SAP Business ByDesign Status, Momentum and Plans

My very first meeting at Sapphire 2011 was an update by Rainer Zinow on SAP Business ByDesign on its status, traction and plans for the future.  The briefing was also attended by other analysts who cover (exclusively or at least in part) the SME enterprise application market. Rainer started the meeting by throwing us a curve and asking us what we wanted to hear – a refreshing change from the usual, “Here’s what we want to tell you.” My question was essentially how SAP was progressing in building the volume business ByDesign is intended to be. It looks like a lot of progress has been made but momentum is still building.

SAP now has 500 Business ByDesign customers and says it is on track to meet its goal of 1000 by year end. After the briefing I tweeted that factoid and almost immediately got a response questioning, “How long does it take to go live on #SAP ByD? Can they mathematically get to 1000 implemented by year end?” My response was (in not so many Twitter words), don’t confuse selling with implementation.

SAP never said that 1000 customers would be live. In fact one of the ByDesign customers I spoke with today (Technodyne) actually went live in 16 weeks. But my experience from talking to ByDesign customers over the past several years is that there is the same variability in implementation cycles as there is for any ERP. I’ve seen ERP go in quick and dirty, fast and solid, well-paced and methodically, or slow and painful. The time required in order to go live often has as much, if not more to do with the company doing the implementation than the solution itself.  

That is of course providing the solution is a good fit and, in the case of small companies, not overly complicated. But the whole reason SAP started from scratch in writing Business ByDesign was to reduce the level of complexity that becomes inherent in a solution that starts out as a large enterprise solution, and grows more complex through evolution. Today ByDesign is still primarily targeting companies with 50 to 500 employees which do not require highly tuned industry-specific functionality. There is one industry in which it is particularly strong (professional services) and there will be more industry specific functionality developed, but SAP never sees it becoming an option for certain industries requiring certain select functionality. Don’t expect a version for pharmaceuticals or oil and gas any time soon.

So what else can I share with you about the status and momentum of Business By Design? If you have been following SAP’s “on demand” plans you will have noticed a major strategy shift over the past year plus. Originally there were really two on demand strategies – one for SME (small to midsize enterprises) and one for larger enterprises. SAP called this the “Line of Business” (LOB) on demand applications, presumably because these other on demand solutions were targeted to specific areas of the business such as sales, procurement or human capital management. But they weren’t ERP. They extended or surrounded ERP, which for the large enterprise was largely staying on premise, or perhaps being outsourced or hosted. Originally these LOB applications were developed using a very different infrastructure than that used to develop and deploy ByDesign, with some technology acquired through SAP’s acquisition of Frictionless Software.

But that all changed as SAP made some breakthroughs in the ByDesign infrastructure.  ByDesign became multi-tenant , which was an important step in turning it into more of a volume business. Then, the underlying technology behind ByDesign became the platform of choice for new on demand development at SAP including Sales On Deman, Career On Demand and Travel On Demand and others to come. Sourcing On Demand remains on Frictionless and Carbon Impact runs on a different platform (River). The development teams were consolidated under Peter Lorenz and development, support and management of the products moved to China.

The release of the SDK (Software Developer’s Kit) ByDesign Studio is also an important consideration. In the early days, while there were certainly ways to configure and tailor the solution, no customization of ByDesign was supported even though the software ran as a single tenant. But with the release of the SDK, SAP can offer customization in multi-tenancy, although with the stipulation that all customization is delivered in the context of the SDK. Additional business objects, and additional logic can be added and partners are also able to further monetize these efforts by publishing to an online SAP store. While available from the store, the customization or extension is purchased from the partner who develops it. Of course SAP takes a cut… after all it is providing the showcase and vehicle for purchase, as well as the SDK itself and it takes an active role in quality certification. And of course the software is hosted by SAP. Remember it is not licensed but sold as a service.

This ability to customize is important as Business ByDesign moves from being just a solution for small to midsize companies. SAP sees a strong market in large enterprises – not at the corporate headquarters, but perhaps in more of a tiered solution structure, satisfying the needs on divisions, business units, remote locations, etc. The first integration scenarios delivered with Feature Pack (FP) 2.6 were also important first steps in supporting this multi-tiered scenario. But even as ByDesign starts to penetrate these larger enterprises, SAP assures us it will also remain true to its heritage, as a midmarket solution. Indeed, even these larger enterprise implementations start off small, sometimes with 10 users, perhaps as a pilot. As they achieve some success, users still need to sell the solution internally. So it opens the door, but there is still the need to go back and do more selling. This is the only part that to me doesn’t lend itself to a real volume sales business. For very high volumes you need to get in and sell and then move to the next sale, and the next… all without losing the relationship with the customer that has become more and more important to SAP. The one redeeming factor is that in some cases this added selling has led to as much as an 80% penetration which is unheard of in the large enterprise (Business Suite) world.

Today SAP hosts the software in two locations: Germany and in the United States. And just this afternoon news broke of a partnership with China Telecom to provide the service in Asia. I’m sure we’ll hear more about that in the days and weeks to come. But in the meantime, SAP is fully certified to be SAS 70 Type II compliant, satisfying more stringent requirements than the Type I compliance achieved by most service organizations, including the ability to be able to sustain operation with power and with no air conditioning for 3 days. While this may not have seemed to be a requirement in the past, recent disasters and extreme weather conditions make this more relevant today.

All told, after getting off to a slow early start, momentum is building and SAP has a very good story to tell about progress made in turning the Business ByDesign business into a volume business.

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Don’t confuse how you deploy ERP with how you pay for it

With all the hype circulating about the cloud, it is no wonder that there is ample confusion over how ERP is bought and paid for. Even for seasoned enterprise application buyers, terminology can be confusing. SaaS. Cloud. On Demand. Hosted. On Premise. Perpetual license. Term license. Subscriptions. Multi-tenant. Multi-Instance. Do you know how all of these are different and where they have similarities? Let’s get down to basics. For those familiar with some of this, bear with me. For those who need a primer… here goes.

Let’s first talk about how you pay for ERP, or any enterprise level software for that matter. Enterprise application software is typically not bought and sold; it is instead licensed for use. It may be licensed to be used by a company, on a particular computer or by other criteria such as number of users. This is similar to consumer software. Buying it once doesn’t mean you can duplicate it and share it with all your friends, or even sometimes with all your own computers. For enterprise application software how you pay for that license and the term of the license can vary dramatically.

A software license can be perpetual. That means you pay for it once and can use the enterprise application forever. Maybe. This used to be the case, but more and more often today a perpetual license agreement might have a stipulation that you have the right to use that software only for as long as you continue to pay maintenance to the software vendor that provides the product. So be careful to read all the fine print in the contract. If all you are familiar with is consumer software, there may be no equivalent. If I buy a product like Microsoft Office or Adobe Acrobat, I can continue to use the software on my computer as long as I want to. But if Microsoft or Adobe comes out with a newer version, they don’t just give it to me. I might get a break on the price if I buy the newer product, but I still have to buy it.

A maintenance agreement, which is a recurring cost, typically provides both technical support and certain innovations. Some of those innovations will be included in my maintenance fee and others I may still have to purchase. Maintenance is typically priced as a percentage of the software license and the going rate at list price today is around 22% for ERP.

But perpetual licenses are not the only type offered. Instead your license might be for a specific period of time.  This is generally referred to as a “term” license. At the end of the term, you must either renew the license or discontinue use of the software. In fact the application might have the equivalent of a kill switch in it that will disable it and prevent you from continuing to use it at the end of the term.  This requires some license management code to be embedded in the solution and is not always done, particularly in older software. If it is not, and you don’t renew, you might find some software auditors on your doorstep.

Subscription-based pricing usually represents a form of a term license. And this is one source of confusion. You are able to use the software as long as you keep your “subscription” current. But this is where some confusion starts to creep in. Often people equate subscription to SaaS. But SaaS is an acronym for Software as a Service. In this case, the customer doesn’t purchase a license, but instead pays for the software as a service. So generally most applications that are delivered as SaaS are paid for through a subscription, but not all subscriptions are delivered as SaaS. A subscription based license may be offered as a way to reduce up-front costs and therefore knock down barriers of entry.

When software is installed at the company’s site, it is generally referred to as “on-premise.” But some companies prefer not to invest in their own computers or may choose to outsource the care and feeding of the application to a third party. But this doesn’t necessarily mean the software is delivered as a service. Often, the software is just delivered to a different destination and is licensed just as it would be if it were running “on-premise.” This is generally referred to as a “hosted” environment and services may also be purchased to perform that care and feeding in addition to the hosting fees.

In a hosted environment, the company that licenses the software may in fact be responsible for running the application itself and just outsource the technical infrastructure and maintenance. Or it may decide to also outsource much of the work involved in running the application. This is generally referred to as Application Managed Services (AMS).  

If the software is not located at your physical site, but you can access it virtually, this operating environment is generally referred to as a “cloud.” A cloud can be private – nobody can access it except your company. This in fact is likely to be the case in a hosted environment.

Or a cloud can be public – you access it through the Internet and you may indeed be sharing the software with other companies, even though your data is secured from anyone else seeing it. This is more likely to be a SaaS environment. In a SaaS or on-demand model (and I use the 2 terms interchangeably) the software itself is neither licensed nor owned by the company using it. The software is delivered as a service and is typically paid for through a subscription for the service provided. Cloud terminology is often intermingled with SaaS, but reference to the cloud simply refers to the operating environment and not how the software is bought or paid for.

Now SaaS purists will insist that in order to be true SaaS, the solution must also be “multi-tenant.” This means there is only one instance of the software itself. The data belonging to each subscriber to the software as a service is segregated and secured.  But everyone runs a common set of code and configuration settings tailor and personalize business processes. But in fact, the software can be delivered as a service in a single tenant or multi-instance, rather than a multi-tenant environment.

In reality, whether the solution is delivered multi-tenant or multi-instance matters far more to the vendor than to the end user. It is the solution provider that benefits most directly from being able to offer a multi-tenant solution because this allows them to scale delivery with less cost. Obviously delivering bug fixes and product innovation to a single instance of software supporting many different customers is far easier and more efficient for the vendor.

But in fact, some vendors choose to not deliver their SaaS solutions as multi-tenant for one of two reasons : Either their solution is not architected to support this, or because they feel they can deliver a more customized solution through multiple instances. And in fact some companies purchasing ERP solutions prefer not to run in a multi-tenant environment for the same (latter) reason. While it is not impossible to deliver customized solutions through a multi-tenant SaaS solution (in fact Plex Online does this) it adds a level of complexity for the solution provider that few have mastered and most are not willing to absorb.

To the non-technical ERP users the most important aspect is that they are able to connect to the application and its data from any computer with a browser. This may be accomplished with any of these deployment and license options.  If in fact this is possible, often times the end user does not know, care or need to know which of these deployment options are actually being used to deliver the application and they are even less likely to care how it is paid for. But for those responsible for the purchase and deployment decisions, it is of paramount importance to understand all the potentially confusing options.

Still confused? Contact me at

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NetSuite has arrived on the scene of ERP in Manufacturing

When I first “met” NetSuite about 5 years ago I have to admit I didn’t really consider it an ERP vendor. Of course that was back when I had a more narrow view of ERP and thought that if a vendor didn’t have MRP then it didn’t have ERP. I’ve since gotten over that and for several years now I have defined ERP as an integrated suite of modules that provide the transactional system of record for a business. Not every type of business needs MRP to form that basis. Of course most ERP solutions offer much more than that, so this is really my base line definition.
Back in 2006 I viewed CRM and eCommerce as NetSuite’s strengths even though it did provide a suite that extended beyond these modules.  But since then it has officially entered the realm of ERP in my book. Its Home page on its website ( labels it as “The #1 Cloud ERP / Financials Software Suite” and further describes its solution as “full-featured financials / accounting, CRM, inventory, and ecommerce software—all in a single system.” So in a way, it is still down-playing the ERP moniker in favour of “suite” and its historically strong suit: CRM and eCommerce, packaged with financials.
Also back in 2006, NetSuite did not target manufacturers. Without a true Bill of Material and MRP all it could address was some level of assembly or very light manufacturing. That has now changed, although not all as a result of organic development. Some of the manufacturing functionality NetSuite offers now comes from a partner, Rootstock. Rootstock Software is a certified NetSuite Solution Provider specializing in the manufacturing industry with heavy focus on the NetSuite Manufacturing Edition solution. While its website claims, “NetSuite Manufacturing Edition is the only cloud-based integrated business suite for manufacturing”, I think they are missing a few other players, with Plex Systems being at the top of that list. Plex has been offering a complete SaaS ERP solution for manufacturing for more than 10 years. Other more traditional ERP players (Epicor, Infor, QAD, SAP) also have cloud based offerings for manufacturers and even more have arrived on the scene with hosted cloud models.
But what I find very interesting is that some of NetSuite’s key customer successes were achieved without the use of Rootstock functionality.  I just listened in to a webcast sponsored by NetSuite and featuring 2 manufacturers using NetSuite and both purchases pre-date the partnership with Rootstock.
Schaeffer Oil prides itself on being “the oldest oil company you never heard of.” With 30,000 customers, it processes 90,000 orders a year using NetSuite and has achieved the following results:
·         Reduced its IT spend by $100,000 in the first 6 months
·         Reduced cycle time of order processing from 3 days to 1.5
·         Reduced backorders by 25%
·         Processed 25% more orders with 15% less staff
·         Improved communication and visibility
GLI Pool Products is a manufacturer and distributor of custom and specialty products for the swimming pool industry. It was founded in 2006 with the purchase of assets from a much larger Canadian company and in doing so inherited an ERP solution, but none of the influence over its continued development.  Ultimately they replaced that inherited solution with NetSuite. GLI has bucked the downward trend in construction related businesses and attribute much of their success to the use of NetSuite. They achieved lower material and operational costs while improving flexibility – a key consideration as they no longer wanted to live in “used-ta-land.” They could no longer be productive and profitable doing things the way they used to do things.
So while the addition of Rootstock functionality really just took effect in mid-2010, NetSuite has been quietly amassing quite a collection of manufacturers in its installed base for quite some time. This is particularly notable since NetSuite is not known for its “quiet” marketing tactics. With the addition of a couple of relatively new names to the NetSuite roster (Roman Bukary and Ranga Bodla) charged with promoting NetSuite in Manufacturing and Distribution, perhaps this will change.
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Epicor Manufacturing Express Edition Up Close and Personal

I sat in on a webcast hosted by Epicor today on Epicor Manufacturing Express Edition, complete with a demo of the product. Epicor had pre-briefed me on its Express Edition back in August 2009 and then again when it was released in May 2010. For those of you not familiar with this Express Edition, here’s a very quick summary….
Epicor Manufacturing Express Edition is a simplified version of Epicor 9, developed specifically for job shops and discrete manufacturers and delivered only using a SaaS model. But Epicor is quick to point out that SaaS is a delivery model, not a product. The product itself is Epicor 9, simplified. By “simplified” I mean that Epicor has hidden selected bits of functionality in order to remove some of the complexity inherent in a comprehensive enterprise-level ERP solution… hidden and not actually removed. Built-in best practices are also layered on top of the software and templates and even a chart of accounts can be delivered right out of the box. The target go-live date is 20-30 days after installation.
Epicor Express includes CRM, product management, production management, materials management, financial management and built in business intelligence. Data migration tools can be included in the Express Start package or not, including the ability to import data from QuickBooks. Customers also have the option of using Sage Peachtree for accounting and financials and Epicor Express for CRM and production management.
Because Epicor Express is derived from Epicor 9, as companies grow (needing more features and functions), there is a good chance the features are already included in Epicor 9. In some cases those hidden features can be turned back on, allowing the customer to remain in a SaaS environment. But generally speaking, if you outgrow the Express Edition, you will likely be moving to another edition of Epicor 9 (Standard Edition or Enterprise Edition) and an on-premise environment or a hosted environment. But this hosted environment can include managed services, allowing customers to continue to avoid investing in their own IT infrastructure and staff. It is an evolutionary (and not revolutionary) path.
While I was quite familiar with the strategy and Epicor’s roll-out, until today I had not seen a “public” demo of the product. There were a few thoughts that struck me as I watched.
1.       The person doing the demo was a “Territory Manager,” which I interpreted it to be a sales function. This tells me two things: the Epicor sales folks know a thing or two about the needs of their prospects and clients (the demo was real and credible and did not appear to be “canned”) and you don’t need to be a product specialist to use the system. No offense to sales, but they typically have much more of a business development orientation than a deep product orientation.
2.       The system is relatively easy to navigate, which lessens the need for training. There is just one potential downside to that. As solutions become easier to navigate, customers make the mistake of thinking they don’t need any training. My experience tells me that users of ERP solutions still need to be trained procedurally, as much from a business perspective as a system perspective. Without some level of training, business processes get mucked up and users never take full advantage of the solution.
3.       And finally, I thought, “My, how far things have come since my days of doing demos.”  In the mid-to-late 1980’s my best demos were the ones where my hands never touched the keyboard. Of course most of those demos were done in the ERP vendors’ offices or via a dial-up modem. But in those days, you really needed to memorize all the various codes (since there were few, if any lookups); you spent as much time navigating the hierarchical menu structure as you did demonstrating “real” work. You spent far more time putting data into the system than you did showing how to retrieve it. Because getting data out was pretty hard, and usually ugly. This demonstration featured a series of what Epicor called “minute of your day type features” and I would venture to say in the old days, those “minutes” would have been hours.
Part of Epicor’s “pitch” is the level of experience it brings to small manufacturers. Founded in 1984, Epicor’s been around since back when I was doing demos. Today they are a public company with about $440 million in annual revenue, 2700 employees and more than 20,000 customers. In defining the simplified version of Epicor 9 that forms the basis of Epicor Manufacturing Express Edition, of course the company will draw on the experience it has gained in dealing with small manufacturers, perhaps many of them still running older Epicor products such as Vista, which over time has merged with Vantage and then morphed into Epicor 9. The only question I have is, how many of those Vista customers are still operating back in the world I knew when I was doing demos? What will it take to get them to venture into the 21st century? Perhaps Epicor Manufacturing Express Edition will lead them out of the darkness.
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Weighing in on SAP Sales OnDemand: Keeping competitors off SAP turf

In just one short day there have been numerous commentaries on SAP’S upcoming release of SAP Sales OnDemand, announced at CeBIT yesterday (March 1, 2011). So while I may not be telling anyone anything new, I felt I would be remiss in not commenting. Many have been headlining the announcement as a direct threat to and Microsoft CRM OnDemand. Yes it might be, but not because it competes directly against either. But it just might keep these two competing products out of the SAP accounts.
SAP Sales OnDemand is exactly what the name implies… a tool for sales. It is just one of the three legs of CRM (sales force automation, customer service and support and marketing automation). But let’s face it, many companies that deploy CRM only use it as a sales tool.  Yet in spite of this limited slice of the CRM pie, John Wookey, SAP’s EVP of Line of Business OnDemand claims this solution is unique in that it is a more comprehensive solution.
More comprehensive? How?
Software solutions in the past have modeled a business process in a rather linear fashion. Instead, SAP went back to the beginning and looked at the business problem, which presumably in this scenario was and is, for SAP customers, how to sell more. What are the roles that all come together in achieving this goal? How do they interact now and how do they want to interact? Does it take a “village” to make a sale? When I first heard how good Sales OnDemand was at allowing sales to collaborate I was skeptical. The desire or motivation to collaborate isn’t always included in the DNA of a sales rep. But if it means truly getting a 360o view of a customer, then yes, collaboration is required.
And for that you not only need a sales tool, you also have to connect it to your other solutions, like ERP. I have always argued that a CRM solution does not provide a 360o view of a customer unless you use it for something other than what it was intended for. Where are the transactions, the shipments, the receivables?  And what about the unstructured data that floats across the Internet, feeding you important data about your customer? Feeds about their earnings, legal battles, trends in their market with a direct impact? Take a look at the demo on YouTube ( ) and you’ll see this kind of Feeds and collaboration is really “Home” for the sales rep using Sales OnDemand.
So to me SAP Sales OnDemand is more about connecting the dots. If it can truly complete the view of the customer, the prospect, sale for the SAP ERP customer, then there is no need to look further.
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When customers have a voice: 3 solution providers who listen well

You probably all have friends out there that send you jokes and other amusing (or not) trivia by email. Some will be selective. Some will not… sort of like two of my cousin who seems to send me everything that comes into her Inbox. The problem with these kind of distribution lists is that there is no way to unsubscribe without hurting someone’s feelings. So the delete button gets a lot of use on my keyboard.
But for the ones that are selective, sometimes there is some useful information. Like just this morning I learned that “a paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part. It is frequently used for humorous or dramatic effect, sometimes producing an anticlimax. For this reason, it is extremely popular among comedians and satirists.” So the first thing I did was forward it to my friend who is also a stand-up comedian. I know he is always looking for material.
But apart from the obvious value to my comic friend, I did find some of these paraprosdokians applicable to the art of developing software solutions. I say “art” purposely. While developing these solutions may be (computer) science, the process of deciding on a product roadmap is far less objective.
For example:
” To be sure of hitting the target, shoot first and call whatever you hit the target.”
This is what happens when the developers (I use the term loosely) make all the product decisions while never venturing out into the real world.
The corollary… “The voices in my head may not be real, but they have some good ideas!”
This is what happens when the developers make all the product decisions while never venturing out of their own space at all.
The result, when the first two are ignored… “You do not need a parachute to skydive. You only need a parachute to skydive twice.”
So the lesson to be learned and applied to the art of developing the roadmap of an enterprise business system is pretty simple:  Listen to your customers. There are 3 developers of enterprise business systems that come immediately to mind here (caveat – I don’t mean to say of course that there are no other solution providers with a particular focus on the customer):
Plex Systems:  You might have heard me say this before, but the reason Plex began offering a SaaS deployment model for ERP long before it was “hot” was because Plex’s founder was an advocate and a pioneer of rapid application development and he was looking for a way to deliver new enhancements at an equally rapid pace. Last year I attended Tom Mackey’s (Plex’s EVP of Sales) worldwide sales meeting. As I watched one of the Plex developers demo something the team was in the process of developing specifically for a large customer and as I learned how long it took the team to create the enhancement (all “customizations” developed by Plex are productized as opt-in features) it struck me that they had gotten this far in the time it might have taken other development teams to tell the sales team why they couldn’t or shouldn’t do it. As this realization dawned on me I heard their head of development say that his team didn’t develop any functionality speculatively. All features and functions were developed by request of a customer or a prospect.
Because Plex was developing features and functions so rapidly there was a time when they were having difficulty keeping up with the documentation. The customers brought this to the attention of management at the Plex user conference a couple years back, but they also brought a solution. Why not have the customers using these enhancements contribute to the documentation, wiki-style? Because these customers were so actively engaged with the company and the development process, this worked out quite well.
Now, there is one downside to this approach. You can’t enter a brand new market this way. But you can expand the boundaries of the markets that you already play in. And that is exactly what Plex has done. Early on, based on its proximity to Detroit, its business was largely in the automotive market. But as it began to expand beyond the state of Michigan, it found many of the features and functions required by other industries were either already built in or very close. For example the product already satisfied the requirements of compliance and traceability in automotive and these were easily adapted to packaged foods. And so on….
Sage Software: Over the past decade, much of Sage’s growth has been by acquisition. However, the second half of 2010 saw a resurgence in organic growth. This has been as a result of a combination of growth by acquiring new customers with an expanded range of offers and increasing share of customer spend through support and cross-selling. In 2010 Sage added 250,000 new customers, half of them here in North America. Now of course, not all of these were ERP customers, but enterprise business systems dominated. And there was also significant growth in spend from existing customers, largely through increased web offerings and a rapidly growing set of connected services – web-based and mobile services that connect to existing products.
Much of this approach resulted from an aggressive campaign to visit and listen to existing customers, which has been a primary focus of the management team. While a new focus, Sage has seen it paying dividends. For example, Sage has seen a growing interest from ERP customers in payment services. By satisfying this need, Sage also benefits since by adding these payment services, it can nearly double customer spend.
Syspro is the third enterprise business system provider that comes to mind when I think of close customer relationships. Syspro reports some of the highest customer retention rates in the industry and largely attributes them to personal one-to-one relationships with its customers, with a heavy emphasis on “personal.” Perhaps it is the South African heritage of the company, but execs like Joey Benedretti (president of Syspro North America) take any issue with a customer very personally. Just go out to their website and search on “awards” and you will see a plethora of nominations and wins. Probably the most telling of these awards in terms of customer focus is the Stevie Award. SYSPRO 6.1, the newest release of SYSPRO ERP software, was presented with a People’s Choice Stevie Award for Favorite New End User Software Product at the 2010 American Business Awards last June. SYSPRO 6.1 included over 1,500 new customer-requested features and functions plus ease-of-use enhancements including dashboards, workflow services and process modeling and a new user interface that combines personalization and power-tailoring options.
All three of these solution providers develop a target with purpose and customer focus, listening to the voices of their customers which provide the perfect canopy to float development efforts.
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Plex Systems grows while others stall

I’ve been watching Plex Systems now for about 5 years. It is one of the bigger small ERP solution providers. Not being one of “the big guys” you might not have heard of them. But if you are a manufacturing company in search of an ERP solution, the company is one you might want to get to know – that is if you are either in active search for or are at least willing to consider SaaS ERP. Because that is all they offer. Unlike some of the new entrants into the SaaS ERP market, “as a service” is the only way Plex delivers its solution. But also unlike these new entrants, Plex has been serving up SaaS ERP for more than 10 years.
How and why they began offering a SaaS deployment model for ERP long before it was “hot” is an interesting aside. Plex’s founder didn’t go looking for SaaS. He was an advocate and a pioneer of rapid application development and he was looking for a way to deliver new enhancements at an equally rapid pace. SaaS was his answer. But SaaS presented an obstacle to selling in its early days, particularly in selling ERP. When I was at Aberdeen and first started following the SaaS ERP market I called ERP “the last bastion of resistance” to SaaS and openly questioned whether it was a chicken or egg kind of problem. Were companies unwilling to consider SaaS ERP because there weren’t many options back then or were there not many options because people weren’t willing to consider it?
That’s a moot point today because the barriers are starting to break down and there are more options to choose from. But interestingly enough, one of the reasons software vendors were unwilling to offer SaaS models was because of the subscription-based pricing that now seems so appealing to both software suppliers and consumers of software. In an era when budgets were cut and credit was tight, accounting for the purchase as an operating expense instead of a capital expense was (and still is) very appealing.
However, making a move from selling on-premise solutions to SaaS has some immediate impact on fiscal reporting. When you sell an on-premise license, you get a bunch of money up front. The on-going maintenance is of course a recurring revenue stream, but that nice chunk up front was pretty hard to give up and if the software supplier gave up too much of that too quickly, revenues would also take a hit. If you were a public company that could very well be a hit you couldn’t afford to take.
You might think that Plex System dodged that bullet by offering a SaaS solution throughout the last 10 years. But in reality, the company didn’t always price their solution as SaaS. In the early days, prospects bought Plex in spite of its being SaaS, not because of it. In order to counter this and remove one obstacle, Plex priced it just like an on-premise solution. In fact it was quite a creative answer to a problem, but it did leave money on the table. That revenue leakage was something they knew they would eventually have to plug up. And they did. Several years ago they made the switch to more traditional (for SaaS) subscription-based pricing but they were smart enough to do it while they were (and are) still a private company and didn’t have Wall Street breathing down their necks.
They not only survived and thrived through that transition, but they are now very actively growing. During a year when most ERP solution providers struggled with a downturn during the first half of the year (some started to see growth in the second half), Plex saw substantial growth. They not only added 54 new employees (they now have 175 so the percentage growth is even more impressive) but they grew revenues by 27% and software sales subscriptions by 26%.
How did they do that? While they may still be a relatively small ERP solution provider, their solution is anything BUT small. I lost count of the number of modules they offered long ago – suffice to say it is a lot and quite complete. It also dives deeper into the shop floor than the typical ERP solution and they have particular strength in automotive. Not surprising because in their early days much of their selling was done locally in and around Auburn Hills, Michigan.  But today their strength pushes well beyond automotive to food processing, medical devices, aerospace/defense, industrial and consumer products. Part of the reason for the impressive footprint is the approach to rapid application development that drove them to SaaS in the first place.
The other significant factor is their very engaged installed base of customers. Enhancement of the product is driven entirely by customer and prospect requests and innovation is delivered every day. So in one way, everything is customized. But in another way, nothing is customized, because all enhancements are added to the product in such a way that the customer opts in to turning them on.
Mark Symonds, CEO of Plex Systems sees this growth continuing through 2011, with specific opportunity arising within the food-and-beverage industry because of the new federal food safety laws. Compliance and traceability has been part of the Plex DNA from the beginning and should position the company well in this new era of requirements and regulations.
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SAP announces release of SAP Business ByDesign FP 2.6

Yesterday SAP announced a major update to SAP Business ByDesign, the centerpiece of its portfolio of on-demand solutions. Feature pack 2.6 has been generally available since February 1, 2011, offering several news-worthy new features and capabilities. On-demand computing itself is one of SAP’s three pillars for growth… the other two being mobility and in memory computing. FP 2.6 touches on all three and more.
So what’s new? First of all there is a brand new SDK (Software Developer’s Kit) that plays two roles in making ByDesign more appealing. It provides some added incentives to its ecosystem of partners not only to jump on board but also to add their own value. And secondly, it begins to allay the fears of those resistant to a SaaS delivery model which is often viewed (sometimes erroneously) as “configurable” but not ”customizable.”
Secondly there is added support for additional mobile devices (the iPad and RIM BlackBerry smartphones).
Mobility came to the forefront of SAP’s strategy last May with its announcement that it would acquire Sybase and its mobility platform.  The goals and objectives of implementing an integrated suite such as Business ByDesign always include efficiency, productivity and visibility. Yet few exec’s today, whether sitting behind their desks, traveling around the world or attending a child’s soccer game, have easy and direct access to the data needed to make decisions, keeping all three goals just out of their reach. Sure, they may get an urgent email on their smart phone at any hour of the day or night, but then what do they do? Most likely they will use that same device to place a phone call or multiple calls, searching for more information.
SAP’s goal instead is to turn that device into a real tool to manage the business. Of course much of the technology needed to do this has been around for more than a decade, but full visibility and direct access anytime, anywhere has still been an elusive goal for the vast majority. I’ve been predicting for a while that this level of alerting and investigation is going to skip the laptop and go directly to these mobile devices. As more and better devices become available, this could finally be a reality in 2011.
The third new capability gets at what SAP calls “orchestration” across any number of delivery platforms (on demand, on device, on-premise) and also the reality of distributed enterprises and the need for consolidation and communication between headquarters and business units or subsidiaries. With Feature Pack 2.6, SAP offers an integration scenario for financial consolidation to help companies deal with the diversity of global financial reporting standards such as GAAP and IFRS, multiple currencies particularly at the subsidiary and transaction currency level, as well as different tax jurisdictions. Further integration scenarios for sales and distribution are planned for the next release.
SAP is not alone in promoting a two tier strategy for large corporations and their subsidiaries, recognizing the complexities of a solution like SAP Business Suite may be out of reach or overkill for satellite or subsidiary business units. Other ERP solution vendors talk about the same, sometimes calling it hub and spoke, sometimes two tier or even distinguishing between administrative and operational ERP. But often they are also talking about interoperability with SAP – either the Business Suite or R/3.
One element of supporting any kind of multinational scenario is making ByDesign available all over the world. Up until now it was available in 6 countries, which together presented tremendous opportunity for SAP (US, UK, China, France, India and Germany). So far they have about 250 customers and now are expanding to include Canada, Austria and Switzerland.
And finally… the in-memory connection. FP 2.6 adds sales and financial planning scenarios powered by in-memory technology, providing added speed and the ability to process huge data volumes in real time. There is also a dashboard app so ByDesign customers can access and consume complete analytical business information. Within the dashboard app users can arrange worksheets and organize reports annotations, notes, e-mail and voice notes for collaboration with partners and coworkers. The dashboard app will be free to download from the Apple iTunes store and available in demo mode for non-SAP Business ByDesign customers.
And Sap is not done yet. Peter Lorenz, executive vice president, On Demand, and corporate officer, SAP AG said,  “As we have now moved to a cycle of delivering a new feature pack every six months, the next big step in our SAP Business ByDesign roadmap will be the general availability of feature pack 3.0 in August.”
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