Intacct Advantage 2015: Education, Collaboration, Inspiration and lots of Predictions

The tag line for Advantage 2015, Intacct’s annual user conference, was “Education, Collaboration, Inspiration.” But the real message I heard was this: The world is changing rapidly and Intacct is doing everything in its power to help customers survive and thrive by helping them keep up with change. In order to keep up today, you can’t sit back and wait for change to occur; you need to anticipate it. You need to make predictions, which was an additional theme running as an undercurrent on the main stage. Indeed Intacct’s CEO Rob Reid delivered some predictions of his own, promising customers, “We are your partner… thinking ahead, innovating ahead, scaling ahead.”

For those of you not familiar with Intacct, it is a cloud financial management solution provider. Bringing cloud computing to finance and accounting, Intacct’s applications are the preferred financial applications for AICPA business solutions and are used by more than 10,500 organizations from startups to public companies. The solution has evolved over time to provide all of the functions necessary to provide an operational and transactional system of record for the types of businesses the company sells to, bringing it more into the realm of an industry-specific ERP.

The Intacct system includes accounting, cash management, purchasing, contract management, financial consolidation, revenue recognition (a particular strength), project accounting, fund accounting, inventory management and financial reporting.

Here are Mr. Reid’s predictions:

Prediction #1: 20 is the new 80

While today finance executives spend 80% of their time completing tasks and 20% of their time planning for the future, Mr. Reid predicts that Intacct customers will flip these percentages, spending 20% of their time completing tasks and 80% planning strategically. I buy into the concept, but perhaps not at that level. Sure you can automate a lot of the tasks performed manually today, but I worry a little about leaders spending four times as much time planning as executing on the strategy.

Prediction #2: The business model is liberated

I view this as less of a prediction than an observation. New business models are disrupting whole industries. You’re already familiar with many of the consumer-oriented examples including Uber (transportation), Airbnb (hospitality), Netflix (entertainment), iTunes (music). But this business model disruption is affecting many other industries. More and more are moving away from simply delivering a product for a price and instead moving into subscription model pricing and delivery. Intacct is well positioned to support customers moving in this direction, including enhancements to its contract billing functionality. So this prediction is meant to exhort customers to adapt models to let their customers consume offerings the way they (the Intacct customers’ customers) want.

Prediction #3: Project finances get a freeze frame and zoom lens.

In this prediction, “project” is used as a noun, not a verb (as in “to project”). This is a prediction with about 100% probability of coming about, because it was simply a means of introducing Intacct Project Management. While Intacct has long been strong in project accounting, this new offering is an exception-based module meant to be used to evaluate progress and performance and predict profitability and utilization… i.e. manage the project rather than just do the accounting. In doing so, customers can assess project health and the impact on financials. Dashboards are meant to “freeze the frame” and give a snapshot of status in real time, also allowing managers to “zoom” in by drilling down to the detailed transactions.

Prediction #4: Finance is strategic planning

Mr. Reid is predicting that the finance department will become “the ultimate strategist.” This has actually been the goal of CFOs for a long time now and there was a time when many were marching determinedly in that direction. Then came Sarbanes Oxley and many took a U-turn and focused primarily on governance and control. By automating finance processes and reporting, many are now in a position to resume that march towards innovation and strategic purpose. But good strategy can’t be just guesswork and bright ideas. It needs to be based on real data and many CFOs still wait for the metrics needed to formulate a strategic plan. When finance departments spend hours, days or weeks gathering this data and formulating the metrics, they are often out-of-date, or even downright wrong, by the time they reach the desk of the CFO.

In days gone by C-level executives, including the CFO, rarely ever put their hands directly on accounting and ERP systems. It was far easier to get data in than to get data and insights back out, and they were just too hard to navigate. That is changing however. Today executives at the majority of companies have direct access to data within these systems, but some take more advantage of this access than others. Those running SaaS solutions (like Intacct’s) seem better positioned to take full advantage (Figure 1).

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

Figure 1 IntacctSource: Mint Jutras 2015 Enterprise Solution Study

Intacct has been hard at working delivering several different vehicles of communication to make this enterprise data easier to consume, including dashboards and a particular delivery method called “ Intacct Digital Board Books.” With both, decision-makers have instant access to data organized for action. However, Digital Board Books are very industry-specific and the first one off the shelf is designed for software businesses that, like Intacct, deliver software as a service (SaaS).

So for those finance departments running Intacct in a SaaS software business, this prediction is spot on. For nonprofits that depend on fundraising, the prediction is likely to become a reality this fall, when Digital Board Books for Fundraising is scheduled for release. Intacct customers in other segments might have to wait a bit longer, but all the (technical) heavy lifting has been done in producing the first Digital Board Books. Now it is just a question of Intacct selecting and defining the right metrics and developing the content for the “books.” Intacct intends to produce these for each of the major segments in which it is strong, and will also continue to innovate those for SaaS software companies and nonprofits.

Prediction #5: You’ll do more with less. Others will fall behind

This sounded more like a promise than a prediction, a promise of new technologies, faster speed and more automation. This was actually a great segue to Intacct CTO, Aaron Harris, who approached the stage on a hover board. Once on stage he proceeded to demo the new Intacct Collaborate, a new “social” capability based on’s Chatter product. Through Collaborate, Intacct customers can initiate conversations online, in real time, but more importantly, those conversations can be stored along with the business objects that are the subjects of the conversation: customers, orders, products, etc.

Mint Jutras research consistently finds “social” capabilities at the very bottom of the list of priorities for selecting finance and accounting and ERP solutions. However, when we separately ask how important some of those actual capabilities are (without calling them “social”), the ability to capture and retain conversations is consistently rated as valuable. Forty percent (40%) rate it as useful and 21% say it is a “must have.” And when we look at the responses by millennials, the percentage that rate it as “must have” almost doubles. No surprise there. These younger workers that never knew life without the Internet, are quite accustomed to electronic conversations. It is often their first communication method of choice.

Some of the baby boomers out there might need a little push in this direction, but once there, the value of keeping an audit trail of communication will become very obvious. And the good news is, even though it is based on Salesforce Chatter, you don’t have to be a Salesforce customer in order to use Collaborate. Even better news: it’s free (included in your standard subscription fee).

In addition to Collaborate, Intacct has been investing in its data centers, including the installation of new servers that are 35% faster, with 2X more application server memory. And beyond investing in more computing power, it has also been using newer technology (including in-memory computing) to speed the processing and analysis of data. It has achieved some pretty impressive results:

  • Intacct can now process 1 million customer invoices in 4 seconds
  • It can produce an analysis report on 20 million orders in 45 seconds
  • And it can produce a vendor ledger with 30 million transactions in 33 seconds

All of this investment puts Intacct customers in a very competitive position. We’ll be watching to see if they can make these predictions come true.

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Deltek On Track to Deliver More by Working Smart

When I think of Deltek, I think projects. But there are lots of different kinds of projects, both internal and external. In its own words, “Deltek provides software solutions specifically designed to meet the needs of project-driven businesses.” If all you need is software to manage the projects themselves, there is a plethora of software products to choose from – as many different options as there are different kinds of projects. It’s one of the most fragmented software categories in the market today, with hundreds of companies and products from which to choose. But when it comes to software that manages the business that is built around projects, that’s an entirely different story. Now we’re not only talking about ERP, but also a special kind of ERP… and possibly much more. And there are far fewer solutions on the market that are purpose-built to manage these project-based businesses. Deltek is not only the proud owner of not one, but several of these solutions.

In fact over the years, through organic development and acquisition, Deltek has collected a dizzying array of products: specialized enterprise solutions for government contractors and a wide range of professional services organizations including architecture and engineering (A&E) firms, management consultants, advertising, PR and marketing agencies and more. The one thing all these segments have in common is this: They are all people-centric, providing services, largely delivered through projects. Beyond this point of commonality, they can be very different. They don’t go after the same type of business; their customers are worlds apart; some are heavily regulated; others operate under few constraints. Some are small; others are large. Some manage projects that last days or weeks and others span multiple years. A general-purpose kind of solution just doesn’t work well here.

Other vendors that do offer general-purpose ERP solutions often make acquisitions in an attempt to grab market share. They buy out competitors and wind up with similar, often competing products. Few have been successful in rationalizing portfolios, and most promise never to “sunset” a product, but seldom do all products get equal attention. Some will be declared “strategic” while others slip quietly into maintenance mode.

But the combination of Deltek’s development and acquisitions has led it into a variety of different markets. Deltek Costpoint serves government contractors. Deltek Vision serves first and foremost A&E, but also has customers in management consulting. The Axium acquisition, which brought Deltek Ajera to the portfolio also serves A&E but allows Deltek to come down market from where Vision competes. Deltek Maconomy targets Professional Services organizations. While there might be some overlap between the targets of each of these product lines, rationalizing to a single product would add a level of complexity that really doesn’t serve the customer well.

There might be some opportunity to merge Vision and Ajera, because they both target the same industry, just at different ends of the market. But Deltek is smart enough to know it would have to do so very cautiously. Not only are Ajera customers quite loyal to the product, but being small companies, most of the leaders within these companies also contribute to revenue generation. Migrating to a new solution might very well be at the expense of generating direct revenue, leaving it low on the list of priorities.

So this leaves Deltek with a rather difficult challenge of providing continued innovation across a broad portfolio. But there are different ways of delivering innovation. Of course Deltek needs to add new features to the core of its products. Often this is driven by customer request.

But innovation of enterprise software is an interesting mix of push and pull. Customers push for new features and enhancements either because their business has changed or because they have discovered functional gaps or missing features, or because processes are clumsy and inefficient.

On the other side of the same coin you also see solution providers who want to be trendsetters. They incorporate new technology and offer new functionality and then try to pull their customers along. In some cases the vendors have better foresight than the customers who might be too busy fighting fires in the trenches to look up and recognize the possibilities of the brave new digital world.

Deltek has been doing both. It’s not enough to just cover the basics today. If you look at its full complement of products, you see that Deltek has been expanding the footprint of its solutions for quite some time now. You’ll see that Costpoint has been extended with a human resources (HR) solution and planning and budgeting and more. Vision has robust customer relationship management (CRM). People Planner extends Maconomy with resource planning and Traffic LIVE (acquired from Sohnar) was added as a front-end to help creative marketing communications agencies seamlessly create estimates and quotes, schedule resources, capture time worked, bill clients, and track tasks at a glance. And this is by no means a complete list. But as you can see, in the past these were most likely to be developed (or acquired) for specific product lines.

But that started to change earlier this year when it acquired HRSmart, a leading provider of global, unified talent management solutions with over 1,000 customers around the world. This acquisition both broadened and deepened Deltek’s portfolio of Human Capital Management (HCM) solutions by delivering cutting-edge, cloud-based talent management capabilities that are essential to project- and people-driven businesses…essential but often overlooked. This is not your run-of-the-mill HR system, but an integrated suite that supports talent acquisition, performance and compensation management, as well as learning and career development.

The goal of this acquisition was not to (only) satisfy Costpoint or Vision or Maconomy customer requirements. It was about bringing added value to all Deltek customers. Deltek Talent Management will be delivered as an external component, but with seamless integration back to all these products. This represents a shift in overall company/product strategy that we are also now seeing applied to other new modules even with initiatives that had previously been underway.

Other add-ons being developed include Deltek CRM, Deltek Resource Planning and a new user experience dubbed iAccess. iAccess will supplant previous user interface efforts such as Maconomy Navigator. The plan is to have a unified Deltek front office solution that can front-end the different back office (ERP) solutions. These new products will be introduced with this new experience (UX) and then gradually this new UX will find its way into each of the back office solutions. During this transition period customers will have a choice of the old and the new UX, with the old user interface eventually phased out.

This kind of approach is smart. It leverages development efforts across a range of products and should ultimately allow Deltek to deliver more innovation across its entire portfolio. The fact that these new modules/components are cloud-based is also significant. Deltek’s transition to the cloud seems to be an unintentionally well-kept secret. Even some of it customers haven’t “heard” that all three of its major product lines (Costpoint, Vision and Maconomy) have all made the transition into the cloud and are offered as multi-tenant SaaS solutions (note the applications are multi-tenant but each customer has its own instance of the data base, and Deltek does support a single instance installation exceptionally, on customer request). Multi-tenant SaaS solutions have the most potential for delivering more innovation, faster and these efforts are also reinforced by Deltek embracing rapid application (agile) development methodologies of late.

Why is this new approach so important?

I have been tracking priority of selection criteria for the better part of 10 years. For many years “fit and functionality” was, by far, the top selection criterion. The Mint Jutras 2014 ERP Solution Study, and other prior year studies asked participants to prioritize individual selection criteria (Table 1) on a scale of 1 to 5. And over a period of the last 5 years, we observed a change.

Table 1: Selection Criteria

Deltek Table 1Source: Mint Jutras 2014 ERP Solution Study

While fit and functionality still had the highest percentage of participant votes for “must have/most important,” ease of use took the top spot in terms of overall priority. Having all the functionality in the world is meaningless if you can’t figure out how to use it.

But the results were so close we wondered what would be the priority if respondents had to choose. So in 2015 we changed the format of the question, again listing the different criteria, but this time consolidating to 10 criteria and forcing the participants to stack rank them from 1 (least important) to 10 (most important). We substituted some of the prior criteria for new factors which had risen in importance in prior research and replaced “ease of use” with “user experience.” The overall results are clear. The top three criteria are all related to features and functionality.

Table 2: Selection Criteria Priorities Stack Ranked from 1 to 10

Deltek table 2Source: Mint Jutras 2015 Enterprise Solution Study

User experience is still in the top half, but when forced to choose, it fell in importance. Most are not willing to sacrifice functionality for what some vendors call “beautiful software” today. But “ease of use” means different things to different people, particularly across generational boundaries.

Figure 1: Defining Ease of Use by Generation (top 3 factors)

Deltek fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Our survey respondents were asked to select the top three most important aspects of “ease of use.” While baby boomers and Gen Xers define it first and foremost in terms of efficiencies, millennials are far more likely to simply equate it to the visual appeal of the user interface (Figure 1). While baby boomers equate efficiency to intuitive navigation, millennials take intuitive navigation for granted. They have never used software that required a user manual. To them, a visually appealing user interface, which was at the very bottom of the priorities for baby boomers and GenXers, is most important. To their credit, while “beautiful software” is most important to ease of use, beauty is not the most important factor in selecting solutions.

There is an important lesson to be learned here. Most companies have representatives of all generations using ERP, which further validates Deltek’s efforts in re-architecting the way users engage with its products.

All told Deltek seems to be moving in the right direction to satisfy the growing requirements of project-based businesses and it is doing so much more aggressively than in the past. All goods news for customers and prospects alike.

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SAP Central Finance: a non-disruptive step towards system consolidation

Operating across a distributed environment has become a way of life for a large percentage of businesses today, even smaller ones. In fact 80% of all survey participants in the 2015 Mint Jutras Enterprise Solution Study had more than one operating location served by ERP (Figure 1). Even small companies (those with annual revenues lower than $25 million) average 2.87 operating locations, and that number grows steadily as revenues grow.

Figure 1: Environments Are More Distributed and Remote

Fig 1 SAPSource: Mint Jutras 2015 Enterprise Solution Study

This proliferation of operating locations often results in a proliferation of enterprise applications in general and ERP solutions in particular. In days gone by, these different operating sites were often left on their own to select the enterprise applications that would help them run their individual businesses. Yes there was a corporate accounting system, and financials needed to be rolled up. But those corporate financials were overkill at the divisional level, and often didn’t have all the functionality needed to manage operations, particularly in manufacturing sites.

As long as these different operating sites operated quite independently, this proliferation wasn’t too much of a problem. But today the likelihood of divisions operating completely autonomously has dramatically shrunk. Whether you are a services organization working on projects that span the globe or a manufacturer striving to manufacture closer to your customer, leaving each operating location to do their own thing just doesn’t cut it anymore. Standardized processes and corporate standards for the enterprise applications that support those processes have become the norm.

The majority (87%) of multi-location companies today have created standards that govern which enterprise applications are used across the enterprise (Figure 2). However, a fair number (14%) are still in the process of migrating to these standards, which means they are faced with the challenge of rationalizing existing solutions that are functioning today. Typically this means a long process of ripping and replacing solutions and many years before they see the benefits.

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

Fig 2 SAPSource: Mint Jutras 2015 Enterprise Solution Study

For SAP customers, SAP Central Finance might just be a shortcut to some of those benefits. It provides more than just the typical kind of consolidated reporting that is done at the aggregate level. Central Finance taps into the power of SAP HANA and replicates all journal entries in a Universal Ledger, while preserving the source of those entries, whether the source is an SAP ERP solution or not. Of course it takes a bit more effort to map the data from nonSAP solutions, but SAP has tools to help and it is quite do-able.

What this accomplishes immediately: Centralized reporting across the organization, beyond the typical financial reporting, and also the potential for more informed centralized strategic decision-making.

  • Reporting based on harmonized master data
  • Central journal for balance sheet and P&L reports
  • Central profitability analysis
  • Overarching views on customer and vendor accounts
  • Liquidity forecasts based on payables and receivables
  • Central overhead analysis
  • Reports for selected cost object categories

… All this without ripping or replacing anything. Of course, some might stop here, centralizing finance and leaving disparate ERP solutions in place, while others might move on to rationalize solutions. … or some combination of the two. Mint Jutras finds there are several different flavors of corporate standards (Figure 3).

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

Fig 3 SAPSource: Mint Jutras 2015 Enterprise Solution Study

Although those all running a single ERP solution won’t need to rationalize solutions, they are still likely to need to consolidate financials, especially those that are multi-national. Central Finance could also be used to absorb a new acquisition, incorporating the new entity into corporate financials. Today Central Finance can be used for corporate reporting and planning, but as SAP continues executing on its planned roadmap, in the future, customers will be able to use it for central operational processing

To sum up both approaches….

Central Finance as a corporate reporting and planning platform:

  • Establishes central financial system as a single source of truth
  • Across entities and units
  • With harmonized master data
  • Using the flexible data model of Simple Finance (now called SAP S/4HANA Finance), with the possibility of adding new dimensions for reporting that might not even be available in source systems
  • With new reporting tools
  • And the speed of HAHA
  • Cross-entity insight with limitless detail. You can even click on a document ID in Central Finance to navigate back to the source system (think traceability). This is done automatically when the source system is an SAP product. Doing the same for nonSAP systems requires additional effort.

Central Finance for operational processing

  • Simplify and standardize processes
  • By centralizing financial processes
  • By standardizing, harmonizing processes across units
  • Move processes to central execution models while streamlining processes based on harmonized data
  • Possibly simplify work in shared service centers
  • Simplify your IT landscape

Whether you need to consolidate financials only, or entire ERP systems, if you are an SAP customer, you owe it to yourself to investigate how Central Finance could make your life easier.

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What does fishing have to do with Salesforce? #DF15

A Quick Take on News from Dreamforce 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Figure 1: Approach to Consuming Innovation in a SaaS Model

Fig 1 SageSource: 2015 Mint Jutras Enterprise Solution Study

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

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

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


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

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


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Enterprise Odd Couple: Plex Systems Partners with Workday

Pre-Packaging 2-Tier ERP for Manufacturers

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

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

Making the Case for 2-Tier ERP

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

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

Figure 1: Environments Are More Distributed and Remote

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

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

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

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

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

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

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

The Emergence of 2-tier ERP

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

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

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

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

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

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

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

Impact on Roadmap

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

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

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


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

A Side Note: Is Workday ERP?

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

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What is Unit4’s “Self-Driving” ERP?

Empowering People in Service Organizations

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

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

People Are at the Core of all Unit4 Does

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

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

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

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

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

The 6 Pillars of “Self-Driving” ERP

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

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

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

 How Does Unit4 Do This?

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

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

Personal Experience

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

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

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

Unit4 Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Note on defining generations:

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

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

Business Capabilities

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

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

Who is Three Rivers Systems and what does it do?

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

A few facts about Three Rivers:

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

 Smart Context

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

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

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

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

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

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

Elastic Foundation

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

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

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

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

Nothing Tells the Story Like an Example

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

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

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

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

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

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

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

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

Summary and Key Take-aways

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

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

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

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

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

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

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

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Divestitures: Growth Redirected. Can Cloud ERP Help?

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

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

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

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

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

Case in Point: Evonik Industries

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

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

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

Figure 1: Have you established corporate standards for ERP?

Fig 1 EvonikSource: Mint Jutras 2015 Enterprise Solution Study

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

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

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

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

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

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

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

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

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

Epicor Reevaluates Its Strategy

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

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

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

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

A Little Background

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

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

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

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

Moving Forward: More Than A Few Changes

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

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

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

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

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

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

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

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

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

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