterprise, but unlike the SAP Business Suite, all these separate products will be merged into a single product, SAP S/4HANA, eliminating any redundancy of data and the resultant synchronization or data passing. Both will play well with certain SAP cloud offerings including SuccessFactors (HCM) and the Ariba [supplier] network.

Also in February, Hasso Plattner announced that it would eventually satisfy the requirements of the same 26 industries SAP has spent decades building out, implying customers should be patient because this would indeed take time. After all, SAP had over 400 million lines of code to rewrite.

To get a better sense for the similarities and differences between the Business Suite and SAP S/4HANA, I would suggest you take a moment and read SAP S/4HANA: Simple, Fast, Different. That post concluded with “…the devil is in the details.” There were still many lingering questions over how both new customers and existing SAP customers would make the transition. Many industry observers were clamoring for more details on plans, roadmaps and specific status of different functions for different deployment options.

Some of those observers are still clamoring, some quite loudly. And as you might expect, they aren’t shouting SAP’s praises from the rooftops. They are looking for detailed roadmaps. But roadmaps for what? And where are they looking? I know SAP is preaching “Simple.” It is a commendable goal to try to simplify the implementation for any one customer. But where these customers are now is anything but simple.

Taken en mass, the “typical” SAP customer just doesn’t exist. The sheer number of different products, versions, databases, hardware platforms and configurations is staggering. Customers (or pundits) are not going to find all the answers and a road map wrapped up in a nice bow on a website. Each customer (and prospect) needs to engage one-on-one with SAP. And quite frankly, which customers raise their hands and express interest can and should impact the sequence in which SAP will deliver pieces of the puzzle.

If SAP publishes a timetable and sticks with it, come hell or high water, it runs the risk of not satisfying real demand. On the other hand if SAP publishes said timetable and then adjusts it according to actual demand, the industry observers without any skin in the game will cry foul. SAP will be damned if they do, damned if they don’t. There is a lot of moving parts here folks, and the more fluid and responsive SAP can be, the better for its customers.

That is not to say that SAP can afford to take its time and wait. But it is not waiting. While Hasso may have implied it would take time to bring those 26 different industries over to S/4HANA, indeed they are all there today – kind of. There was some disbelief expressed in the Executive Q&A when Bernd Leukert (member of the Executive Board and the Global Managing Board of SAP with global responsibility for development and delivery of all products across SAP’s product portfolio) announced they were all there. No, the development team did not rewrite all that code in the last 3 months, but it did make sure that the code supporting these industries was compatible with SAP S/4HANA. This is just the first stage in the full transition (rewrite) of code, but a necessary one if customers want to start making the move to SAP S/4HANA today as it is still progressing.

Customers starting on the SAP S/4HANA journey today will be running a mix of code that has been converted (to HANA) to be compatible and code that has been optimized. Customers that have not started the journey might need some help in seeing the (vast) potential benefits for doing so. Typically this assistance comes from other customers that already had an idea. Seeing those customers on stage is one of the reasons customers come to an event like SapphireNow.

But SAP S/4HANA is really too new for that. Or is it? SAP did have customers on stage, but they were more likely to be customers who had gathered experience through SAP Business Suite on HANA. So the stories tended to be more about HANA than S/4HANA. And as Jon Reed pointed out, Surprisingly, the business potential of the HANA platform is rarely factored into the initial HANA use case.”

I actually don’t find that surprising at all. First of all, for the first several years SAP itself had been talking about HANA as break-through technology in search of a problem. In recent years it has tried to shift the discussion to the business value, but that transition is hard because many SAP-ers and most industry influencers talk in “tech-speak.” Even those that insist they are talking about the impact on the business often litter the rhetoric with phrases like nearline storage, dynamic tiering, multi-tenant database containers, expansion in virtualization, publishing of objects, etc. ..along with a whole host of alphabet soup (SOAP, REST, HTML5, XML, etc.)

News Flash: business folks don’t know or care about these tech terms.

Those business users do care about speed of reporting. They care about getting answers to questions and knowing which questions to ask. And they care about reduced database size when you equate that to the cost of storage. They do care about being able to inventory and assess prior customizations that built barriers to into taking advantage of innovation and growth opportunities. They care about flexibility and agility in terms of the business as their organizations grow and restructure.

The real questions should be:

  • Can SAP S/4HANA deliver all these business benefits?
  • Can SAP deliver innovation to SAP S/4HANA that will help prospects and customers respond to real-world business changes?

The HANA platform is critical to delivering on the promise of the first question. In order to satisfy the second question, SAP needs to start delivering innovation faster than it has ever done so in the past. And the bar continues to rise on this. Its competitors that deliver only a single multi-tenant SaaS solution have a leg up in that they only have to maintain a single line of code. Others that continue to offer both cloud and on-premise solutions are forced to maintain multiple versions and also often offer a choice of operating system and database. For every hour they spend innovating, they must spend a multiple of that hour making sure it works across the entire spectrum of choice offered, in any possible combination.

In offering multiple deployment options for SAP S/4HANA is SAP putting itself at the tactical disadvantage of having to maintain different lines of code? SAP says no. While SAP has committed to delivering annual updates to on-premise customers, it pledges to deliver innovation on a quarterly basis in the cloud. And yet it claims to only maintain a single line of code, and delivers different configurations, updates and extensions through more sophisticated packaging of all these elements. This implies the core code base never changes, but all innovation is managed separately and then packaged with the base. I myself am a little unclear on the technical details here, but the goal is spot on. Business users will have to trust SAP on this for the moment. Time will tell if this approach is indeed sustainable and manageable.

The future of SAP S/4HANA depends on it.

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Acumatica and the Power of Three

Three must be Acumatica’s lucky number. In reviewing all that was covered in a recent (industry) Analyst day, I was struck by how often things came in 3’s:

  • 3 types of partners
  • 3 cloud models
  • A goal to eliminate 3 C’s: cost, complexity and customization
  • 3 veteran Acumatica execs presenting alongside 3 relative newcomers
  • Even the customer in attendance had the Acumatica partner demo 3 different systems side by side and then was up and running in 3 months
  • That partner… typically does 3 integrations per installation

In the competitive world of ERP, it is often quite difficult for solution providers to differentiate themselves. Basic functionality has become somewhat of a commodity, although the basics aren’t so basic any more. Most vendors are responding to the dominant trends impacting enterprise applications… cloud, mobile, social and analytics (aka big data). And yet, differentiation was indeed the theme of the day for Jon Roskill, CEO (and one of the 3 relative newcomers to Acumatica, along with VP Partner Strategy and Enablement, Richard Duffy and brand new CMO Kathy Visser-May).

3 Types of Partners

Apart from the lengthy list of 3’s, Acumatica can claim one easy point of differentiation. Unlike most ERP vendors and definitely unlike other SaaS vendors, it sells exclusively through an indirect channel. And in keeping with the power of 3, Acumatica has 3 different kinds of partners: Value Added Resellers (VARs), Independent Software Vendors (ISVs) and OEMs. How does it define the difference?

Think of a VAR as a typical reseller of the Acumatica software. The “value add” might simply be the implementation and consulting services provided along with the purchase of the software. Or it might include some customization, or add-on functionality developed by the VAR. In providing this value add, the VAR might also be providing specific knowledge or expertise of a certain software, industry or country requirements. The VAR in attendance at the Analyst day, BHE Consulting, is quite typical in that it resells Acumatica along with 2 other applications, both on-premise solutions. BHE’s customer, Menck Windows truly appreciated this diversity as it allowed the evaluation team to work with a single partner, but look at 3 different solutions, side by side.

VAR revenue for Acumatica grew 70% last year, making it one of the fastest growing ERP companies today from a percentage standpoint. While the growth percentages are impressive, they are tempered by the fact that Acumatica is still small compared to key rivals like NetSuite, SAP and Microsoft Dynamics. Yet the company did announce its 1000th customer at its partner event last August – quite a significant milestone.

The value added by an ISV is more specific. An ISV adds value through extensions to the product. Some ISVs you might have heard of include: Avalara (for sales and use tax management), Adaptive Planning (for financial planning, budgeting and forecasting), ADP for payroll and more recently Magento for eCommerce software and platform. Others might expand the addressable market for Acumatica beyond its standard financial, distribution, project accounting and CRM. For example, JAAS Systems adds advanced manufacturing features to Acumatica’s solution. ISVs (like JAAS) might also be VARs and other VARs may also resell solutions from ISVs. Indeed any partner that sells to manufacturers today must also partner with JAAS for a complete solution.

OEMs are a little different. These companies will use Acumatica technology to build their own solutions, sold under their own brands. So Acumatica will be “under the covers” so to speak. The two most notable of these relationships are Visma, a provider of business software solutions to SMBs in Northern Europe and MYOB, an Australia and New Zealand-based company that enjoys market shares as high as 70% to 80% within its operating markets. The deal with MYOB, announced in August 2013, enables MYOB to localize and distribute Acumatica’s ERP solution. Visma offers Visma.net, a complete business solution including a white-labeled version of Acumatica’s ERP as a key component.

3 Cloud Models

Acumatica was developed as a cloud-based solution. It was born in a browser and therefore has always had a zero footprint on the client, making it accessible any time, from anywhere. No legacy issues here. It is built from the ground up with cloud technologies and can be run on a variety of cloud platforms including Microsoft Azure, Amazon Web Services (AWS), IBM cloud and CenturyLink.

The downside of being “all in the cloud” ordinarily means less choice. Typically a cloud-based solution is only available as software as a service (SaaS). Not so with Acumatica. The solution is designed to be a multi-tenant cloud solution, but that doesn’t prevent Acumatica from offering it in a variety of different environments and Acumatica is quite unique in this regard.

Acumatica offers 3 different models through its partners:

  • A traditional multi-tenant option where a single instance of the application can be load balanced for scalability
  • A multi-tenant application, but each tenant can have their own separate database
  • Single tenant, where the customer has a dedicated application and database.

While SaaS purists might argue against this kind of choice, the 2015 Mint Jutras Enterprise Solution Study found when it comes to cloud, not everyone wants the same thing (Figure 1).

Figure 1: How do you prefer your cloud?

Acumatica Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

What is most important to Acumatica is that all 3 options use a single code base, which allows the company to deliver on another promise of 3: it schedules releases every 3 months. The ability to deliver more innovation is one of the benefits of a SaaS solution that is often overlooked and under-valued by consumers of ERP accustomed to upgrades being time-consuming, costly and disruptive. Acumatica has customers like this, and therefore it offers two different “tracks” for updates – quarterly and annually. Which leads us to another of the 3’s.

Eliminating the 3 C’s: Cost, Complexity and Customization

Most everyone today (including our Enterprise Solution Study participants) recognize the potential for cost savings in deploying a SaaS solution. Each year we include a question in our study regarding what respondents find appealing about SaaS. Cost savings consistently rise to the top of the leader board, including reduced total cost of ownership, less cost (and effort) of upgrades, lower hardware, maintenance and startup costs and fewer IT staff required to simply keep the lights on.

But in order to eliminate all 3 C’s (cost, complexity and customization) you need a solution that is broad and deep, yet flexible and agile. Building more and more specialized functionality into the core solution has the potential of turning it into a battleship – complex, unresponsive and hard to maneuver. Instead, Acumatica has made every effort to make its core solution generic but extensible.

By design, the core solution Acumatica itself delivers is a horizontal one, and therefore it will have functional gaps in certain vertical industries. Acumatica looks to OEMs and ISVs to fill the gaps, providing more opportunity for these partners and also shielding individual customers from having to deal with added complexity arising from specialty functionality that serves no purpose for them. Special platform technology helps Acumatica support this approach while making it easier for partners to extend the solution.

As with many modern solutions today, Acumatica has 3 layers: presentation, business logic and data access. Each can be modified through a “customization engine” that can extend the layer without touching original code or binaries. New functionality can be added through extension packages and multiple packages are supported on a single runtime version. The partners, or even the customers themselves, can create packages and they are “automagically” merged together. New data fields can be added and the entire database is split into base tables and extension tables. Even in a multi-tenant environment, different tenants have access to different extension packages and tables.

A good example of using ISVs to extend functionality is in the realm of eCommerce. Acumatica and Magento have partnered to help customers connect eCommerce to the back office functions supplied by Acumatica. This is a different approach than one of Acumatica’s key rivals, NetSuite, which has authored its own eCommerce suite. This is the classic example of weighing “best of breed” functionality versus ease of integration. While the NetSuite approach takes a tightly couple suite approach, Acumatica chose Magento as a market leading “best of breed” solution. That is not to say NetSuite’s SuiteCommerce solution will never match Magento in terms of functionality, but it still has a ways to go. And in the meantime Acumatica offers “out-of-the-box” integration and recognizes that some current Magento users will be reluctant to let go of that “best of breed” functionality and that specific solution.

Another example can be found in Acumatica’s approach to mobile applications. Acumatica has begun to deliver a small number (so far) of these specialized apps. One analyst at the recent event asked why not take a “mobile first” design approach, rather than creating add-on mobile apps? But for Acumatica, this is not an “either/or” approach, but rather “both.” The entire Acumatica ERP, being browser-based, is available from virtually any device with a Wifi connection. The additional mobile apps can be used in a disconnected mode, even when a Wifi connection is not available. Data is later synchronized automatically. So these mobile apps are in addition to (general access through a mobile device) and purpose-built for a particular function.

There is Power in Those 3’s

Being a relative newcomer to ERP, Acumatica has a ways to go before it becomes anything close to a household name. But then, for an industry as mature as ERP, there are indeed very few household names. If it were to rely on a direct sales force to grow its customer base one customer at a time, it might never reach the kind of penetration needed to be taken seriously. But with 327 VARs (200 in North America), OEMs like MYOB and Visma and ISVs like Avalara, Magento and Adaptive Planning, the company will definitely have a leg up.

With the cloud at its current tipping point (for new software acquisition at the very least), Acumatica is well positioned, offering choice, while also preserving the advantages of a cloud-based solution.

On the product side of the house, it has some stability with veterans like Mike Chtchelkonogov (founder and CTO), Ali Jani (VP Product Management and Services) and Gabriel Michaud (director of product management). While continuity is a key factor here, I expect the pace of innovation to accelerate, leveraging key partnerships and new technology.

And yet Acumatica has been smart to infuse some new blood into the organization with Jon Roskill (CEO) and Kathy Visser-May (CMO), both from Microsoft and Richard Duffy, recruited from SAP Business One. All 3 newcomers have pedigrees firmly rooted in the small to medium size business market, where Acumatica intends to stay. All are hungry – and well-equipped – to make a name for themselves and Acumatica in this rapidly changing, cloud-based world of ERP.

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Exact Macola, Reinvented

I recently had the opportunity to attend Exact Macola Evolve 2015. The theme of the event was “Dare to do!” While “dare to dream” is a common motivational message, this variation is reminiscent of Yoda of Star Wars fame, who said, “Do, or do not. There is no try.” yodaAlong those lines, the opening keynote featured Alison Forsythe, new Managing Director (MD) of Exact Macola, getting out of her comfort zone. Her team’s efforts to get her to jump out of a plane were thwarted by weather delays, so instead Alison got into an acrobatic airplane and took over the controls. Motivated by the thrill, she did a daring “fly by” and then asked to do another… and another… and another.

I hadn’t heard much from Exact over the past three years, so it was great to finally catch up. One of the reasons I hadn’t heard much was because there hadn’t been all that much going on… at least not until recently. Exact Macola is one of five (fairly) independent business units of Exact, a global company headquartered in the Netherlands, with 1,550 employees in 15 countries around the world. April 2013 was a turning point for Exact Macola and the beginning of a transformation led by Exact Macola’s daring new MD, Alison herself.

At the core of that transformation is a focus on exceptional customer service, brand revitalization and a cultural shift that has led to talent acquisition (that is still on-going), a strong partner strategy and renewed efforts in product development. Those efforts have paid off, with accomplishments including:

  • Five consecutive quarters of meeting goals
  • Year over year license revenue growth of 46%
  • An increase in partner revenue of 72% year over year
  • A new release of the product (Exact Macola 10), just 14 months into the transformation, after years with no major updates
  • Commitment to releases twice a year
  • The commencement of a major rewrite of the core ERP functions as Microsoft .NET objects (think browser-based screens, mobile apps, and custom apps designed by partners and customers)

Combine these major accomplishments with the theme, and the message to Exact Macola customers is quite clear. It is time to get out of the comfort zone of older products like Exact Progression and Exact Enterprise Suite (ES) and move forward with Exact Macola 10.

Dan (J.D.) Griffin, Director of Product Management at Exact Macola, drove this point home with an analogy. He told the story of how he and his cousins transformed the television viewing experience of his 96-year old grandmother by replacing her old console TV with a new flat panel LCD HD model. Needless to say, Grandma was pretty blown away by the experience. Content with her older model, she never even knew what she was missing until she saw her programs in high def.

Unfortunately, many current Exact Macola customers are still watching ERP on the equivalent of an old console TV. The challenge for Exact Macola will be to educate these customers on what they have been missing. These customers might want to start that education process with some research of their own, perhaps starting with Mint Jutras’ blog series on ERP, The Next Generation: The Final Frontier? We’re also working on a sequel to that series: Can Next Generation ERP Awaken the Force? While ERP might not have supernatural powers, it can provide better visibility and quicker reflexes and awaken you to new potential.

Some of that new potential of Exact Macola 10 includes browser-based workspaces, business process management and business activity monitoring (think workflow and event management) and access to ERP data and functions from mobile devices. If you are running Exact Progression or even an older version of the Enterprise Suite (ES), you might not know what you are missing. But don’t take my word for it. Contact your account representative at Exact Macola and ask for (demand) a demo. And ask yourself: do you really want to stay here?console TV

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