In our recent blog post series (ERP, The Next Generation: The Final Frontier?) we’ve had some fun comparing Enterprise Resource Planning (ERP) to the USS Enterprise, the starship made famous by the extraordinarily successful Star Trek entertainment franchise. Like the USS Enterprise, whose five-year mission it was to explore new worlds and “to boldly go where no man has gone before,” early versions of ERP charted new territory for enterprise applications. It evolved from MRP (material requirements planning) to MRP II (manufacturing resource planning) and then boldly set out to conquer the “final frontier” of ERP, managing not a small piece of the enterprise, but the enterprise itself. As a participant in the ERP space (pun intended), Sage is certainly a player. It doesn’t just have its own ERP starship; it has a whole fleet of them. But is maintaining a fleet of starships the right approach to conquering the final frontier of ERP exploration? Maybe not. Can Sage find another way without abandoning the fleet? Read on to find out.
Sage ERP: A Fleet of Starships
Even with a fleet of ERP solutions and a massive base of installed customers, Sage has not dominated the ERP horizon. In fact it may very well be that fleet of starships that has prevented Sage from achieving the dominance in ERP that you might expect from a company of its size and reach. Sage spent many years acquiring a vast portfolio of products, although not all of which would be categorized as ERP. And throughout those very active years of acquisition, Sage also preserved many of the brand names it had acquired. Names like Peachtree, Simply Accounting, ACT!, SalesLogix, MAS, Adonix and ACCPAC might have better name recognition than Sage. And yet, they are all Sage. Or at least they were until recently.
This past year, Sage not only engaged aggressively in re-branding its products to fit under the Sage umbrella, but also made some divestitures (including ACT! and SalesLogix) in order to achieve more focus. And ERP is a prime target in that focus. But competing in the ERP market today is not for the faint of heart. Technology and innovation is advancing at a rapid rate and it takes a lot to compete.
Does having a fleet of ERP starships help or hurt?
While a fleet of starships gives you more reach, there is an inherent problem. Innovation is key to achieving and maintaining a competitive position. Let’s say someone develops a new propulsion system that allows a starship to move at twice the warp speed previously possible. If your starship can’t achieve that speed, you become a sitting duck, just waiting to be attacked by those that are newer and more advanced. But with a fleet, if you need to innovate, it means each starship needs to be maintained and improved separately. Even with multiple teams this takes a lot of time. And it might mean in order to upgrade, you need to take the ship out of commission.
Upgrading ERP is similar. Although you should never have to take ERP out of commission (at a customer site) any longer than perhaps a weekend, the upgrade process can be very disruptive. As a result many customers delay implementing an upgrade. So even if the vendor innovates on an annual basis, consumption of the innovation lags behind.
Making matters worse, if a solution provider maintains multiple and disparate sets of code, it needs to enhance each separately. Let’s say it wants to add the same functionality to each. With multiple development teams, you may be reinventing the wheel several times over. Instead you might form a specialized development team that brings this new functionality to each product. These developers get very good at that piece of functionality. But they lose a lot of efficiency in moving from one development environment to another. And of course, this team can’t work on all products at once, so a queue will form. Customers will start to lose their competitive edge and the solution provider becomes vulnerable to attrition.
But this is a weakness only because new functionality has traditionally been built into ERP. What if it wasn’t? Just like a starship, which is a self-contained environment that sustains the life of a community (its crew), ERP has traditionally been developed as a tightly integrated set of modules that sustains the life of the business. In ERP, The Next Generation: The Final Frontier? we compared traditional “tightly integrated” to next generation “loosely coupled” solutions and concluded that adding components as a “service” made it much easier to add new features and functions to ERP with less disruption. It might even make it possible to develop functionality once and then re-use it across different ERP solutions. But that means it is no longer like a fully-contained, independent and self-sustaining starship. For this we need a new metaphor.
Transitioning From Starship to Space Station
In fact in ERP, The Next Generation: The Final Frontier? we introduced a new way thinking. Instead of thinking of ERP as a starship traversing the galaxy, think of it instead in the context of a solar system. Imagine ERP in the center. In a solar system, planets orbit around the sun. In our ERP-centric system, picture loosely coupled applications surrounding it. In a real solar system it is gravity that holds the planets in orbit, and the source of gravity is the sun at the core. In our software solar system with ERP at its center, the gravity is drawn from the platform on which the ERP is built.
When you have a single ERP, gravity is strengthened by building ERP and all the surrounding applications on a common platform. Loosely coupled applications draw sustenance from data collected and managed by ERP. Combine this with standardized business objects (e.g. customers, suppliers, orders, etc.) and you insure a strong connection but with a loose coupling that can be easily disconnected and reconnected.
What happens though when you have multiple ERP solutions developed on different technology and architectures? This is the situation Sage finds itself in, with its “fleet” of ERP solutions. You don’t have a single ERP in the center. You might think we’ve “broken” our analogy because there is typically a single sun in any solar system. But with a little tweaking, the concept still works.
Imagine instead a Sage solar system, and each of its ERP solutions as a planet. In a real solar system, you find one or more moons circling each planet. The planet and the moons are all made out of essentially the same “stuff” so they circle naturally. After all, these orbiting bodies are really nothing more than chunks of rock.
The moons in orbit around an ERP might be those made of the same “stuff” as the ERP – the same (or compatible) architectures and technology. But our moon isn’t the only satellite circling the planet Earth. We have a plethora of man-made satellites, including a space station, which is not only in orbit, but also sustains life. The space station requires some additional life-support systems, but it is orbiting and functional. But it isn’t perpetually self-sustaining. It needs supplies (like food and other consumables) delivered on a regular basis. So it needs a means of connecting and communicating back to the “home” planet. Much like our space station, loosely coupled applications must be supplied on a regular basis with data from ERP.
In order to add functionality across a whole portfolio of products, a company like Sage will need to first build a standard space station. But in order to launch it into orbit around several, or all of its planet ERPs, it will need to clone it. Each of these clones might require a slightly different connector back to the planet it will orbit. Taking this approach, that specialized development team can focus exclusively on building the standard space station, while the regular product development team takes responsibility for connecting it to their planet.
Done effectively, this can turn the fleet from a disadvantage into an advantage. Individual ERP solutions can be enhanced and refined to address different markets and where new functionality can be shared, a company like Sage can develop it once and re-use it across multiple product lines. Providing the underlying architectures of the different ERP products allow these new components to be connected relatively easily, products that might otherwise have been relegated to “maintenance mode” might actually thrive with new and added functionality.
In fact, Sage is taking exactly this approach as it develops new functionality and it is going one step further and placing those services in the cloud. While presented as a “hybrid cloud strategy” intended to help customers move incrementally to the cloud, with all the benefits of lower cost, faster implementation, easy access, perhaps the bigger benefit is in being able to develop once and re-use across multiple product lines. In doing so it also brings more life to products that might have otherwise never been significantly enhanced.
Whether this is a “cloud strategy” or an innovation strategy, the net effect will be to surround ERP with a series of “Connected Services.” Sage Payment Services was one of the first of these Connected Services, launched back in 2010. Sage Inventory Advisor was announced in June 2013 and most recently, at Sage Summit 2013 in July, Sage announced new mobile solutions: Sage Mobile Sales, Sage Mobile Service, and Sage Billing and Payment. All are cloud-based subscription services running on Windows Azure, Microsoft’s cloud platform, and designed to easily integrate with Sage ERP systems. Additionally, at the same event, Sage announced two new business intelligence tools.
The strategy is sound, but with such an expansive portfolio, the devil is in the details in keeping track of which Connected Services are actually connected to which Sage ERP products.
For example, Sage Enterprise Intelligence is for Sage ERP X3 and Sage Intelligence Reporting Bundle is for Sage 100 ERP, Sage 300 ERP, and Sage 500 ERP. Sage Inventory Advisor is currently available, while Sage Enterprise Intelligence and Sage Intelligence Reporting Bundle will be available in the fourth quarter of 2013. As for the mobile solutions: They are currently available for those businesses running the latest versions of Sage 100 ERP and Sage 300 ERP. Presumably these would also be applicable to Sage 500 and Sage ERP X3.
This level of detail can be confusing to the market, and this confusion is compounded as Sage continues its efforts to build its brand. Focusing on messaging and marketing the Sage name has the potential of blurring the details product by product. Fortunately this is far less confusing for the customers. Each customer will only be concerned about what is coming down the road for the product they license.
And there is an added advantage to the customer in this approach. Think of these extensions as space station-like satellites that will surround an ERP solution. Many will support functions that were previously not supported by ERP. This may open doors to employees that never went near ERP before. Some of these users will only use these satellite products and never touch the core ERP solution. In other words, they will live on the space station, not the planet. Changes to the ERP shouldn’t affect them at all.
At some point if the size and complexity of the business grows, a company may decide to move to a Sage ERP solution that is better aligned with its needs (e.g. as it grows from small to mid-size). In this move, nothing changes for those living on the space station. It will be circling a new planet, but they might not even notice any difference. This makes the upgrade that much easier and insulates many users from the potential disruption of a reimplementation.
Sage has some catching up to do in terms of modernizing and innovating its ERP solutions. ERP, The Next Generation: The Final Frontier? presented the next generation of ERP in terms of new technology that enables:
- new ways of engaging with ERP
- custom configuration without programming
- more innovation
- better integration
Sage is attacking each of these areas, most notably in new user interfaces and new ways of interacting with ERP. By being a bit late to enter the starting block, Sage does have the advantage of learning from others that might have gone before them in terms of what works and what customers want. A good example of this sort of leap-frog approach was demonstrated at the recent Sage Summit 2013. Himanshu Palsule, Sage Chief Technology Officer demoed voice-activated mobile technology to access customer data from ERP using natural language queries. Using a Siri-like interface, he was able to retrieve data such as credit limit, open receivables, and address information. Equipped with the address and web-based mapping functions he was able to get directions and initiate a call to the customer.
But Sage isn’t looking only at the competition to drive its future direction. It has also launched a Sage Listens RV Tour, a 50-day, nationwide tour where Sage executives met with more than 50 customers in order to gain a better understanding of how to develop features and services to better support its customers. While the mode of transportation is a little more mundane (and practical) than a starship, Sage executives literally hopped on the bus, a well-equipped recreational vehicle (RV), and visited 16 cities across the United States.
Sage’s approach to developing new functionality as cloud-based connected services is a smart move that will drive more innovation in a way that inherently provides better integration. We’ll be watching closely as it starts to make the important transition from maintaining a fleet of starships to developing standard space stations. If you are a Sage customer, or considering becoming one, look for a cloned space station launching around your planet soon.