Plex Systems Takes a Page From Manufacturer’s Play Book

CONTINUOUS INNOVATION DRIVES ERP DEEP ON SHOP FLOOR

Continuous improvement has long been the mantra for many manufacturers. Kaizen and other formal programs like Lean, Six Sigma, and Total Quality Management (TQM) have dominated the manufacturing scene for years. But what about the world of enterprise software for manufacturing? Not so much. Many of the solution providers that serve the manufacturing sector understand the concepts, but don’t apply them to software development. Sure, these software vendors innovate, but not in a continuum, especially when it comes to broad applications like Enterprise Resource Planning (ERP). Except for one: Plex Systems. Believe it or not, Plex can and often does deliver enhancements to its Plex Manufacturing Cloud on a daily basis. Too much, you think? Not at all; its customers love it!

Why Do Consumers of ERP Expect Less?

Many consumers of ERP are conflicted over innovation and upgrades. On the one hand, when functional gaps or missing features or cumbersome processes are detected, customers demand enhancements. On the other hand, we find manufacturers unwilling and unable to actually go through the upgrade process. So the whole process becomes a Catch 22.

If these enhancements are delivered through the normal upgrade cycle, customers can find themselves waiting a long time. Major upgrades to ERP are typically delivered once every 12 to 18 months, or sometimes over a longer cycle, partly by customer request. They simply can’t accept and consume upgrades any faster. But that doesn’t mean the typical ERP client waits “just” 12 to 18 months for a requested enhancement. If your enhancement request just misses the planning phase of the cycle, you might have to wait for another cycle before it is even considered, which means you might wait two to three years for it to be delivered. And even then, it might not make the cut.

But let’s say it does and your enhancement is delivered with a major upgrade within a year (or maybe two or three). Do you jump right on the release? If you are like most of the manufacturers participating in our annual Mint Jutras Enterprise Solution Study, the answer is, “probably not.” Only 14% of manufacturers tend to be early adopters of releases (Figure 1). About a third (34%) upgrade on a regular basis but not as early adopters. This means they will likely wait for those early adopters to shake out all the bugs and for the solution provider to smooth out all the rough edges. This might take three months? Six months? Another year?

Or you might be like the 31% that are likely to skip releases. You might not get too far behind, but if you skip a release, and upgrades happen every 12 to 18 months, you won’t experience any real innovation for at least two to three years.

Figure 1: Approach to Upgrades

Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Why? Largely because upgrades can be disruptive and costly. We asked our survey respondents to stack rank five individual factors in terms of the likelihood each will keep them from upgrading when a new release is available. We used a scale of 1 (least likely) to 5 (most likely). The results are shown in Table 1. As you can see, potential disruption to the business is at the top of the list, but the rankings are very close. Your typical manufacturer understands the cost and effort of a traditional upgrade and will be reluctant to spend the time and money without expecting a significant payback.

Table 1: Ranking of factors preventing upgrades

Table 1Source: Mint Jutras 2015 Enterprise Solution Study

 As a result, although software development is typically a continuous process, the results are not delivered continuously. Most solution providers create enhancements, bundle them up, test them out and issue major upgrades periodically, hence the traditional 12 to 18 month cycle, with just some bug fixes and/or minor releases in the interim.

Plex Customers Have Come to Expect More

While this type of upgrade cycle has been generally accepted and expected by those running traditional, on-premise solutions, Plex customers have come to expect more. Perhaps they were frustrated by delays, got impatient and dissatisfied and were seeking more from their software vendor. Or perhaps they chose Plex for other reasons. Either way, they soon became spoiled by the “Plex way” of innovating.

Of course any solution provider that offers its software exclusively as a multi-tenant SaaS solution has a distinct advantage of only having to maintain a single line of code. Solution providers that deliver on-premise solutions are forced to maintain multiple versions of the software. Very often the software is offered on a choice of platforms and databases, and the vendor must support multiple release levels determined by their customers’ ability to keep pace with upgrades. For every person-day they spend on innovation, they spend another multiple of that day making sure it works across various environments. The more choice they offer, the more permutations and the higher that multiple.

More and more we find vendors riding the cloud wave. They are taking on-premise solutions and moving them to the cloud and offering alternatives for deployment. Some of these moving to the cloud will be multi-tenant; others are single-tenant, delivering more of a hosting option. But even those that offer multi-tenancy will still be forced to maintain multiple versions and will be limited by their on-premise customers’ ability to keep pace with innovation. Only those that offer a multi-tenant SaaS solution exclusively can devote their entire development budget to innovation. That’s the real beauty of having (and maintaining) a single instance of the software, and nobody takes better advantage of that than Plex Systems.

The Plex Manufacturing Cloud is not the only ERP solution that is offered exclusively as multi-tenant SaaS, but it is one of a very few designed exclusively for manufacturers. And of these SaaS-only manufacturing ERP solutions, Plex’s is (by far) the most mature. But not all SaaS vendors take full advantage of the opportunity for continuous innovation. Some do offer more frequent updates and all relieve the customer of much of the burden of the upgrade process. But nobody else (that I know of) does it like Plex.

 Daily Updates – Responsibly

Plex can and often does update the solution every day. You heard (or read) that correctly: every day.

Of course Plex doesn’t pull the rug out from under its customers every day. The development team adds all new features in such a way that a customer must “opt in” to use them. Many of its customers evaluate these innovations on a periodic basis, much like a release cycle. But they are never faced with the “all or nothing” kind of scenario so common in upgrading on-premise software. If they know a valuable new feature is coming, they might jump right on it and not wait for that periodic review.

User Interface Refresh

Plex’s new, redesigned user interface (UI) is the perfect example of this. Plex is methodically updating every screen used by its users, including the navigation screens used to perform back office functions, as well as the control panels used on the shop floor. As each of these are completed, they are introduced into the live product, but the old screens and the old navigation methods are still there.

Of course Plex is only converting those functions its customers are actually using. Over time, newer and better features and functions may have replaced some of the screens, inquiries and transactions. Eventually people stop using the old functions and Plex can then get rid of them. In an on-premise environment, solution vendors have no visibility into what is actually being used and what is not used. So, once code is delivered, it tends to live on forever.

But because all customers are using a single instance of the software running in the Plex Manufacturing Cloud, Plex has full visibility into not only what is being used, but also how often it is used. While this might seem to be a bit big brother-ish to some, customers don’t seem to mind. And it puts Plex in the unique position of being able to eliminate code. In fact the development team recently deleted 30% of its existing source code. And as Jim Shepherd, Plex’s Vice President of Corporate Strategy noted, “If we couldn’t get rid of code, ours would get as big and unwieldy and ugly as everyone else’s.”

You know how good it feels when you finally clean off your desk at work, or clean out your closets at home. Think how good the software developers felt when they could clean out 30% of the code, making that much more room (figuratively) for all the new features, functions and innovation they continue to work on. And indeed the development team has been busy. Combine that with the fact that Plex perfected rapid application development processes more than a decade ago and you get a regular cadence of new features and new offerings.

Here’s an example of some of the areas they have been working on:

Investment in process manufacturing

In order to address the market sitting right outside its doors in nearby Detroit, Michigan, Plex got very good at addressing traceability. The strength of the traceability functions built for automotive discrete manufacturers have led Plex into a fair number of food and beverage and similar process-related industries. Further investment in lot management, lot attributes, lot tracing and unit of measure management will be made in 2015. That investment will also continue into the future with even more sophisticated unit of measure management, costing, yield management, recipes and pricing/promotion management, as well as further work on compliance and FDA validation.

Finite Scheduling

Plex has already released its Advanced Production (Finite) Scheduling modules, but work continues to bring attribute-based grouping (e.g. watch out for allergens!) and sequencing and sequence-dependent changeover time determination (better go from light to dark when applying coatings), and labor-driven capacity determination (knowing how many machines is not enough).

Plex Enterprise Edition

Plex Enterprise Edition is a suite of applications built to support complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements. It was first introduced at PowerPlex 2014, with finance and accounting capabilities (accounts receivable, accounts payable, general ledger and cash management). But work continues throughout 2015 on centralized sales and purchasing functionality, along with inventory work in progress. The team will then move on to enterprise manufacturing (engineering, scheduling, production) and enterprise asset management (fixed assets, treasury management and human resources).

Tech Gadgets and Automation

These are just a few examples of the types of feature/function development that has been underway at Plex. In addition, the team has also been busy experimenting with new technology. This team is led by the ultimate “gadget guys.” But this is not frivolous work. The team also “knows” manufacturing and is always in search of new ways to make manufacturers more efficient and productive. This means new ways of capturing data, automating processes and engaging with ERP both in the back office and on the shop floor. The shop floor was the prime focus of a very interesting demo the Plex team put together about a year ago, but has recently updated.

The demo a year ago was an interactive demonstration of a manufacturing process that took you from the receipt of material through to shipping of a finished product. It was, and still is, a good example of new and different ways of engaging with ERP. You see, we didn’t use a keyboard. But we did use scanners and sensors, a light curtain and yes, there was even a blue button that you might call the “easy button” that signaled an operation was complete. Never once did we go through a traditional menu structure. Each work center looked and felt a little different, and even the devices used for data capture varied, because the work being completed was different. This was a far cry from early days of ERP and confirmed my belief that the best user interface (UI) is really no UI at all.

And this year there were some new “wearables” on the (simulated) shoGoogle glassp floor, some of which were just being prototyped. Plex is participating in the new Google Glass @Work program including Google Glasses built into safety goggles. It is experimenting with smart watch and blue tooth technology and beacons that recognize when someone wearing these devices comes within range of a work center. The goal is to make smart watchdata capture as easy, automated and hands-free as possible.

Manufacturers are widely known for their pragmatism. Unlike some consumers today, they will not go out and buy the latest new gadgets just to look cool or simply because they can. These devices need to add real value Beaconand that is exactly what the Plex team is searching for in this experimental phase.

Not Slowing Down Anytime Soon

With a history that spans almost 20 years, and a product that has matured significantly, you might think innovation might be slowing down at Plex. Quite the contrary. The Plex development team has nearly doubled over the past couple of years. Even though it is already a complete manufacturing ERP solution, with particular depth in functionality in manufacturing execution (MES), there is still lots to do. Along with the wearable technology and the refreshed user experience, it is also working on a universal search capability, master production scheduling, advanced manufacturing intelligence, along with the additional process manufacturing, finite scheduling and multi-national, multi-location capabilities mentioned earlier. And much more.

As an industry analyst, it is my job to stay objective. But every once in awhile a company comes along that does something very unique. Plex’s combination of rapid application development, cloud delivery and commitment to customer satisfaction is the prefect trifecta for this uniqueness. And on top of that, Plex does it very well. Kudos to the Plex team for taking a page from the manufacturers they serve so well and delivering continuous innovation.

 

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The Three Dimensions of SAP Business ByDesign Set The Stage for Growth Part 2

This is Part 2 of a 3-Part series on how SAP sets out to enable growth with its cloud ERP solution, SAP Business ByDesign. In Part 1 we talked about SAP Business ByDesign’s architecture. If you missed it you can back up and read it here or, if you prefer to skip the suspense you can read the full report now.

New Generation User Experience

In Cloud ERP: The Great Enabler of Growth we talked about the people challenges associated with growth. New generations of ERP, delivered through the cloud can help alleviate some of these challenges. But Mint Jutras research finds that “ease of use” means more than just a pretty face. Ease of use is first and foremost about efficiency, which not only requires a user interface that is intuitive, but also processes that align with the way business really works – business scenarios that maximize efficiency and minimize time to complete tasks.

Of course the real proof that SAP Business ByDesign delivers on these promises comes with a demonstration, but SAP’s design methodology is conducive to supporting both. When designing a business scenario, SAP designers go on site, observing the way people work and interact. Their designs are based on these observations and then validated, typically in multiple countries (China, India, Germany and the United States) before being incorporated into the product.

The result of this methodology has been an emphasis on the human engineering of the process. Each individual works from a personalized home page, which combines functions from within SAP Business ByDesign with other functions (e.g. email, calendars, maps, etc.) and a powerful enterprise search capability (think of it as a Google-like search throughout your enterprise data). Business processes are made more efficient as tasks are pushed to users. Throughout, there is a theme of simplicity and personalization.

Business Configuration

Personalization within SAP Business ByDesign is achieved through a “Business Configurator” that takes advantage of the pre-defined business scenarios discussed earlier and a rules-based catalog. Together these allow each customer to tailor the solution to specific needs by interacting in business language, not code and without invasive customization. These business scenarios map the workflow of a business process through the various functions of the solution. Selecting a pre-defined scenario automatically selects all the functions necessary during initial implementation. Customers can then selectively fine-tune the settings immediately or as business conditions change.

This type of configuration tool is particularly important as companies expand into new locations, either through organic growth or acquisition.

The combination of the SAP Business ByDesign business configurator, pre-defined business scenarios and a library of business rules enable this type of standardization. Customers need only to supply company-specific data, including assignments of tasks, to support a “push approach” within an organizational structure. By pushing tasks to an individual, processes continue uninterrupted, making the most efficient use of that person’s time. Nothing falls through the cracks.

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The Three Dimensions of SAP Business ByDesign Set The Stage for Growth Part 1

Simplicity, Flexibility, Extensibility in the Cloud

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. While some of the factors that enable growth are inherent in any SaaS solution, not all cloud ERP solutions are created equal. Targeting mid-size and fast growing companies, SAP claims its SAP Business ByDesign is designed specifically to help these companies grow and maximize profits. In this 3-part series of posts I’ll investigate the merit of those claims.

This is Part 1 of that 3-Part series. If you prefer to skip the suspense you can read the full report now.

SAP Business ByDesign was born in the cloud in 2007, long before “Run Simple” became the mantra of SAP. Yet the initial objective was to simplify, delivering a 100% cloud-based solution for the small to mid-size enterprise (SME), while also fully leveraging SAP’s experience and infrastructure. Instead of reworking an existing product, SAP took a “start over” approach, and over the past seven years has developed and refined a three dimensional design philosophy. Those three dimensions: simplicity, flexibility and extensibility. This philosophy is a perfect prescription for a growing company that needs to get out of the gate fast, but has not yet reached, or perhaps even determined its final destination.

In order to enable growth a solution must be broad (in terms of functionality), flexible and extensible. SAP attacks these requirements with a modern and modular architecture that was born in the cloud. It delivers a next generation user experience that continues to evolve and a business configurator that has become the gold standard within SAP, helping organizations adapt as they grow and change. And finally, it embeds reporting and analytics right in the application itself so that continual oversight and analysis does not become an afterthought.

Architecture

SAP Business ByDesign is modular by design. This should not be confused with simply being comprised of a set of modules. By definition, any ERP solution is an integrated suite of modules. It is how modules are coupled together, or in the case of SAP Business ByDesign, how they are decoupled, that makes a solution flexible or rigid. Most mid-size to large enterprises today no longer grow to be large, monolithic enterprises. They grow modularly, spawning new divisions or subsidiaries to expand to address new products, product lines or territories. But these different business units must interoperate smoothly and seamlessly, making obsolete those legacy ERP solutions that were similarly designed as rigid and monolithic.

One of the guiding principles of the design of SAP Business ByDesign is decoupling. This decoupling is delivered in a variety of ways. Business logic is decoupled from the user interface, allowing for ease of translation and also the reuse of logic and services across any number of different types of interfaces. The same transactions can be triggered whether you are using the product through a browser on a desktop, a mobile application or no user interface at all. Through process automation, sometimes the best user interface is no interface.

In addition, the software modules themselves are essentially decoupled. Instead of hard-coded logic, communication between different modules is message-based. This makes it far easier to add or swap modules and business scenarios as needed or even to consume innovation. With a rigid monolithic solution, the entire enterprise needs to march forward together, oftentimes making some departments wait for much needed enhancements because other parts of the business aren’t ready for change.

While there is a lot of value to be gained from this type of decoupling, there is one area where embedding functionality adds more than it detracts in value. If reporting and analytics are completely separate, they often become an after thought, something the implementation team never quite gets around to delivering. And even if they do, if delivered as an entirely separate function, they are often out of sight and out of mind.

Separating reporting and analytics is often required in order to preserve or improve performance, hence the emergence of solutions for online analytical processing (OLAP) separate from online transaction processing (OLTP). However, from the beginning, SAP Business ByDesign was built using an in-memory database that removes those performance issues and allowed SAP to embed analytical capabilities within the solution. In addition to bringing this analysis front and center, it also provides real time access from a wide variety of data sources, including data from sister companies or headquarters, eliminating delays and speeding decisions. The speed and capacity of in-memory also removes the need to limit the amount or granularity of data needed to help determine where and how to invest next. Instead of using aggregated summary data that might be misleading, SAP Business ByDesign users can dive into a level of detail that would be unmanageable and unimaginable using legacy architectures.

Up Next…

In the next post (Part 2), we’ll take a look at what SAP has done with the user experience and configuration of SAP Business ByDesign.

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SAP S/4HANA: Simple, Fast, Different

What Does it Mean to the Business?

On February 3, 2015, SAP announced what it called its biggest product launch in the history of the company: SAP Business Suite 4 SAP HANA, or (thankfully) SAP S/4HANA for short, was touted as “the next-generation business suite to help customers run simple.” Indeed, “S” stands for simple; “4” is for 4th generation and in Information Technology (IT) circles, HANA speaks for itself. To interpret for those outside the world of IT, HANA is an advanced in-memory platform that is able to crunch through enormous volumes of data incredibly fast.

In combination these three factors hold enormous potential to change the way businesses are run. While the potential impact might seem intuitive to technologists, it is far less obvious to the typical business executive. And yet, in a world where the terms innovative, disruptive and transformative are all too often over-used and mis-used, SAP S/4HANA is disruptive innovation that can be used to simplify and transform your business. If you are interested in learning how, read on…

What is it?

SAP S/4HANA is a new product, which, like its predecessor (the SAP Business Suite) will include enterprise resource planning (ERP) and other complementary functions including:

  • Customer relationship management (CRM)
  • Supplier relationship management (SRM)
  • Supply chain management (SCM)
  • Product lifecycle management (PLM)

Like the SAP Business Suite, it is designed for the large enterprise, and eventually will satisfy the requirements of the same 26 industries SAP has spent decades building out. This is a big and bold move for SAP. Given these similarities, some immediate questions come to mind. First of all, why develop a new product? After all, the SAP Business Suite could already run on SAP HANA. Secondly, is it really possible to replace over 4 million lines of code quickly enough or will a complete solution be decades in the making? To answer these questions we need to look at both the differences and the similarities.

At first glance, the differences that appear most obvious to the typical business user lay in the user experience and deployment models offered. Beyond the obvious is the new code line with a new and simplified data model, but more on that (and what it means to the user) later.

Choice of Deployment Models

The existing product was essentially an on-premise solution, although SAP has recently offered a cloud-based managed services option. The SAP HANA Enterprise Cloud (HEC) is a service that allows organizations to move existing (or new) implementations of the SAP Business Suite off their own servers and into SAP’s massive data centers where SAP would manage it as a single tenant solution in a private cloud. But this doesn’t carry the same benefits of lower cost and faster innovation possible with a multi-tenant software as a service (SaaS) solution.

With SAP S/4HANA comes a choice of deployment options. The On Premise Edition is available today while the Public Cloud Edition (multi-tenant SaaS) will be available soon (the first quarter of 2015), followed by the Managed Cloud Edition in Q2.

New and Improved User Experience

The user interface of the SAP Business Suite has long been a weak point, and also one of the hardest to “fix.” SAP is not alone in this dilemma. Many enterprise application solution providers struggle with this as expectations change over time, especially with the influence of consumer mobile devices. Users become dissatisfied with existing user interfaces but often getting them to change is like pulling teeth, for fear of the need to retrain users and because people (those actually using the software) get used to it and resist change.

SAP has actually been working on fixing this problem for more than two years. In the spring of 2013 it introduced SAP Fiori, a collection of 25 apps (initially) that surrounded the Business Suite, providing a new user experience for the most commonly used business functions of ERP. While useful in pleasing existing users and perhaps even attracting new users within the enterprise, SAP Fiori had limited impact for two related reasons. First, the initial set of apps just changed the user interface (UI) and did not add any significant new functionality. And yet, they weren’t free. Customers balked at paying a fee for innovation they expected SAP to deliver as part of maintenance.

The second round of Fiori apps however began to add in new capabilities, but in spite of that, SAP responded to customer complaints and made them free (with maintenance). And today there are over 500 of them available.

The intended new user experience delivered with SAP S/4HANA is based entirely on SAP Fiori and SAP expects that over time more and more transactions will come from mobile devices, a very viable option with Fiori. New customers will engage with SAP S/4HANA through these apps right from the beginning. Those SAP Business Suite customers that migrate to SAP S/4HANA will have the option of continuing to use the traditional user interface, but of course Fiori apps won’t shore up this weakness unless they are really used. Hopefully, with the mindset of running a new product, customers will expect to engage differently and therefore take better advantage of the new experience and the new functions delivered through Fiori.

Beyond the Obvious

While either or both of these differences might be compelling, even together they don’t justify the time and effort involved in replacing 4 million lines of code to produce a new product. The real game changer here is the underlying technology that allowed SAP to reduce the data footprint by a factor of 10, increase throughput by a factor of 7 and make analytics and reporting orders of magnitude faster (SAP claims 1800 times faster). SAP’s goal was to achieve a zero response time.

However, many business executives running SAP solutions, as well as those of other vendors, might not perceive themselves as having a problem with response time and the size of their data footprint is hardly something that keeps them up at night. If you consider yourself in this category, what’s in it for you? The short answer is

  • Speed in getting at data and answering questions
  • The power of iterative questions, including immediate answers to new ones you didn’t even know you had until you started looking
  • The ability to base all decisions (strategic and operational) on as much detail, in as fine a level of granularity as you can imagine

Perhaps you don’t think you have a problem because you have adapted to the limitations of existing systems. Or you don’t know response time is slow because you never put your hands directly on the system. You might be accustomed to making decisions from data that is frozen in time (a snapshot) because it is not updated and available in real time. You may have waited so long for new queries and reporting that perhaps you stopped asking for them. You probably forecast sales at a summary level by region, assuming you can’t possibly analyze and predict sales at an individual customer level, by product and region, by sales rep. What if SAP S/4HANA could change all this?

Speed is obviously a key factor, but why should you care about reducing the data footprint? The answer lies in understanding why that footprint got so bloated in the first place. As your solution footprint has grown through the years, there is a very good chance you have introduced redundant data. If you started with ERP, then added CRM, both need customer data and product data. This redundant data needs to be synchronized. SAP estimates that 40% of the data load is the exchange of data between solutions.

In addition all enterprise solutions have traditionally accumulated all sorts of totals. Some are for periodic reporting (monthly, quarterly, annually, etc.), while other aggregates are used to gain insight into different parts of the organizational structure. This aggregation enables reporting without having to sort and calculate totals across a potentially large volume of transactions. While the process is simple and effective (because you can gain access to these totals through a simple query), there were some drawbacks.

Not only is there more embedded code to maintain these totals, there is more contention within the data files. Let’s say a large enterprise has people all over the world entering sales orders. If totals are updated in real time, even though it might appear that all transactions are accessing and updating records in the files simultaneously, in reality, these updates happen one at a time. Before a transaction can update a record, it has to check to make sure no other transaction is trying to do the same. If the record is being accessed or updated by another transaction, it must wait for the record to be freed up. Of course it might take only seconds, but those seconds add up and response time slows.

This is also why sometimes these totals are not updated in real-time, and instead are calculated with batch runs. That means you are looking at a snapshot in time and not the “real” number.

And finally, keeping these totals up to date, whether in real-time or through batch runs, means you have to anticipate how and what you want to include in the totals. What happens when you want to change the organizational structure and report in a new way? Those pre-calculated totals are now meaningless. If you can instantly slice and dice and calculate on the fly using any criteria, you don’t have to do any of this aggregation and you get complete flexibility.

Removing these totals means no updates and no more contention. Dozens or even hundreds or thousands of transactions can be entered and stored, at the same time (literally, not just seemingly). This is what the technologists mean when they refer to “massively parallel processing (MPP).”

So SAP got rid of these totals and also the database indices. Database indices allow you to do key lookups. You can easily look up a customer or a product by customer number or part number because those numbers are keys, allowing the software to go (more) directly to a record without having to search through the entire file. But these indices are no longer required if you can search through even massive files and still get sub-second response.

In the end, SAP S/4HANA reduced the number of data tables from 110 to less than 10. And it also segregated out historical data from current data. By its very definition, historical data can’t be changed any more. That makes it easier to handle. So SAP segregated it and made it read-only, making it even easier to deal with the current data.

This flexibility and speed is the real value HANA brings to the business, along with improved, faster decision-making. However, to take full advantage of HANA, SAP S/4HANA must only run on HANA. Of course, this means customers will not have a choice of databases. Some industry observers are criticizing SAP for removing this as a choice. However, preserving that choice of database means SAP S/4HANA would be restricted to the least common denominator of functionality.

If SAP does not take full advantage of the benefits HANA brings, why create a new product? The SAP Business Suite already provides this freedom of choice, including the Business Suite on HANA. And SAP has promised to continue to develop and support the SAP Business Suite through 2025.

Some customers will be reluctant to spend the money on a new platform. Some will cite the skill levels of their current staffs. If customers want to remain on traditional databases, they should just stay on the SAP Business Suite, at least for now. If IT staffs have not upgraded their skill levels by 2025, they will have more problems to contend with than just limitations in response times. So maybe it is time for some “disruption.”

Disruptive Innovation

While technology industry observers love to talk about “disruptive technology,” many business executives think of disruption as a bad thing. Yet while certain types of disruption can indeed be bad, other types can also be good. Disruption that prevents you from delivering a product or service is obviously bad. Disruption that forces you to do things in a different, but better way can be very good.

Wikipedia defines disruptive innovation as “an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect…”

SAP S/4HANA is indeed disruptive innovation, but in the good sense. It is a bold move for SAP. Obviously its customers cannot transform themselves overnight, but they don’t need to. SAP S/4HANA was designed to allow existing SAP Business Suite customers to migrate without the bad kind of disruption. And of course SAP can’t transform millions of lines of code overnight either.

While the SAP Business Suite was just that – a suite of products, eventually all this functionality will be embedded and delivered as a single product. SAP started with ERP, but will eventually add in functionality from CRM, SRM, SCM and PLM. It will start with those industries most likely to see the cloud as the next stop in their extended ERP journey, and then continue to broaden its industry reach. Of course for any company taking this big next step, as always, the devil is in the details. How will companies (both new customers and existing SAP customers) make the transition while SAP itself is still in transition? Will they be able to embrace the good kind of disruption while keeping the bad kind at bay?

Conclusion

The short answer is yes, but that too will be a journey. It will not happen overnight. The key to success is in allowing all the current and new solutions to coexist. While SAP S/4HANA only has 10 or so tables, those applications like CRM, SRM and SCM are expecting to find their share of the full-blown 110 tables. That’s okay.

SAP has also defined a virtual data model that can do a translation of sorts, mapping the old tables to the new data model. This is a key factor in facilitating the migration from SAP Business Suite to SAP S/4HANA without disruption. It not only allows these (currently additional) applications to interoperate with SAP S/4HANA, but also allows customers to continue running current reports that might rely on those old totals. So current and new customers both can ease into taking full advantage of the new capabilities. This is good since it will take companies awhile to realize they can now solve problems that are currently viewed as unsolvable.

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Cloud ERP: The Great Enabler of Growth

 Keep it Simple, Manage Risk, Maintain Control

Every company has aspirations to grow. Growth is exciting, yet it can also be challenging, especially for those companies that have already transitioned from small to mid-size. While that transition may not necessarily have been easy, all the low hanging fruit has been picked and the clear and easy paths to growth have already been traveled. Operations are more complicated now and new paths to growth are riskier. It is no longer easy to keep your business simple and the Enterprise Resource Planning (ERP) solution that got you to your current size may not be sufficient to power you through to the next level of growth.

You need to start thinking and acting like a big company long before you have the budget or the staff of a large enterprise. In order to maintain good governance and control, provide a high level of business consistency and efficiency, and speed decisions that minimize risk, you need to arm yourself with the right enterprise applications and technology. A next generation business solution running in the cloud may just be your ticket to scale your business. You need cloud ERP.

What’s Changed?

In some ways, the more things change, the more they stay the same. Growth aspirations aren’t new. Companies have always looked for opportunities to expand and grow either organically or through mergers and acquisition (M&A). And let’s face it; there are only so many different ways your company can grow. You either add new products (or product lines) or sell more of the products you already offer. That may sound simple enough, but most often it is anything but simple. While on the surface little seems to have changed, in reality a lot has changed.

Historically expansion into new territories still kept you within established economies. Today completely new markets are opening up in emerging economies. Not only does this result in increasingly remote and distributed environments, but added risk and new challenges in maintaining governance and control.

Innovation, advanced technology and the Internet have combined to open doors to opportunities all around the world. New consumer middle classes have sprung up in countries that were hardly industrialized a short decade ago, creating unprecedented growth opportunity even for small to medium-sized enterprises (SMEs). But in tapping into these opportunities, SMEs venture into uncharted territory. Not only is the demand for product and services untested, but also there is no rich pool of local talent well versed in business and technology. Mid-size companies in particular will find governance and control even more challenging. At the same time expectations are accelerated: consumers, shareholders and Wall Street all expect everything to happen more quickly.

To capitalize on this opportunity, mid-size companies will need to take some chances and be willing to fail, but fail (or succeed) rapidly in order to move on to the next opportunity. They will need to leverage technology in order to simplify, manage, control and reduce risk, but they will also need to move quickly. They will not have the deep pockets or the time needed to build out infrastructure. They can’t afford to take years to implement solutions to run the business.

Cloud ERP to the rescue. No capital expenditure required; no need to build out a data center, or even put hardware or a huge information technology (IT) staff in country. And Mint Jutras research shows that solutions delivered as software as a service (SaaS) reach their first go-live milestone 14% faster.

The access any time, from anywhere nature of a cloud solution is conducive to supporting distributed users and bringing up remote sites rapidly and easily. While cyber-security is an understandable concern to all today, SaaS solution providers not only deliver added security, but also the peace of mind of business continuity in the event of a disaster, either natural or man-made.

If you are interested in exploring the people challenge, the risk, the value proposition by persona and learning more about maintaining governance and control through the growth process, Click here to read the full report.

 

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“Ease of Use” of Your Enterprise Software: More than Just a Pretty Face

Or is it? It All Depends on Who You Ask.

For several years now I have been listening to enterprise application software vendors touting “beautiful software.” Yes, the whole customer experience and ease of use of software have become increasingly important, influenced in part by the consumerization of IT. However, I am of the firm belief that beauty is in the eye of the beholder and efficiency is far more important than “beauty.”

This belief has been backed up by data. For the last few years I have asked survey participants in my annual enterprise solution study to select their top three highest priorities for ease of use. The options I provide to them are shown in the chart below (Figure 1). A “visually appealing user interface” is my interpretation of “beautiful software” and has consistently ranked close to the bottom while indicators of efficiency (including time to complete tasks and intuitive navigation) were right up at the top. This year we saw beauty ranking a little higher, but it still comes out towards the bottom

Figure 1: Defining “Ease of Use” by Selecting “Top 3”Figure 1 Blog

Source: Mint Jutras 2014 and 2015 Enterprise Solution Studies

However, with all the talk about the influence of the Millenials in the workforce we decided it was time to get a better picture of this influence. So we captured participants’ age and grouped them accordingly as Baby Boomers (born between 1943 and 1964), Generation Xers (1965 to 1981) and Millenials (since 1982). All three categories had adequate representation for us to make some comparisons, with 61 Millenials, 162 Gen Xers and 108 Baby Boomers. And we found that these priorities depend a lot on who you ask (Figure 2).

Figure 2: Defining “Ease of Use” by Selecting “Top 3”

Figure 2 BlogSource: Mint Jutras 2015 Enterprise Solution Study

While minimizing time to complete tasks still takes the lead for all three generations, it does so with a much wider margin in the Baby Boomer generation. Two out three Baby Boomers selected this, compared to only one out of two Millennials. And look what came in second. A very close second for Baby Boomers was intuitive navigation, while beautiful software (a visually appealing user interface) was virtually tied for first in the youngest of the three generations. Yet only one in five Baby Boomers (and one in four Gen Xers) selected beautiful software as a ”top 3.”

Indeed, if you are an enterprise solution provider targeting Millenials, the visual appeal of the user interface is far more important than if your buyer is a Baby Boomer. The truth of the matter is that all groups are important, particularly in selecting software that essentially runs your business. While it is most likely that a Baby Boomer or a Gen Xer is signing off on the final decision, it is equally certain that Millenials will be part of the evaluation and selection process. And once selected and installed, representatives from all generations are certain to be using the software.

So what happens when software is hard to use? We asked survey participants this exact question, asking them to select one of four possible responses (Figure 3). While many associate the demand for a better user experience with the consumerization of IT and therefore attribute it to the younger generation, we actually find the Baby Boomer generation the least tolerant of software that is hard to use. And this from a generation accustomed to “hard.”

Figure 3: What best describes your response when software is hard to use?

Figure 3 BlogSource: Mint Jutras 2015 Enterprise Solution Study

Let’s face it. Early enterprise solutions, including ERP, were anything but user-friendly. They were hard to learn and hard to use. Because early ERP systems didn’t work exactly the way people worked, workers first had to learn how to do their jobs, and then separately had to learn how to enter data into ERP, and/or how to extract it. Depending on how closely (or not) these two were aligned, the same ERP that was supposed to make life easier, sometimes made it harder. While Baby Boomers might not claim to have walked five miles to school in two feet of snow (uphill both ways?), they were accustomed to “hard.” They didn’t revolt. They adapted, but often that meant working around the system instead of with it. And as you can see, they are still more than twice as likely as younger workers to do just that. Why? Because they can. They’ve been around long enough to know the business inside and out. They don’t need a software package to tell them what to do or guide them in how to do it.

On the other hand, the younger generation is much more dependent on technology and much more easily influenced by “beautiful software.” And they have the Baby Boomer generation to thank… or blame for that.

While Baby Boomers might have simply kept quiet and worked around these early systems, on a personal level they also wanted “better” and “easier” for the next generation. And they delivered that, providing all the “modern conveniences” to their children and grandchildren. And of course the electronics of today were a natural progression for these next generations. They took to Xbox and computer games like fish to water. And games led to computers and cell phones and then smart phones, and then tablets. Computers led them to the Internet. Smart phones and tablets led them to “apps.”

When the generation that grew up with consumer technology entered the “real world” and got jobs, they couldn’t understand why the “apps” they used at work weren’t as easy to use as the ones they were using on their smart phones and tablets. Unlike the older generation that knew the business and the business processes inside and out, and therefore knew how to operate outside of the system, the younger generation had become dependent upon technology.

While years ago only a select few employees within a company ever put their hands directly on solutions that run the business, those days are long gone. Today almost half of employees have some access to solutions like finance and accounting or ERP, beyond those self-service functions like benefits administration, paid time off and purchase requisitioning. And this percentage is growing. How easy the software is to use correlates strongly with how well it is used and the benefits derived. It behooves any company to make sure users can and do make the most and best use of the software. The onus is on the solution providers to make sure the applications are not only robust in terms of features, functions and technology, but also easy to use, including all the different aspects. And it’s a lot easier to like a pretty face.

We are continuing to collect more responses to the Mint Jutras 2015 Enterprise Solution Study so the survey is still open. If you are consumer of enterprise software and are interested in receiving a summary of all our results, please participate by taking the survey. Click here to take the survey. We will need your email address to send you a link to results, but rest assured we never share any contact info and responses are analyzed only in the aggregate.

If you an enterprise solution provider and are either interested in surveying your customers and/or getting more insights into the data we collect and our analysis, please contact Lisa Lincoln at lisa@mintjutras.com.

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Infor Partner Network Focuses on Win-Win-Win

Cloud, Micro-verticals, Value Engineering Benefit Customers, Partners and Infor

The Infor Partner Network (IPN) is coming of age. Over the past four years it has laid a solid foundation with fair contractual terms, rules of engagement and segmentation, marketing programs, training and certification. Unlike some other solution providers that attempt to grow by placing more demands on their partners, Infor has taken a collaborative approach, working with its partners and devoting time, energy and budget towards making both partners and the end consumer of the software more successful. Now as the program enters its 5th year, Infor is leveraging these past efforts but also shifting its focus to reflect the changing environment in which business applications are bought and sold. By helping its partners with cloud business enablement, micro-vertical specialization, value engineering skills and solution portfolio expansion, Infor helps you, the consumer of the software, make the right decision for your company faster and more safely.

If you are considering purchasing a new enterprise solution today, chances are you have done your homework long before you reach out to the first vendor on your short list. If it has been awhile since you went through an evaluation of this sort, you will want to educate yourself, perhaps seeking out some thought leadership. You will identify both the core requirements, as well as any industry-specific needs required to run your business. Through that process you may decide whether you want a traditional on-premise or newer cloud deployment. In the end, you will want to cut to the chase, quickly and efficiently differentiate between solutions and vendors, and make the right choice.

Cloud Business Enablement

A big focus for the Infor’s IPN team in 2015 will be cloud business enablement. Sometimes this is a hard transition for a partner to make, but you, the consumers of enterprise applications, are demanding this change. Based on early results from the Mint Jutras 2015 Enterprise Solution Study, only 26% of survey participants would even consider a traditional on-premises deployment of ERP if they were evaluating solutions today (Figure 1).

Figure 1: Which deployment options would you consider today?

Fig 1 IPNSource: Mint Jutras 2015 Enterprise Solution Study

In addition to this question, participants were also asked to characterize their “cloud strategy.” Only 7% indicated a strong preference for on-premise software, and 12% said they had no cloud strategy (Figure 2). However, not having a cloud strategy does not mean they won’t select a cloud solution… only that deployment option is only one factor to be considered, and not the overriding factor.

Figure 2: How would you describe your cloud strategy?

Fig 2 IPNSource: Mint Jutras 2015 Enterprise Solution Study

While it will take awhile for the majority of ERP installations to shift to the cloud (simply because there are so many currently implemented on premise), the tipping point for new implementations has been reached and vendors and partners that are not fully on the cloud bandwagon will be operating from a serious disadvantage. The shift to the cloud is clearly underway.

Infor wants to help partners understand this demand and enable that transition. This is a two-pronged approach: providing viable products and enabling a cloud business.

First there is the need for a viable cloud-enabled product, and this is more than just slapping a web-based user interface on a legacy solution. To address this, Infor has introduced a series of new generation CloudSuite products.

Infor CloudSuite

Infor CloudSuites are industry-specific solution suites, fully integrated and deployed in the cloud. These suites are hosted by Amazon Web Services (AWS), a secure and affordable cloud environment, which has set a new and higher standard of performance in the industry. By offering multiple suites, Infor can offer deeper industry functionality with less customization.

This is particularly important for multi-tenant SaaS (software as a service) solutions that are offered through the cloud. While most business users of ERP don’t necessarily understand or actively seek out a multi-tenant solution, multi-tenancy allows solution providers to keep costs down while also delivering more innovation. These factors are key in making cloud options so appealing. While multi-tenant solutions typically offer a lot of configuration options that support tailoring and personalization of the solution, invasive customization is precluded.

In fact, Infor has publicly stated its goal of providing complete solutions with zero customization. And yet many partners have made a living off of delivering customization, making this transition to the cloud even more difficult. So Infor has taken steps to allow partners to continue to contribute to that “last mile” of their customers’ implementations.

Infor has provided a next-generation development environment (Mongoose) that allows partners to add functionality, but in a more complementary way, replacing invasive code changes. The advantage to the consumer of the software is in being able to more easily add or change functionality without the usual disruption caused by upgrades and customization. The advantage to the partner is that this new functionality can be re-used and re-sold, and the advantage to Infor is that the solution continues to grow – clearly a win-win-win.

Infor has launched a number of these CloudSuites for different industries, some targeting what they refer to as “Tier 1” enterprises (over $100 million in annual revenues (see sidebar on next page). But most of its partners will be selling in the mid-market, which Infor defines as those with annual revenues between $30 and 500 million. For the majority of these CloudSuite Industrial and CloudSuite Business will be the best fit. These two offerings share a common code base, derived from Infor SyteLine ERP, but each has been specifically configured. CloudSuite Business has been configured for services businesses while CloudSuite Industrial addresses the needs of manufacturers. Those partners that have been selling and supporting SyteLine will find the transition to these configurations easy. Those that have been selling other Infor ERP products will need some extra help in making the transition.

As the name implies, these solutions are all available through the cloud. But Infor emphasizes the “beauty of ‘and’ over the tyranny of ‘or’.” The CloudeSuites can be deployed in a multi-tenant cloud, a private cloud or on premises.

Kicking Off CloudSuite Academy

Without a product, sales efforts are futile. Yet just having a viable cloud product doesn’t guarantee success. Selling and delivering a cloud-based solution is different from the sale and delivery of traditional on-premise software. This too is why the transition to the cloud is so hard for partners.

Mint Jutras has observed other vendors tending to address this problem by recruiting new partners, partners that have cloud DNA, so to speak. This may be appropriate when just starting to build a channel, but Infor’s partner network is quite well developed, with 1500 partners, including 700 channel partners. With a mature channel, this approach turns a blind eye to the tipping point just mentioned. If future sales will be largely cloud-based and existing partners are not able to make that transition, they will wither and die. Infor is not willing to let good partners – partners that customers are comfortable with – flounder. So instead of replacing them, Infor is helping them make that transition.

To that end, Infor has kicked off CloudSuite Academy, a 1.5-day practical training course designed to help alliance and channel partners jump start their Infor CloudSuite business. The first session was held in conjunction with the Infor Americas Partner Summit in February, with a comprehensive agenda for partner business owners, management and practice managers. It included sessions on the process of marketing, selling, supporting and renewing cloud business, as well as CloudSuite solution training and value engineering.

Value Engineering Skills

Infor is also providing tools and training to assist partners in helping customers engineer more value from their solutions. This training introduces a methodology that supports a more strategic way of doing discovery – discovery of the potential for improvement in alignment with the goals of the customer. It includes “discovery templates” for 16 solutions and industries, which assist in benchmarking current performance and quantifying opportunities for improvement.

Evaluating, selecting and implementing a new ERP solution is a massive undertaking. Anyone who has had to sit through days and days of demonstrations knows that after awhile everything starts to blur. Pre-sale consultants have a tendency to want to show you every last feature and function, leading to demo overload. This more purposeful discovery process leads to shorter, but more relevant demos. Benchmarking your current processes and performances helps you set more specific goals that lead to better and faster return on your investment.

Micro-vertical Specialization

Of course dealing with a partner that actually knows your industry is always a big advantage to those evaluating solutions. It is even more important given Infor’s industry-specific approach and its goal of reducing customization to zero. It needs to recruit and retain partners that can best facilitate meeting those objectives. So industry-specific knowledge is important, and as a result, Infor is asking its partners to “declare a major.”

It is not enough for partners to specialize in a general category like manufacturing or distribution. It is not even enough to specialize in an industry like food and beverage, aerospace and defense or industrial manufacturing. Infor is looking for partners to specialize in micro-verticals like dairy, bakery, grains and cereals or prepared foods…or perhaps commercial or defense contractors in A&D…or industrial equipment or oil and gas. It is through this more focused specialization that partners can showcase unique strengths and capabilities and Infor customers can better achieve that “last mile.”

Of course a single partner can specialize in multiple micro-verticals within a vertical. In fact this makes perfect sense as micro-verticals often share some common requirements. But just because a partner specializes in dairy, doesn’t automatically qualify it for prepared foods. This specialty certification is a rigorous process that starts with nominations by customer references. But once a partner qualifies, it receives a certificate of recognition, is allowed to use industry logos and becomes a member of the appropriate industry strategy sales ecosystem and has direct influence on product and strategy decisions. Companies in search of a solution find it easier to find partners that specialize in their field and partners find it easier to be found. By bringing specific supply and demand together, Infor better positions itself for a win. Again we see a win-win-win.

At the same time, those evaluating new solutions find that on the surface many offerings appear to be the same and partners themselves often struggle to differentiate themselves. Combining the value engineering phase with partner micro-vertical specialization should make it easier for those looking for a new system to better differentiate solutions and select one that takes them all the way through the last mile.

Summary and Key Take-aways

As its IPN has matured over the past four years, it would appear that Infor has hit upon a formula for success. By putting customer and partner needs first, it seems to have set the stage for a win-win-win scenario. Recognizing that the way enterprise software is bought and sold has dramatically changed over the past decade, it has brought resources to bear to help partners transition to this new world, rather than discarding them for a new round of partners. It has put in place programs to insure the success of the customers, which in turn insures the success of the partners.

To recap, we see programs, tools and training to support:

  • Cloud business enablement – fully supporting the cloud, but providing choice
  • Micro-vertical specialization – insuring solutions take customers through the last mile without invasive customization
  • Value Engineering – benchmarking performance and encouraging improvements that bring return on investment
  • Solution portfolio expansion – helping partners to transition to newer, technology-enabled solutions, expanded to meet all their needs

As a result, new prospects should feel confident in finding the right partner to take them on their journey and existing customers can feel confident in the continued success of the partners they know and value. Infor wins when the needs of both partners and customers are met.

To download this as a report (with a few additions) click on the link below.

http://www.infor.com/content/analyst/infor-partner-network-win.pdf/

For more information about Infor and its Infor Partner Network, visit http://www.infor.com

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What are you running your business with? Is it ERP?

Perhaps you’ve heard me ask the question, “Is it ERP?” about various solutions on the market. Maybe you were thinking, “Does it matter?” The answer to that question is, “Yes and no.” “No,” in that ERP, like any software category, is just that. It’s a category, a label and you shouldn’t read too much into that. “Yes,” in that the category is often misused and maligned.

While the acronym itself (short for enterprise resource planning) can be somewhat misleading, I have always been very clear on my definition of ERP:

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

The rest of the world doesn’t see it quite this clearly. Of course my definition is intentionally quite broad, but 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.

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. While operational accounting has long been a core competency of ERP, more robust financial management can be an integral part of ERP, or a stand-alone solution. Likewise, the footprint of solutions that have traditionally been marketed as financial and accounting solutions have expanded as well. No wonder there is so much confusion out there.

As a result, I thought it would be a good idea this year to see what people actually think they are using to run their businesses. While I have been conducting an annual ERP survey since 2006, much of the data I collect is relevant to other solution providers as well, particularly those that focus primarily on finance and accounting, with perhaps some project management and/or human resource management included. So this year I changed the name of the study to the Mint Jutras Enterprise Solution Study and added a new question at the very beginning.

Question: Which of the following best describes the software you use to manage your business?

  • Primarily enterprise level finance and accounting solutions (might include project management and/or human capital management)
  • Integrated enterprise level finance and accounting solutions supplemented with other operational applications (e.g. inventory, warehouse management, etc.)
  • An integrated suite of modules that provides a full system of record of our business (often referred to as ERP)
  • Desktop solutions such as Quicken, QuickBooks, Peachtree, etc.
  • Mostly spreadsheets and/or some low-cost or free tools (Google apps, Zoho, etc.)
  • Don’t Know

While data collection is still underway, we have collected almost 300 responses thus far and the results are quite interesting.

Note that participants checking spreadsheets and “Don’t Know” were disqualified and therefore will not be represented in any results. While those running desktop solutions qualified, only 1 participant checked this option and therefore I will only include the first three listed above in our discussion here.

During the course of the survey, participants are asked to check off all the different accounting/ERP solutions they have implemented across their entire enterprises and then asked to select one of those and answer implementation and performance questions for that specific solution. While 84% of the participants selected a solution that is clearly marketed as ERP, only 33% of this segment selected the third option above, which is reflective of the Mint Jutras definition of ERP. So they have purchased an ERP solution, but by my definition, they aren’t running ERP.

The remaining 16% selected solutions that are generally marketed as finance and accounting solutions. And yet 21% of these participants described the solution they were running as an integrated suite that provides a complete system of record of their business (i.e. ERP). So it would appear the majority of those running full ERP solutions are not making the most of what they have. And at least one in five of those running solutions primarily marketed as accounting solutions seem to have all they need to run their businesses. The full breakdown of responses is summarized in Figure 1.

Figure 1: What runs your business?

Figure 1 Blog postSource: 2015 Mint Jutras Enterprise Solution Study

These (somewhat surprising) results caused me to dive a little deeper, looking for, if not an explanation, at least a pattern. This early sample represented a pretty diverse group with the largest representation from manufacturing (41%) and service related businesses (36%). Given ERP evolved from MRP (material requirements planning), one would expect a higher adoption rate and more mature ERP implementations in manufacturers. While very few manufacturers run the solutions marketed primarily as finance and accounting solutions, 41% indicated the software running the business was primarily a finance and accounting solution. Another 26% had integrated finance and accounting solutions supplemented with other operational solutions such as inventory and warehouse management, presumably purchased from another vendor or a partner of their ERP solution provider. Again, only 33% described their implementation as full ERP. So no, manufacturers are not ahead of the pack.

I also looked at individual solution providers where I had a sample of at least 20 responses for smaller vendors or 40+ for larger ones. What segments were most likely to be running an integrated suite that provides a full system of record? The answer: Those running solutions that specifically target small to mid-size businesses. Does this mean small and mid-size businesses were more likely to describe what they were running as ERP? Not necessarily. It depends a lot on the solution provider and the solution itself.

Sixty-eight percent (68%) of those running Aptean’s solutions and 67% of those running SAP Business One described what they were running as ERP, per the definition above. Those running Acumatica’s cloud-based solution were also more likely to do so at 55%. And yet those running any of the four Microsoft Dynamics ERP solutions (AX, NAV, GP, SL), all of which target small to midsize enterprises (SMEs), were less likely, with only 28% indicating they were running a full ERP. Instead, they were more likely to report running integrated enterprise level finance and accounting solutions supplemented with other operational applications. My guess is that the partners that sold them the Dynamics solution (note: all Dynamics solutions are sold exclusively through partners) provide these other operational applications. Yet clearly these add-on’s are not so fully embedded and seamlessly integrated that they appear to simply be part of the ERP solution.

This is in stark contrast to solutions sold by Intacct partners, where I have noted previously that it is nearly impossible to distinguish where Intacct ends and the partner solution begins. As a result, 23% of Intacct customers indicated they were running an integrated suite that provides a full system of record, even though Intacct doesn’t portray its solution as ERP. It is one of those financial and accounting solution providers.

Another factor at play here is the whole concept of 2-tier ERP implementations. A full 85% of our survey respondents operate in more than one location and 69% are multi-national enterprises. This lends itself to the scenario where each operating location (division, subsidiary, business unit, etc.) may be run as a business all on its own. In fact if these units are in different countries they are also separate legal entities, requiring their own P&Ls. So you might have one system running at corporate headquarters (HQ) and other systems running the divisions.

The requirements at corporate HQ are largely financial, particularly if all orders are placed and fulfilled at the divisional level. This contributes to a larger percentage of respondents only running financials.

In days gone by these operating units might have been left to their own devices to find a solution to help them run their individual operations. Those days are long gone though. Today, 96% of our survey participants with multiple locations have established corporate standards and 64% of the time these are multi-tier standards, meaning a different ERP is used at the divisional level than at corporate. But even with a corporate financial solution in place, divisions still need some sort of finance and accounting in order to roll up to corporate. You can push the corporate financials down to the divisional level and then supplement them with other operational solutions. Or you can implement a full ERP at the divisional level and then integrate the divisional ERP with corporate financials.

This alone could be a very good reason why SAP Business One customers are more likely to be running a fully integrated suite. Of course if they are truly a small stand-alone business, they need a complete solution and probably don’t have the budget to be looking for disparate solutions that need to be integrated. Even if they are part of a large corporate enterprise, there is a pretty good chance corporate is running some version of SAP ERP. Because SAP Business One is pre-integrated with SAP ERP, the division has an integrated suite of modules providing a full system of record of the division’s business, that also happens to roll up to corporate financials.

With this as a likely scenario, you might think that the vast majority of SAP ERP customers are simply running integrated financials. They are not. Only 19% reported running primarily enterprise level finance and accounting, while 29% reported running integrated financials and other operational applications and a (relatively) impressive 52% reported running full ERP. Many assume SAP, being the 800-pound gorilla and therefore open to attack, is so complex and hard to implement that many never get beyond the basics of accounting. Yet in comparison to others, it is actually more likely to provide that full system of record.

This is not the case with Oracle, the other giant in the ERP industry. Almost half (46%) of Oracle users participating in the survey characterize their implementations as primarily accounting and only 28% describe them as ERP.

So while I would like to conclude that I found a distinct and recognizable pattern in all this data, the bottom line is that implementations vary quite significantly, particularly in comparing different solution providers. I am excited to have the beginnings of this new and extensive data set and look forward to sharing other insights as we move through the data collection and analysis phases.

Solution providers interested in collecting data from your own installed bases, feel free to contact me directly at cindy@mintjutras.com. There is still time but the window of opportunity will be closing soon!

 

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SYSPRO U.S. Provides Critical Visibility with Voyage & Container Tracking

Mobile, Cloud or On-Premises Supply Chain Management

In a world where international shipments are so commonplace, it is amazing how many global manufacturers and distributors lack visibility of goods that are in transit, often for weeks at a time. Even though the ownership of purchased goods transfers as soon as a container is closed, for most, particularly for small to medium-size businesses (SMBs), materials simply disappear into a black hole, before they (hopefully) are received from half a continent or half a world away. To solve this problem, and also add visibility to shipped products, SYSPRO U.S. has added a new Voyage & Container Tracking solution to its portfolio and made sure it is fully integrated with its enterprise resource planning (SYSPRO ERP) software and complemented with useful analytics. This is perfectly consistent with its “Einstein” market positioning favoring “simply smarter” solutions for what the mid-market customer actually needs, versus simply succumbing to industry hype.

A Real Solution for a Real Problem

Once upon a time, in the not-so-distant past, globalization was the domain of large, multi-billion dollar enterprises. Yet today, almost every company, regardless of size, trades internationally. Low cost country sources have sent even small manufacturers and distributors in search of lower cost materials and small companies themselves have become more distributed. The 2014 Mint Jutras ERP solution study found 66% of all manufacturers operate from more than one location and even small manufacturers (those with annual revenues less than $25 million) have an average of 1.6 operating sites (Figure 1). These types of changes in the business environment have brought an unprecedented level of complexity to supply chains and those supply chains extend across the globe.

Long lead times add uncertainty, which is difficult for any company to deal with, but particularly so for small to medium-size companies that have fewer resources and less clout with their customers — customers which often are very large and demanding. Yet shipment tracking, accurate determination of true landed costs and visibility into where goods are and where they are coming from, have typically been features only available in specialized software packages that are well beyond the reach of an SMB.

Figure 1: Even small companies operate globally

SYSPRO fig 1Source: Mint Jutras 2014 ERP Solution Study

Note: Size is based on annual revenue

SYSPRO U.S. turned to its customer base to help define and design the features and functions required to close this gap in visibility and then it spent the last two years refining it with the assistance of one company in particular: Wormser Corporation, a privately held cosmetics manufacturer and distributor based in Englewood, New Jersey. Wormser’s biggest challenge was in tracking shipments from its manufacturing location in Shanghai to its 40 warehouses in the United States.

Three Major Components

The embedded features of SYSPRO U.S.’s new Voyage & Container Tracking solution are delivered through three major components.

  1. Release Matrix: This component identifies and manages items that are available for shipment through a multi-part release operation. Items included in both purchase orders and sales orders can be combined in a single release. Users are provided visibility into what is available and can adjust quantities and view expected departure and delivery dates.
  2. Container Management: This component is used to determine which products or parts will travel in which containers. It provides the flexibility to consolidate releases from multiple orders into a single container or split a single order across multiple containers. While today the solution does not explicitly manage the capacity of each container, it does provide visibility into container usage. SYSPRO U.S. plans to enhance this capability in the future to include optimization of containers. Through the assignment of goods to these containers, the SYSPRO customer gets added visibility and predictability of departure and arrival dates as well as source and destination ports.
  3. Disposition Management: When a container reaches its destination, this component takes over. Each container may be processed separately or all containers on a voyage can be handled as a single shipment. Upon arrival at a port, the goods in the containers may be placed on quarantine hold or transferred to another segment of the journey (e.g. from ocean vessel to truck) for delivery to the next or final destination. This component performs the inventory and fiscal transactions necessary and provides more visibility. Charts and graphs are useful in analyzing elapsed time between ports, management of the number of containers shipped and landed costs.

These charts are just some of the analytical tools provided. SYSPRO U.S.’s survey of a sample of its own customer base convinced the solution provider that the vast majority of its customers found messaging within the enterprise software industry about “big data” and analytics either difficult to understand or only somewhat understandable.

Yet the lack of understanding does not mean there is no value in these types of analytical tools. It simply means small to mid-size manufacturers and distributors need help in understanding how to leverage these tools. And it also means they will only be receptive to learning more if the tools solve a very real and practical problem. They are not interested in elegant technical solutions in search of problems. They have plenty of problems of their own to solve.

Potential Benefits

The potential benefits of SYSPRO U.S.’s new solution should be very appealing to these pragmatic manufacturers and distributors. The potential benefits include:

  • The ability to track shipments both at an order line level, as well as a summary level. This tracking data will also be available for analysis for both strategic and operational decisions.
  • Better visibility to inventory, even with long lead-time items. This visibility will be helpful in improving full, on time delivery.
  • The ability to analyze performance by product origin through the recording of departure and arrival cities and individual ports.
  • Better vendor performance management through more detailed measurement of promised and actual shipments.
  • Full determination of not just material costs, but full landed cost, whether free on board (FOB) or not.
  • Improved communication and collaboration between departments, locations, and vendors, along with fewer mistakes.
  • A single source of the truth. Because of the seamless integration with SYSPRO ERP, all shipping and financial data is combined in a single source of data.

Proof Positive: Wormser Corporation

With six locations around the world, Wormser Corporation’s biggest challenge was in tracking shipments from its manufacturing location in Shanghai to its 40 US-based warehouses. All these different locations were using different systems and ultimately Wormser turned to SYSPRO for a full and integrated solution for its global operations. SYSPRO ERP was a great fit for daily operations, but Wormser approached SYSPRO U.S. for a custom tracking module for overseas inventory tracking. This was the genesis of the voyage and container tracking system now being released as a standard offering.

In October 2012, Wormser’s six international locations (New Jersey, California, Texas, England, Germany and China) went live with SYSPRO ERP and the newly- developed intercompany modules. All supply chain transactions between entities were automated. In addition Wormser tracks partial and full container shipments from vendors.

By collecting all this data, from all these locations, as well as from vendors, Wormser is able to produce analytical reports and graphs that aid in comprehensively managing a complete supply chain. Analysis can be done at an order line level, all the way up to and including location and the full company. Vendor performance is also tracked and Wormser now has data for strategic, as well as operational decisions.

Summary and Key Take-Aways

This new Voyage & Container Tracking solution provides an enormous opportunity for many of SYSPRO U.S.’s customers. Any that deal with long lead times, complex supply chains and/or international, containerized shipments can potentially derive a lot of value from this newest solution. And as a SYSPRO U.S. offering, it is both affordable and pre-integrated to the SYSPRO ERP solution being used to manage back and front offices across the installed base of SYSPRO U.S. customers around the world. By infusing analytics into the solution, it becomes a potentially powerful tool for decision-making – both from an operational and a strategic decision-making perspective. With this new option, SYSPRO U.S. companies faced with real supply chain challenges, particularly those with multiple locations, can gain new efficiencies with real solutions.

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SAP Business One Emerges as the SMB ERP Solution to Beat

If you are a small to mid-size business (SMB) faced with a decision about Enterprise Resource Planning (ERP), SAP Business One is likely on your radar. Even if your initial search did not result in placing SAP’s solution on your short list, chances are one of its competitors has brought it to your attention by attacking either SAP or Business One, or both. Why? Just like political attack ads that go after the front-runner, ERP vendors go on the attack against the industry leader. By sheer numbers, SAP is the largest enterprise solution vendor and over 80% of its 263,000 customers are in the small to midsize bracket. With over 45,000 SAP Business One customers, this solution might be an easy target, but it is not going to be easy to beat.

The rationalization, “Nobody ever got fired for choosing [insert front runner here]” doesn’t work for ERP, leastwise for ERP in a small company when it is usually the top boss signing off on the decision. All 45,000 SAP Business One customers could not have been “wrong.” And let’s face it: If you want to make an informed decision about a solution, you don’t go to the competition for the facts. Competitors often get the facts wrong and propagate rumors, myths and misinformation. Any comparison the competitions’ sales/marketing teams offer is often driven by wishful thinking and influenced by drinking their own Kool-Aid. To examine some of those assertions, along with some facts, click on the link below.

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