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Divestitures: Growth Redirected. Can Cloud ERP Help?

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

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

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

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

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

Case in Point: Evonik Industries

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

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

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

Figure 1: Have you established corporate standards for ERP?

Fig 1 EvonikSource: Mint Jutras 2015 Enterprise Solution Study

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

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

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

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

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

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

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

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

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

Epicor Reevaluates Its Strategy

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

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

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

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

A Little Background

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

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

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

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

Moving Forward: More Than A Few Changes

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

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

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

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

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

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

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

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

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

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Exact Macola, Reinvented

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

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

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

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

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

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

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

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

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The Three Dimensions of SAP Business ByDesign Set The Stage for Growth Part 3

This is the 3rd and final post of a 3-Part series on how SAP sets out to enable growth with its cloud ERP solution, SAP Business ByDesign. In Part 1 we talked about SAP Business ByDesign’s architecture and in Part 2 we discussed the user experience and configuration of the solution. If you missed either you can catch up with Part 1 and/or Part 2 or, if you prefer to skip the suspense you can read the full report now.

Organization Structure

SAP Business ByDesign allows growing companies to maintain a single organization structure that defines relationships between all legal entities both from a financial consolidation standpoint as well as an organizational (reporting) point of view. As enterprises mature and grow both of these tend to shift and change.

Legacy solutions often require these different structures to be maintained separately by business unit, embedding the enterprise structure within the general ledger account, making maintenance clumsy and any type of change difficult. Once established, changing the structure of the chart of accounts is next to impossible. In legacy systems personnel reporting structures were likely to be defined in a completely separate solution, if they were recorded at all. These two are often not aligned identically and this causes problems in managing performance while maintaining governance and control.

Take your sales organization for example. Sales is often managed as a global organization, yet salaries are paid and revenue is accrued by country and different countries mean separate legal entities. Sales representatives are part of both a legal entity and a global sales organization that spans multiple entities. Pipeline and quotas may be determined in an entirely different way, by internal, external or global sales and/or perhaps by product lines. Where can you get a full picture of performance from any or all perspectives?

SAP Business ByDesign provides the flexibility to structure all of this once, in a way that makes most sense, not in the way dictated by your ERP.

Embedded Analytics

Often companies look to reporting capabilities within their ERP solutions for managing operational performance. Yet in managing growth, you need to look beyond current operations and analyze the potential of growth opportunities. For this you need analytics. Most ERP implementations today don’t adequately deliver either because ERP has long had the reputation for being easier to get data into than decisions out of.

Standard reporting is never exactly what decision makers want and need and they often tire of waiting for the IT staff to make modifications or deliver new reports. And when making more strategic decisions about growth, they need to ask a lot of questions and the process is very iterative. Yet it is very hard to know where to start and what questions to ask.

Companies are sitting on a mountain of data, making it difficult to process through it very quickly in order to discern which key performance indicators (KPIs) will be most indicative of future performance. After all, they can’t look at every detail. So decision makers settle for aggregate summary data instead of the real detail they need. And they put the request for analytics on the back burner while they fight the operational fires. This is particularly true of mid-size companies struggling with the same kind of decisions as large enterprises, but without the deep pockets and large staffs to address them specifically.

This is why SAP Business ByDesign embeds analytics directly into the business scenarios. The analytics are browser-based and available on mobile devices, complete with alerts that can be sent in real time. SAP makes extensive use of dashboards, which business users can create or personalize for themselves. But SAP didn’t turn its back on business users’ almost universal love for spreadsheets. Offline analysis using Microsoft Excel is still possible.

Good Growth is Profitable Growth

Throughout, whether looking at subsidiaries or the corporate whole, you will need to manage cash and liquidity, payroll services, quality assurance and the financial close. For this you need visibility, delivered by SAP Business ByDesign’s embedded analytics. And you will need a consolidated view across these potentially different businesses within the business. You can’t run a sales and marketing team like a service and repair facility. And you can’t run a field service operation identically to a manufacturing operation. Yet all these have a common thread of master data (customer, products, parts, employees) and need to be consolidated at HQ.

Of course you want to satisfy the individual needs of the different types of businesses within a business, but you also don’t want to be trying to cobble together a unified view from disparate systems. This is the advantage of SAP Business ByDesign’s approach of a single, multi-purpose solution – providing it really can meet the individual needs of the different functions. During your evaluation process, look carefully at those business scenarios delivered with the standard solution. These will provide the base of operation of each facet of your business and those operations may vary and change with growth.

Summary and Key Take-aways

Cloud ERP is indeed a great enabler of growth for mid-size companies, particularly those looking to take bold steps in a rapidly changing business climate. It is clear that SAP has taken the needs of these mid-size companies seriously, particularly those that are fast growing. Keeping in line with its current mantra of “Run Simple,” SAP Business ByDesign can indeed help simplify the growth process through its three-dimensional design philosophy incorporating simplicity, flexibility and extensibility.

For mid-size companies looking to take full advantage of unprecedented growth opportunities, any old ERP is not enough. If you are in search of a cloud-based ERP solution that can help you grow and grow quickly, SAP Business ByDesign definitely deserves consideration.

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SAP Leverages the “Power of Big” to Benefit SMEs

Some common myths and misconceptions in the world of ERP are hard to kill, particularly when competitors and pundits just won’t let them die. Among these common myths is the perception that SAP is just for the big guys. Yes, the SAP Business Suite and even some predecessors to the Suite are installed in a large percentage of the Fortune 500. And yes, some of them cost millions of dollars and took many years to implement. Of course there are some horror stories, but I would argue those exist for any major ERP vendor.

I have to admit, during my 30+ years of working for software companies (but never for SAP), I might have encouraged some of those misconceptions, just as SAP’s competitors do today. But now, as a recovering software executive turned data junkie, I tend to look beyond the rumors and misperceptions. I go for the facts. Here are a few that are hard to argue with:

  • SAP has about 263,000 customers
  • 80% of them fall in the small to mid-size (SME) bracket. Do the math. The answer is 210,400.
  • SAP does not sell just one product. There is the Business Suite, but also SAP Business One and SAP Business ByDesign (no it is not dead or dying). SAP Business All-in-One is the Business Suite repackaged, by industry, for medium size businesses. You might choose to call it a different product or not, but it really matters little. Repackaged with best practices included, it makes the Business Suite more attractive to smaller (but not too small) companies.
  • SAP Business One, which addresses the lower end of the SME market, is installed in over 45,000 small businesses.
  • SAP’s ecosystem of partners that support small to mid-size businesses is 700 strong and growing.

I am sure one of SAP’s goals for this year’s annual SAP SME Summit was (once again) to help dispel these myths and misconceptions. I am equally sure that SAP understands it will take more than just bringing together customers, press and analysts in its hip New York City office to counter these perceptions. Instead, it seems to be effectively leveraging its extensive resources in order to help small and medium size businesses. Here are a few of different actions it has taken recently:

  • SAP HANA 9 can now be run on less expensive hardware
  • Powerful data visualization tools are available with a copy of SAP Lumira, free to any SAP customer
  • Fiori apps, providing an intuitive and modern new user experience, are now included for free (with paid maintenance) with SAP Business All-in-One
  • A 0% financing program, designed specifically for small businesses, as well as SAP’s partners that sell directly to them. This is a “buy now, pay later” option that gives the small business free financing for 24 months, while the partner gets paid within 5 days.
  • A free connection to the Ariba Network, which connects over 1.6 million companies in 190 countries, allows the small business to list its products. Although the free version does not allow bidding and purchase from the site, this is an effective way for small businesses to reach a large potential group of buyers.

It takes a large company with deep pockets and extensive resources to be able to make these kinds of offers to SMEs. Yes SAP continues to be the 800-pound gorilla in the ERP space but that doesn’t mean it can leverage the “power of big” to the benefit of the little guy.

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Intacct Helps Customers Unleash Their own Super Powers through Innovation and partnerships

 

American Express and SalesForce Aid in Delivering Automation and Collaboration

Intacct Advantage 2014 in Orlando (November 9-13, 2014) drew a crowd of over 1,300 attendees, a record for the company’s annual customer and partner conference. The conference has grown, along with Intacct’s ecosystem and its revenues. Indeed, Intacct has doubled its subscription revenues over the past two years. Following the themes of automation, collaboration and insight, Intacct announced two new partnerships, both of which help its customers leverage innovation in order to unleash their own “super powers”.

Intacct has partnered with American Express Global Corporate Payments to automate and “seamlessly integrate commercial payments and working capital solutions into Intacct’s software.” Intacct Check Delivery Service is the first milestone delivered from the partnership, enabling businesses to send check payments to suppliers, without ever having to write a check, while automatically updating their general ledgers – all with a click of a button.

The second partner is Salesforce.com. Intacct Collaborate embeds Salesforce Chatter into Intacct to create a secure social layer across all finance processes. Have you ever gone in search of scribbled notes and “sent” emails or wracked your brain trying to remember a conversation about a customer, an order, a payment? Employees can now conduct “conversations” right inside Intacct’s application, attaching them directly to specific records such as customers, projects, invoices, purchase requisitions, journal entries, and more. And you don’t even have to be a Salesforce customer. Of course, if you are (and 60% of Intacct customers also use Salesforce), those conversations also get recorded right in Salesforce as well.

Focus on Finance, but….

Intacct describes itself as a “cloud accounting software company” and says it is “100% invested in meeting the needs of financial professionals.” But if you look closely at its solution portfolio, you actually find it satisfies more than just the needs of the accounting and finance professionals. When you add in Intacct’s purchasing, order management, inventory management and project accounting modules you realize that for the majority of the industries the company serves*, the product is actually an integrated suite of modules that provides the full operational and transactional system of record of the business. That happens to be Mint Jutras’ definition of enterprise resource planning (ERP). And even where Intacct does not provide the full suite of functionality for operations, often a partner will fill those gaps.

* Intacct targets high growth small to midsize businesses (those with fewer than 500 employees) in the following industries:

  • Accounting firms
  • Franchises
  • Healthcare
  • Hospitality
  • Non-Profits
    • Faith-based
    • Foundations
  • Services
    • Business consulting
    • IT consulting
  • Software and software as a service (SaaS)
  • Wholesale distribution

So while other solution providers, which fall far short of providing this full system of record, overstate their capabilities and claim the category of ERP, Intacct does just the opposite and understates its capabilities.

So… what’s in a name? Does it really matter whether Intacct calls its product accounting software or ERP? The label itself is less important than the assumption behind the label. Figure 1shows an overwhelming preference for a fully integrated, end-to-end solution. Data was collected as part of the 2014 Mint Jutras Enterprise Solution Study, from small to midsize businesses (those with fewer than 500 employees), in the industries targeted by Intacct.

Figure 1: Preferences for end-to-end solution?

Intacct fig 1Source: Mint Jutras 2014 Enterprise Solution Study

These companies need more than just accounting to run their businesses and if they perceive that Intacct just provides accounting, they just might look elsewhere for a full solution, even though Intacct may meet the vast majority of their needs.

Much of Intacct’s growth has come from expanding its solution to meet the needs of the entire business. It has doubled its subscription revenue over the past two years. While new customers account for much of the growth it has experienced, added revenue from existing customers is growing even faster. Some of that growth comes from expanding the footprint of the solution and, of course some from expanding the number of users. More users may be needed when the customer’s business grows. But expanded user counts might also reflect reaching into new functional areas of the business… functional areas outside of the accounting department.

And don’t forget the ecosystem that has developed surrounding and supporting Intacct. This ecosystem now boasts 120 partners and according to Intacct, 75% of customers integrate with at least two partners. Many of these partner products are so tightly woven into the fabric of the Intacct solution that it is impossible to distinguish where Intacct ends and partner solutions begin. This is exactly the type of end-to-end integrated solution the vast majority of our survey participants favor.

The two most recent partnerships with American Express and Salesforce both provide extended capabilities, but also go one step further. These new capabilities are embedded right in the Intacct solution itself.

Intacct Check Delivery Service Enabled by American Express Global Corporate Payments

The offering here is quite simple: Intacct customers will no longer have to write their own checks. They will continue to match invoices and, with a click of a button, can send a request to American Express to cut the check. Customers simply choose “outsource check service” as a payment option. American Express has technology in place to secure the communication and automate the process.

Of course Intacct will charge a fee ($1.50 per check) but the cost savings from automating the process, along with the convenience of not having to maintain and secure check stock should make this very appealing to customers.

In bringing this option to market, Intacct and American Express have engaged with a handful of customers. All are excited and planning to throw their existing stock of checks out, along with the hassle of printing. As companies become more and more security conscious, just eliminating the securing of check stock in the office could be enough to justify using this check delivery service. Mint Jutras anticipates a huge rush to take advantage of this service. The savings are very simple, but also very good.

This could also be just the tip of the iceberg in terms of automation and savings. This service is now limited to accounts payable functions and payment is entirely by check, which is still the primary method of payment for many SMBs. Eventually the two companies will add both card and non-card services and perhaps branch into other areas of cash management, which would be a wise choice.

The Mint Jutras 2014 Enterprise Solution Study asked survey respondents to select the top five categories of business solutions in which they were most likely to invest in the near future. Cash management landed in the top three when looking at aggregated results across all industries, and was number one in service industries, a key target for Intacct.

Intacct Collaborate Embeds Salesforce Chatter Into Intacct

Intacct describes this joint venture with Salesforce as a way to “create a secure social layer across all finance processes and across devices through the Salesforce1 Mobile App.” While the “social” connotation is unlikely to resonate with the finance department, the name (and real purpose) of the product just might. Collaborating to speed execution of the order to cash cycle across finance, sales, and services teams is something that should get the attention of any finance team. And improved communication is key to effective collaboration and execution.

In-person and telephone conversations might be effective in getting immediate attention. But the problem with these conversations is this: Once the people walk away or hang up the phone, the conversation is over. There is no formal record of the discussion or the resolution. Email threads have a longer lifespan, but retrieving and recreating the conversation is far from efficient. And how do you directly attach the conversation to the issue around a customer or an order? You better hope the subject line is clear and meaningful. But it seldom is.

With Intacct Collaborate, customers no longer have to rely on memory or separate and external email threads to resolve process issues. Employees can conduct conversations right inside Intacct’s application, tying them directly to specific records such as customers, projects, invoices, purchase requisitions, journal entries, and more. They can involve the right team members in the discussion and retain them for as long as necessary.

And since Intacct Collaborate is embedded right within Intacct, you don’t even have to be a Salesforce customer, or pay extra to benefit from Chatter as a collaboration tool. However, if you also happen to use the Salesforce Sales Cloud, these conversations appear simultaneously in both systems. This enables Sales to collaborate from the system they spend the most time in, while Finance has access to the conversations from the accounting system of record they call home.

The result: heightened visibility and better collaboration.

Launched at Dreamforce 2014 in October, Intacct Collaborate is already live at several Intacct customer sites, including some from a variety of industries:

  • Canto, a leading provider of digital asset management solutions
    “Collaboration is an everyday activity for finance, whether it’s working with Sales to resolve invoicing issues, clarifying and adjusting order policies, or reviewing transactions within the accounting team. As a multi-national organization, Intacct Collaborate is helping Canto accelerate decision-making, deliver better customer service, and move faster as an organization.”

Hans Schaedel, CFO, Canto, Intacct Collaborate early adopter

  • AWS Truepower, a leader in renewable energy consulting
    “Keeping projects moving smoothly can be a real juggling act – from staffing a project with the right resources, to keeping clients and staff on the same page, to maintaining the records of a project over time. We expect that Intacct Collaborate will help us execute more efficiently and maximize our project performance.”

Sophy Lai,CFO,AWS Truepower, Intacct Collaborate early adopter

  • The Thurgood Marshall College Fund (TMCF), anon-profit that supports and represents nearly 300,000 students attending its 47 member-schools that include publicly supported Historically Black Colleges and Universities, medical schools, and law schools

Conclusions

Intacct targets small to mid-size businesses in a variety of (mostly service-related) industries, seeking to aid customers in “improving company performance and making finance more productive.” And yet its expanding footprint reaches well beyond the finance team and also quite effectively meets the needs of larger, multi-national, multi-entity enterprises. Indeed its installed base includes one customer with over 2,000 active users, another supporting 650 entities and yet another that supports 250,000 transactions a day.

Intacct’s ability to retain these customers through the customers’ own growth phases is a testament to the continued rapid pace of product innovation and Intacct’s foresight and ability to forge strong partnerships with strategic powerhouses like American Express and Salesforce.com. Whether you call it accounting software or ERP, companies with high growth expectations within Intacct’s wheelhouse would do well to consider its solution, not just for accounting, but to run the business.

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Think The Plex Manufacturing Cloud is Just for Small Companies? Think Again

Plex Enterprise Edition Makes its Debut at PowerPlex 2014

Recently at its annual PowerPlex conference, Plex Systems announced Plex Enterprise Edition, a suite of applications built to support complex, global, multiplant manufacturing organizations with multi-entity financial and supply chain management requirements. As always, Plex worked closely with its customers to define those requirements and has the first component of Plex Enterprise Edition — Financials — for centralized accounting and cash management ready to deliver the end of this month. Many of its competitors (and even some industry analysts) write Plex off as a non-threat except perhaps in small companies. Big mistake! Even without the multi-entity capabilities announced this week, Plex has been providing continuous innovation and steadily expanding the range in size of companies that are attracted to its Plex Manufacturing Cloud solution.

Clearing Up Some Misperceptions

Why do competitors assume Plex is just for small companies? One reason is the fact that Plex has exclusively offered its solution as Software as a Service (SaaS) since 2001, long before the cloud became popular. And many also wrongly assume SaaS ERP is only for small companies. Yet the Mint Jutras ERP Solution Study found the willingness to consider SaaS as a deployment option for ERP only grows with company size (Figure 1).

Figure 1: Willingness to Consider SaaS Grows with Company Size

Plex Fig 1Source: Mint Jutras 2014 ERP Solution Study

NOTE: Mint Jutras believes these percentages may be understated. We ask participants to select all deployment options they would consider if they were to purchase a solution today. “Hosted by your ERP vendor” is often confused with SaaS. Percentages of participants considering that option were similar to those shown in Figure 1 above.

Why Might That Be?

As companies grow, they become more distributed. Most companies, both large and small trade internationally and our ERP Study found 66% of manufacturers operate across multiple locations and the number of sites grows along with annual revenues (Figure 2).

Figure 2: Distributed Environments

Plex Fig 2Source: Mint Jutras 2014 ERP Solution Study

Defining Corporate Standards

In the past it was very likely that these different operating locations would have been left on their own to find and select a solution to meet their local needs for manufacturing. However, more and more companies are defining standards for enterprise applications. Companies have been talking about this kind of consolidation of solutions for years, but now it is really happening and World Class ERP implementations are most likely to have defined and executed a strategy that includes a standard ERP solution (Figure 3). What better way to control and enforce these standards than implementing a SaaS-based solution throughout the enterprise?

Figure 3: Have you defined corporate standards?

Plex Fig 3Source: Mint Jutras 2014 ERP Solution Study

Of course not all standards involve just a single ERP. In some cases we see two (or more) tier standards where one ERP solution is implemented at corporate headquarters and a different standard (or standards) is defined for the operating locations. This is most evident in manufacturing companies where the corporate solution is strong in financials, consolidation and reporting, but perhaps lacks the features and functions required to manage manufacturing processes. The operating locations require these manufacturing functions and also balk at the complexity often imposed by these corporate financials.

With a two-tier approach, a single ERP is also selected for the manufacturing facilities, in addition to an ERP for consolidated financials at corporate headquarters. In a multi-tier environment, often we see different types of operating locations (for example, distribution versus manufacturing, or significantly different styles and methods of manufacturing) requiring multiple standards (Figure 4).

Figure 4: Single, Two or Multi-tier Standard?

Plex Fig 4Source: Mint Jutras 2014 ERP Solution Study

While almost half of others with multiple operating locations choose this multi-tier approach, not so with Plex customers. A full 93% have decided on Plex and expect the solution to be their only solution. So it is not surprising that customers have collaborated with Plex to fulfill this need.

Of course, if a company has grown through acquisition, or the enterprise is extremely diversified or simply a holding company, there is an increased likelihood of multiple ERP solutions. But many view a single standard almost as a no-brainer when it comes to expansion in pursuit of green field opportunities. Many Plex customers have grown like this, leading Plex into parts of the world where it might not have previously ventured.

Case in Point: Shape Corporation

One such Plex customer is Shape Corporation, North America’s top manufacturer of automotive bumpers. Shape also manufactures impact energy management systems and performs advanced custom roll-forming for furniture, agricultural, recreation and health care industries.

While based in Michigan, Shape also has locations around the world, including China, Japan, the Czech Republic, Mexico, Germany, Korea and other locations within the United States. “All are running the same Plex system. Our users in China run on the same system as our users in Mexico, our subcontractors in Alabama, and everyone on the shop floor in our Michigan facilities. All our expansion is into new green field territory. We can have the Plex system up and running in a new location in a matter of weeks,” said Molly Hunting, Director of Information Technology

As Shape grew back in the 1980s and 1990s, it had acquired and implemented separate stand-alone systems, upgrading and linking them as needed. Maintenance became cumbersome and resource-intensive, inspiring the company to seek a single solution: the Plex Manufacturing Cloud.

The Plex solution replaced several separate systems for preventive maintenance, production, gages, problem controls, reporting, and more. While the solutions it replaced were not able to communicate with each other, all Plex functions are completely integrated.

The Plex Manufacturing Cloud now manages all core shop-floor functions for Shape, including bills of material, purchasing, receiving, inventory, manufacturing, basic quality, planning and scheduling, shipping, key measures, EDI, engineering change tracking, subcontracting, financials, and document control. Shape also implemented Plex’s advanced human resources, quoting, maintenance, advanced quality, and program management functions. “We probably use as much, if not more of the Plex solution than any other customer today,” according to Ms. Hunting.

The Desire for a Complete and Comprehensive Solution

This also is indicative of another consistency across the Plex customer base: the preference for and the implementation of a broad and comprehensive solution. While the majority of all manufacturers surveyed (92%) prefer an end-to-end integrated solution, the larger portion of that majority is cautious about sacrificing functional requirements for ease of integration or the luxury of dealing with a single vendor (Figure 5).

Figure 5: Preferences for a Suite?

Plex Fig 5Source: Mint Jutras 2014 ERP Solution Study

Only 26% have an overriding preference for a complete, fully integrated end-to-end solution supported by a single vendor. But that percentage more than doubles (to 53%) across the Plex customers we surveyed. Clearly these customers are drawn to the Plex Manufacturing Cloud, at least in part, by the breadth of the solution, shattering another misperception that customers only run shop floor-centric processes or an otherwise incomplete solution from Plex Systems.

Ms. Hunting acknowledged only one weakness in the past: support for multi-entity finance and supply chain operations. Tax and regulatory compliance requirements force companies like Shape into a multi-entity environment as soon as they set up shop in a foreign land. So while Shape’s preference is to have a single solution and solution provider, for now, it is using a solution from an independent software provider to manage the consolidation and financial reporting requirements.

But this type of solution has its drawbacks when it comes to managing the supply chain issues. Any movement of goods between multiple entities and any joint sales opportunities between these locations create not only financial requirements, but also supply chain issues. While operationally movement of inventory is a simple transfer, in fact behind the scenes it must be treated as a purchase of one entity and a sale to another. And that’s the easy part. What happens when multiple operating locations sell to a common customer, who of course, wants to take advantage of corporate discounts based on total volume? And what about your own purchasing? Do you have master purchase agreements that need to be managed across sites and across legal entities?

And all the while each of these separate legal entities needs to be managed as its own business, probably with its own language, localizations, tax and regulatory reporting, global labeling and printing. It doesn’t take long before you realize just how complicated your business has become. The typical Plex customer does not want to add to the burden of that complexity by adding new “add-on” software products or, even worse, different ERP solutions.

This is exactly why Plex worked closely with several of its customers that are large manufacturing organizations, to design and develop applications to support the complexities of multisite, global manufacturing operations. Inteva Products was one of these customers actively engaged in the design and development of the new Enterprise Edition.

Customers Help Define the Problem: Inteva Products

Inteva is a global tier-one automotive supplier with 14 manufacturing locations and two joint ventures covering three continents, six countries and four U.S. states. While many of Plex’s customers grew into larger multisite manufacturing organizations over time, as a former division of Delphi Corp., Inteva was an instant multisite, global enterprise with multiple entities and all the associated challenges. Needing to get off its former parent’s systems within 12 months and being tasked to reduce IT costs from 2% of revenue to less than 1%, Inteva chose the Plex Manufacturing Cloud and never looked back.

Plex met Inteva’s tight time frame for implementation and migrated all sites from Delphi’s systems to Plex in less than 12 months. Germany was first, followed by one in Mexico, then two manufacturing facilities in Alabama three months later. The remaining launches were completed three months afterwards at all of Inteva’s remaining locations in Mexico, Europe, and the United States. As a result, it certainly had the experience to bring to the design table to help Plex.

“Plex enables us to run more than 30 manufacturing facilities around the world, all on a single cloud platform,” said Dennis Hodges, chief information officer of Inteva. “Just as important, the Plex Manufacturing Cloud gives Inteva access to continuous innovation, so my team can take advantage of new opportunities to drive our business forward, whether that means deploying Plex in a new facility or enabling new functionality. Plex makes enterprise software a business decision rather than an IT decision, and that’s transformed how we run our operation.”

Sharp Corporation will be looking more closely at the phased delivery of Plex Enterprise Edition, but will continue to operate with its third party solution until more of the required pieces are in place.

 A Phased Delivery Planned

The first phase of delivery is Plex Enterprise Financials, available now. It includes centralized accounting and corporate cash management.

Centralized accounting includes

  • Entity relationship management, which may be hierarchical across a group and may include due to and due from accounts
  • General ledger chart of account management, with full chart segment replication
  • General ledger journals with inter-entity journal accounting
  • Transaction level drill down from consolidated financial statements

Corporate cash management delivers:

  • Consolidated cash disbursements, including accounts payable invoices for multiple entities
  • Consolidated cash collections, including invoices for multiple entities
  • Consolidated bank reconciliation with the option of a single bank account representing multiple entities

Plex Enterprise Supply Chain, scheduled for the second half of 2014, includes:

  • Sales Order Management, which enables central administration of customer sales orders and billing, allowing any facility in the organization to fulfill orders
  • Purchasing, which similarly provides for a single, central operating unit to order goods and services on behalf of any business entity and manage purchase orders executed by any unit across the group.

Both centralized sales order management and purchasing also support automated inter-entity billing as part of the distributed order fulfillment process.

Plex Enterprise Edition also enable provides consolidated visibility and insight across the entire business, as well as deep-dive analysis of specific plants and products — all through Plex’s embedded business intelligence.

Summary and Key Takeaways

This is a massive undertaking by Plex. It is not short-circuiting the process or shrinking from the complexities of this global world by any means. It “gets’ multi-entity financial and supply chain issues. It is working directly with customers to define real needs for real manufacturers. Those needs are complex, and impact multiple facets of a manufacturer’s business.

Those unfamiliar with Plex’s rapid application development capabilities might think the company is getting out of the gate too late to make a big impact in the world of complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements. But Plex has already carried many of its customers through growth phases. Its engaged customers and its aspirations to play on a bigger stage will help them continue that momentum.

In addition, Plex Systems is not your average software developer. It has mastered the art and science of delivering continuous innovation. Not only does it “do” rapid application development, and do it well, but also Plex has a distinct advantage over those that do not deliver a multi-tenant solution deployed exclusively as SaaS. Plex only needs to maintain one single set of code. It is not juggling multiple versions, running on different operating systems, different platforms, or even different databases. So it only has to develop innovations once and it is done. This too is a huge advantage.

Plex Systems also knows how to make money in a SaaS-based business. This is important for customers and prospects alike. Nobody wants to do business with a company that is living hand to mouth, nor does talent want to work there. Plex has been one of only a few SaaS-only companies that can claim this. While it has been self-funded in the past, investment firms Francisco Partners and Accel Partners have infused it with new capital and it has made more progress. Now more recently T. Rowe Price and another round from Accel Partners has resulted in a new infusion of $50 million.

Competitors say they don’t see Plex in deals. Look for this new round of funding to allow them to put far more feet on the street, both direct sales as well as channels. When that happens, look out! When they get invited to the party, they are typically a big hit. Look for that to happen more and more. Competitors that might be tempted to write them off: Be warned. Do so at your own risk.

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The Message from SapphireNow was Simple

Period.

You probably thought I was going to tell you what the message was, after describing it as simple, right? Wrong. “Simple” is the message. In the past, SAP’s products and SAP, the company has been anything but simple. Anyone that follows me knows I am a very big fan of keeping things simple. I spend a good chunk of my time and efforts distilling complex concepts down to understandable …simple terms. So you might think I would be thrilled with this message. But when I walked out of Bill McDermott’s keynote earlier this week, there was something about the message I found troubling. My issue: Business isn’t simple.

No place is this more apparent than in manufacturing, which is sort of “home” for me. But all enterprises face complexities. First of all, all are becoming more distributed. My research shows even the average small company (with annual revenues under $25 million) has 2.2 operating locations. That number escalates to 13.7 in large enterprises (over $1 billion in annual revenues). Increasingly these are global organizations, managing complex, global supply chains. Add to this changing regulatory requirements, the uncertainties of a global economy and the emergence of new sources of competition as well as new markets. There is no magic wand anyone is going to wave that will remove these complexities. And yet with the liberal use of quotable sound bites generated on the main stage, I had visions of SAP’s personnel aggressively promoting and promising “simple business.”

Then I happened to have a conversation with Josh Greenbaum (@josheac) about our mutual reactions to Bill McDermott’s keynote. A remark from Josh made it all click for me. Essentially what he said was: “Simple” is the wrong word. “Simplify” says it much better. Josh is right.

Yes, doing business with SAP could be simplified, both from a partner and a customer perspective, as well as from a supplier standpoint (I can personally attest to the latter – yes, SAP is my customer). The software products and associated implementations scream for simplification. The way innovation is delivered can be made simpler. So can pricing. The same can be said for SAP’s organizational structure. So the real question is: Can SAP deliver on this promise to simplify? There is no single answer. Instead you need to break it down by the many different opportunities for simplification. Here are a few.

SAP’s Organizational Structure

We’ve already seen a few changes here. Obviously with Jim Hagemann Snabe stepping out of the co-CEO role, leaving Bill McDermott as the sole CEO, this, in of itself, could be seen as a simplification. And I think this was a catalyst for creating the focus on “simple.” I am convinced that this is not just a word, a tagline or a marketing message to Bill. He is truly committed to simplifying everything he can. Indeed SAP has already made some organizational moves, but I would say the jury is still out on whether SAP can really deliver on this one.

I gave up a long time ago trying to figure out the organizational structure and who does what in just the parts of SAP that I cover and deal with directly. I have never encountered a more confusing mess of titles, reporting and seemingly overlapping roles. Back when I did try to keep track of all of this… just when I thought I had it figured out, it would change. So rather than waste cycles second-guessing the organizational structure, I have come to rely on the phenomenal analyst relations (AR) staff to guide me. If there is a better AR team in the industry, I haven’t met them. Yet, while they do a fantastic job, I vote for a simpler organization chart, clearer roles and responsibilities and titles that give you a clue as to what the individuals actually do.

One recent change leads me to believe that SAP is trying. This is the recent announcement of Rodolpho Cardenuto as the head of a new Global Partner Operations (GPO) organization. Prior to forming this organization, partners were covered in a very fragmented way. The new GPO organization consolidates these disparate groups, combining the existing Ecosystem and Channels team, with the SAP® Business One business (which is sold exclusively through the channel), the OEM business and all the company’s strategic partnerships around the world – much simpler.

I know there are some other changes underway and I have to believe some of the jobs that were recently eliminated may have been as a result of “simplification” efforts, since SAP execs made it quite clear this week they are in growth mode, and not contracting.

 

Simpler to Partner?

Speaking of this new GPO organization, partners are becoming increasingly important to SAP. In addition to the strategic decision to sell to small to medium size enterprises (SMEs) exclusively through the channel several years ago, SAP now sees the potential for accelerating growth worldwide by building alternative routes to market through its partner ecosystem, whether this is through added coverage or added capabilities.

SAP has also actively encouraged partners to develop their own “value-add” in terms of industry-specific functionality and other add-on capabilities. The development of new platforms (the HANA Cloud Platform) and an online marketplace directly supports this.

Of course the formation of the GPO organization is one step in the simplification process in dealing with partners. Before, different groups dealt with different types of partners (e.g. systems integrators, global VARs, strategic partners, etc.) However, more and more, partners have taken on multiple roles. Systems integrators also became resellers; global VARS also became strategic partners and co-innovators, etc. In the past that meant they had to deal with different groups within SAP, and those different groups all worked differently.

The formation of the consolidated GPO organization is therefore one more step in the continuing effort to make it simpler to partner with SAP. Of course some of these partners are large companies, like Cap Gemini, Accenture and Deloitte and are well-equipped to deal with complexity. But then there are thousands of partners that are themselves small businesses. Think what it must be like for a small Business One reseller to deal with a company like SAP. I first saw these simplification efforts get underway about 4 years ago when Kevin Gilroy came on board. One of his first tasks was to simplify contracts. Don’t quote me on the page count, but I think before Kevin arrived, the contracts were upwards of 30 pages or more. He proudly brought a two-page contract to Bill, who promptly told him to get it down to one.

The partner management team has made great strides already in making it simpler to partner with SAP, and this week I saw a new partner portal that will likely make the life of a partner much easier. It is a single point of entry, easily searchable, to access all the assets and resources SAP provides. This is free, but for an added fee, partners can also sign up for the SAP Learning Hub, which brings additional virtual educational directly to the partners.

Bottom line: I think the simplification efforts have been successful and will continue to make it easier for partners, which will in turn allow them to spend less time figuring out how to deal with SAP and more time servicing the customer.

Easier to Do Business With?

But what about the customers that deal directly with SAP or even indirectly through partners? Often questions of ease of doing business boil down to pricing. One analyst in a press conference this week asked about simplifying pricing, citing Oracle’s policy of publishing its price list for all to see. I would caution anyone against confusing transparency with simplicity. Oracle might publish prices, but good luck in trying to figure out what anything will really cost, because its pricing is far from simple.

In all fairness though, any ERP vendor struggles with this, particularly those with broad portfolios. SAP has already taken steps to further simplify its pricing structure, particularly around the bundling of HANA, but any prior efforts were dwarfed with one announcement this week: Fiori apps are free. Here is the announcement:

SAP AG today announced that SAP Fiori user experience (UX) and SAP Screen Personas software will now be included within underlying licenses of SAP software. For existing customers [those who already purchased], SAP will provide a software credit redeemable against future software sales. In addition, SAP will offer a portfolio of UX services, including design, rapid deployment and custom development, to enhance customer engagement. SAP users can now take advantage of a next-generation user experience based on modern design principles setting a new standard in the industry.

This announcement is huge, for a couple of reasons. First of all, it really does help to simplify the pricing because there is no price. From the moment Fiori was released with a modest price tag, the hue and cry from customers and industry observers was that it should be free. This perception was largely based on the fact that the first 25 Fiori apps simply changed the user experience and added no new features and functions.

A new user experience adds “value” in of itself but no further value was added, so it is understandable that customers would expect their maintenance dollars would pay for this. In addition, because Fiori largely just delivered a new user interface, many customers and industry experts alike lost sight of the fact that they were indeed developed and delivered as apps. They thought SAP had just gone into the presentation layer and changed the user interface, as it would have for an upgrade. That was never the case and now the Fiori apps that are being developed go well beyond changing the user interface. The SAP Smart Business Cockpits being developed now are changing business processes and delivering very significant added features and functions.

These cockpits address a variety of functions and roles throughout the organization, including:

  • Cash management
  • Sentiment analysis
  • Bank analyzer
  • Demand forecasting
  • Bulk pricing scenarios
  • Mass execution of availability checking
  • Transportation asset management
  • MRP cockpit
  • Transportation management
  • Purchasing
  • PLM Variant configurations
  • An accounting hub
  • An “exposure” hub

These will be delivered over the next year or so. I am sure I have missed a few, but you get the picture. What does this have to do with simplicity? All of these are being developed as Fiori apps, which means there won’t be an SAP salesperson knocking on your door to sell them to you. They are released on a quarterly basis and they are free. And because they are delivered as “apps” and not as traditional “enhancements” you don’t have to go through a complete upgrade cycle to get the one (and only one) you are interested in. You just implement that one app.

This essentially paves the way for SAP to reinvent the Business Suite from the outside in, without causing a major reimplementation along the way. I think this added value was overshadowed by the declaration of victory by ASUG in having won the battle over charging for Fiori apps and the fact that many are still thinking Fiori is just a new user interface.

A Simpler Solution?

Which brings us to how the “Simple” or “Simplify” message pertains to the SAP products. The best example of the impact is probably the introduction of a new product, “Simple Finance.” Don’t let the name fool you – it is not just for small companies that might have simple accounting requirements. SAP itself made the transition to this product and is now running its financials with it. And I heard it made that transition over a weekend.

I myself don’t have as clear a picture of this as I would like, since my packed schedule at SapphireNow often conflicted with sessions and discussions on the topic. So I will turn to the dynamic duo of Jon Reed (@JonERP) and Dennis Howlett (@dahowlett) to add some insight since they spent some one on one (or two on two?) time with Hasso Plattner and new head of development Bernd Leukert on the topic. Den and Jon published this to better explain SAP’s cloud strategy, and indeed Simple Finance was developed as a cloud offering. But this excerpted section is perfect for the point I am trying to get across:

Plattner and Leukert confirmed that the freshly-named ‘Simple Finance’ is part of a broader rewrite/re-imagining of SAP ERP, with HANA and cloud as the enablers. Referred to as the ‘simple suite’ or the ‘S system,’ Leukert said that the monstrous ordeal of rewriting 400 million lines of business suite code was not necessary, because of a “massive reduction in code” resulting from the simplification HANA allows and in particular, the elimination of bulky aggregates which account for a significant percentage of current code.

This simple suite, currently focused on the Simple Finance area also includes an aggressive paring down of software accounting complexities, a now-familiar talking point of Plattner’s.

While anyone can see the value of massively reducing the amount of code required, the non-technical person might not immediately appreciate the significance of the elimination of aggregation. Forgive me for over-simplifying, but think of it this way. Traditionally accounting solutions have accumulated all sorts of totals. Some are for periodic reporting (monthly, quarterly, annually, etc.), while other aggregates are used to gain insight into different parts of the organizational structure. This aggregation enables reporting without having to sort and calculate totals across a potentially large volume of transactions. Sounds simple and effective because you can gain access to these totals through a simple query. But there were some drawbacks.

Not only is there embedded code to maintain these aggregates, but sometimes these totals are not updated in real-time, and instead are calculated with batch runs. That means you are looking at a snapshot in time and not the “real” number. Secondly, what happens when you want to change the organizational structure and report in a new way? Those pre-calculated totals are now meaningless. If you can instantly slice and dice and calculate on the fly using any criteria, you don’t have to do any of this aggregation and you get complete flexibility.

This flexibility and speed is the real value HANA brings to the business, along with improved, faster decision-making. If SAP can deliver this simpler suite through a combination re-writing code and adding Fiori apps, I believe the SAP products will undergo a dramatic transformation.

Of course, even if this happens, SAP’s competitors won’t let go of the message that SAP is big, clumsy and complex any time soon. They will still be inserting that FUD (fear, uncertainty and doubt) in the minds of prospects as long as there is a shred of truth to it. That only makes it more of a challenge for SAP.

Conclusion

SAP will never deliver Simple. But it can Simplify. These are just a few of the ways. While I believe SAP has already made progress, it still has a long way to go to deliver simplification. But I do believe it is committed at the very top of the organization. But the buy-in has to permeate throughout the ranks. I believe some of the SAP folks will need a frontal lobotomy to make this transition, but many more will be breathing a sigh of relief. They, like SAP partners and customers, will say, “Finally.”

 

 

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Einstein Inspires SYSPRO USA Brain Trust

Boosting US Manufacturing In 4-Part Partner Program

In December 2013 SYSPRO USA launched a program targeting US manufacturers. The four-part program has ambitious goals, designed to be facilitated by the company’s extensive partner channel.  While SYSPRO has been committed to supporting the global small and mid-sized manufacturing and distribution community for over 30 years as a provider of Enterprise Resource Planning (ERP), this program reaches far beyond the usual objectives of an enterprise software company. Labeled as a new Brain Boost program, it consists of four “trust” initiatives focused on:

  • Product trust
  • Deployment trust
  • Micro-vertical trust and
  • Economic or community trust

While the first three components are fairly straightforward and less unique-sounding competitively, the fourth “trust” initiative extends beyond the aspirations and scope of most ERP providers. Yet SYSPRO has always emphasized its customer, hence community, focus. Unlike many other enterprise software vendors focused exclusively on increasing market share and share of the customers’ wallet, SYSPRO has always genuinely cared about making its customers both happy and successful.

Now it is stepping beyond the customer, to the manufacturing community at large. This economic trust initiative is all about creating an environment that protects intellectual property, supports job creation and keeps US-based manufacturing companies strong and profitable. Can an ERP company really have this kind of impact? Certainly not all by itself. That’s why it needs a Brain Trust.

Inspired by Einstein

SYSPRO is clearly inspired by the genius of Einstein. Over the years Einstein has influenced many of its initiatives, starting with its “Simply SMARTER” strategy (an acronym: Strategy, Methodology, Accountability, Resources, Technology, Education, Customer Rewards). SYSPRO also built out its own theory of ERP relativity: S=MC2, where M stands for material, and C2 is cost and cash management. S, of course, stands for SYSPRO. Then came the SYSPRO Quantum Architecture, followed by a “wired” Einstein on Espresso, fueling the “always on, on-the-go” mobile (wireless) customer.

The latest inspiration is based on what made the brilliant physicist so special: his brain. Einstein’s brain has long been the subject of speculation and research. At one time, many believed his genius to be a result of his brain being larger than normal, stemming from the observation that he was born with an unusually large head.

However, you might say the child soon grew into his head, which ultimately, for all outward appearances seemed a normal shape and size.  Although clearly “special” in terms of its capabilities, actual measurements proved it to actually be a bit smaller than average. For the role Einstein would play in life, it was clearly built better, not bigger. This is one of the reasons SYSPRO loves to draw these analogies. While not the biggest vendor in the ERP market, SYSPRO fancies itself and its products as “better, not bigger” for the markets it serves.

Yet not being the biggest also means it must build trust in its product and its ability to deploy easily and reliably in the markets it hopes to serve.

Product Trust

SYSPRO is one of only a few remaining ERP vendors that offers a single product suite and therefore it enjoys the luxury of a singular, focused development effort. That focus happens to be on manufacturing and distribution. In addition, SYSPRO, as a privately held company can also afford the luxury of concentrating on satisfying the customer and reseller community, as opposed to the investment community (Wall Street).

This “Product Trust” is based on SYSPRO’s latest Release 7, which represents a time-phased delivery against requirements collected from over 750 small to mid-size manufacturing companies. The SYSPRO ERP product is almost exclusively sold through channel partners. This collection process combines the power of the SYSPRO channel with the relationship SYSPRO enjoys with its customers directly through periodic “SNAP Surveys.” SNAP, short for SYSPRO Needs Answers Please, is the mechanism SYSPRO used to bring features such as enhanced user interfaces, with active tiles and touch capabilities, custom configurability and mobile access to its latest release (Release 7).

The Product Trust is formed through collaboration between its trusted partners (users and resellers) and its own development staff. Not content to rest on its laurels, SYSPRO is constantly strengthening its capabilities both from a functional and technological perspective. Yet the combination of standards-based technology from Microsoft (standards like .NET framework, XML, HTML5) and multi-tier architectures keep it affordable and suitable for a small-scale environment.

But continuous change, even when linked to continuous improvement, can be a challenge for small to mid-size manufacturers. Even though technological advances allow software vendors to bring more innovation to the market, updates and upgrades can be costly and disruptive. While ERP can generate cost savings and other improvements, many manufacturers wind up squandering those savings on the care and feeding of the systems designed to save them money.

Which is exactly why SYSPRO is delivering the innovation of Release 7 in a new way. You might call it “drip feeding” innovation, allowing customers to accept enhancements in smaller, more digestible chunks. This is just one of the ways SYSPRO is helping manufacturers become stronger and more profitable. By making product features and technology easier to consume, manufacturers are able to divert budget from the typical maintenance-related IT spend, freeing up cash and working capital to innovate their businesses. Features, functions and technology that are easier to consume can be deployed faster and more efficiently.

Deployment Trust

While today many narrowly associate “deployment options” with Software as a Service (SaaS), in this case Deployment Trust is more about rapid implementation than it is about cloud versus on-premise deployments. Yes, SYSPRO can be deployed either in a traditional on-premise environment or in the cloud, although cloud implementations are more akin to hosted models than a multi-tenant SaaS solution.

The SYSPRO Deployment Trust has been formed to battle against the bad rap ERP has gotten in general based on potentially long and difficult implementations. Failed implementations are frequently blamed on the software itself and yet often the software attributed to a failed implementation is the same software powering one that is wildly successful. Success is often less about the software, and more about the disciplines and business processes the applications are intended to model.

SYSPRO has long had its own implementation methodology suitable to small to mid-size businesses (SMBs), but it is now investing in new industry-specific business process workflows, account structures, executive dashboards with pre-defined key performance indicators (KPIs), industry roles and reporting. It recognizes the typical SMB faces many of the same pressures as its larger counterparts, but can’t afford to start from scratch and re-invent wheels. So it builds best-practices into the data and process models.

SYSPRO has worked diligently to make sure these templates, structures and process flows are not static. Not only must they be adaptable and configurable to each individual business, but also reflective of the reality that business change is inevitable. Therefore the software must continue to be agile and flexible, able to evolve and change.

Micro-vertical Trust: The Food Industry

The investment in micro-verticals is a natural by-product of the Deployment Trust initiative, since much of the content provided is indeed industry-specific. The first micro-vertical selected for this Brain Trust is the food industry, which provides a unique opportunity for SYSPRO USA. It is an industry that is not only recession-proof, but also faces a very specific and pressing set of operational challenges. The food industry across the world faces rising commodity prices, but in the US, it also faces increased pressure from large retailers like Walmart, added complexities of trade promotions and deductions and intense scrutiny from the Food and Drug Administration (FDA).

But perhaps top of mind has been the growing concern over food safety. Over the past six years the US has seen some of the biggest food recalls in history, impacting both fresh produce like lettuce, spinach and peanuts, as well as meats (beef, ground turkey, chicken and other poultry) and all sorts of processed foods from cookie dough to frozen dinners and salad dressings.

A result of these growing concerns has been the passing of the Food Safety Modernization Act (FSMA) in 2011. The goal of the new law is to better safeguard the US food supply and therefore compliance is mandatory, even for small to mid-size companies in the food industry. The law will radically change how many do business. The FSMA gives new legislative power to the FDA, including the ability to mandate a recall and close plants where there is a “reasonable probability” of potential threat. But perhaps most game changing of all, managers can be held personally liable and face the threat of criminal prosecution. The FSMA will be to manufacturing executives what Sarbanes-Oxley was to the accountants. So achieving regulatory compliance and food safety has become an absolute necessity.

Like other manufacturing segments, the food industry must deal with growing supply chain complexities, the need to improve forecasting, reduce inventory and improve customer satisfaction. In addition, it needs to comply with food safety regulations, including complete forward and backward traceability, manage recipes and formulas, replacement ingredients, co-products and by-products. And yet, throughout, it must not lose sight of efficiency, accuracy and profitability, often with razor-thin margins.

Economic Trust

So can SYSPRO build economic trust by addressing the stringent requirements of the food industry and perhaps others? Can a software company help…

  • Protect intellectual property?
  • Modernize processes that lead to profitability?
  • Free up resources wasted now on IT support that adds little value?
  • Stimulate US manufacturing innovation?
  • Facilitate creation of the best kind of US jobs, those based on creating real opportunity for business growth?

This is indeed a tall order. And perhaps software alone can’t achieve these goals. But one thing is certain. Manufacturers cannot compete and contribute to strengthening the US economy today without adequate supporting technology.  ERP has been both a boon and sometimes a burden to bottom lines. Many manufacturers have seen cost savings gained through ERP implementation eaten away by the cost and disruption of upgrades, or even worse, have left money on the table by not taking full advantage of software innovation. Today’s US manufacturing/distribution community could benefit enormously from having a partner focused on reasonably priced ERP technology, innovation that is easy to consume and operational coaching. That is why SYSPRO is committed to turning its channel partners into these dedicated resources.

As a result, SYSPRO is revisiting its Einstein Strategy and turning its Simply SMARTER acronym into the basis for a new SMARTER channel program:

Strategy: While SYSPRO has always sold almost exclusively through the channel, there is a renewed focus on recruiting, not just “life style” partners, but those not only interested in growing a significant business, but also with the knowledge and business acumen to truly add value to manufacturing operations.

Methodology: new and revised implementation methodologies for rapid deployment. This approach also extends back through the selling process, with heightened collaboration and standardized sales methodology, including special bundles and pricing.

Accountability: with program deployment incentives and the measurement of customer lifetime value.

Resources: pre- and post-sale assistance with the addition of ecosystem experts, particularly in food and safety and even assistance in factory layout.

Technology: continuous feature, function and technology innovation that is easily consumed.

Education: in strategy, marketing, sales, implementation, support and application development.

Rewards: customized partner-tailored goals, KPI measurement and management.

Thus far, SYSPRO has been able to bring 37 new partners to close. By concentrating on coaching these partners to success, SYSPRO hopes the channel will be able to “pay it forward’ and in turn coach their customers to the same level of achievement, creating an environment of growth and profits.

Summary

Most ERP software companies would be happy just to sustain or grow their own revenues. While this is important to SYSPRO USA, its executives have a long history of participating in civic, government and economic development. Being focused exclusively on manufacturing and distribution segments, this community holds a special place in SYSPRO USA’s executives’ hearts and minds, as does the desire for a stronger US manufacturing economy. Focus on product innovation and ease of deployment are important elements, particularly in support of the food industry, which feeds the country and helps fuel its growth. By also contributing executive services and educational programs, along with program incentives, SYSPRO USA stands squarely behind and in support of economic growth and job creation. A worthy goal of a Brain Trust? Yes. Genius? Perhaps not. Simply smarter? Definitely.

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Two New Performance Apps from UNIT4 Encourage Finance to Embrace Change

Simplicity and Automation Put Analysis In and Take the Fear Out

Best Independent ERP Blog

Best Independent ERP Blog

It has been said time and again, “Nothing is constant but change.” And yet many Chief Financial Officers (CFOs) and Treasurers live in fear of change, and as a result, they resist it. Whether resulting from new regulations and reporting requirements, a merger or acquisition, organizational restructuring, or new or revised business processes, change can wreak havoc on the finance department’s ability to manage the cash flow, prepare financial statements, close the books and provide transparency to the business.

While all businesses face change, the typical UNIT4 customer faces frequent and/or massive changes. For years now UNIT4’s unique VITA architecture has been the key to helping its customers respond quickly when forced to navigate the sea of change. With two new financial performance management applications, UNIT4 goes one step further: to enable its customers to not only accept change but to seek it out, not for the sake of change itself, but for the growth and performance of the business.

Cash Flow and Consolidation

So, what’s new? In December 2013 UNIT4 introduced two new financial performance applications to the North American market: UNIT4 Cash Flow Planning and UNIT4 Consolidation. These new products will be available in the United States and Canada starting January 1, 2014, but were previously test-marketed on a limited basis in Europe. The pre-launch in selected European markets was successful and yielded 22 net new deals in the past year.

The products themselves stem from acquisition of OCRA, which enjoys 75% market share in financial performance management software on its home turf in Sweden. The acquisition of UK-based Coda and its suite of financial applications have also influenced these new offerings. Both acquisitions occurred in 2008. Since then OCRA has increasingly gone toe-to-toe in competition against the “big three” in financial reporting and financial performance management: Hyperion (now owned by Oracle), Cognos (now owned by IBM) and Business Objects (now owned by SAP).

According to Alar Lange, Managing Director UNIT4 OCRA, his team competes against at least one of these “top three” in 80% of new deals and one of these three products is already installed in about 40% of the companies that invite UNIT4 OCRA into the evaluation for a possible replacement.

One customer, a privately held Scandinavian media group of 175 companies operating in 20 countries, was one such company. Mr. Lange said, “This firm invested first in Cognos in the year 2001; they replaced it with Hyperion in 2005 and after four years were still not up running. They signed with OCRA in late 2009, and went live in the beginning of 2011. Since they went live our overall close rate in competitive deals rose from 60% to 73%.”

Part of the reason for this improvement: Since the acquisition, OCRA has been updated with a new user interface, as well as social and mobile capabilities. OCRA was originally created as a stand-alone application (and can still operate as such), with the ability to unite disparate data sources. But today the integration with UNIT4’s Agresso ERP and Coda Financials is optimized to give these new applications an added advantage, one that is particularly significant for those operating in volatile markets where change is simply a way of life. This is UNIT4’s target market, particularly for its Agresso Business World ERP. Through this seamless integration, the new financial performance applications inherit the ability to deal with change quickly and efficiently. The UNIT4 existing customer base is therefore the initial target.

Why is embracing change so important?

These new solutions fall under the category of performance management. As a result, both are designed to provide visibility to the business, add a level of control and support clear communication. The ability to analyze and compare against plan, as well as answer the ever-present questions of “what if?” are integral to improving performance. But unless this added visibility simply tells you what a good job you are doing, then you need to take corrective action. And taking action means making some changes yourself, in addition to those imposed on you. Any resistance to change will limit your ability to respond, improve performance and perhaps even grow the business.

Yet companies resist change because change is hard. People resist, which makes it harder to make improvements to processes and to the organizational structure itself. And if the enterprise software solutions you are using to run your business are rigid and hard or expensive to change, the tendency is to minimize the impact, which also minimizes any improvement sought.

Those that can react quickly and effectively can better keep pace with necessary changes. Those that actively seek out new ways to change in order to improve and grow, even before change is necessary, can gain a significant competitive advantage. Change seekers do take some risk, but the risk/reward ratio can produce game-changing results.

Change seekers need to start with performance management solutions that help identify risk and opportunity before executing those changes and reflecting them in their enterprise solutions. That is the job of UNIT4 Cash Flow and UNIT4 Consolidation. Here are some of the features built into each.

UNIT4 Cash Flow Planning

UNIT4 Cash Flow Planning uses a simple cash report builder to produce a single-screen environment for analysis and reporting. Finance managers (not technical IT staff) use standard templates and wizards to create charts and graphs to expose liquidity forecasts, net cash position and currency exposure, automating the input of bank balances and other cash planning data.  These decision makers can drag and drop data and drill down by currency and bank account, directly to invoices and other transactions.

Once these visuals have been created, Finance and Treasury can compare and analyze forecasts, spot trends and differences by month, week or day, all managed by a rule-based alert system that logs actions and comments, bringing more participants into the conversation.

UNIT4 Consolidation

UNIT4 Consolidation brings together all the elements of your financial position, from multiple business entities across a group, in order to provide top to bottom visibility to financial performance. Unlike a traditional business intelligence (BI) tool that is only effective in the hands of an IT specialist, UNIT4 Consolidation is a tool for the Finance manager to consolidate income statements and balance sheets and produce key performance indicators (KPIs), not only for finance data, but for operational performance as well. It supports both GAAP and IFRS reporting requirements right out of the box, without extensive setup. There are user-friendly functions for input and reconciliation, a full audit trail and easy drill-down directly to the transaction level.

Logic for consolidation is pre-defined for automatic aggregation and eliminations. The consolidation flow is user-friendly, multi-dimensional and the reporting is transparent from both a legal and management perspective. It comes with pre-defined data values (e.g. monthly, accumulated, quarterly, rolling) and pre-defined flow-steps (e.g. consolidated value, group value, acquisition value), as well as cash flow statements.

But probably most important in the context of a UNIT4 customer, all these dimensions and views are easy to change. You are not locked into a single, set reporting structure and insight can be gained in a cross-dimensional manner. Look at the position of the entire business unit, or analyze sales or other areas across different units. You decide how to analyze to expose risk and opportunity.

And you also have the freedom to decide how you will respond and take action. Would you benefit from an organizational restructure? Should business processes be changed to exert more control? These are changes that need to be reflected in your ERP solution. The last thing you want is to be discouraged from making a change that could improve performance and support growth simply because it is hard to change your ERP once it has been implemented.

Play the “What If?” Game

But how do you determine the best course of action? Perhaps the most important aspect in terms of improving your financial position will be in your ability to answer the most important “What if…?” questions. How will currency fluctuations impact profitability? How will a redistribution of cash across banks, across international boundaries impact interest and investments? How will moving operations impact tax and other liabilities?

Much of this analysis is supported today through multi-dimensional online analytical processing (OLAP), allowing “what-if” functionality that can test many different financial scenarios. These “what-if” capabilities are crucial to effective cash flow planning and are also particularly useful in consolidation and reporting, and therefore UNIT4 has added this to both of these financial performance products.

UNIT4’s Vita Architecture Facilitates Change

This is where UNIT4’s Vita architecture comes in. This VITA architecture tightly integrates three layers: data management, process modeling and delivery of information (analytics and reporting). This type of component architecture is not unique. Most modern service-oriented architectures today will support a presentation layer (user interface), an object-oriented data model representing standard business objects (think of a customer or an order as a business object) and business logic. This business logic might be a combination of hard-coded programs and externally defined business rules.

To understand how UNIT4 is unique, consider what needs to happen when a business process changes. In the past IT might have been engaged to make changes to the underlying programs. This also might have taken months to implement and in the meantime the focus (and even the problem) may have changed. With UNIT4’s Vita architecture, no source code changes are required and even if it means changing the business rules, the data model and the user interface, this does not constitute three changes. With UNIT4 you make a single change and it is permeated throughout all the necessary components of the solution. All are on the same page. No delays. Nothing can be out of sync. Of course this doesn’t guarantee your organization will execute well on these changes, but if they don’t, it won’t be because of the ERP solution.

This is why the financial performance solutions alone can only take you so far. But through optimized integration back to an ERP solution that handles change easily, you not only see what you need to do, you are in a position to initiate change for the sole purpose of improvement. You can actually take action without unnecessary cost and disruption.

Summary

Change has not only become a way of life for many businesses, the pace of change is accelerating, requiring better, faster decisions. Companies require better visibility with intuitive graphical interfaces, multi-dimensional analysis and drill down capabilities, particularly when making decisions that impact financial performance. Gone are the days when decision makers could afford to wait for access to new data, or to see data in a new or different way. They need to interact dynamically with data and other individuals. And they need to interact with that data in clear, simple and intuitive ways. The data they need today will not suffice for tomorrow’s decisions.

But seeing the data and being able to analyze it only gets you half way to the goal. It keeps you afloat on the sea of change. But initiating your own changes allows you to set sail for a safe harbor in a new, exciting and perhaps distant land. Do you have confidence you have a complete picture of your business? Can you take action to improve performance, avoid risk and support growth? Can you easily reflect changes in your ERP post-implementation? Does your ERP solution put wind in your sails or send you crashing against the rocks?

For existing and potential new customers of UNIT4, having the ability to respond to change that is forced upon you is a key differentiator. Think what you could do if you could initiate action that could really change the game. Look for synergy with UNIT4 Cash Flow and UNIT4 Consolidation. They could be a force multiplier.

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