Workday: Is it ERP or Not? Does it Matter?

You may have noticed I haven’t written much about Workday over the past few years. It’s not because I’m not interested. I am. But I haven’t had as much direct contact and interaction with the company as I would like in order to write from a basis of knowledge and experience. Having recently been invited to an analyst briefing call, I hope that is changing.

Some might assume this lack of direct contact is because I write a lot about ERP and Workday seems to go out of its way to characterize itself as not an ERP company. However, as an analyst, I always describe my coverage area as “enterprise applications with ERP at the core.” But 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. Those that know me well “hear” me talking about functions and topics (like performance management, talent and human capital management, etc,) that used to sit squarely outside of ERP, but today might sit either inside or outside that boundary. They also “hear” me talk about financial management, which can be an integral part of ERP, or a stand-alone solution. Both of these are certainly in Workday’s wheelhouse.

While Workday might be careful to say “We’re not ERP,” I hear other influencers refer to the company and its products as “ERP” all the time. In response I have been known to challenge those influencers, asking, “Is it really ERP?” I don’t do that to be contentious, or to denigrate Workday’s solution, but to better position it. Who should buy it and why?

I have always been careful to define ERP quite clearly, and in fact my definition outlasted me at Aberdeen. I left Aberdeen and founded Mint Jutras almost four years ago (January 2011), but my definition of ERP lives on there.

My definition of ERP is quite simple:

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

Of course many (if not most) ERP solutions today do much more. But the minimum requirement is to provide an auditable record of operations, including any transaction that impacts the balance sheet (assets and liabilities) or the profit and loss statement. So does this mean an integrated suite of accounting modules qualifies as an ERP solution? It’s close, which is why I am able to collect so much data on financial management solutions in the context of my annual ERP solution studies, and in 2015 I am devising a way to capture data specific to each while distinguishing between the two. But the question is not as simple as it might seem and I have found the real answer lies in whether or not the solution handles orders: both purchase orders and sales orders. While purchasing is not strictly the domain of finance, it is not unusual for a financial management solution to include at least the basic requirements for purchasing transactions. It is less likely for these financial solutions to include the sales order.

An interesting aside: I attended the very first analyst call back in 2006 when Dave Duffield and Aneel Bhusri introduced Workday. I remember clearly that Workday was introduced as a ‘new ERP company”, although the first functions that would be developed would be for managing Human Resources (HR). The HR part came as no surprise given the founders’ background (Peoplesoft). But the reason I remember it so well is because Dave Duffield actually said something along the lines of, “You are probably wondering whether the world needs another new ERP system.” Of course Workday went on to fully develop its Human Capital Management solution, including HR, benefits, talent management, recruiting, payroll, time tracking and workforce planning and analytics. Financial Management came later.

So, what about the full operational and transactional system of record? Yes, Workday’s Financial Management solution handles the purchasing side, covering the full procure-to-pay process. And earlier this week, I got excited when I heard it also handles the full cycle from contract to cash. Aha! Is that the final piece of the puzzle that would qualify it as an ERP? While I might prefer a simple black and white, yes or no answer, I think there are at least a few shades of gray here, depending largely on the type of operations in question.

So I went in search of the sales order. I found a “contract” but not a sales order. But then remember that Workday specifically targets talent intensive organizations, including several for which it has developed new features in its latest Workday 23 release (the topic of the recent call):

  • Software and Internet Services
  • Financial Services
  • Business Services
  • Higher Education and Non-profits

Also noted on its website are healthcare, state and local governments, and retail and hospitality. These types of businesses don’t necessarily book an order in the classic sense of the term (e.g. when you think about an order for widgets). Colleges and universities don’t sell degrees. Hospitals don’t sell surgical procedures. Hotels don’t sell and deliver rooms. Business services are contracted for. Even software companies that might talk about booking an order are really more likely to sign a license agreement or offer a subscription (both are contracts). So in this case, the contract represents the commitment to buy and is the trigger for invoicing. In these cases, I would guess that Workday’s Financial Management suite can provide the full operational system of record for the business. In other words, by my definition, they are providing ERP to these types of businesses.

But if they were to stray outside these target markets, they can’t provide the full operational system of record, especially for a manufacturer. While Workday does target manufacturers, if you look closely you realize it is selling Human Capital Management to manufacturers, especially those looking to balance human resources to optimize revenue opportunities.

Flextronics, a global leader in design, manufacturing, distribution and aftermarket services, and one of the largest contract manufacturers in the world, is a Workday customer with over 200,000 employees in 30 countries. According to Mike McNamara, CEO, “We have to rebalance our workforce on a continuous basis for our customers. For example, we may be spending a lot more time in Malaysia and a lot less time in China. We may want to move more of our workforce into Mexico as opposed to Eastern Europe, depending on the markets we’re accessing. And Workday actually gives us the data to continuously analyze what our cost structures are—the average labor rates in each area. It has actually changed some of our investment policies for different countries as a result of studying the data and the trends in the data.”

Flextronics is running Workday’s HCM. I suspect Workday doesn’t sell a lot of Financial Management to manufacturers except maybe to replace corporate level financials. Manufacturing sites already have accounting functions embedded within ERP because it is hard for them to live without it. This is the perfect setup for a two-tier standard for ERP: manufacturing ERP at the divisions, rolling into a corporate ERP, which may just be financials, analytics and maybe even HCM (like Workday).

So this begs the question: Why does Workday go out of its way to characterize itself as not being ERP? Mark Nitter is the vice president at Workday responsible for setting the strategic direction of its products. He wrote about this in his blog post Why ERP Is Out, and Unified Finance and HR Is In, in which he assumes all ERP solutions were “designed for enterprises engaged in the manufacture and distribution of goods” and that “people were primarily seen as labor—a commodity whose cost is to be minimized.” He also assumes there is an arm’s length relationship between finance and HR. Mr. Nitter writes:

At Workday, we certainly don’t consider what we offer as “ERP.” From the beginning, our mission was to deliver an enterprise cloud for HR and finance, and this solution has been a key driver for many of our talent-driven enterprise customers, including AAA NCNU, Allied Global Holdings, Life Time Fitness, Sallie Mae, and TripAdvisor. For these companies and others, a business management system that unifies HCM and financials provides efficiencies and insights far beyond the capabilities of the ERP model.

An example: Imagine that a P&L analysis points to a revenue shortfall for your fiscal quarter. State-of-the-art financial drill-down analysis may help you identify which organization, product, or customer is responsible. But what if the reason for the shortfall cannot be determined through analysis of financial data? What if the reason for lower-than-expected revenue is that you have three open positions in the sales organization, and have had for six months?

The arms-length relationship between finance and HR that exists in ERP systems cannot deliver this insight. Separately, the finance department could identify where the shortfall occurred, and the HR department—if it knew where to look—could identify the hiring problem, but only a unified solution is capable of connecting the dots.

I would agree that most ERP solutions today couldn’t identify this hiring problem. But that is not because of any inherent limitations of ERP. It is because the ERP solution doesn’t have the same depth of functionality in HR that Workday has built into its solution. Yes, ERP evolved from MRP, which was originally designed to meet the planning needs of manufacturers. But ERP has evolved way beyond the realm of manufacturing and some ERP solutions on the market today – in fact those solutions that compete most directly with Workday – were never designed to support (physical) product-based businesses.

So, is Workday ERP? I would mostly agree with Workday and say, “Not really.” But does it matter what you call it? I would say, “Yes it does.” That is if Workday wants to be considered as a viable option in all the places where it could truly add value.

This is particularly true in companies that already have ERP and are not looking to replace it. Because HR has been largely underserved by ERP for many years, many ERP implementations lack a lot of specialized HCM functionality. Workday’s HCM can add very significant value, even without being sold as a “unified finance and HR solution.” If Workday portrayed itself as an ERP solution, that prospect would likely say, “No thank you. We already have one of those.”

Mint Jutras data indicates a dichotomy of preferences in satisfying HCM requirements. While there are some that have a strong preference for HCM functionality embedded within ERP, an (almost) equal number strongly prefer a separate (possibly stand-alone) applications. The remainder has no defined preference and will decide based on a combination of functionality and price (Figure 1).

Figure 1: Preferences for HCM Functionality

Figure 1 WorkdaySource: Mint Jutras 2014 ERP Solution Study

However, where the Workday solution might provide a complete system of record, this argument might work against Workday. Where those companies perceive the need for ERP, even though Workday might have all they need, if Workday says it doesn’t sell ERP, it might not be considered. This may also be true where companies might define a two-tier ERP strategy, with one ERP providing corporate financials and a second standard defined for units, divisions or business units. If the prospect has defined this as a “two-tier standard” for ERP, it will be looking for ERP at the corporate level, even though orders are managed at the divisional level and “unified finance and HR” is what it really needs. The difference in the label might make all the difference in which solutions they will consider.

Bottom line: I admire Workday for identifying the value of a unified finance and HR solution particularly for the “talent-driven enterprise” and for not portraying itself as something that it is not. Some of the influencers who refer to them as “ERP, just not for manufacturing” could learn a lesson or two from this. But at the same time, I would caution Workday against assuming that an ERP can’t and won’t unify finance, HR and a lot more.

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Infor customers: Are you listening?

Once again Inforum, Infor’s annual customer event was chock full of new announcements. At last count I saw 13 press releases issued since the start of the event on Monday September 15th:

Sep 17, 2014 Etam Group Expands Scope of its Marketing Activities with the Help of the Latest Version of Infor’s Marketing Management Solutions

Sep 17, 2014 Brasil Norte Bebidas Adopts Infor Solution to Optimize Logistic Processes

Sep 17, 2014 Kansas City Citizens Receive Enhanced Service from Local Government

Sep 17, 2014 Infor Aligns With MercuryGate To Strengthen Transportation Management

Sep 17, 2014 Infor Helps Ferrari to Accelerate Supply Chain Planning

Sep 17, 2014 Infor Announces Internship and Educational Alliance Programs

Sep 16, 2014 Infor Delivers Robust CloudSuite for Business Management

Sep 16, 2014 Infor Announces New Era of Automated Financials

Sep 16, 2014 Infor CloudSuite Available for Healthcare Delivery Organizations

Sep 16, 2014 Infor Announces New Technology Platform, Infor Xi

Sep 16, 2014Infor Dynamic Science Labs Pioneers New Class of Applications

Sep 16, 2014Infor and Aras Deliver Transformative Cloud PLM Solution

Sep 16, 2014Infor Reports Q1 License Revenue at Double-Digit Growth

Sep 15, 2014Varian Medical Systems and Infor to Add New Data Integration Capability within Varian Software Suite for Planning, Managing, and Delivering Cancer Care

 

As you can see from the list above, this collection of news bites is quite diverse. You might even say it’s all over the map. And still it doesn’t cover everything I found noteworthy from the event. Having grown through acquisition, in the past Infor has struggled to have any focus beyond growth for the sake of growth. But I would argue that in spite of the large volume of news, in spite of the diversity, today Infor does have a focus. And that focus is something I have been writing a lot about lately: the convergence of trends, with goal of making ERP easier to consume.

My recent 2014 Trends in ERP Converge report began as follows:

In 2013 you couldn’t pick up an article without being bombarded with what industry observers were calling the “big trends” in enterprise software. We heard cloud and software as a service (SaaS) deployments would take over, although definitions were just that… cloudy. We heard about the prevalence of mobile devices and the resultant “consumerization of IT.” “Social” took on new meaning as Facebook, Twitter and other social media phenomena not only changed the way many of us communicated with the world but also impacted our business applications. And then, as if we weren’t already bombarded with enough data, we heard all about “big data,” analytics and in-memory computing. Enterprise Resource Planning (ERP) was not immune to these influential factors and the solution providers strove to brand themselves in the context of these trends. Will these trends continue to dominate, or will we see new waves of innovation? Mint Jutras anticipates 2014 will bring the convergence of these trends, brought together by a common goal of making not only innovation, but also the enterprise applications themselves inherently easier to consume.

 And that was the focus I heard at Inforum. It was all about making software that people want to consume, while making it easier to consume. Infor started down this path with Infor 10x, a platform that delivered a reinvented HTML5 user experience (the SoHo user interface), Infor Ming.le (its social collaboration platform), and embedded analytics. The Infor ION framework (light weight middleware) was integral to this effort. This week Infor announced the next evolution of Infor 10x: Infor Xi, which it calls “an enterprise technology platform for next-generation applications…[which] will deliver a major step in achieving the company’s vision for cloud applications that address specific industry needs with responsive design infused with machine-learning and big data analytics.” That’s a mouthful, but I think it supports my concept of this convergence of trends towards a common goal.

Infor has been talking about “beautiful” software for the past two years, introducing this concept at Inforum 2012. I haven’t always been a big fan of “beautiful” software simply because I think beauty is largely in the eye of the beholder and typically beauty isn’t the primary concern of users. It’s got to be more than a beauty contest.

I have been observing the growing importance of “ease of use” in terms of ERP selection criteria for the past few years. I have asked survey participants to prioritize ERP selection criteria in my annual ERP survey for many years. While “fit and functionality” reigned for years, “ease of use” has bubbled to the top for the past two years (Table 1).

Table 1: Priorities of Selection Criteria in Evaluating ERP

Table 1 InforSource: Mint Jutras 2014 and 2013 ERP Solution Studies

Survey participants were asked to rank the importance of thirteen different selection criteria for ERP on a scale of 1 to 5 where 1 was “not a consideration” and 5 was “must have/most important.” There was nothing to stop the respondents from ranking each and every criterion as a “must have,” but they didn’t.

So what does “Ease of use” mean? Glad you asked. I asked that of my survey respondents as well. For this question, I gave them a list of options and asked them to pick their “top 3.” I guess a “visually appealing user interface” is the closest I come to “beautiful software.” As you can see in Figure 1, it is not at the very top of the list. Factors that affect efficiency and productivity outrank beauty. But in spite of the words Infor execs use (beautiful software), I actually think this is what they are striving for.

Figure 1: What does Ease of Use mean? Pick your top 3

Figure 1 InforSource: Mint Jutras 2014 ERP Solution Study

Sadly enough, all too often in the past, ERP solutions that were meant to streamline and automate processes ended up forcing users to work in ways that simply weren’t natural. That point comes up a lot when talking to Infor execs. In fact they have launched a new initiative (Infor refers to it internally as SoHo Glide) to further improve the user experience. Graphical user interfaces (GUIs) have evolved from legacy command line interfaces. Now Infor wants to take the next step from “graphical” to “natural,” which addresses both the need for intuitive navigation and supporting a natural way of working. I could talk for pages about this, but the best way to understand what they are doing is to ask for a demo.

While many cite “Don’t make me change my business processes” as a “top 3” priority in terms of “ease of use,” I would warn Infor’s (and other vendors’) customers not to use this as a blanket requirement, unless of course all your business processes reflect best practices and/or provide a source of differentiation for you in your market.

Infor has flat out stated that it wants to rid the Infor world of customizations. That’s at the root of its micro-vertical strategy. The goal is to have very industry specific solutions that can address all the requirements of a particular sector without the need for customizations or other point solutions. But that doesn’t mean the software can or should support every idiosyncrasy of your company. “We’ve always done it that way” is not a valid justification, especially if the reason you did something differently was because of a (previous) gap in software functionality or resistance from an individual (who probably doesn’t even work for your company any more). There are a lot better solutions out there today, some of which are offered by Infor.

“Friends don’t let friends build data centers”

One of the reasons Infor is so adamant about removing customizations is because of the move to the cloud. I have lots of data that shows the growing willingness to consider, even the preference for cloud-based solutions. Infor has known for a while that this was happening, but execs on the main stage of Inforum 2014 admitted the push to cloud happened a bit faster than they had anticipated. Hence the “all out” effort to be “all in” on the cloud. And in fact the quote in this heading was from Infor CEO Charles Phillips.

Infor is offering two different paths to the cloud. Its UpgradeX program is probably most attractive to companies that are stuck on older releases, often because of the cost and effort of the upgrade process. Through UpgradeX, Infor gets the customer to the latest release of the software and then lifts and shifts it to the cloud, taking responsibility for its care and feeding, including upgrades. This is more of a hosting option, but relieves the customer of the burden of maintenance of both hardware and software.

I should point out that this option is not available to all customers because not all product lines are cloud (web-) enabled. Those Infor teams are working hard to encourage customers to remove customizations and move forward in anticipation of that day. But I have a better idea. Where Infor has an alternative solution that is modern and technology-enabled, get rid of that older solution and move to something that can more easily, safely and efficiently move you into the future.

You won’t hear Infor say this because it doesn’t want to appear to be abandoning customers or products. And of course, moving forward could mean opening the door to a competitive situation. Quite frankly, when I worked for software companies, some of which are now owned by Infor, I would have said and done the same.

But looking objectively from the outside in, I don’t think this serves the customer well. Suggesting “rip and replace” used to be heresy but today it might just be the fastest, cheapest path to get you to a far more competitive position.

If you do consider trading in an older Infor solution, the other cloud path might be best for you. Re-implement on one of Infor’s industry-specific CloudSuites. These CloudSuites integrate multiple functions traditionally requiring disparate systems into a single suite. Some will be industry-based (e.g. healthcare, manufacturing verticals, wholesale distribution, etc.) and others will be “solution” suites (e.g. financials, human capital management, etc.). These CloudSuites are all destined to be multi-tenant software as a service (SaaS) solutions, although all the necessary components are not multi-tenant today.

The CloudSuites will be available on the Amazon Web Services (AWS) cloud infrastructure. As Infor’s COO Pam Murphy likes to say, “Infor is in the enterprise application software business. We let someone else worry about pipes and feeds.” Of course a significant advantage to customers and Infor both is the elasticity and scale of AWS. Infor will also use leading open source solutions including Red Hat’s Enterprise Linux (RHEL) and JBoss Enterprise Middleware, and EnterpriseDB’s Postgres Plus database. And all will be supported by Infor ION®, Infor’s purpose-built, lightweight middleware. Infor ION provides integration and other services.

These suites will feature a consumer-grade user experience from Hook & Loop, Infor’s internal design agency based in its Manhattan headquarters. And they will have embedded analytics. This is an important point. As other vendors are packaging business intelligence (BI) tools and analytic applications and selling them separately, Infor is operating on the belief that analytics are core to next-generation applications and should be a basic part of the solution, with no additional charge.

These analytics will also run on mobile devices. In many ways Infor adopts a “mobile-first” design philosophy that is becoming quite prevalent in new development today. But it also recognizes that a lot of work (both transactional and decision-making) is still done on a desktop, so it is committed to bringing the consumer-grade user experience to all.

In fact this enhanced user experience, based on “beautiful software,” is all about engaging more of its customers’ employees. In the past only a small percentage of employees ever put their hands on ERP – those doing heads-down data entry and a few selected “super users.” Executives in particular couldn’t be bothered to “figure it all out” and were dependent on those super users for answers, causing delays that could be fatal to decision-making.

But today that is changing. The better the experience, the more connected the people running the businesses are to ERP and to each other. And Infor has the stated objective of ending “the tyranny of the super user.” Mint Jutras is already seeing a shift in the market to higher levels of engagement with ERP and cloud deployments seem to play a big role. While overall a little over half (55%) of employees use ERP today, that percentage jumps to 63% when a SaaS solution is deployed (Figure 2).

Figure 2: What percentage of your employees uses ERP?

Figure 2 InforSource: Mint Jutras 2014 ERP Solution Study

Of course cloud-enablement is not the only factor here, but, apart from the access anytime, from anywhere advantage of the cloud, today’s cloud-based solutions are not saddled with a lot of older technology that stands in the way of a consumer-grade experience.

But Will Infor Customers Move?

The new management that took over Infor a few years back has brought significant change to the culture, the technology and the direction of the company. I think all these seemingly distinct announcements are all pulling Infor in the right direction and we’re really starting to see positive results. But the real question remains: Will its customers follow it into the future?

I went to my first Inforum in 2006 and was stunned to learn that Infor had 70,000 customers. Yet through the years of further acquisitions and more Inforums where the stats offered up about numbers of new customers were impressive, the total remained at 70,000. That told me that some customers (although still running run Infor products) might not be (maintenance) paying customers anymore and/or there was attrition equal to new customer wins. That is troubling for any software company.

This year that changed. In 2013 Infor added 3018 new customers and the total jumped to 73,000. But Infor still has a very large number of customers that simply are not in a position to take advantage of all this new technology, including consumer-grade user experiences, mobile design, cloud connectivity, embedded analytics, etc. etc. Other vendors see that as a huge opportunity.

Having dealt directly with some of these specific customer installed bases in the past, I would say a very large part of the reason these customers stay where they are is inertia. It is the “if it ain’t broken….” syndrome or the philosophy that ERP replacement is like brain surgery. Don’t do it unless the patient is dying. Anyone that follows me knows exactly what I think about that philosophy. Waiting until your business is in distress is not the optimal time to set out on a new ERP implementation.

Infor is offering a lot of options to its customers, but not every customer has the exact same options. These new “natural” customer experiences, new technology, new products and new CloudSuites are quite compelling. But if a customer can’t figure out how to get there, it’s all meaningless. Infor has been working on so much that it can be appear quite overwhelming. And it is very hard to convey this in a general session in front of such a diverse crowd. And it is equally hard to have 73,000 conversations.

The promise of beautiful software is not enough. Infor’s story is much more than that, but are its customers listening?

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Acumatica Poised as ERP Trends Converge

 

Partners Attracted by Technology, Innovation and Choice

Acumatica held its annual Partner Summit earlier this week in Broomfield, CO, just outside of Denver. Attendance this year topped 400, with over 100 partner companies represented. Over the past year Acumatica has undergone some management changes, bringing in a new CEO and a new head of partner strategy, a key role considering 100% of its sales are indirect. There was a definite sense of excitement in the air this year, partly as a result of the new management, but largely due to a combination of technology, innovation and choice of cloud-based deployment options offered in response to the latest trends impacting Enterprise Resource Planning (ERP).

Mint Jutras has been writing a lot about four specific trends this year. Its report, 2014 Trends in ERP Converge, looked back over these “big trends” in enterprise software from 2013 and concluded that we don’t need any new or different trends for ERP in 2014. Cloud, mobile, social and big data will do just fine. However, we have concluded that it is no longer sufficient to treat them as independent movements. We need them to converge around a single common goal of making ERP easier to consume, thus bringing more value to the business. Enlisting the aid of OEM and VAR partners, Acumatica has set its sights on delivering on this promise of added value.

The Key Trends

As I have noted before (but it is worth repeating), the 2014 Trends in ERP Converge report talked about four specific trends. These should come as no surprise to anyone following enterprise software:

  • Cloud and software as a service (SaaS)
  • Mobile access and the consumerization of IT
  • “Social” as a way to deliver collaboration, connectivity and visibility
  • “Big data” for intelligence and decision-making

It is impossible to talk about the convergence of these trends without mentioning innovation that is easier to consume in a less disruptive way. This often requires new ways of engaging with ERP in order to change the whole ERP customer experience. So how does Acumatica address each of these trends?

Pure Cloud

Acumatica can be characterized as a pure cloud solution. The Acumatica solution 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: SOAP, web services, HTML5, Azure, Amazon, etc.

Many use the terms “cloud” and “SaaS” interchangeably, but indeed they are not the same. The distinction is quite simple and need not be over-complicated:

  • Cloud refers to access to computing, software, storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.
  • SaaS is exactly what is implied by what the acronym stands for: Software as a Service. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another’s) computer. It is accessed over the Internet and is generally paid for on a subscription basis. It does not reside on your computers at all.

Using these definitions, we can confidently say all SaaS is cloud computing, but not all cloud computing is SaaS. Acumatica is cloud-based but not always delivered as SaaS.

The downside of being “cloud only” often means less choice. Typically a cloud-based solution is only available as software as a service (SaaS). Not so with Acumatica. Lots of choices here: multi-tenant SaaS, single tenant SaaS (more like a hosted model), or even traditional on-premise deployments. You can purchase a perpetual license or pay a subscription. It 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.

Some industry observers, including those that have their own specific definition of what constitutes “true SaaS,” might argue against this approach. While Mint Jutras is seeing a major shift in acceptance of SaaS solutions, our research also proves that there is  continued interest in other delivery options for the access any time, from anywhere advantages of the cloud. But we see a decided decline in interest in traditional, licensed on-premise solutions (Figure 1).

Figure 1: Which deployment methods would you consider today?

Figure 1 AcumaticaSource: Mint Jutras 2011, 2013 and 2014 ERP Solution Studies

Many are simply looking to unburden themselves from the care and feeding of enterprise apps like ERP. They are attracted by lower costs, easier upgrades, less hardware and IT staff and are less worried about a single prescription of how cloud solutions are delivered. They are looking for business partners they can trust and having more choices in how they address these needs can be very attractive.

However, Acumatica does sacrifice some of the advantages of a pure multi-tenant solution through this approach. For those not familiar with the terminology, Mint Jutras uses the following simple definitions:

  • Multi-tenant SaaS: Multiple companies use the same instance of (hosted) software. Configuration settings will vary per company and data is protected from access by other companies (tenants).
  • Single-tenant (or Multi-instance) SaaS: Each company is given its own instance of the (hosted) software.

Those vendors that only support a multi-tenant environment have the luxury of maintaining one single line of code. By not having to worry about multiple instances at different (potentially customized) version levels, they are better positioned to deliver more innovation, faster.

However, at the Partner Summit, Acumatica announced a new Acumatica Grow Program, which leverages the multi-tenant capabilities of its solution within the partner community. FusionRMS for SMB Retail is one example.

Fusion Retail Management System (FusionRMS) is a suite of applications extending the reach of Acumatica to the SMB retail and wholesale distribution markets. Offering added functionality such as point of sale (POS) and warehouse management (WMS), its solutions are seamlessly integrated with Acumatica without effecting core functionality. Now, through the Grow Program, it is also offering multi-tenant SaaS back office accounting supported through Amazon Web Services (AWS).

While this might sacrifice some of the flexibility of choice other Acumatica customers enjoy, Fusion Retail Management manages a single line of code and can pass along savings to its customers. This helps them support clients that otherwise might not be able to afford Acumatica.

Fusion Retail Management not only sells direct, but also other partners bring them small retail clients that might be too small for Acumatica now. This is preferable to simply losing a deal, particularly in knowing they will get them back if the prospect grows. FusionRMS supports these small clients until they grow large enough to justify the purchase or subscription of Acumatica. At that point, FusionRMS turns the client back over to the partner.

A Mobile Framework

The trend towards mobile goes hand-in-hand with cloud, as mobile access is gained through web-enabled services. We are seeing different approaches to mobility in the ERP market these days. Some vendors are adopting a “mobile first” design approach. Any features and functions are being designed to “fit” on the real estate of a tablet or smart phone. Others are taking a “mobile apps” approach where they are releasing multiple, individual purpose-built apps that complement core ERP. Some are building these themselves and others are leaving this development effort to partners. Some are hosting “App stores” where customers can shop. Others simply bundle them into existing software licenses.

Acumatica is taking the approach of providing a mobile development framework, purposely leaving the actual delivery of the mobile apps to the partners in order to provide them more opportunity. But this framework isn’t built for a developer. According to CTO Mike Chtchelkonogov (aka Mike C), “You no longer have to be a developer to target the mobile market. In the past, partners may have needed to hire specialists to create iOS or Android applications, but with Acumatica’s new mobile development framework, any of our partners can do it.”

This is especially important to the Acumatica channel because many partners are business and implementation specialists and not technologists. According to Mike C, the partner [or the customer] can take any part of Acumatica and expose it on the mobile device. So what kind of opportunity are we talking about? That might be in delivering a customized solution through services, or building an app to be sold through Acumatica’s app store.

What About Big Data and Social?

There was not a lot of direct reference to “social” and “big data” at the Acumatica Partner Summit. But that doesn’t mean either is being ignored, only that these trends and concepts are being worked into the product roadmap naturally, not as separate and distinct efforts. In fact many of the new features of its upcoming new release 5.0 indirectly support the goals of a “social” enterprise.

Social can mean different things to different people. It has some intuitive connotations in the world of consumer goods where social sentiment can have a serious impact, both positively and negatively, when shared publicly. But the real impact in any industry, while perhaps not as intuitive, is quite real.

When you take the view that “social” should mean improved collaboration, visibility and connectivity, then you start to understand the connection with the ERP user experience. Much of the development effort that produced the latest release 5.0 has gone into the user experience. Probably the best testament to the result was the fact that several key top executives put their hands on keyboards, or their own mobile devices, and ran their own demos. Not only were these “real” demos (not mock-ups or a series of screen shots in PowerPoint), but no pre-sale consultant or sales engineer was needed.

Simply by putting access to an ERP directly in the hands of high-level decision-makers improves connectivity, which in turn fosters visibility and collaboration.

Another announcement at the Partner Summit reinforced Acumatica’s commitment to another type of connectivity: a deep partnership with Azuqua, a cloud connectivity platform. On stage Azugua demonstrated its recently launched cloud integration service featuring connectivity between a broad range of popular web services (including Salesforce, Office 365 and Hubspot) to Acumatica’s system. Interestingly enough, the integration demonstrated on the main stage was so dead simple that it led to skepticism from industry observers and influencers in the audience. Was it too good to be true? I suspect it is real, but time and partner experience will tell.

As to “big data,” Acumatica was quick to point out its approach was very different from those of ERP giants SAP and Oracle. Instead of building a “big data” platform outside of the ERP system and requiring retrofitting of existing systems, Acumatica is building this kind of capability into its solution. This speaks to speed and ease of handling large volumes of structured data, but downplays (ignores?) the inclusion of massive volumes of unstructured data. It appears this is also something Acumatica might leave to partners and it will take a special kind of partner to deliver on this.

The Convergence of Trends Toward a Goal

If you recall, in our intro, the goal was to have these trends converge around a single common goal of making ERP easier to consume. The better the experience, the more connected the people running the businesses are to ERP and to each other. In fact over the past few years, we’ve observed an increase in the percentage of employees who actually use ERP. Today that percent is about 55%, up from about 20% less than a decade ago. In addition, 62% of survey participants claim top-level executives have direct access to and regularly use ERP. So Acumatica executives are not the only execs in the driver seat when it comes to using ERP. Another 30% indicate these high level execs have at least some access to ERP.

This, combined with expectations raised by the consumerization of IT, is perhaps the catalyst in shifting priorities in terms of ERP evaluations. While fit and functionality was king for many years, it has slipped to number two in the priority of selection criteria. “Ease of use” has taken the number one spot.

But “ease of use” means different things to different people. In fact it means different things to a single individual (Figure 2).

Figure 2: What does ease of use mean? (top 3 priorities)

Figure 2 AcumaticaSource: Mint Jutras 2014 ERP Solution Study

While many vendors are focusing efforts on “beautiful” software these days, beauty is always subjective. Those using ERP today are more concerned about efficiency and productivity than in a visually appealing user interface. Being a relative new-comer to ERP, Acumatica (founded in 2007) might not have the same depth of features that other more mature solutions have. But the development team seems to be working on a good balance of features and functions, along with better usability and a web platform that helps partners further develop breadth and depth. If the reaction to the main stage demos is any indication, partners and the few customers in attendance at the Partner Summit agree.

Ehrin Dimitry, CEO of AME Corporation, an Acumatica customer said, “I thought I knew what our next steps were until I saw Acumatica 5.0. My wheels are turning!” Customers and partners seemed genuinely excited about this newest release, a clear indication of perceived value.

Summary and Key Takeaways

As a pure cloud solution provider, Acumatica is very well positioned to deliver the benefits of the cloud through a variety of different deployment options. Virtually every partner I spoke with at the Partner Summit was drawn to Acumatica for its technology. Few offer Acumatica exclusively and many of them have experience selling, implementing, servicing or developing other ERP platforms. But that seemed only to strengthen their opinion of and commitment to the Acumatica solution. They like the partner friendliness of a relatively small company that sells exclusively through the channel. They are drawn to cloud computing but like being able to offer choice.

Customers and partners alike were enthusiastic about the latest release and the roadmap forward. Overall Acumatica seems poised to deliver as major trends like cloud, mobile, social and big data start to converge.

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Sage Technology Strategy Leverages Convergence of Trends

Innovation focused on Cloud, Mobility and Data, driving connectivity and collaboration

At the recent Sage Summit 2014 (July 29-31, 2014), Sage North America outlined the strategy driving the company’s technology roadmap, a strategy that leverages three key trends shaping the future of enterprise applications: cloud, mobility, and big data/business intelligence (BI). At the same time it also hit on the fourth trend rocking the Enterprise Resource Planning (ERP) world: the connectivity and collaboration of “social.” A roadmap is exactly what is needed for any Sage prospect or customer contemplating these trends and navigating the journey into the future.

A recent Mint Jutras report, 2014 Trends in ERP Converge, looked back over these “big trends” in enterprise software from 2013 and concluded that we don’t need any new or different trends for ERP in 2014. Cloud, mobile, social and big data will do just fine. However, it is no longer sufficient to treat them as independent movements. We need them to converge around a single common goal of making ERP easier to consume, thus bringing more value to the business. Indeed the key messages at Sage Summit – cloud, convergence and intelligence – were very much in line with this way of thinking.

The Key Trends

In 2014 Trends in ERP Converge we talked about four specific trends. These should come as no surprise to anyone following enterprise software:

  • Cloud and software as a service (SaaS)
  • Mobile access and the consumerization of IT
  • “Social” as a way to deliver collaboration, connectivity and visibility
  • “Big data” for intelligence and decision-making

It is impossible to talk about the convergence of these trends without mentioning innovation that is easier to consume in a less disruptive way. This often requires new ways of engaging with ERP in order to change the whole ERP customer experience. Sage’s approach to delivering on this promise is to reduce the footprint of core ERP, replacing those functions (over time) with cloud services, while making both cloud and mobility central to its technology strategy. There are some key advantages to this approach both for Sage itself, and its customers. With a diverse portfolio of ERP products, Sage is able to develop new features and functions once and deploy across multiple product lines, delivering more innovation that is easier for its customers to consume. It also facilitates a more incremental, and therefore less disruptive transition to cloud-based systems.

When Less is More

For some it may not be intuitively obvious why we characterize “reducing the ERP footprint” as a step in the right direction in delivering more innovation. Let’s explore how that works. First of all, Mint Jutras defines ERP as an integrated suite of modules that forms the operational and transactional system of record of a business, including all the master data needed to support the full order-to-cash cycle. This is a rudimentary definition because today ERP is likely to do much more than this.

What we refer to as “core” ERP is developed as a tightly integrated set of modules, using a single data base model; integration is built in and there is little or no redundancy of data elements, except where there is a specific need. Not only do all modules of an ERP solution share a common database, but also all are developed using the same tools and technology and they all move forward in lock step.

This eliminates data redundancy and any need for separate integration efforts. But it also means purchasing can’t move forward until order management, shop floor control and inventory management modules are ready to move. It takes massive efforts of coordination by the vendor to make sure all the pieces of the puzzle more forward together. And it takes similarly massive efforts of coordination for all departments within their customers’ organizations to take those next steps altogether.

But what if a supplier (or, even worse, a customer) demands that your enterprise change the way you conduct business with them? What if your current solution can’t support that new way of doing business? Maybe you need to upgrade, enhance or even swap out the purchasing (or order management) module for a new solution that does. If purchasing (or order management) was a separate application you could, although that would most likely require additional effort (and cost) to integrate that separate application with ERP. And when you make a change, the integration would likely require change as well.

What if, instead, you could take that tightly integrated purchasing module of ERP and loosely couple it, or better yet, deliver it as a service? That way, if you wanted to replace it, you would just have to uncouple it and swap in a new one. Or perhaps you just leave the original module in place and enhance it with new services.

In fact, Sage is taking exactly this approach as it develops much of its new functionality, and it is going one step further and placing those services in the cloud. This eliminates the headaches associated with expanding hardware configurations or incompatible infrastructure requirements and it responds to the growing preferences for cloud-based solutions.

Sage uncovered these preferences in its own survey of customers and prospects, but Mint Jutras data also confirms them. Its annual ERP Solution Studies perennially ask which deployment options would be considered if respondents were to purchase a new solution. For years software as a service (SaaS) lagged significantly behind traditional on-premises options, but today SaaS is more likely to be considered than on-premises solutions (Figure 1). In addition, hosted solutions are also favored over those on premises. Most hosted solutions today are also accessed securely through web-based interfaces, but usually employ a private cloud versus the public cloud of a SaaS-based solution.

Figure 1: Which deployment methods would you consider today?

Sage Figure 1Source: Mint Jutras 2011, 2013 and 2014 ERP Solution Studies

Sage presents this as a “hybrid cloud strategy” intended to help customers move incrementally to the cloud, with all the benefits of lower cost, faster implementation, and easy access. But perhaps the bigger benefit is in helping customers add incremental functionality without the usual cost and effort of a full upgrade.

Whether this is a “cloud strategy” or an innovation strategy or both, the net effect will be to surround ERP with a series of “Connected Services,” with cloud and mobility central to all that is developed and delivered.

 Cloud Announcements

With this focus on the cloud, Sage has made several announcements aimed at different segments of its target market (companies with less than 500 employees).

  • Sage 300 Online was launched at Sage Summit. Sage 300 Online targets the small and smaller midsize SMBs that have outgrown their basic accounting software and “are seeking to increase collaboration, streamline their operations and get a complete picture of their business anytime from anywhere.” Running on Microsoft Azure, it is a multi-tenant SaaS solution.
  • Sage also allowed a “sneak peek” of the new Sage One mobile app for “solopreneurs”, expected later this year.
  • And right after Sage Summit, Sage announced limited availability of Sage ERP X3 Online (for medium-sized businesses) in North America as of September 2014. X3 Online will be offered in a hosted environment.

In addition Sage has created the Sage Data Cloud, which is available to all customers whether they are running applications in the cloud or on-premises. Customers have access to 50 gigabytes (or more, if needed) of cloud storage. Three different types of data might be stored in the Sage Data Cloud:

  • Reference data: this is largely master data that would be defined by applications. If the source of the data is an on-premise application, that application is the master of that data and the data in the cloud is replicated, but automatically synchronized.
  • Transactional data: these are transactions (e.g. orders, invoices, payments, etc.) that might originate in a separate cloud application but may need to be processed by or stored in ERP, applying all the same logic and business rules ERP would use if they had been entered directly there.
  • Cloud-only data: This might be additional data used only by the cloud-based application, perhaps something like a reference to other products of interest that might be used by a sales person in efforts to up sell or cross sell.

What About Mobility?

As noted above cloud and mobility are central to all Sage innovation. According to Sage, it is, “Leveraging consumer trends in mobility, [and] making the cloud more actionable for SMBs.” The first of these applications have been Sage Mobile Sales, Sage Mobile Service, and Sage Mobile Payments. Using the Sage Data Cloud, Sage mobile applications are device-native and enable SMBs to use the Cloud in the way that provides real value to the business while imitating the real life of “mobile” individuals today.

Here at Mint Jutras we agree with Sage regarding the importance of mobility. In fact, we would contend that mobility has the potential to be the biggest game changer to impact ERP in the near term. And yet few of the Mint Jutras survey participants seem to recognize this enormous potential (Figure 2).

Figure 2: How important is the ability to access ERP through a mobile device?

Sage Figure 2Source: Mint Jutras 2014 ERP Solution Study

Why do almost half (44%) think mobile access isn’t all that important? Mint Jutras believes the answer lies in the fact that “mobile access” can be interpreted in many ways and because the real value does not lie in just lifting and shifting traditional ERP functions to a mobile device. The true value is in delivering access that is purpose-built for a particular person, playing an individual role, performing a specific function.

Most individuals that don’t spend the vast majority of their time sitting at a desk all day have specific functions they perform, or questions they are most likely to ask or be asked, or decisions they must make. And they need to make these decisions and answer these questions while not sitting at a desk. They don’t necessarily perceive running ERP as the solution to perform those functions, answer those questions or make those decisions; instead they want an “app for that.” However, that app is most likely to be powered by the data in ERP.

That is exactly what these new mobile apps from Sage do, delivered through the cloud as connected services. This is the convergence Sage is talking about: the convergence of cloud and mobile and the convergence of business skills and personal skills. With the consumerization of IT, individuals have come to expect the same type of ease of navigation and general usability they have become accustomed to in their personal use of smart devices.

 What About Big Data and Social?

While we didn’t see too many specific announcements about either “big data” or “social” coming out of Sage Summit, we did hear about intelligence and data access. In fact we got to see a preview of Sage Intelligence online (or Sage Intelligence Go!), which will leverage existing data inside of Sage ERP with Microsoft Excel to filter, analyze and summarize data. But Sage Intelligence Go! will not be limited to the data within ERP. It will also be able to import data from external sources and summarize it along with internal data. Sage Intelligence Go! will be the cloud version of Sage Intelligence and will be available in 2015.

An emerging trend in ERP discussion lately has been the shift from focusing on process to focusing on data. To that end, Sage presented additional results from its own survey. Sage claims its data shows that access to more intelligence leads to better usability of solutions, resulting in a 10% increase in productivity. Companies with more usable data, with more accessible intelligence grow 35% faster. Without direct access to this survey data, Mint Jutras cannot substantiate those claims, but we point them out because it shows a shift in focus from Sage to reflect these last two of our four trends.

And yes, the discussion of “big data” often leads to the discussion of “social.” Social can mean different things to different people. It has some intuitive connotations in the world of consumer goods where social sentiment can have a serious impact, both positively and negatively, when shared publicly. But does it have the same impact in other industries? The connection is there, although perhaps not so intuitive.

When you take the view that “social” should mean improved collaboration, visibility and connectivity, then you start to understand the connection with the ERP user experience. The better the experience, the more connected the people running the businesses are to ERP and to each other. Mint Jutras is already seeing a shift in the market to higher levels of engagement with ERP. Not too long ago a very small percentage of employees at most companies actually used ERP.

Figure 3: What percentage of your employees uses ERP?

Sage Figure 3Source: Mint Jutras 2014 ERP Solution Study

This percentage has grown to over half (55%). But here we see the cloud having a very definite impact (Figure 3). Those companies using SaaS ERP have a much higher rate of employee engagement (63%), further reinforcing the value of “access any time from anywhere.”

By combining the ability to share data in real time via the cloud with the convenience of mobility, Sage paves the way for better connectivity and easier collaboration – the real meaning of social.

Summary and Key Takeaways

Seldom has an entire market agreed on what trends are most influential, and yet today, here we are. But this level of consensus brings its own set of challenges. With all enterprise software vendors jumping on the cloud, mobile, big data and social bandwagons, the competition will be fierce. Vendors will have to deliver in order to capture the minds and wallets of both customers and prospects. They must accelerate the pace of innovation, while they improve connectivity, visibility and collaboration in order to draw the biggest crowd of willing users.

This makes the consumers of this technology the big winners.

Sage is well aligned with these trends, given its vision for cloud, mobile and intelligence and its “convergence” mindset. But given its long history of acquisition, in many ways it must reinvent itself. That is exactly what it has in mind. If it can successfully reduce the footprint of its (multiple) core ERP solutions and ramp up innovation through connected services, they just might be able to pull it off. At Sage Summit 2015 we’ll be looking to see if the “old” Sage shows up or if this transformation is complete or still underway. Mint Jutras votes for “still underway” since by this time next year, things will have (of course) changed even more.

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SAP Launches Strategic Division: SMB Solutions Group

Yesterday a press release from SAP crossed the wire announcing a new division focusing on small and midsize businesses (SMBs). Here, SMB is defined as companies with fewer than 500 employees and is a subset of SAP’s traditional view of small to midsize enterprise (SMEs). This appears to be another step in the larger plan to make everything about SAP simpler. It is no secret in the industry that smaller companies can easily be intimidated by the likes of an SAP, or (in all fairness) any company of its size and dominance. While many smaller customers take refuge behind their first line of support, SAP’s channel partners, the presence of the giant behemoth behind those partners looms large.

At this point this is largely an organizational change. Dean Mansfield will head up the new division. Dean is an industry veteran, perhaps best known in the market for his senior leadership position at SaaS ERP provider, NetSuite. But, although he is an industry veteran with a career that spans more than 20 years, he is a relative newcomer to SAP, having joined last October. He is based in Hong Kong. But if this were just an organizational announcement, it would probably elicit a big yawn. I see it as more than that, largely because of the strategy behind it.

SAP’s board is putting in place a strategy to “redefine the SMB business solutions market by creating the next generation of simplified business applications powered by SAP HANA, delivered via the cloud that will solve tomorrow’s complex SMB challenges.” That’s a mouthful. But if you look below the surface, you find several, wide-reaching implications.

First of all it is a bold and perhaps presumptive statement. In “redefining” a whole market of business solutions by creating next generation, simplified applications, it seems to imply that all business solutions targeting SMBs need to be simplified. I think this is a gross over-simplification in of itself. Not all products in this market are overly complex. In fact I am not even sure I would call SAP Business One overly complex. If Business One has a weakness, and of course all business software does, it might be in some of the gaps that remain in functionality. After all, it’s not on par with the SAP Business Suite in terms of features and functions…or complexity. The complexity with SAP is more about having a diverse product portfolio. And SAP could certainly benefit from simplifying the selling and consumption of the software. So simplification extends beyond software products, and I think SAP gets that.

But there is a product element to the announcement. This strategy seems to imply that the SMB Solutions Group will be developing a brand new product. SAP has made it very clear that it is not making a new product announcement; it is announcing a strategic division focused on defining what is needed in the future. But the implication certainly is that a (new?) simplified product is needed. I can see why SAP doesn’t want to construe this as a new product at this point in time, because it could very well be that it takes one of its existing products and transforms it into this new generation of simplified, integrated business applications. The simple truth is, SAP has not made any firm decisions yet as to direction and roadmap, and wants to leave all its options open. That is fine for now, but with this announcement, the pressure will be on to better define this strategy.

A couple of things are certain though. Whatever direction SAP decides to go in, it will involve HANA and it will be delivered via the cloud. This might lead you to believe that SAP will leverage its existing products to the fullest in order to bring a solution to market faster and more cost effectively (for SAP). This is exactly what the market would expect an SAP, or any other dominant player with a huge portfolio, to do. That and a bigger development budget than its competitors give SAP an edge. But that is not the stated direction.

Instead, SAP has a stated intention of doing what makes the most sense in meeting the needs of the customer, rather than looking first to leverage prior investments in other product lines, both in terms of core ERP and those “edge” products that might surround it. Why (possibly) create a whole new product from scratch when you have so much component inventory on your shelves? The answer is, because it is a cleaner and simpler solution for the customer. Remember, the overriding goal is to simplify.

On the one hand, it is refreshing to hear SAP express this as an objective, but on the other hand, you have to feel a bit of déjà vu here. Isn’t that what it intended to do with Business ByDesign? The whole reason SAP started from scratch in writing Business ByDesign was to reduce the level of complexity that becomes inherent in a solution that starts out as a large enterprise solution, and grows more complex through evolution.

While many love to attack ByDesign as a “failed” product, I would caution both industry observers and competitors against labeling ByDesign as a failure. No, it has not met a lot of the lofty goals originally bandied about, like 10,000 customers. No, SAP has not sold that many subscriptions, but SAP can boast more ByDesign customers than some of its smaller competitors claim as their entire customer base. Of course everyone has their own personal definition of success and failure, but I would still propose that the rumors of its death have been greatly exaggerated. That said, if you harken back to the goal of this new redefinition of the SMB market to simplify the offering, it certainly has a very familiar ring to it.

Will this effort be more successful? I believe it will be, for a couple of reasons. First of all, it is supported by a rather dramatic organizational change, which is driven by a new strategy. But probably more importantly is another consideration not immediately visible from the press release. Some of us in the analyst community had the opportunity to meet Dean both in person and virtually, and it was through these meetings that it became clear there was another change afoot. While product strategy at SAP in the past has always been driven by a technology focus, this new organization will have more of a business focus and will be guided and driven by business needs. To some, this might seem a minor point, but I think this could stack the deck heavily towards the new division being more successful than prior efforts.

HANA is a prime example. Yes, it was/is new and groundbreaking, some might even call it game-changing. But it was inspired by technology and created by technologists. And when it first came to market, it was incredibly elegant technology in search of a business problem. While this might go over well in the large enterprise, that is not how SMBs make decisions or acquire business solutions. Even Business ByDesign was driven largely by the development organization working with a few charter customers.

This new team understands that it is not selling IT. Technology is part of the solution and critical to the success, but first and foremost, it is selling a business solution. While simplicity is the goal, this team understands, the business needs of the SMB may not be simple. In fact complexity has a way of creeping up on SMBs over time, particularly as expectations are elevated by consumer technology. SAP wants to help fix that. Its goal is to deliver a solution that can satisfy those needs and can be implemented and deployed in a modular fashion, adding new pieces as needs evolve or budget becomes available.

While this team might not have all the answers today, it is being thorough and methodical in evaluating all the different possible avenues to meeting the goal of redefining the SMB business solution market. But now that the cat is out of the bag, the pressure is on for them to come up with a more specific product strategy and roadmap. The clock is ticking.

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The Value Proposition for Apparancy is… Well, It’s Apparent

Especially When it Comes to VetApprove

Software companies often struggle to articulate the value proposition of their products. In translating the technical promise of enterprise applications, marketing and sales like to talk about business value. Because the deal gets signed at a very high level in the buying organization those selling the value strive to talk at a very high level. The problem is, in elevating the level of discussion, the value proposition becomes so abstract that it often becomes meaningless. Apparancy, a new business process management (BPM) Platform Company has no such problem.

Many businesses today have multiple enterprise applications that are not well connected, leaving gaps in the data needed for decision-making and processes that are broken. Apparancy fixes this. Nowhere are processes in worse shape than in the United States Department of Veterans Affairs (VA), now currently engulfed in scandal amid allegations that thousands of veterans were denied adequate healthcare because of false record-keeping and long waiting lists at VA facilities across the country. Combining its core strengths with the acquired usage rights to software called “TurboVet,” Apparancy is looking to help the US government fix broken promises and processes for over 22 million veterans with the launch of its new VetApprove ® product.

Apparancy’s Value Proposition

So what exactly is the value proposition of Apparancy and why would any company need its products? Most companies of any size today have many, different, often single-purpose systems. When this results in redundant data and processes, companies will experience a productivity drain. Because this productivity drain often happens gradually, over time, it might go unnoticed or even if recognized, is deemed to be an accepted side effect of growth. But as these solutions age, outdated technologies grow further apart and become more and more difficult to change and update. The result is a combination of fragmented processes and views and it becomes impossible to effectively leverage existing information technology (IT) and to optimize resource efficiencies and build in profitability.

While in the long run, it might be best to rip and replace existing systems and replace them with more comprehensive and well-integrated solutions, this can be expensive both in terms of time and money. And these existing solutions might be getting the job done, albeit not so efficiently. Layering Apparancy on top of these solutions allows you to leverage what you have until a more optimal time to replace. By combining data and processes into a single- purpose, role-based view, you can eliminate redundant efforts and get more value out of what you already have in place. How so?

  • By automating tasks by process or by user
  • Centralizing visibility of all tasks, even those that span multiple systems
  • By building in alerts to monitor the status of each workflow via dashboards
  • By implementing rules to escalate those alerts based on team hierarchies
  • By building compliance verification in for audit-ready accountability
  • By reporting process bottlenecks, employee performance and other improvement metrics

All of this is possible without changing your underlying systems and yet resulting in better flexibility. Let’s face it, you know that as soon as you get processes in place, they are likely to need to evolve and change. These changes, when implemented through Apparancy, can be as simple as “drag, drop and publish.” Process change need not mean code changes. This promotes usability, which is probably the most important key to getting participants to use the system, which enforces the rules.

Apparancy also infuses a level of “social” into the process. While for some “social” has an unfortunate connotation, here we equate it to better communication, collaboration and visibility. Those that shy away from “social” in the context of enterprise applications distinguish between business contacts and social (or personal) contacts, a business discussion versus a social chat. These folks equate “social” to something employees should do on their own time. But doing so misses the importance of a social structure that can be used to integrate users into a process based on roles. “Social” in the business context means aggregating all threads of a communication regardless of format (email, chat, phone, text, etc.) “Social” in the business context means integrating alerts for assigned tasks and delivering them on a choice of mobile devices. “Social” in the business context means structured collaboration, including both internal and external participants.

All these benefits translate to cheaper, better, faster. The cloud-based SaaS deployment eliminates the need to add more servers, software licenses and installation headaches. There is no underlying technology to upgrade, no expensive tool to manage and no additional IT staff to hire. Apparancy combines data liquidity with process fluidity for business improvement and efficiency. This means you work smarter, not harder, which translates to lower costs and higher profits.

Applying the Value Prop to the VA

You might think the high profile news breaking over the VA scandal was what drove Apparancy to try to solve the problem, but the initial push was more of a personal story, as told by Karen Watts, Apparancy’s CEO. About three months ago Karen was trying to arrange a family vacation but was running into obstacles caused by the uncertainty experienced by her mother in attempting to schedule a surgical procedure through the VA.

As a pragmatic businesswoman, Karen thought, “How hard can this be?” After all, the administrators must know how many operating rooms are available and how many other procedures are scheduled. Surely they could give her an estimate of the date of the surgery. Apparently not. The deeper Karen dug, the further away she seemed from an answer.

She said, “I have a family member veteran who urgently needed surgery and was surrounded by wonderful Veterans Administration people who wanted to help. But both the VA folks and our family couldn’t clearly understand the next steps and the process of trying to get my stepfather help became mired in incorrect actions and wrong forms that led to dead ends and do-overs. It became clear to me that this problem of complex processes we are hearing about to help veterans is no different than the problem I am trying to solve for companies and healthcare organizations. This is something my platform is designed for and this is a way I can make a huge immediate impact on the lives of many millions of deserving veterans.”

Karen’s experience was quite similar to one I too experienced. Back in 2008 it was clear my 93-year-old mother could no longer safely live alone in her own home. We began looking into assisted living facilities near my home in southern New Hampshire and found these facilities to be outrageously expensive in the area. But we also discovered a little known VA benefit: As the widow of a World War II veteran, she qualified for assistance.

While there was never any question of her qualification, the process for approval took a grueling seven months. One step in the process was a medical exam that had to be conducted at a VA facility, by a VA doctor. Although the doctor had been working at the VA for many years, it came out during the appointment that this was the first such exam she had conducted for this purpose. Her mother-in-law was herself a veteran who was confined to a nursing home. Neither the doctor nor her mother-in-law was even aware she was eligible for this benefit, leaving me wondering how many qualified veterans and surviving spouses were not being granted benefits for which they clearly qualified. And of course, there was always the question: Why did this take seven months?

Fortunately for the 22 million veterans today, Karen immediately set about investigating how Apparancy’s platform could help. In the course of her investigation she came upon Ned Hunter, a graduate of the US Naval Academy, former Naval Aviator and former CEO of Stratizon Corporation.

Even before the scandal broke, Stratizon had developed and piloted a software solution that catalogued thousands of VA forms and created a series of questions to be asked of a veteran. The answers were used to further refine what was needed, asking additional questions where appropriate and then auto-populating every applicable form.

Ned, a Lean Six Sigma Black Belt had worked with a partner to get inside the walls of the VA to map the processes between the veterans, state benefits representatives and federal adjudicators. Ned and his team meticulously sourced and verified every benefit form relating to a veteran, available from all the federal agencies they could find, and then built out the questions from the forms. They found the redundancy between all these forms mind-numbing.

The team also discovered that it took an average of seven years to train a veteran claims representative. As absurd as this length of time seems, it is further aggravated by the fact that these reps were retiring at a faster rate than they could be trained. No wonder a process that should have essentially been a “rubber stamp” took seven months. No wonder Karen couldn’t get an estimate of when her stepfather’s surgery could be scheduled. No wonder the media is having a field day over the death of veterans who are not being attended to adequately.

The result of this effort was a piece of software, called “TurboVet.” Ned and his partner pitched it to the VA, which expressed interest, but took no action. Without the backbone of a workflow engine and business process management, TurboVet wasn’t a complete solution and the VA did not feel the urgency to change.

With the recent scandal, the VA is now feeling more urgency. Apparancy has been updating and integrating these forms into the Apparancy platform. The end product, called VetApprove ® will help guide veterans through the process of navigating, sorting and downloading the correct forms for their required need within minutes, versus the months or even years currently being reported in the news.

As part of the process of bringing this to the public, Apparancy has begun a sign-up and crowd-sourcing option for U.S. veterans to participate in signing up for (and eventually optionally funding) VetApprove. The link for veterans can be seen at https://www.facebook.com/VetApprove and a demonstration can be viewed at http://vetapprove.com/video/vetapprove-demonstration/.

Apparancy has also decided to move its corporate headquarters to the Washington D.C. area by year-end 2014 to keep a closer pulse and proximity to critical compliance-centric regulations. It also hopes that the Veterans Administration will automate VetApprove into its ongoing process operations.

Mint Jutras and 22 million veterans join Apparancy in this hope.

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Can SYSPRO Put a Genius in a Manufacturing Executive’s Pocket?

Espresso Mobile Solution: a Single Portal to All Your Applications

As Mint Jutras has noted in prior reports, SYSPRO is clearly inspired by the genius of Einstein. Over the years Einstein has influenced many of its initiatives, including its “Simply SMARTER” strategy (an acronym that stands for Strategy, Methodology, Accountability, Resources, Technology, Education and Customer Rewards) and its SYSPRO Quantum Architecture. Back in December 2012 it announced its plans for a new mobile platform (a “wired” Einstein on Espresso) that would bring the customization capabilities of its Enterprise Resource Planning (ERP) solution for manufacturing and distribution natively to multiple mobile devices including Android, Apple I-OS and Blackberry. Now with the release of SYSPRO 7, more advances to this mobile platform are available. While in the past decisionmakers may have shied away from accessing ERP directly, assuming it was too complex and hard to use, SYSPRO Espresso now puts intelligence directly into the hands (and pockets) of executives with mobile devices.

Making the Business Case for “Mobile”

SYSPRO’s objective in this release is to provide “leading edge” solutions to a market segment not particularly well known for its aggressive and pioneering use of enterprise software. While manufacturers might be pioneers in their own industries, typically they are more interested in spending their capital budgets on new equipment for the plant or shop floor than on hardware and software to run their back and front offices.

In fact SYSPRO recently conducted one of its SNAP (SYSPRO Needs Answers Please) pulse surveys, this time on Information Technology (IT) priorities. The survey found a growing recognition of the impact IT has on a manufacturer’s ability to compete today: 87% said IT has a moderate to substantial impact on their competitiveness. While in the past manufacturers might have chosen to invest in facilities, people and equipment instead of enterprise software and the servers needed to support it, more and more of these same companies are realizing they need to invest in both in order to take full advantage of the new capacity.

According to SYSPRO’s survey, 9% of participants said they fairly regularly choose to undertake both such projects at the same time and 48% say this is a decision they have made at least once or twice. While the SYSPRO team was surprised by this, Mint Jutras is not. Once a manufacturer expands capacity, either through capital investment in existing facilities, or through expansion into new geographies or new markets, the game is changed. These same manufacturers now need new tools to manage that capacity for profitable growth.

While data collected in Enterprise Resource Planning (ERP) has always been important to executive level decision-making, in the past very few executives ever put their hands directly on ERP. Instead they relied on subordinates or super users to collect data and investigate, delaying decisions and sometimes even distorting the view from above. Why? Because the perception (and often the reality) was that ERP was complex and hard to use. Executives simply didn’t have the time or inclination to “figure it all out.” And yet today the pace of business has accelerated to the point where any delay in decision-making can be fatal.

The Mint Jutras 2013 ERP Solution Study first showed executive access to ERP on the rise and that trend continued this year (Figure 1). More and more executives are directly connected to ERP, with the percentage of manufacturing companies saying all have access and regularly use ERP increasing from 47% to 57% year over year.

Figure 1: What level of access does top executive management have to ERP?

SYSPRO figure 1Source: Mint Jutras 2013 and 2014 ERP Solution Studies

And yet we see little progress in putting dashboards from ERP on mobile devices or sending alerts or giving these executives the ability to take action directly from these devices. Whether they want it or not, whether they know it or not, they need immediate and direct access to ERP, and these mobile devices may just serve as the catalyst and the game-changer. But nobody wants to just lift and shift the same old monolithic ERP.

This might explain why even with the proliferation of these devices and the “always on” environment they create, the priority for access to ERP data and functions from a mobile device remains close to the bottom of the list of ERP selection criteria (Table 1).

Table 1: Selection Criteria in Evaluating ERP

SYSPRO figure 2Source: Mint Jutras 2013 and 2014 ERP Solution Studies

In the age of “there’s an app for that” few people equate ERP to that “app.” While only 21% of manufacturers ranked mobile access to ERP as a “must have,” 38% indicated that mobile access to business intelligence (BI) was a “must have.” And 32% wanted access to BI from their chosen device (BYOD). What seems to get lost in the shuffle: many don’t realize most data from which they are likely to derive that intelligence resides in ERP.

We need a catalyst that can bridge this perception gap.

SYSPRO 7 Espresso Mobile Solution

SYSPRO has taken many steps to insure that SYSPRO 7 Espresso is that catalyst. Its goal is to provide a “leading edge” solution without losing sight of what manufacturers and distributors really need.

A Strong Platform

First of all it needs a solid platform that supports the needs of a mobile deployment, including the following:

Device and platform independence: With “bring your own device” (BYOD) rapidly invading the business world, users expect to interact with enterprise data using the same user interface features that attracted them to the device to begin with. Even more importantly, users can easily change devices. Switching from a Blackberry to an iPhone? No problem. Use both an iPad and a Samsung Galaxy 5? No problem. Moving to a Surface tablet? Not a problem. SYSPRO Espresso can be used on all major mobile device operating systems and is compatible on all web browsers that support HTML5.

Users can personalize their user interface (UI): Customization is truly as easy as dragging and dropping different screen components.

Real-time or offline access: This is huge.What happens when you lose your Wi-Fi or mobile signal? SYSPRO Espresso lets you continue working offline. Any transaction made while working offline can be synchronized when you reconnect. Yes you have to press the button, but it really is that easy.

Secure communication: Often businesses ignore the possible vulnerabilities introduced through mobile devices. Either that or this potential scares them from allowing mobile access. Transmission between mobile devices and the SYSPRO server are encrypted using SSL secure communication standards. In addition, administrators of the SYSPRO system can configure menus and applications by company, role and user.

Enable alerts to be sent via push notifications: Receiving alerts on a mobile device is always the top priority for business users. According to our Mint Jutras ERP survey, 76% say they receive alerts based on enterprise data either often (35%) or occasionally (41%). Yet only 18% get alerts from ERP. We conclude that the vast majority of the alerts received are delivered via email or text messages as a result of some manual intervention. SYSPRO Espresso automates this and connects the user directly back to ERP, the source of the data.

Uses active tile technology: This too is huge. If you are monitoring certain metrics, a static image only shows you a moment in time. Using SYSPRO Espresso, an icon or tile is constantly refreshed and dynamically updated every few seconds. You are always looking at the real results.

Multi-lingual support: Supporting the same languages SYSPRO ERP supports.

Mobile applications packaged with Espresso and via the SYSPRO App Store: SYSPRO Espresso comes standard with a growing number of applications. But given the simplicity of developing new apps, and the simplicity of making them available on the SYSPRO App Store (for free or for a fee), SYSPRO fully expects partners to also contribute and this number will grow significantly.

A single app for all applications: Only one app needs to be downloaded from the App Store to a device. Mobile users only needs to log into the menu system once to gain access to any applications they have permission to use. As additional apps become available, they can be pushed to the user’s device, removing the need to download anything else. This brings the process of provisioning to a new level of efficiency.

Development platform that supports deployment to any device: A free plugin to Microsoft Visual Studio 2012 allows developers to build custom applications once, using one set of source code that can be deployed on all major mobile device platforms. This preserves the native operation of a device without a proliferation of code. This includes native device capabilities such as a camera and GPS tracking, both supported by SYSPRO Espresso. An ink component is also supported to allow capturing of signatures or drawing of simple diagrams.

Easy Movement Between Devices: Perhaps a sales rep begins entering an order in the field, but has not completed the task when it is time to pack up and head back to the office. Upon return, the sales rep can log onto a laptop or desktop computer and pick up exactly where he or she left off.

A Library of Pre-Built “Apps”

Part of the lack of urgency in providing access to ERP data and functions from mobile devices is likely due to the monolithic approach used in delivering legacy ERP in the past. ERP was this massive application, touching many different functions of the business. Figuring out how to navigate through the pieces and processes that impact any one particular user was hard. Contrast this to the typical mobile app. Because these mobile apps are purpose-built for a very specific function, they are intuitively easy to use.

SYSPRO has taken the same approach to delivering Espresso apps. There are a number of pre-built applications, which are free to any licensed Espresso user. Below is a list of apps that are immediately available with the initial release of SYSPRO 7, but this list will continue to grow over time and is also likely to be supplemented by others added to the SYSPRO App store by users and partners.

  • Aged Sales Orders
  • Bank Query
  • Customer Maintenance
  • Customer Query
  • GIT Reference Query
  • Inventory Maintenance
  • Inventory Query
  • Inventory Valuation (chart)
  • Job Query
  • Lost Sales Orders
  • Price Query
  • Purchase Order Query
  • Quotation Query
  • Ratio – Asset Turnover
  • Ratio – Leverage
  • Ratio – Liquidity
  • Requisition Query
  • Sales Analysis
  • Sales by Month
  • Sales Dashboard (charts)
  • Sales Order Commitment
  • Sales Order Entry
  • Sales Order Query
  • Sales Order Taken
  • Supplier Maintenance
  • Supplier Query

Summary and Conclusion

While more and more executives today are looking for answers and a return on their investment in ERP, many still struggle to connect through the same mobile devices that keep them “always connected” to the business. In spite of using these mobile devices to receive alerts, many still respond by turning the smart device, on which they receive the alert, into a dumb device. They call or text. They turn to others to further investigate, to track down answers. They won’t be able to take direct action until they are easily connected directly back to ERP.

Any kind of knowledge worker today needs new ways of engaging with ERP, ones that make the connection easy, ones that answer their specific questions and address their specific issues.

Just lifting and shifting a massive application like ERP to a mobile device, without these new ways of engaging is useless. Instead, workers need “an app for that.” Yes, that app is ERP, but it needs to be disguised as something else, something that is purpose-built to answer questions and resolve issues. The savvy executive today should be looking to put a genius in his or her pocket. For a SYSPRO customer, that means SYSPRO Espresso running on the mobile device of choice.

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Think The Plex Manufacturing Cloud is Just for Small Companies? Think Again

Plex Enterprise Edition Makes its Debut at PowerPlex 2014

Recently at its annual PowerPlex conference, Plex Systems announced Plex Enterprise Edition, a suite of applications built to support complex, global, multiplant manufacturing organizations with multi-entity financial and supply chain management requirements. As always, Plex worked closely with its customers to define those requirements and has the first component of Plex Enterprise Edition — Financials — for centralized accounting and cash management ready to deliver the end of this month. Many of its competitors (and even some industry analysts) write Plex off as a non-threat except perhaps in small companies. Big mistake! Even without the multi-entity capabilities announced this week, Plex has been providing continuous innovation and steadily expanding the range in size of companies that are attracted to its Plex Manufacturing Cloud solution.

Clearing Up Some Misperceptions

Why do competitors assume Plex is just for small companies? One reason is the fact that Plex has exclusively offered its solution as Software as a Service (SaaS) since 2001, long before the cloud became popular. And many also wrongly assume SaaS ERP is only for small companies. Yet the Mint Jutras ERP Solution Study found the willingness to consider SaaS as a deployment option for ERP only grows with company size (Figure 1).

Figure 1: Willingness to Consider SaaS Grows with Company Size

Plex Fig 1Source: Mint Jutras 2014 ERP Solution Study

NOTE: Mint Jutras believes these percentages may be understated. We ask participants to select all deployment options they would consider if they were to purchase a solution today. “Hosted by your ERP vendor” is often confused with SaaS. Percentages of participants considering that option were similar to those shown in Figure 1 above.

Why Might That Be?

As companies grow, they become more distributed. Most companies, both large and small trade internationally and our ERP Study found 66% of manufacturers operate across multiple locations and the number of sites grows along with annual revenues (Figure 2).

Figure 2: Distributed Environments

Plex Fig 2Source: Mint Jutras 2014 ERP Solution Study

Defining Corporate Standards

In the past it was very likely that these different operating locations would have been left on their own to find and select a solution to meet their local needs for manufacturing. However, more and more companies are defining standards for enterprise applications. Companies have been talking about this kind of consolidation of solutions for years, but now it is really happening and World Class ERP implementations are most likely to have defined and executed a strategy that includes a standard ERP solution (Figure 3). What better way to control and enforce these standards than implementing a SaaS-based solution throughout the enterprise?

Figure 3: Have you defined corporate standards?

Plex Fig 3Source: Mint Jutras 2014 ERP Solution Study

Of course not all standards involve just a single ERP. In some cases we see two (or more) tier standards where one ERP solution is implemented at corporate headquarters and a different standard (or standards) is defined for the operating locations. This is most evident in manufacturing companies where the corporate solution is strong in financials, consolidation and reporting, but perhaps lacks the features and functions required to manage manufacturing processes. The operating locations require these manufacturing functions and also balk at the complexity often imposed by these corporate financials.

With a two-tier approach, a single ERP is also selected for the manufacturing facilities, in addition to an ERP for consolidated financials at corporate headquarters. In a multi-tier environment, often we see different types of operating locations (for example, distribution versus manufacturing, or significantly different styles and methods of manufacturing) requiring multiple standards (Figure 4).

Figure 4: Single, Two or Multi-tier Standard?

Plex Fig 4Source: Mint Jutras 2014 ERP Solution Study

While almost half of others with multiple operating locations choose this multi-tier approach, not so with Plex customers. A full 93% have decided on Plex and expect the solution to be their only solution. So it is not surprising that customers have collaborated with Plex to fulfill this need.

Of course, if a company has grown through acquisition, or the enterprise is extremely diversified or simply a holding company, there is an increased likelihood of multiple ERP solutions. But many view a single standard almost as a no-brainer when it comes to expansion in pursuit of green field opportunities. Many Plex customers have grown like this, leading Plex into parts of the world where it might not have previously ventured.

Case in Point: Shape Corporation

One such Plex customer is Shape Corporation, North America’s top manufacturer of automotive bumpers. Shape also manufactures impact energy management systems and performs advanced custom roll-forming for furniture, agricultural, recreation and health care industries.

While based in Michigan, Shape also has locations around the world, including China, Japan, the Czech Republic, Mexico, Germany, Korea and other locations within the United States. “All are running the same Plex system. Our users in China run on the same system as our users in Mexico, our subcontractors in Alabama, and everyone on the shop floor in our Michigan facilities. All our expansion is into new green field territory. We can have the Plex system up and running in a new location in a matter of weeks,” said Molly Hunting, Director of Information Technology

As Shape grew back in the 1980s and 1990s, it had acquired and implemented separate stand-alone systems, upgrading and linking them as needed. Maintenance became cumbersome and resource-intensive, inspiring the company to seek a single solution: the Plex Manufacturing Cloud.

The Plex solution replaced several separate systems for preventive maintenance, production, gages, problem controls, reporting, and more. While the solutions it replaced were not able to communicate with each other, all Plex functions are completely integrated.

The Plex Manufacturing Cloud now manages all core shop-floor functions for Shape, including bills of material, purchasing, receiving, inventory, manufacturing, basic quality, planning and scheduling, shipping, key measures, EDI, engineering change tracking, subcontracting, financials, and document control. Shape also implemented Plex’s advanced human resources, quoting, maintenance, advanced quality, and program management functions. “We probably use as much, if not more of the Plex solution than any other customer today,” according to Ms. Hunting.

The Desire for a Complete and Comprehensive Solution

This also is indicative of another consistency across the Plex customer base: the preference for and the implementation of a broad and comprehensive solution. While the majority of all manufacturers surveyed (92%) prefer an end-to-end integrated solution, the larger portion of that majority is cautious about sacrificing functional requirements for ease of integration or the luxury of dealing with a single vendor (Figure 5).

Figure 5: Preferences for a Suite?

Plex Fig 5Source: Mint Jutras 2014 ERP Solution Study

Only 26% have an overriding preference for a complete, fully integrated end-to-end solution supported by a single vendor. But that percentage more than doubles (to 53%) across the Plex customers we surveyed. Clearly these customers are drawn to the Plex Manufacturing Cloud, at least in part, by the breadth of the solution, shattering another misperception that customers only run shop floor-centric processes or an otherwise incomplete solution from Plex Systems.

Ms. Hunting acknowledged only one weakness in the past: support for multi-entity finance and supply chain operations. Tax and regulatory compliance requirements force companies like Shape into a multi-entity environment as soon as they set up shop in a foreign land. So while Shape’s preference is to have a single solution and solution provider, for now, it is using a solution from an independent software provider to manage the consolidation and financial reporting requirements.

But this type of solution has its drawbacks when it comes to managing the supply chain issues. Any movement of goods between multiple entities and any joint sales opportunities between these locations create not only financial requirements, but also supply chain issues. While operationally movement of inventory is a simple transfer, in fact behind the scenes it must be treated as a purchase of one entity and a sale to another. And that’s the easy part. What happens when multiple operating locations sell to a common customer, who of course, wants to take advantage of corporate discounts based on total volume? And what about your own purchasing? Do you have master purchase agreements that need to be managed across sites and across legal entities?

And all the while each of these separate legal entities needs to be managed as its own business, probably with its own language, localizations, tax and regulatory reporting, global labeling and printing. It doesn’t take long before you realize just how complicated your business has become. The typical Plex customer does not want to add to the burden of that complexity by adding new “add-on” software products or, even worse, different ERP solutions.

This is exactly why Plex worked closely with several of its customers that are large manufacturing organizations, to design and develop applications to support the complexities of multisite, global manufacturing operations. Inteva Products was one of these customers actively engaged in the design and development of the new Enterprise Edition.

Customers Help Define the Problem: Inteva Products

Inteva is a global tier-one automotive supplier with 14 manufacturing locations and two joint ventures covering three continents, six countries and four U.S. states. While many of Plex’s customers grew into larger multisite manufacturing organizations over time, as a former division of Delphi Corp., Inteva was an instant multisite, global enterprise with multiple entities and all the associated challenges. Needing to get off its former parent’s systems within 12 months and being tasked to reduce IT costs from 2% of revenue to less than 1%, Inteva chose the Plex Manufacturing Cloud and never looked back.

Plex met Inteva’s tight time frame for implementation and migrated all sites from Delphi’s systems to Plex in less than 12 months. Germany was first, followed by one in Mexico, then two manufacturing facilities in Alabama three months later. The remaining launches were completed three months afterwards at all of Inteva’s remaining locations in Mexico, Europe, and the United States. As a result, it certainly had the experience to bring to the design table to help Plex.

“Plex enables us to run more than 30 manufacturing facilities around the world, all on a single cloud platform,” said Dennis Hodges, chief information officer of Inteva. “Just as important, the Plex Manufacturing Cloud gives Inteva access to continuous innovation, so my team can take advantage of new opportunities to drive our business forward, whether that means deploying Plex in a new facility or enabling new functionality. Plex makes enterprise software a business decision rather than an IT decision, and that’s transformed how we run our operation.”

Sharp Corporation will be looking more closely at the phased delivery of Plex Enterprise Edition, but will continue to operate with its third party solution until more of the required pieces are in place.

 A Phased Delivery Planned

The first phase of delivery is Plex Enterprise Financials, available now. It includes centralized accounting and corporate cash management.

Centralized accounting includes

  • Entity relationship management, which may be hierarchical across a group and may include due to and due from accounts
  • General ledger chart of account management, with full chart segment replication
  • General ledger journals with inter-entity journal accounting
  • Transaction level drill down from consolidated financial statements

Corporate cash management delivers:

  • Consolidated cash disbursements, including accounts payable invoices for multiple entities
  • Consolidated cash collections, including invoices for multiple entities
  • Consolidated bank reconciliation with the option of a single bank account representing multiple entities

Plex Enterprise Supply Chain, scheduled for the second half of 2014, includes:

  • Sales Order Management, which enables central administration of customer sales orders and billing, allowing any facility in the organization to fulfill orders
  • Purchasing, which similarly provides for a single, central operating unit to order goods and services on behalf of any business entity and manage purchase orders executed by any unit across the group.

Both centralized sales order management and purchasing also support automated inter-entity billing as part of the distributed order fulfillment process.

Plex Enterprise Edition also enable provides consolidated visibility and insight across the entire business, as well as deep-dive analysis of specific plants and products — all through Plex’s embedded business intelligence.

Summary and Key Takeaways

This is a massive undertaking by Plex. It is not short-circuiting the process or shrinking from the complexities of this global world by any means. It “gets’ multi-entity financial and supply chain issues. It is working directly with customers to define real needs for real manufacturers. Those needs are complex, and impact multiple facets of a manufacturer’s business.

Those unfamiliar with Plex’s rapid application development capabilities might think the company is getting out of the gate too late to make a big impact in the world of complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements. But Plex has already carried many of its customers through growth phases. Its engaged customers and its aspirations to play on a bigger stage will help them continue that momentum.

In addition, Plex Systems is not your average software developer. It has mastered the art and science of delivering continuous innovation. Not only does it “do” rapid application development, and do it well, but also Plex has a distinct advantage over those that do not deliver a multi-tenant solution deployed exclusively as SaaS. Plex only needs to maintain one single set of code. It is not juggling multiple versions, running on different operating systems, different platforms, or even different databases. So it only has to develop innovations once and it is done. This too is a huge advantage.

Plex Systems also knows how to make money in a SaaS-based business. This is important for customers and prospects alike. Nobody wants to do business with a company that is living hand to mouth, nor does talent want to work there. Plex has been one of only a few SaaS-only companies that can claim this. While it has been self-funded in the past, investment firms Francisco Partners and Accel Partners have infused it with new capital and it has made more progress. Now more recently T. Rowe Price and another round from Accel Partners has resulted in a new infusion of $50 million.

Competitors say they don’t see Plex in deals. Look for this new round of funding to allow them to put far more feet on the street, both direct sales as well as channels. When that happens, look out! When they get invited to the party, they are typically a big hit. Look for that to happen more and more. Competitors that might be tempted to write them off: Be warned. Do so at your own risk.

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Can Running SAP Business Suite on SAP HANA Be a Game Changer?

It can if you change the conversation

Back in February I posted this update on SAP Business Suite on HANA after having spoken with Jeff Woods, former industry analyst, currently Suite on HANA aficionado at SAP.

As a follow-up I joined Katie Moser for a webcast.

Click here to listen to the webcast

And now for the original post:

Jeff had lots of good stuff to share, including some progress to date:

  • 800+ Suite on HANA contracts have been signed
  • 7,600+ partners have been trained
  • There are 200+ Suite on HANA projects underway
  • 55 of these projects have gone live (and the number is growing)
  • The largest ERP on HANA system supports 100,000 users

So the Suite on HANA is quite real. But the single message that resonated the most strongly with me: the conversation has (finally) changed. While we’ve been hearing about HANA as this wonderful new technology for several years now, for the most part, the talk was about technology and even when the technologists spoke about purported business value, they spoke in very technical terms. But the audience I write for, business leaders in various industries, don’t care about technology for technology sake. Many don’t (care to) understand tech-speak. But they do care about what technology can do for them.

A Year Later…

It was just about a year ago that SAP announced the availability of SAP Business Suite powered by HANA, complete with live and live-streamed press conferences in both New York City and Waldorf, Germany. I don’t think I have ever seen such genuine excitement from SAP folks as was displayed in this announcement, and yet the “influencers” in the audience were a bit more subdued. A year ago I attributed this to the fact that these same influencers tend to be a quite jaded bunch, hard to impress. We had also been hearing about HANA for a few years already. There wasn’t a “newness” or game-changing feel about the announcement. But impressing the influencers is only one step towards the real goal of engaging with prospects and customers.

A year ago I also wrote, “SAP is trying hard to change the conversation to be less about the technology and more about the business value.  What is the real value? In the words of one early adopter: HANA solves problems that were deemed unsolvable in the past.” But uncovering those previously unsolvable problems required some visionary thinking.  Tech-speak is not going to get the attention of the guy (or gal) that signs the check or spur that kind of thinking. And a year ago the conversation hadn’t changed. Just look at how the vision of HANA was portrayed:

  • All active data must be in memory, ridding the world of the “rusty spinning disk”
  • Full exploitation of massively parallel processing (MPP) in order to efficiently support more users
  • The same database used for online transaction processing (OLTP) and analytics, eliminating the need for a data warehouse as a reporting tool for OLTP to support live conversations rather than “prefabricated briefing books”
  • Radically simplified data models
  • Aggressive use of math
  • Use of design thinking throughout the model

Look carefully at those words. They mean nothing to the non-technical business executive. Sure, those words got the attention of some forward thinking CIO’s, and that was enough to kick start the early projects, projects that produced amazing results. But that’s as far as the message got. And even when the message was not articulated in technical terms, it was presented at too high a level of abstraction. Business executives faced with important decisions don’t think in terms of “becoming a real-time business.” Operational managers don’t seek out “transformative innovation without disruption.” They want to get through the day most effectively and efficiently and make the right decisions.

Asking the Right Questions Today

So how do you change the conversation? By asking a different kind of question. Because “faster” is universally accepted as a good thing, in the beginning the HANA conversation might have been kicked off with the question to the CIO: What processes are running too slowly today? But in talking to the business user, you need a different approach. SAP’s “cue card” below is a good start. You are now seeing conversation starters that make more sense to the business leader. Take the time now to read them carefully. If you are a business leader, they will resonate much more than discussions of MPP and column-oriented databases or even speed of processes. I especially like the business practice questions in the rightmost column.

Cue card

Source: SAP

But if I were sitting across the table from a business leader, I might ask questions that are even more direct and down-to-earth. For example:

  • Describe a situation where you have to hang up the phone, dig deeper and get back to your customer or prospect later. (By the way Jeff’s thought was that by hanging up you only encourage them to pick up the phone and call your competitor.)
  • What summary data do you get today that consistently requires more detail before you make a decision? Can you get at that data immediately (no delays) and easily (no hunting around)?
  • What level of granularity are you forecasting revenue? Is it sufficiently detailed? Are you forecasting by region or maybe by product line when you would love to be able to forecast by territory, individual customer and individual product combined?
  • Are there decisions that require you to consult with others? How much time does this add to the decision-making process? How easy or hard is it to keep track of who to contact? How quickly can you make contact? Quickly enough?

The goal really is to improve the business not only in small linear steps, but also to increase speed of decision and therefore efficiency exponentially. The first step is to provide new ways of engaging with the system, which means changing the user experience. But to change the game, you need to make improvements to the process itself. SAP’s new Fiori applications are a good example of this progression.

 Fiori: More Than Just a Pretty Face

Last spring, SAP announced SAP Fiori, a collection of 25 apps that would surround the Business Suite, providing a new user experience for the most commonly used business functions of ERP. While useful in pleasing existing users and perhaps even attracting new users within the enterprise, this first set of apps just changed the user interface and did not add any significant new functionality.

The latest installment has 190+ apps supporting a variety of roles in lines of business including human resources (HR), finance, manufacturing, procurement and sales, providing enhanced user productivity and personalization capabilities. The apps offer users the ability to conduct transactions, get insight and take action, and view “factsheets” and contextual information. The next round of Fiori apps are expected to add even more new capabilities, thereby taking them to the next level in changing the game.

The MRP cockpit is an example of this next generation Fiori app and a perfect illustration of how these new apps can recreate processes, even ones that are 30 years old. If you “know” manufacturing, you probably also know that the introduction of Material Requirements Planning (MRP) software back in the late 70’s was transformational, although nobody really called it that back then. “Transformative” innovation is very much a 21st century term. But it truly was game-changing back in the day.

Last year, even before the conversation had shifted, I saw the parallels between the potential for HANA and the automation of the planning process that MRP brought about. Today the MRP cockpit delivers on that potential.

For those outside the world of manufacturing, in a nutshell, MRP takes a combination of actual and forecasted demand and cascades it through bills of material, netting exploded demand against existing inventory and planned receipts. The result is a plan that includes the release of purchase orders and shop orders and reschedule messages. While the concept might be simple enough, these bills of material could be many layers deep and encompass hundreds or even thousands of component parts and subassemblies. Forecasts are educated guesses and actual demand can fluctuate from day to day. Without automated MRP there is simply too much data and complexity for a human to possibly work with.

As a result, prior to MRP, other ways of managing inventory became commonplace. You had simple reorder points. Once inventory got below a certain point, you bought some more, whether you actually needed it or not. You also had safety stock as a buffer, and the “two bin” system was quite prevalent. When one bin was empty, you switched to the other and ordered more. These simplistic methods may have been effective in some environments, but the net result was the risk of inflated inventory while still experiencing stock outs. You had lots of inventory, just not what the customer wanted, when it wanted it. And planners and schedulers still had to figure out when to start production and they knew enough to build a lot of slack time into the schedule. So lead times also became inflated and customer request dates were in jeopardy.

Once MRP entered the picture, these were seen as archaic and imprecise planning methods. Even so, most didn’t rush right out and invest in MRP when it was first introduced. In fact now, decades later, the adoption rates of MRP in manufacturing still sits at about 78%. Why? The existing practices were deemed “good enough” and, after all, that’s the way it had always been done.

It required a paradigm shift to understand the potential of MRP and the planning process executed by MRP was complex. Not everyone intuitively understood it. And if they didn’t really understand, planners were unwilling to relinquish control. Particularly since MRP runs were notoriously slow.

It was not unusual for early MRP runs to take a full weekend to process, and during that time nobody could be touching the data. This didn’t work so well in 24X7 operations or where operations spanned multiple time zones. Of course over time, this was enhanced so that most MRPs today run faster and can operate on replicated data, so that operations can continue. But that only means it might be out of date even before it completes. And MRP never creates a perfect plan. It assumes infinite capacity and “trusts” production run times and supplier lead times implicitly. So while most planners were relieved of the burden of crunching the numbers, they were also burdened with lots of exceptions and expedited orders.

Yet over time, MRP brought a new dimension to material planning. It brought a level of accuracy previously unheard of and helped get inventory and lead times in check. Manufacturers have experienced an average of 10% to 20% reduction in inventory and similar improvements in complete and on-time delivery as a result of implementing MRP.

But through the past three decades, MRP hasn’t changed all that much. Yes it has improved and gotten faster, but it hasn’t changed the game because it still involves batch runs, replicated data and manual intervention to resolve those exceptions and expedite orders. Now with HANA we’re not talking about speeding up the processes by 10% to 20% but by several orders of magnitude, allowing them to run in real time, as often as necessary. But if it was just about speed, we might have seen this problem solved years ago.

You probably don’t remember Carp Systems International or Monenco, both Canadian firms that offered “fast MRP”. Carp was founded in 1984, and released a product in 1990 bringing MRP processing times from tens of hours down to 10 minutes. It ran on IBM’s RS6000 (a family of RISC-based UNIX servers, workstations and supercomputers). But it was both complex and expensive for its time ranging in price from $150,000 to $1 million). Not only was it expensive and required special servers, in order it to work it needed to replicate the data and then apply sophisticated algorithms.

About the same time Monenco introduced FastMRP, also a simulation tool, but one that ran on a personal computer. While it cost much less than Carp’s product, it was also less powerful and had significantly fewer features.

You won’t find either of these products on the market today. If speed was all that was required they would have survived and thrived. In order to change the game, you also need to change the process, which is exactly what SAP intends with its new Fiori app for MRP.

The new MRP cockpit includes new capabilities, like the ability to:

  • View inventory position looking across multiple plants
  • Analyze component requirements with real-time analytics
  • Perform long term MRP simulations
  • Analyze capacity requirements and suggest alternatives

But this too requires a paradigm shift. Manufacturers, as well as other types of companies, are quite accustomed to making decisions from a snapshot of data, usually in report format, possibly through spreadsheets. They have become desensitized to the fact that this snapshot is just that, a picture of the data, frozen in time.

What if you never had to run another report? Instead, whenever you needed a piece of data or an answer to a question, you had immediate and direct access, not to the data as it was at the beginning of the day, or the end of last week, but to the latest data in real time? Not only will decision-makers need to adjust to thinking in real-time, but will also have to trust the software to automate much of the thinking for them. Will they be able to sit back and let the software iterate through multiple simulations in order to find the best answer to an exception even before it is reported as an exception? I suspect they will if it is fast enough. And HANA is now delivering at speeds that just a few years ago would have been impossible. But with these speeds accelerating by orders of magnitude, the ability to communicate and collaborate effectively must also accelerate.

Making the Human Connection

It is not enough to change the way users engage with the software, it is also necessary to change the way they engage with other people. How often do you or your employees today express sentiments like:

  • If I just knew who to contact for approval/help….
  • I don’t know what to ask
  • I wish I could check with (several) people on this quickly

What if the software could help? As work flows are streamlined, automated and accelerated, so must the lines of communication and potential collaboration. Whether employees are looking to move a process forward, resolve an issue or mature an idea faster, lack of communication and clumsy modes of collaboration can inhibit the game-changing effect of the technology. Which is why SAP has upped its game in the area of Human Capital Management and social collaboration tools. It took a significant step forward with the acquisition of SuccessFactors and JAM and has been blending these capabilities with the HANA platform.

Key Takeaways

Nobody today would disagree that the SAP Business Suite, powered by HANA combines deep and rich functionality with powerful technology. But can it be game changing in terms of how businesses operate? The potential certainly exists, but it’s not just about speed. Changing the game means changing the way we’ve been doing things for decades. Before we can change the process, we need to change the conversation. Are you looking to optimize business processes? Are you ready to talk?

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The Message from SapphireNow was Simple

Period.

You probably thought I was going to tell you what the message was, after describing it as simple, right? Wrong. “Simple” is the message. In the past, SAP’s products and SAP, the company has been anything but simple. Anyone that follows me knows I am a very big fan of keeping things simple. I spend a good chunk of my time and efforts distilling complex concepts down to understandable …simple terms. So you might think I would be thrilled with this message. But when I walked out of Bill McDermott’s keynote earlier this week, there was something about the message I found troubling. My issue: Business isn’t simple.

No place is this more apparent than in manufacturing, which is sort of “home” for me. But all enterprises face complexities. First of all, all are becoming more distributed. My research shows even the average small company (with annual revenues under $25 million) has 2.2 operating locations. That number escalates to 13.7 in large enterprises (over $1 billion in annual revenues). Increasingly these are global organizations, managing complex, global supply chains. Add to this changing regulatory requirements, the uncertainties of a global economy and the emergence of new sources of competition as well as new markets. There is no magic wand anyone is going to wave that will remove these complexities. And yet with the liberal use of quotable sound bites generated on the main stage, I had visions of SAP’s personnel aggressively promoting and promising “simple business.”

Then I happened to have a conversation with Josh Greenbaum (@josheac) about our mutual reactions to Bill McDermott’s keynote. A remark from Josh made it all click for me. Essentially what he said was: “Simple” is the wrong word. “Simplify” says it much better. Josh is right.

Yes, doing business with SAP could be simplified, both from a partner and a customer perspective, as well as from a supplier standpoint (I can personally attest to the latter – yes, SAP is my customer). The software products and associated implementations scream for simplification. The way innovation is delivered can be made simpler. So can pricing. The same can be said for SAP’s organizational structure. So the real question is: Can SAP deliver on this promise to simplify? There is no single answer. Instead you need to break it down by the many different opportunities for simplification. Here are a few.

SAP’s Organizational Structure

We’ve already seen a few changes here. Obviously with Jim Hagemann Snabe stepping out of the co-CEO role, leaving Bill McDermott as the sole CEO, this, in of itself, could be seen as a simplification. And I think this was a catalyst for creating the focus on “simple.” I am convinced that this is not just a word, a tagline or a marketing message to Bill. He is truly committed to simplifying everything he can. Indeed SAP has already made some organizational moves, but I would say the jury is still out on whether SAP can really deliver on this one.

I gave up a long time ago trying to figure out the organizational structure and who does what in just the parts of SAP that I cover and deal with directly. I have never encountered a more confusing mess of titles, reporting and seemingly overlapping roles. Back when I did try to keep track of all of this… just when I thought I had it figured out, it would change. So rather than waste cycles second-guessing the organizational structure, I have come to rely on the phenomenal analyst relations (AR) staff to guide me. If there is a better AR team in the industry, I haven’t met them. Yet, while they do a fantastic job, I vote for a simpler organization chart, clearer roles and responsibilities and titles that give you a clue as to what the individuals actually do.

One recent change leads me to believe that SAP is trying. This is the recent announcement of Rodolpho Cardenuto as the head of a new Global Partner Operations (GPO) organization. Prior to forming this organization, partners were covered in a very fragmented way. The new GPO organization consolidates these disparate groups, combining the existing Ecosystem and Channels team, with the SAP® Business One business (which is sold exclusively through the channel), the OEM business and all the company’s strategic partnerships around the world – much simpler.

I know there are some other changes underway and I have to believe some of the jobs that were recently eliminated may have been as a result of “simplification” efforts, since SAP execs made it quite clear this week they are in growth mode, and not contracting.

 

Simpler to Partner?

Speaking of this new GPO organization, partners are becoming increasingly important to SAP. In addition to the strategic decision to sell to small to medium size enterprises (SMEs) exclusively through the channel several years ago, SAP now sees the potential for accelerating growth worldwide by building alternative routes to market through its partner ecosystem, whether this is through added coverage or added capabilities.

SAP has also actively encouraged partners to develop their own “value-add” in terms of industry-specific functionality and other add-on capabilities. The development of new platforms (the HANA Cloud Platform) and an online marketplace directly supports this.

Of course the formation of the GPO organization is one step in the simplification process in dealing with partners. Before, different groups dealt with different types of partners (e.g. systems integrators, global VARs, strategic partners, etc.) However, more and more, partners have taken on multiple roles. Systems integrators also became resellers; global VARS also became strategic partners and co-innovators, etc. In the past that meant they had to deal with different groups within SAP, and those different groups all worked differently.

The formation of the consolidated GPO organization is therefore one more step in the continuing effort to make it simpler to partner with SAP. Of course some of these partners are large companies, like Cap Gemini, Accenture and Deloitte and are well-equipped to deal with complexity. But then there are thousands of partners that are themselves small businesses. Think what it must be like for a small Business One reseller to deal with a company like SAP. I first saw these simplification efforts get underway about 4 years ago when Kevin Gilroy came on board. One of his first tasks was to simplify contracts. Don’t quote me on the page count, but I think before Kevin arrived, the contracts were upwards of 30 pages or more. He proudly brought a two-page contract to Bill, who promptly told him to get it down to one.

The partner management team has made great strides already in making it simpler to partner with SAP, and this week I saw a new partner portal that will likely make the life of a partner much easier. It is a single point of entry, easily searchable, to access all the assets and resources SAP provides. This is free, but for an added fee, partners can also sign up for the SAP Learning Hub, which brings additional virtual educational directly to the partners.

Bottom line: I think the simplification efforts have been successful and will continue to make it easier for partners, which will in turn allow them to spend less time figuring out how to deal with SAP and more time servicing the customer.

Easier to Do Business With?

But what about the customers that deal directly with SAP or even indirectly through partners? Often questions of ease of doing business boil down to pricing. One analyst in a press conference this week asked about simplifying pricing, citing Oracle’s policy of publishing its price list for all to see. I would caution anyone against confusing transparency with simplicity. Oracle might publish prices, but good luck in trying to figure out what anything will really cost, because its pricing is far from simple.

In all fairness though, any ERP vendor struggles with this, particularly those with broad portfolios. SAP has already taken steps to further simplify its pricing structure, particularly around the bundling of HANA, but any prior efforts were dwarfed with one announcement this week: Fiori apps are free. Here is the announcement:

SAP AG today announced that SAP Fiori user experience (UX) and SAP Screen Personas software will now be included within underlying licenses of SAP software. For existing customers [those who already purchased], SAP will provide a software credit redeemable against future software sales. In addition, SAP will offer a portfolio of UX services, including design, rapid deployment and custom development, to enhance customer engagement. SAP users can now take advantage of a next-generation user experience based on modern design principles setting a new standard in the industry.

This announcement is huge, for a couple of reasons. First of all, it really does help to simplify the pricing because there is no price. From the moment Fiori was released with a modest price tag, the hue and cry from customers and industry observers was that it should be free. This perception was largely based on the fact that the first 25 Fiori apps simply changed the user experience and added no new features and functions.

A new user experience adds “value” in of itself but no further value was added, so it is understandable that customers would expect their maintenance dollars would pay for this. In addition, because Fiori largely just delivered a new user interface, many customers and industry experts alike lost sight of the fact that they were indeed developed and delivered as apps. They thought SAP had just gone into the presentation layer and changed the user interface, as it would have for an upgrade. That was never the case and now the Fiori apps that are being developed go well beyond changing the user interface. The SAP Smart Business Cockpits being developed now are changing business processes and delivering very significant added features and functions.

These cockpits address a variety of functions and roles throughout the organization, including:

  • Cash management
  • Sentiment analysis
  • Bank analyzer
  • Demand forecasting
  • Bulk pricing scenarios
  • Mass execution of availability checking
  • Transportation asset management
  • MRP cockpit
  • Transportation management
  • Purchasing
  • PLM Variant configurations
  • An accounting hub
  • An “exposure” hub

These will be delivered over the next year or so. I am sure I have missed a few, but you get the picture. What does this have to do with simplicity? All of these are being developed as Fiori apps, which means there won’t be an SAP salesperson knocking on your door to sell them to you. They are released on a quarterly basis and they are free. And because they are delivered as “apps” and not as traditional “enhancements” you don’t have to go through a complete upgrade cycle to get the one (and only one) you are interested in. You just implement that one app.

This essentially paves the way for SAP to reinvent the Business Suite from the outside in, without causing a major reimplementation along the way. I think this added value was overshadowed by the declaration of victory by ASUG in having won the battle over charging for Fiori apps and the fact that many are still thinking Fiori is just a new user interface.

A Simpler Solution?

Which brings us to how the “Simple” or “Simplify” message pertains to the SAP products. The best example of the impact is probably the introduction of a new product, “Simple Finance.” Don’t let the name fool you – it is not just for small companies that might have simple accounting requirements. SAP itself made the transition to this product and is now running its financials with it. And I heard it made that transition over a weekend.

I myself don’t have as clear a picture of this as I would like, since my packed schedule at SapphireNow often conflicted with sessions and discussions on the topic. So I will turn to the dynamic duo of Jon Reed (@JonERP) and Dennis Howlett (@dahowlett) to add some insight since they spent some one on one (or two on two?) time with Hasso Plattner and new head of development Bernd Leukert on the topic. Den and Jon published this to better explain SAP’s cloud strategy, and indeed Simple Finance was developed as a cloud offering. But this excerpted section is perfect for the point I am trying to get across:

Plattner and Leukert confirmed that the freshly-named ‘Simple Finance’ is part of a broader rewrite/re-imagining of SAP ERP, with HANA and cloud as the enablers. Referred to as the ‘simple suite’ or the ‘S system,’ Leukert said that the monstrous ordeal of rewriting 400 million lines of business suite code was not necessary, because of a “massive reduction in code” resulting from the simplification HANA allows and in particular, the elimination of bulky aggregates which account for a significant percentage of current code.

This simple suite, currently focused on the Simple Finance area also includes an aggressive paring down of software accounting complexities, a now-familiar talking point of Plattner’s.

While anyone can see the value of massively reducing the amount of code required, the non-technical person might not immediately appreciate the significance of the elimination of aggregation. Forgive me for over-simplifying, but think of it this way. Traditionally accounting solutions have accumulated all sorts of totals. Some are for periodic reporting (monthly, quarterly, annually, etc.), while other aggregates are used to gain insight into different parts of the organizational structure. This aggregation enables reporting without having to sort and calculate totals across a potentially large volume of transactions. Sounds simple and effective because you can gain access to these totals through a simple query. But there were some drawbacks.

Not only is there embedded code to maintain these aggregates, but sometimes these totals are not updated in real-time, and instead are calculated with batch runs. That means you are looking at a snapshot in time and not the “real” number. Secondly, what happens when you want to change the organizational structure and report in a new way? Those pre-calculated totals are now meaningless. If you can instantly slice and dice and calculate on the fly using any criteria, you don’t have to do any of this aggregation and you get complete flexibility.

This flexibility and speed is the real value HANA brings to the business, along with improved, faster decision-making. If SAP can deliver this simpler suite through a combination re-writing code and adding Fiori apps, I believe the SAP products will undergo a dramatic transformation.

Of course, even if this happens, SAP’s competitors won’t let go of the message that SAP is big, clumsy and complex any time soon. They will still be inserting that FUD (fear, uncertainty and doubt) in the minds of prospects as long as there is a shred of truth to it. That only makes it more of a challenge for SAP.

Conclusion

SAP will never deliver Simple. But it can Simplify. These are just a few of the ways. While I believe SAP has already made progress, it still has a long way to go to deliver simplification. But I do believe it is committed at the very top of the organization. But the buy-in has to permeate throughout the ranks. I believe some of the SAP folks will need a frontal lobotomy to make this transition, but many more will be breathing a sigh of relief. They, like SAP partners and customers, will say, “Finally.”

 

 

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