SAP Anywhere Moves Beyond eCommerce to Provide Complete Front Office

Marketing, Sales and Service for SMBs

At first glance SAP Anywhere might appear to be just another new eCommerce solution for online retailers. But if you dig a little deeper you find much more. Purpose built for the small to medium size business (SMB) with a digital presence, it is a complete front office solution. It is a multi-channel commerce and marketing platform designed to be mobile first, low-touch and easily extensible. It supports SMBs in their efforts to:

  • Design and manage marketing programs and leads
  • Manage inside sales and customer service
  • Have visibility into what’s being sold, through which channel
  • Process online and in-store orders in one place
  • Track and manage inventory

Yes, SAP Anywhere targets retailers, but also recognizes the evolution in the way products are bought and sold today. Not only do retailers sell through multiple channels (online, in store and anything in between), but also more and more manufacturers and distributors have at least one sales channel where they eliminate the middleman and sell directly to the consumer. This places new demands on the business at the point of sale, demands typically not easily addressed by back office solutions such as enterprise resource planning (ERP).

SAP has taken a modular approach to satisfying these needs. Rather than building more complexity into the ERP solution itself, forcing upgrades or replacement, it loosely couples the front office to existing back office solutions. If you are an SAP Business One or SAP Business By Design customer, the integration is out of the box. But the platform approach of SAP Anywhere also allows it to be easily connected to any back office – virtually anywhere.

Supporting Any Model, Anywhere

When it comes to managing the sale of goods, retail and manufacturing/ distribution are typically worlds apart. In retail, at the point of sale you deal with cash, check or debit/credit card; the customer walks away with goods in hand and inventory is depleted. In manufacturing you process your customer’s purchase order, create a sales order and subsequently ship and invoice, relieving inventory and creating accounts receivable. Later you receive cash and apply the cash receipt against accounts receivable either on an open item or a cash balance basis.

Receiving cash in a traditional point of sale system in a retail environment, either in store or online is easy. Managing an open account is more difficult. For a manufacturer or distributor using an Enterprise Resource Planning (ERP) system, managing accounts and accounts receivable is standard practice. Processing a cash sale is more difficult.

In a retail store, the cash in the drawer is reconciled against the sales recorded at the end of the day. In a manufacturing or distribution environment shipments, invoices and cash receipts are reconciled at the end of the month. Yet in all cases, everything must be posted to the general ledger in order to create a balance sheet and profit and loss statement.

So what happens when a manufacturer or distributor sells directly to a consumer? It happens more and more today in showrooms and factory outlets, as well as online. In eliminating the traditional retailer, does the manufacturer need to invest in a retail point of sale (POS) solution, an eCommerce solution, as well as a back office ERP solution… and then interface or integrate them all in the hope they will one day all work seamlessly?

SAP Anywhere supports all these different environments at the point of sale without causing you to jump through hoops, automatically sending the necessary transactions back to ERP, whether you post an order, to be followed by shipment, invoice and payment or whether it all happens at once. And with SAP Anywhere, it’s not just about being able to take cash for a product in hand. Manufacturers or distributors might have a virtual showroom from which you can place a more traditional business-to-business (B2B) order. The manufacturer or distributor might have the goods in stock to be shipped and invoiced, or it might take an order, source the product and have it shipped directly to the customer. SAP Anywhere supports any and all of these different business models.

And these business models, and even prices, may vary by channel. Are you selling direct, through distributors or through online commerce companies like Amazon or Alibaba? Today are they all forced to use the same catalog and pricing? Or are you forced to create (maintain) separate catalogs for each? Can you tie a channel to a specific warehouse or fulfill all orders from a central distribution point or anything in between? If using a central warehouse, can you reserve inventory for a specific channel? All of these options are supported by SAP Anywhere. Perhaps SAP should call it SAP Anywhere Anyhow.

Flexibility in Payment

SAP Anywhere can also accept a variety of payment methods common in a combination of online and physical retail outlets including in store, showroom, warehouse or simply “in person” transactions (think about a service technician selling a spare part). These payment methods include cash, debit card and stripe (payments infrastructure).

In a physical setting, the application itself supports bar code scanning directly from the mobile device on which the sale is captured, without any added hardware. Or you can add an external scanner connected via Bluetooth. In addition to the scanner you might also connect a printer and make use of cash drawer functions that allow the use of any personal computer with a “locked” cash drawer, all while keeping track of total sales for any day broken out by payment method.

Customer Lead Generation

Completing a sale is great, but not necessarily unique to SAP. However, there is more to the front office function than just selling. The front office is also tasked with creating demand and acquiring new customers. These marketing functions are typically supported by separate applications, if at all. Many SMBs today see digital marketing as an affordable alternative to more traditional software to manage marketing campaigns. But they then struggle to tie these digital campaigns back to the transactions for closed loop marketing.

The next area of investment in developing SAP Anywhere is in the realm of digital marketing. Look for instant integration with Constant Contact and Mail Chimp, both of which can track clicks and other campaign statistics. Next on the docket are search (think Google ads) and integration with social media to integrate campaigns into Facebook, Pinterest, Twitter, Instagram and LinkedIn.

Where and When?

SAP Anywhere isn’t available everywhere… yet. It launched in Beijing in October, in partnership with China Telecom. SAP is planning to launch in the United Kingdom soon, to be followed shortly thereafter in North America. But it will need to continue to expand geographically if it wants to achieve its goal of 100,000 customers within five years. Along with that customer count goal comes an annual revenue goal of $200 million. Because this solution is completely cloud-based, all sales will be by subscription.

If you do the math, this means average annual revenue per customer of just $2,000, making it quite affordable and appealing to the SMB market.

In Summary…

SAP seems to have very aggressive plans for SAP Anywhere, targeting growing SMBs interested in having more customers. And today, who isn’t? The Internet levels the playing field for expansion and growth. But growing your customer base today also requires a digital presence – one that is very carefully orchestrated from lead generation to customer acquisition to customer retention. Don’t settle for just one piece of the puzzle. Make sure you start down a path that can take you Anywhere you want to go. Perhaps SAP Anywhere can help.

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Anaplan: A Complete, Connected and Living Plan

A lot of planning can and should happen in any company. It all starts with a business plan, followed by financial planning, budgeting and workforce planning. Then you better have a sales plan, with territories, quotas and incentive compensation, which should tie in with a revenue plan. Of course this leads to demand planning and sales and operations planning. If you want to grow those sales, you better do some marketing and campaign planning. If you sell a consumer product, you might have a trade and promotion plan and you’ll definitely have to plan for inventory. Maybe you need to plan projects. And throughout, you need to watch your cash flow.

But how do you tie all these plans together? How do you stay vigilant, monitor performance and adjust the plan as you move forward? More often than not, you don’t. You rely heavily on spreadsheets and even if you have software tools to help you plan, each department works in its own silo, oftentimes using disparate solutions that essentially ignore each other. This can happen even when you buy these different solutions from a single vendor.

Anaplan has set out to solve this problem by creating an enterprise planning cloud designed to solve any planning challenge across all functions of your enterprise. Unlike most plans, developed at an aggregate summary level, Anaplan’s patented technology supports a level of granular detail that lets you connect all the dots naturally. And because visibility and transparency are built in, you can easily adjust the plan as you monitor performance. Instead of letting your plan lie dormant on the shelf, only to be dusted off periodically (if ever), it becomes a living plan.

The Anaplan Approach

Anaplan takes a platform approach to planning. At the core is its planning engine, built on 64-bit in-memory technology, which facilitates real-time modeling that can handle large volumes of data. As a result, planning can be done using very detailed data that might not be possible without in-memory computing power – think of forecasting for each customer down to the product level, rather than having to make a regional forecast in total or by product category. The planning engine uses Anaplan’s patented HyperblockTM calculation engine. It can perform modeling, including the ability to do simulations prior to making changes. But when changes are made, a full history is maintained.

While this planning engine is extremely powerful, it is useless without data and this data might come from any number of sources, including enterprise resource planning (ERP), customer relationship management (CRM), human capital management (HCM), additional financial applications or any other source of structured data. Therefore data integration is an important piece of the Anaplan Planning Platform. Anaplan has prebuilt many common connectors, but also provides application programming interfaces (APIs) to facilitate building out more custom connectors quite easily.

While the planning engine sits on top of the data, the user interface sits on top of the planning engine. Here is where individual Anaplan customers develop the model map (typically by dragging and dropping elements) and tweak the settings. This is also where the reporting, the analytics and the actual planning gets set up. If you are savvy enough to use Excel, you are savvy enough to set up planning and analysis in Anaplan. In fact the user interface looks and feels a lot like Excel (by design). However, Excel has two dimensions whereas Anaplan let’s you look at your data in any and all of the ways that make sense to your business.

Planning and performance management are business exercises, but all too often it is the Information Technology (IT) department that is required to do the heavy lifting. Plans and actuals often reside in different systems and can only be compared once a data warehouse is built, populated and periodically refreshed. This type of scenario leads to a very common concern among business leaders: over-reliance on IT.

The 2015 Mint Jutras Enterprise Solution Study asked leaders to check off all causes for concern over solutions used to actually run their businesses. Forty-one percent (41%) expressed concern over integrity of data, and an equal number (also 41%) were concerned over difficulty in reconciling different sub ledgers and different systems. This situation is only exacerbated during the planning and performance management process. The last thing you need is to make a plan based on faulty assumptions that come from bad data.

Relying too heavily on IT also means waiting for models to be built, and what happens when the model itself needs to change? Are you able to tweak it mid-cycle? Are you able to perform a “what if” analysis?

Over-reliance on IT also means the results aren’t available in real time and are only as good as the last request for analysis.

Not only does Anaplan provide real-time access to the real data (not one or more copies that must be periodically refreshed), but also it removes IT from the middle of the planning process, except of course in IT planning.

Additionally, you have applications built with the platform. Anaplan (and its partners) provide some pre-built apps, but these are all developed with the app designer, so they can easily be modified and managed. Or you can build your own using model templates, pre-built algorithms and business rules.

A Complete And Connected Plan

Planning means very different things to different leaders throughout your organization. If you are in Finance you think of budgeting, cost and profitability analysis and cash flows. But you also forecast revenue. You probably think first of applications for financial planning, budgeting and forecasting.

If you are in manufacturing operations you think of material requirements and manufacturing resource planning (MRP and RRP), long and short term capacity planning (CRP). You worry about the demand plan and how that impacts your supply chain. You try to optimize your inventory. You have a sales and operations plan (S&OP), which by necessity includes a workforce plan. You might try to accomplish all this in your ERP solution, perhaps extended with some specialty applications.

In Sales? You think of account segmentation and scoring, territory coverage and quota assignments, as well as incentive compensation planning. Your primary “go to” application might be sales force automation (SFA) and/or customer relationship management (CRM). But does it really support these planning functions or is all the information sitting in spreadsheets?

Meanwhile your human resources (HR) department is building out a workforce plan. Is that tied in with your sales plan and your manufacturing operations plan? If you start running significantly ahead of your sales plan, how does this potentially impact demand, inventory and other operational costs? What if you are falling short? Does that mean you start to cut jobs? What impact will this have on your ability to respond to a rebound in sales? Are you closing the door to recovery? How does all this impact margins, cash flow, debt, credit?

Anaplan makes these connections based on the different data elements that make up the plan. If inventory (at a warehouse, regional or corporate level) is part of the operational plan and also part of the sales plan, these plans are intrinsically and inherently tied together. Actual sales ties the sales forecast to the revenue plan to accounts receivable to cash flow and profitability goals.

The Right Level of Detail

The key to tying this all together is developing the plan at the right level of detail. If forced to plan at too high a level, you may not be able to connect the dots or even spot problems. You may appear to be right on track, hiding the fact that one region is totally over-performing while others are struggling. Will you have enough people and product in place to service that regional demand or will you be facing chronic shortages in that region while you sit on excess capacity elsewhere? Left unchecked, overall performance could take a nosedive. On the other hand, you may be falling short of your goals because of a serious failure limited to just one area. Over-reacting to an overall shortfall can result in blanket cost cutting measures that could make matters worse.

Anaplan lets you plan and manage performance at the lowest level of granularity required, pinpointing failure or success, and taking appropriate action. Anaplan has already built apps to use as a start (or end) point for functions within finance, sales, marketing, human resources, supply chain and operations. No need to start from scratch. Give yourself a jumpstart in launching what can and should be an iterative process, including the analysis of simulated results.

With the Convenience of the Cloud

And oh, by the way, Anaplan does all this in the cloud. According to Mint Jutras research, few companies today are looking to build out on-premise deployments. When it comes to applications, like ERP, that are used to run the business, companies are almost twice as likely to consider a Software as a Service (SaaS) deployment as a traditional on-premise implementation. We ask the question each year, “If you were to consider a solution today, which deployment options would you consider?” Participants are allowed to check any or all options (Figure 1).

Figure 1: Deployment Options that would be Considered Today

Anaplan fig 1Source: Mint Jutras Enterprise Solution Studies
* Option added in 2015
Note: The time span between the 2011 and 2013 studies was about 18 months as Mint Jutras shifted the timing of the study during the calendar year.

This does not mean SaaS will dominate overnight, simply because there are so many of these solution on premise today, and many are reluctant to simply rip them out and replace them. In fact, with the availability of complementary solutions such as Anaplan, companies have the option of leaving solutions in place while they extend functionality and venture into the cloud.

There are many different reasons for this preference for cloud, not the least of which are cost, ease of upgrade and support of increasingly distributed environments. But perhaps most important to the planning functions, the cloud facilitates collaboration. A plan that is made collaboratively is much more easily accepted and embraced. With fewer constituents fighting the plan and more working together, the higher the likelihood of achieving your goals.

Make it a Living Plan

All too often the planning process is time-consuming and painful. The sooner it’s done, the sooner you can get back to your business. But if that’s the way you feel – and react – you aren’t getting the most value out of the process or the plan. And yet most enterprises today separate the processes of planning and performance management. They quickly lose whatever confidence (if any) they had in that plan.

And then of course, there’s change. Business conditions change. The economy changes. Competition changes. New products and new business models enter the market. On the one hand, you need to keep a snapshot of your original plan (and Anaplan does that). After all, you need to see how close you came to predicting outcomes, in order to continue to get better at it. But continuing to operate against a plan that you know is not achievable is like continuing to behave the same way while expecting different results. That is the very definition of insanity. Or, on a more positive note, continuing to blow out sales quotas with the same inventory plan is a sure way to put the brakes on exceeding quotas.

Anaplan takes a different approach. It fuses the two processes together. You essentially manage performance from the plan. All the reporting and analysis ties back to the plan, which remains front and center of reporting and analysis. You don’t put the plan on the shelf and forget about it until you remember your bonus might be affected or the board of directors starts asking the tough questions. You want to make it a living, breathing plan. That’s the Anaplan approach.

Summary

In today’s fast-paced world, it’s good to have a plan. But it’s not enough just to have a strategic business plan. Finance, Sales, Marketing, HR and Operations can no longer afford to work in their own silos of data, applications and reporting. They all need plans that pull together in order to achieve the overall company goals. The plan needs to be developed collaboratively; it needs to be complete and connected. But in order to take full advantage of opportunity today, it needs to be a living plan. As many of us are closing the year and looking forward to growth in the coming calendar year, now is the perfect time to scrutinize your plan… and perhaps scrutinize the tools used to develop it, manage it … and get ready to exceed your goals for 2016.

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The Force was Strong at Autodesk University (#AU2015)

Attending Autodesk University (AU2015) is a pleasant change for me. First of all, it diverges a bit from my usual focus on ERP. But as I have been saying for years now, the footprint of ERP has been expanding to the point where it is hard to tell where ERP ends and other software categories begin. Indeed, many ERP players have ventured into design software (largely PLM solutions), data management, and more recently the Internet of Things (IoT), all of which lie squarely in Autodesk’s wheelhouse. And of course, while I don’t limit my writing or research to a particular industry, manufacturing (a key industry for Autodesk) is “home” for me.

I came to “know” Autodesk better a couple of years ago when I worked on a project with them as they partnered with NetSuite, integrating ERP and PLM. That partnership is still strong today, expanding into the area of configure, price, quote (CPQ), as well as IoT. AU2015 is a good opportunity to refresh my knowledge of and my relationship with Autodesk itself.

But that’s not the only reason why AU2015 is a pleasant change for me. Even more appealing: Being surrounded by a vibrant crowd of innovators that see technology as a potential game changer. It seems I spend a lot of my time these days convincing business leaders of that potential. Even those who might be innovators in their own fields seem to undervalue and underappreciate what technology can do for them in terms of the (back office and front office) software that runs the business. Even as their current software might keep them locked out from this competitive advantage, because they spent a lot of blood, sweat and tears (not to mention money) getting it up and running, they are simply reluctant to rip it out and replace it, often convincing themselves “they can’t” or “it’s not worth it.” It’s my job to convince them otherwise, showing them the potential for game-changing results. Innovation can’t reside exclusively in a silo all by itself. It needs to connect back to the people and the software running the business.

Many in the Autodesk community have already made the connection between technology and innovation. So it is very refreshing to see and hear so many business leaders chomping at the bit to take advantage of these new technologies in order to accelerate innovation and really change their own game. Company after company came on stage during the Innovation Forum within AU2015 with bright new ideas and applications for technology.

Companies like…

LMN Architects that actually took it upon itself to develop software to use in validating designs. Turning to its in-house LMN Tech Studio for its Cleveland Civic Center project, it developed a 3D digital model of the façade, using parametric modeling techniques to help them convert a hand sketch of the window pattern into a set of fabrication-ready glass and precast-concrete panels. The team used a 3D printer to print out the basic panel form, then used this as the basis for a plaster mold to generate its own complete scale model. Tech Studio set a new standard for team wide collaboration and completely redefined the role of technology in design. As a result, they were able to complete the Cleveland Civic Center project in just 3.5 months (a typical project is 13 months).

JE Dunn Construction also developed a tool in house (called LENS), not for design, but for estimating. LENS allows you to develop a full estimate based on a simple sketch.

GE FirstBuild (yes even old dogs can develop new tricks!) is a partnership between GE and Local Motors formed to “create a new model for the appliance industry, engaging a community of industrial designers, scientists, engineers, makers and early adopters to address some of the toughest engineering challenges and innovations. FirstBuild will then manufacture those designs in its Microfactory for rapid product introduction and iteration.” Its first ever Appliance Hackathon developed 5 new prototype appliances. And as GE’s product evangelist Taylor Dawson (@J_TaylorDawson) said on stage, “A prototype is worth a thousand meetings.” Amen!

These are just a small sampling of companies, ranging from very small, early stage startups to large enterprises taking an innovative approach to using the software, services and platforms Autodesk provides. And it’s not just companies that are innovating. Matt Flail and Tim Ganter, industrial design students at Philadelphia University’s masters program came on stage to describe how they are taking a giant step beyond custom orthotics (the kind that fit inside shoes.) Instead they are making the whole shoe, using 3D scanning and 3D printing to create completely customized footwear that is made to conform exactly to the wearer’s needs. Their thesis project is called FOOTPRINT: 3D Printed Custom Algorithmic Footwear and their goal is to produce cutting edge shoes by incorporating 3D scanning, algorithmic model development, rapid manufacturing, and advanced textile technologies.

And Autodesk itself is no slouch when it comes to fostering innovation. There were several themes interwoven throughout the event to prove that. The overriding theme was “the future of making things.” To this end, Autodesk is on a mission to fuse three components that have previously been treated separately: Design, Make and Use. There are a lot of technical components here. We heard about generative design, and building intelligence and machine learning into smarter products. We heard about 3D printing, not just for printing trinkets, but some really valuable industrial and medical uses, from body parts to tooling. Attendees even assembled 3D printed hands with e-NABLE, a non-profit that provides customized 3D printed prosthetics for children.

So what is this fusion of design-make-use really all about? I think a quote from the stage really sums it up: “Stop trying to make people want what you make. Instead make what people want.” And recognize that people sometimes don’t know exactly what they want from a product until they use it. Therefore what people want continues to evolve as products are used. A smart product, connected through the cloud, can indeed continue to evolve even as it is being used.Storm-CHRON

This philosophy fit nicely into a fun kind of theme at Autodesk University – Star Wars. Complete with Storm Troopers!

Always drawn to fun analogies, I’ve picked up on the anticipated Star Wars craze in some of my recent writing (contact Lisa Lincoln at lisa@mintjutras.com if you are interested in learning more). A couple years ago I had fun with a Star Trek theme as I wrote about “Next Generation ERP” moving into the final frontier. But that concept of next generation software can be applied to a lot of different software categories.

Star Trek was all about sleek and futuristic technology, including starships that could travel at warp speed, transporter beams, (wireless) communication devices, weapons that could be placed on “stun,” and other electronic gadgetry that might not seem so futuristic today. But all these pieces of technology had something in common. They weren’t just cool to have; they served a real need -solved the right problem, perhaps?

The Star Wars franchise was (is?) better known for “the Force.” The Force was an energy that could be harnessed to perform supernatural feats and to amplify other common physical traits of speed and reflexes. Of course the original movie relied on some futuristic technology at the time, particularly in the use of robotic droids and space travel, but it was more about enhancing human performance. While we haven’t yet achieved the same level of progress in space travel, robotics don’t seem so futuristic today and in fact we saw them featured prominently on the AU2015 show floor. More importantly, the Force at AU2015 was really about enhancing the performance of people, products and organizations.

This supports a concept Autodesk CEO Carl Bass (@carlbass) emphasizes – one of “reframing.” He encouraged his audience to ask themselves: Are you solving the right problem? The example he used: Did you know there is a higher energy impact in making a car than driving it over its lifespan? So is reducing fuel consumption really the right problem to solve? I guess it is for the consumer paying at the pump, but maybe not so when you consider the greater good. But just asking the question is a giant step in the right direction.

But solving the right problems is going to be a group effort, which is why Autodesk is relentlessly building out the ecosystem, with more than just software and design tools.

 

Its cloud-based Forge ILogo_Colornitiative, announced during the event, is a three-pronged effort to transform how products are designed, made and used. The three major components include a platform-as-a-service (PaaS) offering, a robust developer program, and a $100 million investment fund. The components:

  • Platform-as-a-Service – The Forge Platform is a set of cloud services that span early stage design, engineering, visualization, collaboration, production and operations. Open application programming interfaces (APIs) and software development kits (SDKs) enable small and large software developers alike to build intuitive solutions to real problems.
  • Developer Program – The Forge Developer Program will provide ongoing training, resources and support to the developer community. Autodesk will host an inaugural Forge Developer Conference next June.
  • Investment Fund – The Forge Fund will provide up to $100 million in funding, as well as business and technical support to start-ups that are working to deliver innovative solutions and services on or connected to the Forge Platform. This investment will be made over the next several years.

But of course for the Force to be strong, there must be at least the implication of some magic – remember those seemingly supernatural powers? For a company like Autodesk, I think the keys to unleashing this “magic” lies in harnessing data from the Internet of Things (IoT). As Mr. Bass points out, we are rapidly approaching a time when everything will have an IP address and everything is addressable. This opens the doors to a whole new level of understanding of how products perform and how they are used.

IoT is not a foreign concept to manufacturing. Manufacturers have been collecting enormous volumes of data from sensors on the shop floor for many years now. But much of that data has lain dormant because these manufacturers didn’t have the tools and technology to really harness it. Of course the most intuitive use cases for harnessing that data has been in maintenance. Don’t schedule downtime for unnecessary preventive maintenance. Don’t wait for products to fail. Predict failure and perform maintenance optimally based on data collected by the product itself.

In the future of making things, we need to apply this same concept to any kind of consumer, medical or industrial product, move it beyond maintenance and harvest that data to help us improve the products themselves, along with efficiencies that measure human performance. That means we need tools to make it easy to connect all these addressable sources of data. I think this must have been at least part of the consideration in Autodesk’s acquisition of SeeControl last summer, which resulted in the announcement of Autodesk SeeControl at AU2015.

From Autodesk:

The Internet of Things refers to the growing ecosystem of physical things embedded with electronics, software, and sensors that are connected to the Internet and to each other. When these things are products sold to end customers, manufacturers can gather and stream data about how they are being used to offer valuable insights, allowing them to respond to the needs of their markets and individual customers. Connected products also create new insights for the people who design and make them, helping companies better understand their use and improve them over time.

Autodesk SeeControl allows manufacturers to monitor how their product performs in the real world and use live data to optimize future versions. They can keep products running at peak levels, identify potential for failure before it happens and schedule maintenance downtime when it is least disruptive. Ultimately, manufacturers can bring their customers a level of enhanced services based on information about real world product performance and consumption.

Autodesk SeeControl is absolutely native to cloud and device agnostic. Most any protocol you encounter has been accommodated, but if you find a new one, Autodesk can add it generally within a couple of days. But even better, it requires no specific technical or programming skills to connect new devices. Most any business analyst or product manager can get in and do something meaningful with hardly any keying. Just point and click.

The connected product journey has begun – the journey to customer discovery, better next design, advanced services and product as a service.

In conclusion, whether you are looking to

  • Re-imagine the future of making things
  • Fuse the design – make – use processes with connected products
  • Solve the right problems or
  • Simply bring innovation to your business and your customers

…Know that the Force is strong at Autodesk. May the Force be with you.

 

 

 

 

 

 

 

 

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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 Salesforce.com’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.”

Conclusion

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

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

 

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Enterprise Odd Couple: Plex Systems Partners with Workday

Pre-Packaging 2-Tier ERP for Manufacturers

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

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

Making the Case for 2-Tier ERP

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

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

Figure 1: Environments Are More Distributed and Remote

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

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

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

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

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

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

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

The Emergence of 2-tier ERP

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

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

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

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

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

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

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

Impact on Roadmap

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

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

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

 Conclusion

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

A Side Note: Is Workday ERP?

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

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