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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Figure 1: Approach to Consuming Innovation in a SaaS Model

Fig 1 SageSource: 2015 Mint Jutras Enterprise Solution Study

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

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

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

Conclusion

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

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

 

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Enterprise Odd Couple: Plex Systems Partners with Workday

Pre-Packaging 2-Tier ERP for Manufacturers

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

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

Making the Case for 2-Tier ERP

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

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

Figure 1: Environments Are More Distributed and Remote

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

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

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

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

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

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

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

The Emergence of 2-tier ERP

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

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

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

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

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

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

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

Impact on Roadmap

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

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

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

 Conclusion

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

A Side Note: Is Workday ERP?

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

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What is Unit4’s “Self-Driving” ERP?

Empowering People in Service Organizations

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

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

People Are at the Core of all Unit4 Does

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

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

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

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

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

The 6 Pillars of “Self-Driving” ERP

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

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

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

 How Does Unit4 Do This?

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

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

Personal Experience

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

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

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

Unit4 Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Note on defining generations:

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

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

Business Capabilities

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

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

Who is Three Rivers Systems and what does it do?

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

A few facts about Three Rivers:

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

 Smart Context

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

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

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

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

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

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

Elastic Foundation

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

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

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

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

Nothing Tells the Story Like an Example

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

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

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

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

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

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

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

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

Summary and Key Take-aways

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

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

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

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

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

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

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

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Divestitures: Growth Redirected. Can Cloud ERP Help?

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

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

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

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

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

Case in Point: Evonik Industries

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

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

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

Figure 1: Have you established corporate standards for ERP?

Fig 1 EvonikSource: Mint Jutras 2015 Enterprise Solution Study

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

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

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

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

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

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

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

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

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

Epicor Reevaluates Its Strategy

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

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

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

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

A Little Background

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

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

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

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

Moving Forward: More Than A Few Changes

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

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

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

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

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

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

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

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

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

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SAP S/4HANA at SapphireNow

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

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

What is SAP S/4HANA?

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

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

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

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

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

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

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

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

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

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

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

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

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

The real questions should be:

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

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

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

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

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Acumatica and the Power of Three

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

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

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

3 Types of Partners

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

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

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

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

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

3 Cloud Models

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

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

Acumatica offers 3 different models through its partners:

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

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

Figure 1: How do you prefer your cloud?

Acumatica Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

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

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

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

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

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

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

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

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

There is Power in Those 3’s

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

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

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

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

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Exact Macola, Reinvented

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

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

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

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

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

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

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

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

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NetSuite Announces the End of the Beginning: Cloud is Here

At SuiteWorld 2015 NetSuite CEO Zach Nelson announced The End of the Beginning. “The question of whether cloud was going to happen is answered. Cloud is here.” Mint Jutras agrees. Attitudes towards cloud and Software as a Service (SaaS) have changed dramatically over the past few years, particularly with respect to software that runs your business. As recently as five to ten years ago, Enterprise Resource Planning (ERP) could easily have been called the last bastion of resistance to SaaS. “Cloud” had yet to become part of the business vernacular and “SaaS” was still a relatively new and poorly understood concept. While other complementary solutions were headed in that direction, entrusting the transactional system of record of your business to the cloud requires a higher level of trust than required for other applications, including those which are often referred to as “systems of engagement.”

But now – how times have changed! According to the latest Mint Jutras 2015 Enterprise Solution Study, the majority of businesses have some sort of cloud strategy and the shift to the cloud has definitely begun.

What’s Your Cloud Strategy?

To get a clear picture of how cloud strategies have developed and evolved, we turn to some specific questions in our study.

Figure 1: What Best Describes Your Cloud Strategy?

NS Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

The first of these questions specifically asked about cloud strategies. This is the first year we have asked this question and the results were a little surprising – but only a little. The first surprise was that the majority (84%) has a cloud strategy, even if that strategy is to not go there (8%). In a way this is not particularly surprising given all the hype over cloud these days. This leaves the remaining 16% with no cloud strategy. But notice how we phrased this option: “We don’t have a cloud strategy. Cloud is just one of many factors we consider.” So it doesn’t mean these participants will not consider cloud.

We phrased it that way because for years we have been capturing priorities for selection criteria for ERP. Over the years we have always included some sort of reference to deployment option and it has consistently been ranked close to the bottom of the list of criteria. Since deployment option was not the overriding factor in selecting these solutions, you might also conclude that cloud was not driving strategy. And yet only 16% don’t have a cloud strategy.

So, in a way, survey participants are sending us mixed signals. But at the same time, we saw the availability of “cloud options” rise significantly in importance this year. It moved up from the very bottom of the list of criteria to the middle of the pack.

But, based on the strategies shown in Figure 1, we might conclude that cloud deployments will not dominate immediately. We actually confirmed this conclusion by capturing the percentage of all business software that is currently deployed as SaaS, along with projections over the next two, five and ten years and beyond (Figure 2).

Figure 2: Percentage of Business Software Deployed as SaaS

NS Fig 2Source: Mint Jutras 2015 Enterprise Solution Study

This steady progression is to be expected largely because of the number of existing on-premise (non-cloud) solutions that are currently installed. These will not be ripped out and replaced overnight, particularly when it comes to ERP. Implementing a solution that runs your business is not a small undertaking and most will not abandon their current solutions without a very good reason and an expected return on investment. So in that respect, it is not surprising that the most likely strategy is to leave existing systems in place but surround them with cloud-based solutions. This option leads to a hybrid environment, which delivers some of the benefits of SaaS, but will lead companies down a more circuitous route in their cloud journeys. In these cases, hybrid solutions might simply be viewed as temporary options and not necessarily the desired final destination. It will be interesting to see if interest in these hybrid solutions continues to grow or decline over time. A lot will depend on whether the hybrid solutions deliver the desired (end) results or just whet the appetite for more SaaS.

However, one in five (20%) will seek to replace existing on-premise solutions with cloud-based alternatives and another 8% are taking specific action now to do just that. If we add these two percentages together we see those taking the plunge and replacing systems with complete cloud solutions (slightly) outnumbers those that prefer a more evolutionary, hybrid approach (28% versus 25%). These are the companies most likely to be evaluating NetSuite as a replacement solution, as well as companies just starting out on their ERP journeys.

Those with a defined strategy of moving to the cloud clearly see the potential benefits. These benefits may be cost savings, more innovation, better support of remote workforces and distributed environments, or simply enabling growth.

But Remember, Not All Cloud is SaaS

However, if you recall our previous definitions, while all SaaS is cloud, not all cloud is SaaS. So we asked specifically “Which is most important to you in terms of placing any solution in the cloud?” While 12% admit to not really understanding (Don’t Know), the preference is for SaaS (Figure 3).

Figure 3: Which is most important to you in terms of cloud?

NS Fig 3Source: Mint Jutras 2015 Enterprise Solution Study

SaaS is the top choice, but as long as the solution is web-enabled, even a hosted or on-premise solution might be able to be accessed anytime, from anywhere. However, Mint Jutras would contend that without a SaaS solution, you would leave some of the potential benefits on the table. And as you can see, there is still a significant percentage that prefers a private cloud. This might be because a private cloud is considered more secure (it may or may not be), or because of current or anticipated customization. If the overriding desire is to simply move to the cloud (only), it might be easier to lift and shift existing solutions to a private cloud. Yet in doing so, you relinquish the opportunity to re-implement and remove limitations that might have been imposed by older, less functional and less technology-enabled solutions. And with the current configurability of a good SaaS solution, you would likely be able to eliminate a lot of your invasive customizations and therefore simplify your IT life, particularly as business needs change over time.

As the World Turns

And what business today is not undergoing change? Only those that are stagnating and losing any competitive advantage they might have ever had. In fact today we are living in times of unprecedented change and growth opportunity. New consumer middle classes have sprung up in countries that were hardly industrialized a short decade ago, creating opportunity even for small to medium-sized enterprises (SMEs). Innovation, advanced technology and the Internet have combined to create new business models that were never even considered a decade ago.

Those companies providing these consumer goods and even those offering industrial products that support the manufacturing and distribution of these consumer products see the most opportunity, but are also most subject to new and ever evolving business models. This is a market that NetSuite is very well suited for given its strength in eCommerce and its support for digital transformation.

NetSuite was born in the cloud long before cloud and SaaS came into the limelight. While NetSuite could not have foreseen all the new opportunities and new business models that have been created over the past few years, it did have foresight enough to build a system that could accommodate change. As Zach Nelson likes to say, “We built change into the system. We can’t predict the next business model or where it might go, but we can make the solution adaptable, regardless of the direction.”

Disruption in an Omni-channel Environment

As a result, NetSuite views “disruption” as a good thing. In prospecting, it seeks out these disruptive business models and sees its support of “omni-channels” as a key factor in supporting growth and therefore featured it prominently in its SuiteWorld message..

Omni-channel, alternatively referred to as “multi-channel,” refers to the ability to use different channels simultaneously. Consumers might purchase online, but pick up, or return merchandise at a physical store. Retailers may use retail stores as distribution hubs. As consumers make online purchases, it may be advantageous to ship from a store location where the item may be overstocked, thereby drawing down surplus inventory. Or the choice of ship from location may be made to minimize cost and lead-time. This is definitely an issue for retailers today. But more and more manufacturers and distributors find themselves also selling direct now, so it is just a matter of time before they need to deal with omni-channel supply chain issues as well.

Combining all these options requires flexibility, a level of expertise and feature functionality not typically included in your traditional ERP software suite. NetSuite has differentiated itself by doing all of the above. But more importantly, this requires an unprecedented degree of flexibility and adaptability, well suited for the cloud.

Much of this adaptability comes simply from being a multi-tenant SaaS solution. On the one hand, solution providers that maintain a multi-tenant SaaS solution have a distinct advantage to those offering traditional on-premise or even single-tenant SaaS solutions. But while they must only maintain a single line of code, it must be more configurable and flexible than a traditional solution, or it winds up appealing only to a small sector of companies.

The NetSuite ERP provides many options for configuration without invasive code changes. But it also goes one step further, offering a software development platform that allows partners and customers to add in new features without impacting the single line of code that NetSuite manages for its subscribers. The code developed using this platform can and does survive updates that are made on a quarterly basis.

Shopping for a New Solution?

In order to take full advantage of next generation solutions, enabled by advanced technologies, you may choose to replace your current solutions. The question we have been asking for years now is this: “If you were to select a solution today, which deployment options would you consider?” In the early days of this question, those that would consider SaaS were definitely in the minority and almost everyone would, of course, consider on-premise solutions. That landscape has shifted dramatically. Figure 4 shows the most recent few years.

Figure 4: Deployment Options that would be Considered TodayNS Fig 4

Source: Mint Jutras Enterprise Solution Studies

* Option added in 2015

SaaS is currently the option most likely to be considered (participants are allowed to select as many options as they want). For the past few years “SaaS” and “hosted and managed by your solution vendor” have run neck and neck. In the past, one of the reasons has been because the difference between these two options was often blurry and survey respondents didn’t necessarily understand the difference. This was substantiated by observing that a significant percentage of participants that were running solutions that are SaaS-only (including NetSuite) chose this hosted option instead of, rather than in addition to SaaS.

But we’re now starting to see evidence of a better understanding of the difference between these options. Not only are more participants actually running SaaS solutions, but also the preference for SaaS is starting to pull away from hosted solutions.

Conclusion and Recommendations

Mint Jutras would agree with Zach Nelson. Data from our 2015 Enterprise Solution Study signals that the end of the beginning is indeed here. Early pioneers, and NetSuite in particular, have been providing cloud-based SaaS solutions for more than a decade. NetSuite customers, pioneers in their own right, have led the way and are living testimony to the benefits. The shift to the cloud has begun in earnest.

Most companies today have defined a cloud strategy. If you have not, either because of lack of understanding or lack of attention, take a step back and develop one. Educate yourself on cloud and SaaS, along with the potential benefits; satisfy any lingering concerns you might have and investigate your options.

Not everyone will take the same approach. If you are currently running your business on legacy solutions that limit your connectivity and interoperability, adding some peripheral and complementary cloud solutions might selectively help you connect to trading partners and customers, but ultimately you will need to replace that old software or run the risk of being at a significant competitive disadvantage. Replacing it with a cloud-based ERP, deployed in a secure SaaS model might just be the giant step you need to move into today’s digital world and accelerate your own competitive advantage. If you’re looking for a SaaS ERP solution with some longevity in the market, you would do well to add NetSuite to your short list of vendors.

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Infor: On a Mission to Go the Last Mile

Cloud-enabled Industry Functionality People Actually Want to Use

Infor is on a mission to “build beautiful business applications with last mile functionality and insights for select industries, delivered as a cloud service.” Supporting this mission are three strategy pillars:

  1. Specialized micro-vertical suites
  2. Powered by the architecture of the Internet
  3. That create experiences people love

In constructing these pillars, Infor hits on all cylinders of the go-to-market messaging surrounding the key technology trends today. But for Infor, this is much, much more than just marketing hype. Its portfolio of business applications is broad. Its executive team has a very deep understanding of the products, the underlying technology and the business itself, and has invested heavily in development. That investment includes a creative design team, which is large (about 100 people) and in-house. It’s all about bringing value to its current and future customers and growing its business.

Here we examine each of the three elements of its strategy in terms of the value it brings to Infor’s current and future customers.

Industry-Specific Features and Functions

Much of the functionality required in software that runs your business is quite generic. All companies must record basic transactions that create a system of record, and in some departments that are subject to regulatory requirements (e.g. operational accounting), creativity is frowned upon. This generic functionality has become a commodity today. Any good ERP solution today covers the basics, although the basics aren’t so basic any more.

However, no two businesses are identical and most growing companies actively seek competitive differentiation. Infor acknowledges these differences. In promoting its new CloudSuites, it likes to say, “No two clouds should be alike…because manufacturing tires is different than growing kiwis.”

And yet, one of Infor’s stated objectives is to eliminate customization. In order to do that, it needs to offer an unprecedented range of features and functions, some of which are very specific to certain industries. As a result, Infor is dropping down a level or two in its definition of industry. For example, some vendors refer to manufacturing in general as an industry. Others might concentrate on certain manufacturing sectors like automotive, aerospace and defense, high tech electronics, or food and beverage. But Infor thinks a bit more granular and will, for example, break out food and beverage into sub-verticals such as produce, dairy, beer, processed meats, etc., because each faces its own set of challenges. Dairies must worry about the variability of fat content, while breweries manage fermentation processes and measure alcohol content. Growers need traceability back to the field, or ideally, even a row picked on a certain date. Some food processors combine ingredients through formulas and recipes, while others have the equivalent of a reverse bill of material. How much bacon or pork loin you get will vary pig by pig.

These types of special requirements are often satisfied through customization, or not addressed at all by enterprise applications. Adding this type of specialized functionality to a single, general-purpose Enterprise Resource Planning (ERP) solution would certainly add an unwanted level of complexity. On the other hand, maintaining many different solutions that share some common requirements is a waste of development resources for the ERP vendor.

Through many years of acquisitions, Infor has actually accumulated quite a few different ERP and financial management solutions and has made a commitment to existing customers to never force them to rip and replace them. And so, Infor is faced with a delicate balancing act in prioritizing its investments.

Some of these solutions are quite mature and continue to be based on technology that has become outdated. Investment in these solutions is (and should be) minimal. Others are very modern and technology-enabled. Some were originally designed with a certain industry in mind, others were conceived as more general-purpose solutions. Decisions surrounding these solutions require careful thought. Some will be more strategic than others.

As Infor attacks sub-vertical markets, it is critical to start with the ERP solution best suited to each one. The specific industry functionality provided will be a better fit, and easier to deliver. In the case of food and beverage, for example, M3 is the selected ERP solution. Infor then builds out the requirements for dairy or beer or processed meats as optional add-on components. More on that in the next section where we talk about architecture.

Before we do that, let’s explore what this means for customers and prospects looking for a new solution. Mint Jutras has been collecting data on priorities in selecting software for years now. In days gone by, “fit and functionality” always topped the list. But over the past few years another selection criterion crept up in importance and appeared to be running neck and neck with “fit and functionality.” That criterion was “Ease of Use.”

In many ways, this makes sense. All the features and functions in the world won’t do you any good if you can’t figure out how to use them. But the ranking of “ease of use” and “fit and functionality” were so close, we started to wonder what the priority would be if users were forced to choose between them – hypothetically of course.

So in 2015 we changed the format of the question, again listing the different criteria, but this time forcing the participants to stack rank them from 1 (least important) to 10 (most important).

Table 1: Selection Criteria Priorities (ranked from 1 to 10)

Infor Table1Source: Mint Jutras 2015 Enterprise Solution Study

It is quite clear from Table 1 that “fit and functionality” is still king. The top three criteria are all related to features and functions, which would indicate Infor is on the right track in terms of providing solutions that “go the last mile.” User experience (a broader criterion than ease of use) is still in the top half, which indicates it is much more than an afterthought. But getting the right software to do the job – the whole job – trumps all other considerations.

Infor needs to make the best of two worlds. It needs to be able to develop some generic functionality once and reuse it across multiple applications. And it needs to easily tack on new components of functionality, preferably making them optional. Infor’s answer to this is ION.

ION is lightweight middleware, providing common reporting and analysis, workflow, and business monitoring in one, consistent event-driven architecture (EDA). ION also provides an environment that enables new functionality to be developed once and shared by multiple products in the Infor portfolio, which helps in that delicate balancing act.

All of Infor’s strategic product lines have been appropriately “ION-ized.” This means Infor can develop functionality that can and should be shared across many of its different products, including horizontal solutions such as customer relationship management (CRM), human capital management (HCM), supplier exchanges and more, as well as localizations that deal with local country requirements in transaction basic business. This results in more innovation and a broader footprint than could ever be delivered by a single developent team focused on a single purpose-built product.

But Infor also feels it needs to go a step further: providing the architecture of the Internet.

Architecture of the Internet

Nobody today would argue the value of the Internet, bringing us “access any time, from anywhere” connectivity. Of course, the Internet implies “cloud” and Infor is moving into the cloud in a big way. As Infor (and also other major enterprise software providers) vie for leadership in the cloud, most assume the cloud is both well understood and a desirable goal. Mint Jutras research confirms that the market has reached a tipping point where cloud-based solutions are preferred over traditional on-premise deployments.

A question we have been asking for years now is this: “If you were to select a solution to run your business today, which deployment options would you consider?” In the early days of this question, those that would consider SaaS were definitely in the minority and almost everyone would, of course, consider on-premise solutions. That landscape has shifted dramatically. Figure 1 shows the most recent few years.

Figure 1: Deployment Options that would be Considered Today

Infor Fig 1Source: Mint Jutras Enterprise Solution Studies

* Option added in 2015

Note: The time span between the 2011 and 2013 studies was about 18 months as Mint Jutras shifted the timing of the study during the calendar year.

And yet, even with all this interest, Mint Jutras is absolutely convinced that many still don’t understand the terminology that is so easily tossed around today. Many use the terms “cloud” and “SaaS” interchangeably, but there are some important differences. So let’s distinguish between the two:

  • Cloud refers to access to computing, software and 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 the acronym. 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 generally is paid for on a subscription basis and does not reside on your computers at all.

All SaaS is cloud computing, but not all cloud computing is SaaS. Traditional on-premise or hosted solutions might (or might not) be accessed via the cloud, although these are more likely to be delivered through a private cloud. Not all of our survey participants want the same thing in terms of the cloud (Figure 2). Yet despite this diversity in preferences, Mint Jutras believes it is important for any software that can be delivered through the cloud to be able to fully exploit the power and benefits of the Internet.

Figure 2: How do you prefer your cloud?

Infor Fig2Source: Mint Jutras 2015 Enterprise Solution Study

This is presumably the reason Infor has set out to take full advantage of the Internet, regardless of what cloud means to its various constituents. It has developed a very clear progression that it refers to as Cloud 1.0, Cloud 2.0 and Cloud 3.0. This journey continues today but Infor’s stated goal is “efficient, scalable, secure, highly available, cost effective applications running on world class infrastructure in the cloud.”

Infor’s requirements for “Cloud 2.0” include:

  • Multi-tenancy: This is the most efficient and cost effective way for solution providers to deliver a SaaS solution and aligns very well with Infor’s goal of “no customization.” Maintaining a single line of code precludes customizations that involve invasive code changes. Not all of Infor’s products offered as SaaS are multi-tenant today, but it is moving in this direction.
  • Scaleability and high availability: These should be prerequisites for any SaaS solution, but both require data centers that can easily grow as needed, with an adequate level of redundancy for backup, disaster recovery and business continuity. Rather than taking on this responsibility itself, Infor relies on the massive remote computing services offered through Amazon Web Services (AWS), leaving Infor to concentrate on developing business applications rather than building and supporting data centers.
  • Zero footprint and no local device dependency: By not requiring any software on the device used to access the software (desktop, laptop, tablet, smart phone, etc.), it delivers the access any time, anywhere promise of the cloud.
  • ION/web-based integrations: Features of Infor’s light-weight middleware, such as its event-driven architecture, message-based communications between applications and industry standard object models for data definition, provide alternatives to point to point integration involving a lot of programming and invasive source code changes. Individual ERP products making up its different suites will of course need to be able to take full advantage of this middleware. Solutions that are deemed “strategic” will take full advantage, while legacy solutions based on older technology can and do have limited capability and therefore might not be good candidates for movement to the cloud.
  • Successful security tests: Infor has three layers of security. Cloud-based products are required to follow acceptable protocols for software development and product release processes. It also has a team of ethical hackers, reporting to a chief security officer, that continually test and advise the development teams. And finally, it uses independent third parties for audits.
  • Health Check Monitors: These need to be built into the software for self-monitoring of performance (think scaleability and high availability).
  • No source code changes are allowed: But extensions, connected through ION, can be used to fill functional gaps.
  • Meets patching and upgrade requirements

Cloud 3.0 will likely produce more changes that are “under the covers,” including more use of open source technology, better support for single instance deployments (think private cloud) and minimizing the use of third party products that would require additional purchases from the customer.

Providing last-mile functionality across a broad set of micro-vertical industries, supported by the architecture of the Internet is a lofty and practical goal. But Infor faces a unique challenge in leveraging this strategies in growing its business. Like any other solution provider today, Infor must attract new business. But it also must work hard to satisfy and retain its existing customer base of over 73,000 companies.

Many of these customers are stuck on older products, built on outdated technology. While promising to never force them to move off these old products is laudable, in a way it does the customers a disservice. In staying put, they will remain at a competitive disadvantage. Infor needs instead to lure them into making a significant change. That is where the third strategy pillar comes in.

Creating Experiences People Love

All too often companies and the people responsible for choosing to replace or upgrade solutions (or not) become complacent. The solution in place might not have all the functionality they need; it might be hard to use; it might not have produced the results anticipated. But change is hard. Many fool themselves into thinking old solutions, based on outdated technology aren’t “that bad.” They lose sight of how much solutions have evolved, both from a technology standpoint, and also in terms of features and functions. They cling to old customizations, not realizing a newer solution could probably be configured and personalized to satisfy their needs without invasive customization.

Many Infor customers fall into this category. What they don’t realize is that they could trade in their old solutions without changing solution providers. If they choose to go to a cloud-based solution, they also benefit by relinquishing the care and feeding of that solution to Infor, allowing the existing information technology (IT) staff to play a more strategic role in the company, adding more value than just keeping the lights on. And those running old versions of the products that are “strategic” for Infor might not even have to switch solutions.

Infor’s UpgradeX program is designed to get these folks on the latest release of these strategic products and then move them into the cloud. If their current ERP is part of one of Infor’s CloudSuites, the biggest effort will be in upgrading. If not, that probably means it will never bring them the kind of competitive advantage a more modern solution can provide. So these customers will need to migrate to a different solution, which means a reimplementation. But that is not necessarily a bad thing. Reimplementation allows the customer to rethink decisions that may have been influenced by prior limitations of the technology or the application. It’s an opportunity, but to get them to move, the target solution better be something that truly beckons.

While Infor has been talking about building “beautiful software” for several years now, it is the concept of delivering an experience that people love that resonates and should have a bigger impact on that portion of its installed base that has been clinging to older software. After all, beauty is in the eye of the beholder and Mint Jutras research has confirmed in the past that efficiency far outweighs the visual appeal of the software. In fact our 2015 Enterprise Solution Study confirmed it once more.

We asked survey participants to select the top three most important factors in determining “ease of use.” As in the past, minimizing the time to complete tasks took first place and intuitive navigation was a close second (Figure 3). The two are closely related, more for knowledge workers than those doing heads-down data entry. A decision-maker in search of answers that must hunt and peck for the right inquiry or function is certainly not minimizing the time to complete a task.

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

Infor Fig 3Source: Mint Jutras 2015 Enterprise Solution Study

However, with all the talk of the impact of the millennial generation recently, we decided to look at this from a generational perspective this year (Figure 4).

Figure 4: “Top 3” Factors Influencing Ease of Use by Generation

Infor Fig4Source: Mint Jutras 2015 Enterprise Solution Study

This gave us a new perspective. While minimizing time to complete tasks still takes the lead for all three generations, it does so with a much smaller margin in the Millennial generation – actually by no margin at all. Beautiful software (a visually appealing user interface) was tied for first in the youngest of the three generations.

While it is more likely that a Baby Boomer or a Gen Xer will have final approval over the purchase of new software, Millennials will often be involved in the selection committee and will definitely be amongst the regular users of the system. So the perspectives of all three generations are critically important.

Yet for decades, user interfaces have been designed by software developers who have never walked a mile in the shoes of the customer, regardless of generation. Which is why Infor is providing more user experience options and is also now taking a radically different approach.

Several years ago Infor created Hook & Loop, its internal creative design agency. Typically software companies turn to creative designers for advertising and imaging, not for software design. But that is exactly what the Hook & Loop team does at Infor. The team has grown from six people to a staff of over 100. This team is not a team of software developers and as a result brings no preconceived notion of how software looks and feels. Instead it goes to those who do the work and asks questions like:

  • What is your role in your organization? What are the different “hats” (roles) you wear?
  • What is a typical day like?
  • How do you interact with your co-workers and share information?
  • What frustrations do you experience on a regular basis?
  • What workarounds have you come up with to make your life easier?
  • What are the (small) things that make you happy?

Remember this team isn’t developing the software. It is just designing what it will look like and how the users will interact with it. As a result, it is unfettered by all the distractions of the programming that very often leads developers down rat holes, creating added complexity and even scope creep.

Yet through its experiences to date, it has grown beyond designing each user experience from scratch, which is very important in terms of delivering innovation at an acceptable and accelerated pace. The team has developed a variety of page-level navigation methods for specific use cases, including approaches such as:

  • Drill down / drill up
  • Breadcrumbs
  • Sections: Tabs
  • Sections: Dropdown
  • Accordion (expand and contract information)
  • Wizards
  • Cardstack/List

If you talk to Infor you will hear them talk about the SoHo user interface, which is transitioning to SoHo Xi. Infor is quite fond of code names. What is more important to the users of the software is that it is designed to be efficient and visually appealing, both at the same time, whether the user is using a desktop, laptop, tablet, smart phone or any other type of device that may come on the scene.

Conclusion

The investment that Infor has been making over the past few years is now coming together and producing some pretty dramatic results. Its verticalized CloudSuites have been emerging on the scene. This of course is an on-going process, but expect more (functionality), and expect more vertical focus. New ways of engaging with ERP are being introduced. They are both efficient and visually appealing. These suites look nothing like the old software of yesterday. This is a new Infor.

Infor will not force its customers or its prospects to move to the cloud, but if they so choose, Infor will be ready and fully Cloud 3.0 enabled. Even if customers choose to stay on premise, they will still be able to benefit from the architecture of the Internet. But of course those stuck on older technology will have to take some action.

Mint Jutras has observed that some Infor customers seem to want to die with their cold, dead hands on old software. While that may be a tribute to the software, if you want your business to grow and thrive, we recommend getting on board with the Infor program. Of course you will have to get used to a new user experience, but we think it will be a welcome change. You could even fall in love with your ERP all over again.

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