Are Control, Independence, Data Privacy (and more) worth
Zoho is serious about
software. If you go out to its website
to learn more about the company and its products, one of the first statements
you encounter is, “Software is our craft and our passion. At Zoho, we create
beautiful software to solve business problems.” While this type of mission
statement is certainly not unique in the world of enterprise applications, the approach
Zoho takes, along with the results it has achieved, are just that: quite
unique. And impressive.
And its customers will
attest to that differentiation. If you speak to some of its (more than 50
million) users, you are struck by some of the terms you hear – terms like peace
of mind, seamless, simplicity, certainty, powerful, predictability, and “It just
The uninformed might assume
this level of seamless simplicity comes from overly simplified, lightweight
functionality. And they would be wrong. These descriptors are the direct result
of Zoho taking a full stack approach. The Zoho philosophy: “To provide this
seamless, superior customer experience, we need to own all core aspects of the
technology stack.” That stack includes everything from the applications
services, and middleware software, to the hardware, infrastructure, network,
and data centers.
This full stack approach
comes at a time when most other native Software as a Service (SaaS) solution
providers are choosing to leverage tools and technology from public cloud
providers like Microsoft (Azure), Amazon (AWS) and Google, in order to focus
their efforts on their core competency, which is the application itself. Some do
create their own development platforms, while others turn to giants in the
industry like Salesforce and its Force.com platform. They do organically
develop new features, functions and new products. But they also plug gaps in
functionality and expand into new markets through acquisition and partnerships.
And in doing so, they also sacrifice a level of independence, control and
sometimes performance and data privacy.
Zoho is unwilling to sacrifice any of this, and is also committed to providing seamless integration and a single, unified data model. But that comes at a price. There are no shortcuts. Zoho must develop everything itself. While this might appear to be a serious constraint, its solution stretches well beyond the usual boundaries of enterprise applications to include productivity tools like Mail (think Outlook), Sheet (think Excel), Show (think PowerPoint), Writer (think Word), Meeting Bridge (think Microsoft Teams or Zoom), and much more, totalling 47 apps today and growing. Plus it continually innovates its products, embedding new technologies like natural language processing (NLP) and artificial intelligence (AI). And it somehow manages to deliver an average of five new products a year.
Challenging the Status Quo, In Pursuit of the Extraordinary
IFS is in hot pursuit of the “challenger.” Being a challenger isn’t
about market position or size, but more of a mindset. It’s about challenging
the status quo, in pursuit of the extraordinary. Challengers have an appetite
for something new. They aim to stand out, to transform their businesses. And
while IFS is committed to empowering the world’s challengers in five select
industries, it is also intent on being a challenger itself in the world of
In the eighteen months since Darren Roos took the helm as Chief
Executive Officer (CEO), he has sharpened the focus and brought consistency,
collaboration and authenticity to its global operations, without damaging a
corporate culture built on trust. Already a strong solution provider, IFS has developed
products with deep industry functionality by listening to and working closely
with its customers. That depth is now complemented with embedded, enabling
technology that brings agility, usability, extensibility and more innovation. Under
Darren’s leadership IFS challenges the status quo by being a software solution
provider that prides itself on “Saying what we [will] do, and doing what we say.”
Here we take a look at what IFS has done to enable it to empower the
Sharp Industry and Solution Focus
IFS has always focused on asset-intensive and product-centric
businesses, but it has sharpened that focus to five industries:
Aerospace & Defense
Energy, Utilities & Resources
Engineering, Construction and Infrastructure
Installation, Repair and Maintenance Service
While sometimes prospects might pull it into some related,
under-served markets that share some common characteristics (like mining and
oil & gas), these five are the segments it will use to provide direction to
its product roadmaps and its go-to-market strategy. Unlike some of its
competitors, interested only in grabbing market share, IFS is sticking to the
industries it knows best, and for which its solutions have been designed and
tuned. Rather than offering a general-purpose, one size fits all solution, it
develops one that is purpose-built.
And while some of those same competitors are also trying to
be one-stop shops for all enterprise applications, IFS focuses on three
specific solutions that are individually deployable, yet inherently integrated.
Enterprise Resource Planning (ERP)
Enterprise Asset Management (EAM)
Field Service Management (FSM)
However, when combined, these three cover a very broad
footprint. Indeed, many ERP solution providers today claim to provide a
complete “end-to-end” solution, to the extent that it is often hard to tell
where ERP ends and other applications begin. But is this really what companies
want today or is it just another land grab?
We asked our 2019 Enterprise Solution Study participants to
choose between a “Suite in a Box” – a complete end-to-end solution that is
pre-integrated and ready right “out of the box,” or a more “Best of Breed”
approach with a strong core, coupled with the ability to purchase or develop
additional functionality and easily connect it back to the core. We recognize
the choice is not always so cut and dried, and therefore added some options
that are more of a mix but leaning in one direction or the other. Where one
approach was clearly preferred (i.e. not a mix), we found the “Best of Breed”
approach preferred 2:1 over a “Suite in a Box” (Figure 1).
Figure 1: Which approach is most appealing to you?
Source: Mint Jutras 2019 Enterprise
This may seem like the integrated suite versus “Best of
Breed” arguments that have waged throughout the world of enterprise
applications for decades. That debate was always about the tradeoff between
sacrificing “best of breed’ functionality for ease of integration. But there
are some subtle and not so subtle differences. Nobody today is willing to
sacrifice features and functions. And everyone wants an integrated solution. But
they also want it “their way” and at their own pace. And they don’t necessarily
like to be locked in with a single solution or vendor.
ERP itself is an integrated suite. Mint Jutras defines ERP
as an integrated suite of modules that provides the operational and
transactional system of record of your business. As such, it is comprised of modules,
some of which are core to any business (e.g. general ledger, accounts payable, accounts
receivable, purchasing, order management, etc.) and some specific to a type of
business. Product-centric businesses, particularly manufacturers, also need
logistics and production capabilities. But ERP doesn’t necessarily address the
needs of sales, service or marketing. And seldom does it address all the
special needs for asset maintenance and management or field service.
For these asset-intensive industries, IFS has chosen to
address the special needs of field service (FSM) and enterprise asset
management (EAM), but don’t expect it to acquire or develop a CRM system any
time soon. It will leave sales and
marketing to the likes of Salesforce and Marketo, and payroll to the likes of
ADP, Paychx and CloudPay. And it is not afraid to use technology from partners
like Microsoft to address industry-specific needs like ITAR (International
Traffic in Arms Regulations) compliance in the United States.
Of course, a lot of development effort internally goes into
developing and innovating these solutions. But IFS has also invested in
acquisitions, including the acquisition
of Workwave in 2017, and the most recent
announcement of a definitive agreement to acquire Astea Technologies, a
well-recognized player in the FSM arena. According to the announcement, “The
combined company will have strengthened leadership position in Field Service
Management (FSM) by integrating two of the most established and well recognized
players in the market.”
It is clear, IFS will stick with what it knows best,
leveraging its deep domain expertise, but also provide strong integration
capabilities. This is not only possible today, but is also the key attraction
to the most popular option in Figure 1 – the ability to assemble exactly what
is needed, with the caveat that it must be easily connected back to the core…
which brings us to the product(s).
Delivering on its Promises
IFS prides itself on the philosophy of transparency: We say
what we do and do what we say. But the cadence and volume of innovation is also
important. IFS has a spring and fall release each year. But it is also
establishing an ‘evergreen’ approach, which gives customers the option to
always be on the latest version of their applications without the disruptions
that come with full-scale upgrades. The applications are continuously updated, and
new features are optional.
This re-imagined application life-cycle experience does not
require the customer to be running in the cloud. Unlike other vendors that seem
more intent on being the biggest (in the cloud) than on delivering what
customers really want, IFS offers the choice between cloud and on-premise, with
the same software available regardless of which deployment option is chosen.
While there are some obvious advantages to the cloud, including this
‘evergreen’ approach, IFS offers no incentives to move to the cloud, leaving
the choice entirely up to the customer.
Architecture is Key
The secret behind IFS’ ability to keep a steady cadence of
both features and technology improvements is the attention it has paid to
laying the proper foundation. Oftentimes today, in selecting a new ERP (or FSM
or EAM), there is a tradeoff between a solution that has matured over years or
even decades, and one that has been developed more recently, based on the
latest and greatest technology. IFS is one of the very few solution providers
today that has survived the evolution from mainframes to component-based, cloud
native architectures, without abandoning its original solutions or leaving them
behind to ride out their final years on old and outdated technology.
“IFS has been evolving its
technology foundations over an intensive and sustained period of engineering
This statement was included in its recent announcement
of what it calls its “evolved industry-focused architecture.” Scheduled for
availability in 2020, this new architecture will lay the foundation for IFS’s
entire portfolio of products.
“In essence, this new approach
will allow customers to integrate enabling technologies such as internet of
things (IoT), augmented and mixed reality (AR/MR), artificial intelligence (AI)
and machine learning (ML) in pragmatic and focused ways so they can optimize,
automate, predict and interact better across their business.”
But IFS customers don’t have to wait until next year to reap
some benefits. The current underlying architecture is already component-based
and this is, in fact, how IFS has been successful in delivering last mile
functionality, not only to its declared focus industries, but also to
individual verticals within those segments. Process manufacturing industries,
like food and beverage, provide the perfect example. Keeping up with different
regulatory requirements across the globe has always been a challenge, but one
IFS has readily accepted. But it has not burdened other industries with the
specific requirements needed for compliance. Instead, it has developed a series
of components that can be assembled and integrated seamlessly into the core ERP
How does this work and how does it set IFS apart from rivals
that have similar maturity of feature/function, but perhaps not the technology
enablement to meet rising expectations today?
In the past legacy solutions were developed as monolithic
structures. Adding very narrowly focused features and functions added to the
complexity of the solution and also made it rigid, hard to maintain and
innovate. IFS was among the early pioneers in moving away from this monolithic
approach. Its journey to a component-based architecture began in 1994 when it
introduced its Services Oriented Architecture (SOA). Today it is moving
steadily towards a microservices architecture, with specific mention of
container technology and Kubernetes,
but that is a more technical discussion than most business leaders care to dive
Every technologist in our audience knows a microservices
architecture is defined as an architectural style that structures an
application as a collection of loosely coupled
services. For those nontechnical readers, think of it as constructing a
solution from a set of Lego building blocks. Purists hate this analogy, and
yes, it is an over-simplification. But it is an effective analogy that
resonates with most business users that don’t have the interest or inclination
to dive deep into technical jargon.
Think about how you build a structure
from Legos. Each Lego block is made of the same kind of material and is
attached (connected) to the other Lego blocks the same way. In many ways they
are interchangeable. But by choosing different colors and sizes, and connecting
them with a different design, you can make a structure that is very unique. And
once constructed, if you want to change it, decoupling some of the blocks and
replacing them doesn’t destroy the parts that are not affected. There is far
less disruption introduced than if you had constructed it with a hammer, timber
IFS has already evolved from the era of the mainframe,
through the client/server era where the graphical user interface (GUI)
dominated, followed by web-enablement and the cloud era. IFS has declared the
next era to be the era of intelligent and autonomous enterprise solutions.
In a world where self-driving cars are a reality, why shouldn’t enterprise
applications be smart enough to automate processes and help you make
intelligent, data-driven decisions? So how is this transition coming along?
Tracking IFS Progress
When the latest IFS Applications 10 was announced last year
at its 2018 World Conference, it included new features and functions, but also
introduced some key areas that show IFS moving in this general direction. Let’s
take a look back on each and get an update.
A New User Experience (UX)
IFS Applications 10
introduced a brand new, intuitive user experience, called IFS Aurena. The new UX
was well received when initially launched. It has now been extended across all
IFS solutions (FSM, ERP, and EAM), and (impressively) it was delivered ahead of
schedule. Aurena provides customers with a truly responsive design. This means
it responds to the environment on which it is used, based on screen size,
platform and orientation. Whether you use it on iOS, Android or Windows, the
applications take advantage of the native capabilities of the device, giving
them a familiar look and feel, with support for offline scenarios and
device-specific capabilities such as GPS and camera. In addition, IFS
Aurena BOT is now generally available. This is essentially a virtual assistant
that allows the user to interact with the system via voice or text. It can
connect to any of the popular messenger apps (Skype, Skype for Business,
Facebook Messenger, etc.) and is making use of artificial intelligence (AI) to
make it an intelligent bot.
Application Programming Interfaces (APIs)
Last year IFS started adding APIs to open its applications
to new paths to extensibility and integration. Whether you prefer a Suite in a
Box or a Best of Breed approach, nobody runs a single application today. And no
application can afford to be an island. IFS has now developed over 15,000 APIs,
which means connecting, extending or integrating into the IFS core is quick and
member of the OpenAPI Initiative (OAI), IFS promotes open
applications in order to give customers and partners total freedom to develop
and connect data sources to drive value in a way that is meaningful to
them. IFS Aurena uses the same set of APIs which are now generally
available for every function in every IFS application.
Connecting Smart Devices
IFS is constantly
evaluating the potential new digital technologies have in providing real value
to its customers. Projects are led by a small development group called IFS
Labs. IFS Labs is focused on solving the problems of tomorrow – or perhaps the
problems and opportunities customers don’t (yet) realize they already have. With
this approach, IFS Labs hopes to provide guidance and inspiration to influence
customers to disrupt, rather than be disrupted.
But this is not
technology for technology sake. These endeavors are essentially “proof of
concept” projects, often conducted with real, live customers in order to solve
real problems. IFS Labs keeps the projects small because, with the requisite
license to fail, it must decide to pursue the concept and apply it universally
or fail fast in order to move on to the next potentially disruptive project.
Much of this
pioneering, experimental work is done quietly in the Lab and yet the results of
several of these projects were demonstrated at the most recent IFS World
On stage and on the
Exhibition floor at the 2019 World Conference, attendees watched as Marvin, a
small, self-driving, robotic forklift delivered materials to the shop floor. Marvin
is very real and working at Cheer Pack, a US manufacturer of spouted pouches
used in the packaging of baby food, children’s snacks, yogurts, pet foods,
dressings, condiments and other food & non-food items… and an IFS customer.
While humans are still
loading and unloading the materials, CheerPack intends to connect it directly
to material handling equipment in the future to further automate the
process. In the meantime, no human is
involved in guiding the little robot to its pickup and drop off locations. ERP
drives what it carries and where it goes.
The audience also
watched as remote technicians guided the diagnosis and repair of Marvin. Think
of it as Facetime for the enterprise. An operator on stage was able to share a
live view of Marvin with a remote technician, who was able to guide her through
the diagnosis and resolution of the problem. Think of the possibilities this
might present to asset-intensive companies running a 24/7 operation, but with
technicians only on site one shift. Or those operating in remote parts of the
world where it makes no economic sense to have technicians remain on site
constantly when they are seldom needed.
Attendees of the
conference could also don a HoloLens and be guided through the replacement of
an integrated circuit board. While this type of augmented reality has been
available for a while, in the past it was hard to operate and required far too
much skill and use of the wearer’s hands, when in fact the biggest benefit
should be for hands-free operation. This
technology has now reached the level of maturity where a novice (like the
author) can pick up the device and use it with little or no instruction.
While some might call them “next gen” capabilities, these
are among those IFS has deemed to be “now gen,” ready for prime time. But these
Look for the introduction of a new Machine Learning (ML)
Service coming in 2020. While asset-intensive industries are ripe with
possibilities for accelerating the use of Artificial Intelligence (AI) in
practical ways and connecting applications to devices and the Internet of
Things (IoT), there are also challenges. It is very difficult to prepare the
right data, often requiring a data scientist and competency in machine learning
technologies. There is always the risk of a communication breakdown between those
data scientists and technologists and business leaders with business goals.
The new ML Service
is being designed to be easy to use, enabling business users to solve specific
business problems with the automated selection of ML algorithms, based on their
own data. These new services will be “explainable.” In order to build trust in
the data and the algorithms, ML can’t be a black box. The user should be able
to understand why an algorithm is being used. IFS agrees.
Expanding and Strengthening the Ecosystem
In conjunction with
opening up its architecture with APISs and modern component architectures, IFS
is also investing in its partners. Its mission is to triple the resources, but
also create one IFS team, while providing its customers more choice. Many
customers prefer to work directly with a more local partner, but since IFS
requires all to be 100% certified on the applications, customers should see no
difference in quality in working with IFS or a partner.
While in the past
partners were very likely to build customizations for customers, we see a huge
potential for them to transition to building extensions. As IFS opens up its
platform to partners, this presents an opportunity for them to package up
potential modifications, providing themselves further revenue sources while
also extending the IFS applications deeper into the vertical and even micro-vertical
segments within the sectors in which IFS plays well. This removes barriers to
consuming IFS innovation that customizations create, while also creating
opportunity for IFS, its partners, and its customers.
Summary and Key Takeaways
IFS customers don’t necessarily hold the top spots in their
chosen fields. As a result, the old advertising slogan, “We’re number two. We
try harder” might very well apply.
To IFS “For the challengers” means:
Helping customers differentiate
Focusing on industries and solution sets
Providing agility and better time to value
Value and results for the customer
Choice – how licenses are consumed, and software
is deployed and who delivers (partners, IFS, both)
IFS clearly believes in the world’s challengers, encouraging
and enabling then to gain a competitive advantage and create value through
innovation. In support of these beliefs, it is focused on providing its
customers value by delivering on three key enablement points:
The software used to run the business in select
asset-intensive, product-centric industries, namely ERP, EAM and FSM
Enabling technology that helps its customers
keep pace with our rapidly changing world
Data needed to drive effective decision-making
And at the same time, IFS sees itself as one of those
challengers. It’s not the biggest enterprise solution provider, but still it
strives to disrupt, rather than be disrupted. In reaching for this objective,
it has sharpened its focus on five industries, with three solution categories.
With functionality that is broad, deep and industry-specific, it also continues
to take advantage of new and enabling technologies. It chooses to embed these
technologies rather than use them to milk the cash cow of their installed base.
Whether you are a challenger in one of IFS’ chosen
industries, or whether you aspire to be, you might want to take a closer look
Sage Intacct has been on
this journey towards an Intelligent General Ledger (GL) for several years. The
company’s goal has been to relieve
finance leaders of the burden of routine accounting tasks, while also bringing
them visibility to data, along with the necessary tools to provide actionable
insights that will lead to growth and profits. Many finance leaders today are
spending 80% of their time on accounting, leaving only 20% available to think
and act on a more strategic level. An “Intelligent GL” is really all about
flipping that ratio. Of course, no piece of software can magically turn a bean
counter into a strategist. But it can help you build trust in your data and
decisions, and provide you the time and the tools you need to dig deeper,
analyze, predict and prescribe a course of action.
And therefore, although an
Intelligent GL is a lofty goal, the real value will come from diffusing this
intelligence beyond the GL, beyond finance, leveraging it across all aspects of
the enterprise. But then, isn’t that what strategic thinking (and doing) is all
about? While Sage Intacct doesn’t profess (or pretend) to provide an end-to-end
solution, a strong, “best of breed” financial management solution can indeed
serve as a solid foundation on which to build a strategy that leads to
here for a closer look at Sage Intacct’s path to providing an Intelligent
GL and what it can mean to your business.
In its quest to enable the Self-Driving
Enterprise, last fall Aera Technology
introduced its Cognitive Workbench. Using billions of data points collected with
its patented data crawlers (real-time crawling technology), Aera’s processing
engine analyzes data continuously (even while you sleep) to detect business
risk and opportunities. After utilizing decision trees and algorithms to
recommend the best course of action, its Cognitive Workbench presents personalized,
time-sensitive, and prescriptive recommendations to drive capital efficiency,
productivity, growth and customer satisfaction.
Now, Aera further augments and digitizes decision making, tracking decisions made by all your team members, including those made autonomously by your newest virtual team member: its new Cognitive Decision Board. Working interactively through the Decision Board you gain better visibility into your decision making process, and understand the impact of each decision. By tracing steps taken and the reasons why they were taken, you are able to get quick insights about those decisions. Did you accept Aera’s recommendations and if not, why not? Through this monitoring, measuring and feedback, Aera continues to learn and therefore can make better recommendations and your entire team can make better decisions.
Technology vendors, particularly those that offer Enterprise Resource Planning (ERP) solutions, must walk a fine line in terms of innovation. On the one hand, they must listen carefully to their customers. Responding to customer requests is crucial to keeping existing customers happy as they push for more features and functions. But today, that just isn’t enough. The most successful vendors also pull the customers along in many ways, including applying advanced technologies. While customers may not be asking for them, these technologies can improve efficiencies and provide a competitive edge.
Like many vendors, cloud ERP provider Acumatica has an “idea” website where it encourages customers to log feature requests and vote for those they feel will produce the most value. Many of those ideas make their way into the product. But Acumatica goes a few steps further. In addition to partner advisory boards and customer focus groups, executives, product managers and developers go on-site to observe how the cloud ERP is being used. They then combine their objective outsider’s view with their intimate knowledge of tools and technologies to come up with new ideas for enhancing productivity. Sometimes those ideas result in what appear on the surface to be small changes, but result in innovation that makes the customers say, “Wow! That’s huge! Why I didn’t I think of that?”
In addition, Acumatica is testing the waters with technologies that go beyond features – like combining machine learning (ML) with natural language processing (NLP) and image recognition to produce artificial intelligence (AI). Like introducing drones into a warehouse or augmented reality (AR) into a service environment. While customers aren’t (yet) pushing them in this direction, Acumatica knows it needs to stay ahead of customer demand in order to pull its customers into a competitive position in the ever-changing global, digital economy. But those customers will not be pulled in the right direction unless the technology delivered has some practical value. Elegant technology in search of a problem benefits no one.
Acumatica’s Path Forward
Acumatica’s path forward (Figure 1) is stated quite simply, but then simplicity is often the key to success. Acumatica’s strategy is to continue to add functionality, both from a horizontal (everyone benefits) perspective, as well as vertical features to support selected industries. The horizontal functionality is delivered in the core product and industry-specific functionality is added through its industry “editions.” But the horizontal and vertical features work together seamlessly. This is made possible through Acumatica’s modern, open architecture, which provides flexibility and scalability. And therefore, both the technology embedded within, as well as platform and technology partners are key.
Figure 1: Acumatica’s Path Forward
So how does Acumatica determine the roadmap? Click here to read the full report.
Oracle OpenWorld is a huge event, covering a plethora of topics. Here at Mint Jutras we focus exclusively on enterprise applications that run businesses. At the very core of those is Enterprise Resource Planning (ERP), but these days it is often difficult to tell where ERP ends and other applications begin. And therefore we often stretch the boundaries of ERP and also write about Enterprise Performance Management (EPM), Human Capital Management (HCM) and also the “Customer Experience (CX).” While we leave coverage of hardware, infrastructure and data base technology to other analyst firms, enterprise applications provided plenty of food for thought at Oracle OpenWorld 2018.
According to Steve Miranda, Executive Vice President, Applications Product Development, the two key themes driving his development organization are movement to the cloud and speed of innovation. These two are closely related. Mint Jutras has long been a strong proponent of software as a service (SaaS) for many reasons, not the least of which is the ability to deliver more innovation – that is also easier to consume – faster. Mint Jutras would agree both of these themes are necessary and commendable. Both address the inertia holding many companies back from being fully active, successful participants in the rapidly changing, global, digital economy.
In the recent Mint Jutras report Digital Transformation: It’s Time to Develop a Sense of Urgency, we discussed digital transformation in the context of enterprise applications. Where are we on this journey? You might be surprised by the data we have collected that indicates enterprises might not be as well prepared for the global, digital economy as they think. What is Oracle doing to remedy that situation?
What Is Digital Transformation?
In our previous report, we began our discussion by posing the question: What is “digital transformation?” In so many ways, in the context of the software that runs your business, it is simply delivering on the original promise of ERP. Mint Jutras defines ERP as an integrated suite of modules that provides the operational and transactional system of record of your business. Even the earliest versions of ERP did indeed provide this system of record. But did they live up to the promise of an end-to-end, integrated solution that could streamline and automate all your business processes? Did they make your life easier? No. The technology necessary to deliver on that promise simply didn’t exist back then.
In the meantime, the pace of change and the pace of technology innovation continue to accelerate. Today that pace is staggering and fortunately, the technology needed to deliver on that promise finally exists, and a lot of it sits in Oracle’s vast portfolio of products. However, not all of Oracle’s customers are able to take full advantage of these technologies simply because they are still running older solutions. We would call them “legacy solutions,” or sometimes “heritage solutions” – legacy solutions you are proud of. Indeed Mr. Miranda is quick to point out, “So we don’t have legacy customers. They may be on older software. But our customers are still always modern and going forward.”
In response, we would argue: All the more reason to get them off that older software and onto something more modern and technology-enabled. They need the ability to transact business digitally in order to actively and fully participate in the global digital economy. This requires a level of connectivity that is simply not possible with older, legacy solutions. Many of these older solutions pre-date the Internet, and let’s face it… the Internet has forever changed our world. It has created the global digital economy and it has leveled the playing field for entry.
In the past, only the largest companies were able to establish a global presence and trade on a world-wide basis. Today any company, large or small, can establish a global presence, creating unprecedented opportunities. We see new markets, new economies, and even whole new middle classes emerging every day. But as you start to expand your global presence, be careful what you wish for. Without digitally transforming the solutions that run your business, windows of opportunity will close as quickly as they open.
The Role Cloud (and SaaS) Plays
The Internet has truly changed our lives both from a business, as well as a personal perspective. As noted earlier, the Internet has leveled the playing field, making it possible for any company, large or small, to create a global presence and be an active participant in the global, digital economy. The Internet enables the cloud as we know it today. The ability to access software any time, from anywhere is inherent in any solution that resides in the cloud, opening doors for improved and increased usage. And let’s face it – solutions only bring value if they are actually used.
So, web-enablement is the first step. You can simply take your software that is licensed and installed either on or off-premise and improve access. Web-enablement is conducive to supporting distributed users. But taking the next step and running software as a service (SaaS) brings additional value: No capital expenditure required; no need to build out a data center or maintain hardware. The elasticity of a solution, including the ability to expand the number of users without over-taxing the supporting hardware and software, is critical during growth spurts. When your plans involve expansion, bringing up remote sites rapidly and easily is an added benefit and requires less information technology (IT) staff on site. This is especially important when you venture into new, emerging economies where local IT talent may be scarce or nonexistent.
While cyber-security is an understandable concern to all today, if you are a small to midsize company, without a dedicated IT security expert on board, chances are you assume more risk than you would in a SaaS environment. Even if you are a large company with IT security experts on staff, there is no way you will be able to match the level of investment Oracle makes in terms of security from infrastructure and software and business practice. Plus Oracle can deliver the peace of mind of business continuity in the event of a disaster, either natural or man-made.
Based on many of the reasons noted above, the majority of companies today see cloud and SaaS in their future. While customers vote with their wallets, each year our Mint Jutras Enterprise Solution Study seeks more clarity on preferences for different deployment options, including preferences of those that might not have (yet) decided to make a move off legacy software.
We have been asking the following question for years now: If you were to consider a new solution today, which deployment options would you consider? Participants are allowed to select as many as they wish. A summary of answers since 2011 is shown in Figure 1. We skip every other year simply to fit the chart on the page. SaaS is currently the option most likely to be considered and the willingness to consider traditional on-premise solutions dropped off dramatically between 2011 and 2013 and has not recovered.
Figure 1: Deployment Options That Would Be Considered Today
Source: Mint Jutras Enterprise Solution Studies
*Option added in 2015
But don’t let these preferences tempt you into thinking SaaS solutions will be prevalent in the very near future. Why not? There are simply too many existing on-premise deployments out there today, including some of the brands in the Oracle product portfolio (JD Edwards, Peoplesoft, Siebel…) Our most recent 2018 Enterprise Solution Study found about 40% of business solutions today are deployed as SaaS (Figure 2).
Figure 2: Percentage of Business Software that is SaaS
Source: 2018 Mint Jutras Enterprise Solution Study
Our survey respondents estimate that percentage will grow steadily, but it will take many years before SaaS solutions dominate. Mint Jutras believes the momentum is building and the transition will happen somewhat faster than Figure 2 would indicate. But the average company running legacy solutions on premise obviously need a gentle push.
Oracle Makes Moving to SaaS Easier
And Oracle is providing that gentle push. Earlier this year it introduced a new program called SOAR, a prepackaged set of utilities and methodology to get customers to the cloud. For customers running solutions like JD Edwards, Peoplesoft, Siebel, and even the E-Business Suite, this means replacing solutions. While some software vendors offer the same solution on premise and as a SaaS solution, allowing customers to simply lift and shift existing deployments, this provides limited value. In doing so you sacrifice some of the benefits of a multi-tenant SaaS solution (see sidebar). With multi-tenant SaaS solutions, vendors maintain a single line of code. As a result, they can deliver more innovation, at a faster pace. – one of Oracle’s stated goals. With single-tenant solutions running in private clouds, vendors and their clients still face the complexity and disruption of traditional upgrades.
Lifting and shifting also means you are dragging along any limitations of prior implementations. Oftentimes customers delay moving off of old systems because of customizations and yet many of those customizations were required, not to provide market differentiation, but to address functional gaps or other limitations of older solutions, or simply because that was the way things were always done. Today’s solutions are far more configurable and extensible, eliminating much of the need for invasive code changes. If an existing or proposed customization doesn’t provide differentiation, Mint Jutras advises against doing it. And if it does provide a level of market differentiation, look for ways to accommodate it without mucking around in the code. Look for component-based architectures that allow you to extend, rather than modify solutions.
Mr. Miranda seems to agree with these recommendations. When asked about existing customer perceptions around customization he said,
“… the more complex you are and the older implementation you have, the more strongly I would advise you, ‘Do not inventory your customizations.’ If you want an interesting archeological expedition, knock yourself out. What happens is they find things that they don’t even know why they did it. They don’t know if it’s relevant anymore. We have customers who customized things 15 years ago. We’ve actually added it to E-Business Suite. But they haven’t had the time to unravel it. I’m not saying this in a critical way; it’s just a reality. What I strongly encourage the customers to do is look at the baseline product. And guess what? There may be things that are missing that we haven’t built. But you won’t need an inventory of your customization to figure that out. You will know what’s relevant.”
Through the SOAR program customers can see the depth and breadth of the product, and determine, with a level of certainty, how long it is going to take to get there. How much is it going to cost them? And when they come out the other end, what they will see in terms of improvement in business practice. In Mr. Miranda’s words:
“So, based on our experience of existing customers, we developed a set of utilities with Oracle Consulting that can take what we think is a reasonable scope – a certain number of integrations, certain number of reports, certain number of extensions. We’ve done the work to automate the data migration. We know how much it’s going to cost in terms of each migration or each extension or each report. And so, we can quickly give you an estimate. Here is your size and shape. Here is your cost. Here is your time. And here’s what we believe, based on a typical customer, will be the amount of business process change/improvement.”
So, cloud is the first step towards speeding innovation, but there’s more to it than that. You also need some foundational technologies, which we still find lacking in the majority of businesses today (Table 1).
Development platforms and microservices architectures, on which applications are built, are the perfect example. For the reader with a technical background, a microservice architecture is defined (by Wikipedia) as an architectural style that structures an application as a collection of loosely coupled services. For those nontechnical readers, think of it as constructing a solution from a set of Lego building blocks.
Table 1: Embedded (or foundational) digital technologies
Source: 2018 Mint Jutras Enterprise Solution Study
Think about how you build a structure from Legos. Each Lego block is made of the same kind of material and is attached (connected) to the other Lego blocks the same way. In many ways they are interchangeable. But by choosing different colors and sizes, and connecting them with a different design, you can make a structure that is very unique. And once constructed, if you want to change it, decoupling some of the blocks and replacing them doesn’t destroy the parts that are not affected. There is far less disruption introduced than if you had constructed it with a hammer and nails.
These platforms and technologies provide a level of agility, configurability and extensibility to today’s applications to help us respond to change. Oracle has invested heavily in both its Platform as a Service (PaaS) and its Infrastructure as a Service (IaaS), resulting in its Oracle Cloud Infrastructure (OCI). It is now turning its attention to other foundational technologies like machine learning and natural language processing (NLP). But it is approaching these differently than some of its major competitors. Instead of providing these technologies as tool sets, Oracle is embedding them into applications so that customers of all sizes (not just those with deep pockets and large development staffs) can take advantage of them “right out of the box.”
Throughout the entire suite of application products, the concept is to turn what used to be “input-receiving” apps into “recommendation” apps. Examples include suggesting the next-best offer or the next-best action in CRM. Or they might help prioritize employee recruiting in HCM or make audit suggestions and cash-management recommendations in ERP.
Digital assistants (bots) will be available pervasively throughout the ecosystem, not only from your phone and through SMS, but also through Slack, Siri, Alexa, or Google Home. The way people work is changing, so the applications must change too.
Mint Jutras believes this approach to embedding these technologies is smart. Notice Table 1 captures not only current adoption rates, but also plans for adoption. We also allowed survey respondents to indicate where they expected software vendors to simply provide these technologies with no additional purchase required (the next to the last column). Few are demanding this today, or even expecting them. And yet Oracle is working on delivering them, much like Apple delivered Siri. Apple customers didn’t demand the ability to converse with their mobile devices. Apple just delivered it. Other device manufacturers followed suit. Pretty soon virtual assistants became commonplace features. And people got hooked. It was only after the value was recognized that people willingly went out and bought stand-alone devices like the Amazon Echo Dot and Google Home.
Now is the time to bring them into the enterprise, much like they were insinuated into our personal lives. Pretty soon these types of technologies will be generally available throughout the Oracle Cloud, but you won’t be able to take advantage of them if you are still stuck on old legacy solutions.
Develop a Sense of Urgency
As we noted in our report on Digital Transformation, it is time to develop a sense of urgency – the same kind of urgency Oracle has demonstrated in urging customers to move to the cloud in order to speed innovation. The digital age is upon us. The pace of change and the pace of technology innovation has accelerated beyond anyone’s expectations and it doesn’t show any signs of slowing down. We live in disruptive times.
We asked our 2018 survey participants to assess the level of risk their industries faced in terms of the potential for disruption.
Figure 3: What risk do you face in your industry being disrupted?
Source: 2018 Mint Jutras Enterprise Solution Study
While all but 10% acknowledged some level of risk, the majority (84%) feel the risk is low to medium rather than high or imminent. Yet we feel compelled to ask the question: How do you think the taxi industry would have answered this question on the eve of the launch of Uber? Nobody saw that disruption coming and therefore few (if any) were adequately prepared.
Disruptive change is nothing new, but the speed with which it can impact business models and revenue flows has certainly changed. While it took a decade for the personal computer to disrupt the computer industry, and years for digital photography to disrupt the film industry, it took less time for Netflix to put Blockbuster stores out of business. And how long did it take Airbnb to impact the hospitality industry or Uber to disrupt the taxi industry? These kinds of disruptions can happen virtually overnight, creating new ways of transacting business that can have a cascading impact on both front and back office applications.
This type of disruption might come from a variety of sources. We asked survey participants to select the single most likely cause of potential disruption (Figure 4).
Figure 4: What is most likely to cause this disruption?
Source: Mint Jutras 2016 Enterprise Solution Study
While the threat from new, innovative products may have the lesser disruptive impact on business processes and business models, it does require companies to place more emphasis on innovation. Windows of opportunity can open and close very quickly. Of course an agile ERP solution isn’t all you need to accelerate new product introductions, but you also don’t want it to be the reason you can’t respond to new market demands or take advantage of new and unprecedented opportunities.
New ways of selling/pricing existing products might include subscriptions to services or outcomes that replace outright sale of products. Rather than selling a machine, you might invoice for uptime or hours of production. You might ship a physical product for free and charge for usage and/or consumables. Software companies that used to offer perpetual licenses might now also (or instead) offer subscriptions to software as a service (SaaS). These types of changes can have a major impact on how you invoice, recognize revenue and manage cash. And these changes must be reflected in your ERP solution.
The impact of entirely new business models is even harder to predict because of the inherent “newness.” You don’t want your ERP solution to be the reason you can’t capitalize on that brilliant new idea that can create a new revenue stream. Your ERP must adapt as your business evolves.
And yet many hesitate to replace or upgrade aging solutions that have no hope of ever connecting with or leveraging the emerging digital technologies required to survive in today’s digital economy. Perhaps they are looking for proof they will not be taking a step backwards in moving to a newly developed solution. Indeed, there are some industries that may (still) be better served by some of its older, deeply entrenched products – industries like food and beverage or project-based businesses. These industries are still on the horizon for the Oracle Cloud solutions.
But perhaps the best customer reference for a wide range of industries comes from Oracle itself. The diversity of Oracle’s business is a testament to the breadth of the solution in a world of changing business models. Oracles runs:
an on-premises software business
a subscription software business
a reasonably large consulting services business
a reasonably large, assemble-to-order, hardware business
a procure-to-order business for Micros on smaller machines
We wrap up with a quote from Mr. Miranda.
“We spent a ton of time combining feature functions we needed, technical innovations that either we built or the industry built, so now we have what we think is an extremely compelling, deeply functional, and differentiated solutions in just about every area: EPM, ERP certainly, now with Supply Chain Manufacturing as well…. Core HR including global core HR, benefits, payroll; and then CX being sales, service, marketing, both B2B marketing … and B2C marketing…. It is just an incredibly feature-rich area on top of those baseline components.”
The entirety of Oracle’s business runs on the same software in the cloud that all of its customers are running. That spells confidence and commitment.
On July 31, 2018 Plex Systems, a cloud ERP and MES solution provider for manufacturing, announced it had completed the acquisition of DATTUS, Inc. a leader in Industrial Internet of Things (IIoT) connectivity technologies. This is an important step in executing on its product strategy, which includes connecting to more IIoT data for more actionable insights, along with enhancing manufacturing and business processes.
As a solution provider of enterprise resource planning (ERP), the Plex Manufacturing Cloud provides the operational and transactional system of record of your business. But looking beyond business transactions, Plex’s goal has always been to connect the shop floor to the top floor. But that is often easier said than done.
While sensors, machines and equipment on the shop floor have been collecting vast volumes of operational data for decades now, that data has not always been “connected” or accessible for decision making. Indeed the very fact that this data collection has been happening for decades contributes to the problem. Many of the machines and software put in place decades ago pre-date the Internet and therefore have no ability to connect to a network. Retrofitting equipment or replacing it is expensive and most of these machines were designed to last a lifetime. Expensive custom integration projects are beyond the expertise and budgets of all but the largest manufacturers. So what’s the alternative?
Providing an alternative is what DATTUS is all about. DATTUS solutions connect manufacturing equipment and sensors to the cloud. Think of it as the bridge between you and your machines. The platform is a hardware/software combination, which collects data from PLCs, VFDs, industry protocols like MTConnect, and popular enterprise applications including Salesforce, SAP and (of course) Plex.
In addition to this plug and play connectivity, DATTUS also brings IIoT data management and industrial analytics. The data management and analytics capabilities previously offered by Plex were sufficient for managing the volumes of data within ERP. But as customers are empowered to bring almost any data stream into the Industrial Internet of Things, they now need to be prepared for a tsunami of data.
Giving Manufacturers a “Leg Up”
The IIoT is just one of several inter-related digital technologies we continue to watch, and what we most often see is limited progress being made in terms of leveraging these technologies. Our 2018 Mint Jutras Enterprise Solution study explored plans and investments in selected digital technologies normally associated with Industry 4.0. We find very low rates of adoption (Table 1) and many have no plans to change that. In spite of all the hype around all these technologies we confirmed many are still sitting on the sidelines of the latest manufacturing revolution.
Table 1: Digital Technologies Plans and Investments in Manufacturing
Source: 2018 Mint Jutras Enterprise Solution Study
*Includes those that expect vendors to deliver at no additional cost
Running legacy solutions based on outdated technology forcibly sidelines some. And others are hamstrung by decades-old equipment on their shop floors. Plex Systems’ acquisition of DATTUS can’t help with the first unless those running legacy solutions are willing to trade up to a more modern, technology-enabled solution. But it can help in connecting those disconnected machines.
While all adoption rates are quite low, we do find IoT has the lowest percentage of manufacturers with no plans and no activity and close to the highest percentage of those that have already made some investment (second only to 3D printing). This tells us manufacturers have at least a grasp of its potential. Indeed manufacturers have been collecting vast volumes of data from sensors on the shop floor for decades. And yet that data has gone largely underutilized because manufacturers fail to connect the data back to the enterprise applications, and the business decisions. And this is where DATTUS can open new doors.
Instead of retrofitting equipment or developing custom connections, the DATTUS platform provides “out-of-the-box” direct connectivity for machines using cellular capabilities. It can capture data from non-networked, discrete industrial assets while remaining agnostic to data type, machine protocol, and infrastructure. It is a hardware-agnostic IIoT solution that can reliably collect and manage data and make it available for further analysis and open doors to several other of the technologies listed in Table 1.
The availability of more data increases the need for analytics in order to make sense of it. The data within an ERP solution lends itself to historical reporting and perhaps even ad hoc queries. Both are designed to answer questions you already have. But where do you turn when it is not intuitively obvious which questions you should be asking in order to optimize production or grow your business?
Therein lies one of the primary differences between reporting and analytics. While reporting answers a series of pre-defined questions, the discovery process and the iterative nature of analytics helps you ask the right questions. Reporting helps you identify a problem. The right kind of analytics helps you avoid it. Reporting seldom helps you recognize an opportunity. Analytics help you seize it.
But as volumes of data start to grow exponentially, you eventually reach a point where the human mind is no longer able to assimilate and cope with that volume. This is where machine learning can add a level of intelligence that is simply not possible without technology. Data sets have grown rapidly in recent years, thanks, at least in part, to information-sensing devices such as those to which the DATTUS solutions connect.
And the shop floor provides us with some of the most often cited use cases for artificial intelligence and machine learning. The ability to constantly scan data collected by machinery and equipment on the shop floor, searching for patterns that have previously led to failures, have saved manufacturers countless hours (and costs) associated with preventive maintenance. By predicting failures, you only need to bring production to a halt to perform maintenance when it is really needed.
Similarly, in environments regulated by strict adherence to specifications, by monitoring sensor data continuously, machine learning can alert operators before out-of-spec product is made. While shop floor supervisors are only able to scan, monitor and cope with a limited amount of data, machine learning knows no such limitations. Machine learning can recognize patterns and correlate data points that a human does not recognize as relevant. And as more data is gathered, it keeps on learning. That is what continuous improvement is all about.
DATTUS adds capabilities for analytics on data-in-motion, quickly providing insights in support of decision making on the shop floor. This includes:
Anomaly detection (quality control)
Custom event rules
Real-time production and efficiency reports
As part of Plex Systems, we also see the potential of applying these industrial analytics capabilities to the business side of the equation within ERP for supply chain planning, financial planning and budgeting, forecasting and more. The possibilities are endless.
Mint Jutras believes these digital technologies are destined to be absorbed into the enterprise in general, and manufacturing in particular, in much the same way as technologies like artificial intelligence (AI) and natural language processing (NLP) have insinuated themselves into our personal lives.
Think about it. As consumers, we didn’t loudly voice our desire for AI or NLP. But that didn’t stop Apple from delivering Siri on an iPhone. Pretty soon Microsoft delivered Cortana on Windows 10; Google delivered Google Now; Amazon delivered Alexa and now Bixby is on your (newer) Samsung Galaxy. We see these digital technologies being absorbed into the manufacturing landscape in much the same way, as long as solution providers like Plex and DATTUS continue to innovate and push them into the mainstream.
While the technologies in Table 1 are typically outside the scope of ERP, in order for them to be truly transformative, they must interoperate and/or integrate with the enterprise applications like ERP in the front and back office. When purchased separately it is often a daunting task to connect back to ERP and in turn, the business itself. But without this connection, factories don’t get any smarter and neither do the leaders making business decisions. And that’s the real goal of digital transformation in manufacturing: a smart factory and smarter business decisions. And therefore this acquisition makes perfect (and practical) sense.
Realizing Potential through AI, Analytics, Network, Cloud, and Industry
Infor has a mission: to “build beautiful business applications with last mile functionality and insights for select industries, delivered as a cloud service.” Behind this mission is a solid strategy to deliver industry-specific functionality to a growing number of specialized micro-verticals, through “Cloudsuites” that leverage the power of Internet-based networks, analytics and artificial intelligence (AI). Over the past several years the privately held company has spent billions of dollars acquiring and developing technology to execute this mission, providing a steady stream of innovation along the way. In the last 12 months alone the company has delivered 176 new products.
And yet, Infor is still one of the largest enterprise application solution providers of which you may never have heard. Even some of its customers (those running acquired legacy solutions) are not aware of how innovative Infor is. This is, at least in part, because of its approach. In the enterprise application market it is not unusual for a vendor to pre-announce its latest, greatest, most innovative idea with a big splash. Then as it begins to execute on this idea it realizes just how much foundational work needs to be done to deliver on it. In the meantime it grows quiet (or announces its next big idea) and (often several years) later when (and if) the first deliverables are finally ready, it makes another big splash.
Infor has taken an entirely different approach, building innovation from the inside and working its way out. It too had a vision of tremendous new innovation driven by advanced technology, but it also had the foresight to clearly see that much of the work needed to deliver on this vision was foundational. And therefore, while others were “splashing,” so to speak, Infor was building that foundation behind the scenes, but with a clear vision of the possible. It is now time to emerge from under the covers as the potential is being realized.
A Smarter Approach
This approach is even smarter than it might appear to be on the surface. Having grown through acquisition, Infor has a very broad portfolio of enterprise applications, including multiple Enterprise Resource Planning (ERP) solutions, some more modern and strategic than others. But Infor’s portfolio also contains other applications that extend the capabilities of ERP, such as Customer Relationship Management (CRM), Enterprise Asset Management (EAM), Human Capital Management (HCM), Supply Chain Management (SCM) and more. The different strategic ERP solutions can benefit from these complementary applications, some more so than others. So how can Infor integrate all of these applications and also individually bring them to their full potential without a lot of duplication of effort? The answer lies in taking a two-pronged approach.
Infor has invested in building a strong foundation, which has evolved into the Infor OS (operating service). Infor OS provides a common set of shared services to augment its applications (Figure 1). Rather than reworking each individual user interface, for example, Infor developed a common user experience (UX), which further serves to unify the experience when working across different but complementary applications.
Figure 1: Infor OS Augments the Cloudsuite(s) with Common Shared Services
But before these strategic enterprise applications could take full advantage of those shared services, they had to be transformed. The transformations took time and effort in parallel with the development of Infor OS. But these efforts proved to be invaluable. Once complete (and even to a certain extent during the process), rather than working on security, connecting to the Internet of Things (IoT), country-specific localizations, or a host of other elements of the infrastructure, the individual enterprise application development teams could focus on delivering features and functions specific to their target markets.
Infor OS: The Journey to Microservices Architecture
While the name (Infor OS) is fairly new, the development of this foundation has been evolving for almost 10 years. First introduced as the Intelligent Open Network (ION), it was based on the same premise as Infor’s prior Open SOA (Service Oriented Architecture) (circa 2006 to 2009). That premise: to provide an environment that enables new functionality to be developed once and shared by multiple products in the Infor portfolio. However, unlike Infor’s Open SOA, which had become very heavy and took years to develop, ION was kept lightweight and simple. Over the years the name has changed and it has evolved to support what is commonly referred to today as a microservices architecture.
Never heard of microservices? You’re not alone. For the reader with a technical background, a microservices architecture, is defined (by Wikipedia) as an architectural style that structures an application as a collection of loosely coupled services. Unfortunately the reference to “loosely coupled” often conjures up the old argument of an integrated suite versus “best of breed.” But this is not that.
For those nontechnical readers, think of it as constructing a solution from a set of Lego building blocks. Think about how you build a structure from Legos. Each Lego block is made of the same kind of material and is attached (connected) to the other Lego blocks the same way. In many ways they are interchangeable. But by choosing different colors and sizes, and connecting them with a different design, you can make a structure that is very unique. And once constructed, if you want to change it, decoupling some of the blocks and replacing them doesn’t destroy the parts that are not affected. There is far less disruption introduced than if you had constructed it with timber, a hammer and nails.
Infor needed to transform existing strategic solutions by refactoring the underlying code to introduce microservices. Again, for the nontechnical reader, think of it as restructuring the code without changing the behavior or the functionality. You might be wondering, why bother to change the code if you aren’t changing what it does? There may be any number of reasons, including enabling the solution to take advantage of those common shared services. But Mint Jutras feels the most valuable by-product of refactoring is to make it more “extensible.” In the context of ERP: to make it easier for Infor (and possibly its partners) to add specialized features and functions to a solid code base, with minimal disruption.
This is really the (not so) secret sauce behind Infor’s ability to deliver “last mile” functionality, not just for major industries like manufacturing, or even verticals like food and beverage, but also micro-verticals like dairy, beverage, bakers, confectionary, ingredients, prepared/chilled foods and meat/poultry/fish. While some features and functions might be the same across all manufacturing, food and beverage manufacturers and distributors also must deal with lot and sub-lot traceability and recall. Many within food and beverage must also deal with catch weights.
Catch Weight is a food industry term that means “approximate weight” because unprocessed food products (particularly meats) naturally vary in size. A retailer might order a case of 12 turkeys. The manufacturer (food processor) will estimate the price of the order by the approximate weight (e.g. 15 pounds per turkey), but will then invoice for the exact weight shipped. This can wreak havoc in an ERP solution not well-prepared to handle it.
But catch weight doesn’t affect all food industries in the same way in. It is also used in the cheese industry to manage shrinkage as the cheese ages. So handling catch weight varies for different types of food. By handling all the different types of catch weights in a single line of programming code, you add a level of complexity that adds little or no value to the customer beyond the single problem it is facing. A cheese processor doesn’t care if you can satisfy the needs of a butcher. Having different “Lego blocks” of code to insert depending on the needs of the specific micro-vertical preserves simplicity without sacrificing very specific functionality.
Beyond Features and Functions
But there is more to be gained than industry-specific features and functions from this foundational approach. Most companies today are forced to undergo a digital transformation. Two years ago our 2016 Mint Jutras Enterprise Solution study found that 88% of participants felt that digital technologies were necessary for survival and 80% agreed that digital technologies are truly transformative in the way they connect operations to systems such as ERP. And yet at the time almost half still relied at least partially on spreadsheets and/or manual processes for maintaining their operational and transactional systems of record (i.e. conducting business). Our latest 2018 study shows at least half of companies still rely at least in part on spreadsheets to satisfy needs of various departments. So obviously those transformations are still a long way from being completed.
One strategic acquisition by Infor could go a long way in supporting these digital transformations. In 2015 Infor acquired GT Nexus, a cloud-based global commerce platform. This acquisition represents a marked shift in acquisition strategy. In its formative years Infor aggressively acquired its competitors with more of an eye to growing market share than filling gaps in its portfolio. By comparison, the acquisition of GT Nexus is quite strategic.
More and more of the communication, collaboration and business processes of any company are likely to extend beyond the four walls of the enterprise. Focused on the supply chain, GT Nexus largely applies to those industries that must manage the movement of materials, but also has an impact outside of traditional manufacturing and wholesale distribution. The procurement of supplies in industries like healthcare and hospitality has not changed in decades and are ripe for innovation.
Whether you deal with a physical product or services, the value chain has lengthened and become more complicated. Yet expectations of response time and delivery performance have risen dramatically. Hence the need for an added level of intelligence in dealing with this new digital, network economy.
In addition, it is worth noting that last year Infor also acquired Birst, Inc. a pioneer of cloud-native Business Intelligence (BI), analytics and data visualization tools. The addition of Birst’s analytical tools was also a step forward, but Mint Jutras sees it more like another investment in infrastructure and shared services rather than a true differentiator. While the executives that came along with the acquisition might argue Birst is better (the best?) in terms of capability and speed of data discovery and easy to use analytics, most of the existing Birst customers are running enterprise applications that are not part of the Infor portfolio and it is still sold as a stand-alone tool. So you don’t have to run an Infor application to benefit from them.
That said, the tools were made immediately available to Infor customers as a like-for-like trade-in. Since then Infor has been working to replace any existing data cubes and content (previously Cognos-based) and also build out additional applications, content and migration tools.
Enhanced Data Management
Birst allows Infor customers to draw from all sorts of data sources for analysis. But the better story is what Infor has done in terms of data management in general, and to understand that you need to look across several different components “inside” Infor, including artificial intelligence, which requires you to select algorithms, train models and deploy data science. Because we’re talking about advanced technology, this can get very technical very quickly.
A business decision-maker seldom knows the difference between linear regression, neural topic modeling, K-means clustering and a boosted decision tree. Nor should they have to. From a business decision-maker’s point of view, it is more important to understand the potential, and that is quite simple. It’s all about answering these questions:
Why did it happen?
What should I do?
To Infor’s credit, this is exactly what it is offering, even though it often falls into the trap of offering TMI (too much (technical) information) to nontechnical business folks.
This is all about collecting data. It might be structured data from enterprise applications (yours or your trading partners’), semi-structured data like XML or CSV (maybe you get orders or payments from customers in XML files or streams of IoT data) or entirely unstructured data from social media or other community-based data. You need a common place to put all this data and Infor’s answer to this is its Data Lake. A data lake is a storage repository that holds raw data (usually vast amounts of it) in its native format. Yet while the data is in its native format, Infor also provides a catalog that can be used to determine connections between the different data elements (e.g. an order is connected to a customer, a dollar amount is connected to a key performance indicator).
But you need to consume that data in order to determine what really happened. Figure 2 (provided by Infor) is a bit on the technical side. The key takeaways from it: You might use Birst for analysis of the data; you might use the data in universal searches within the Infor applications; or you can develop your own applications using Infor’s Mongoose development platform.
Figure 2: Infor Data Lake: How to consume data from the data lake
Why did it happen?
For the “Why?” question, Infor leverages the different connections within the data and does a correlation analysis, looking for causal factors. Did sales go down because prices went up? Or did they go down because sales reps were on vacation or left the company? Was the weather to blame? Or a sluggish economy? For some of these questions you need massive amounts of data, not all of which resides in your enterprise applications.
Infor claims to have no shortage of insights to offer across customer relationship management (CRM), financials, human capital management (HCM), procurement and more. An example of the types of financial insights are shown in the sidebar to the left.
What should I do?
This is where the real data science comes to play. Since announcing the Coleman AI Platform Infor has been developing its first AI data science applications. These are generally predictive in nature, drawing on deep machine learning for forecasting, optimization and decision execution. Some examples include patient demand forecasting for hospitals, a predictive framework to predict asset failure, inventory optimization across a number of different industries, predicting estimated time of arrival for logistic providers and benchmarking performance across industry. Benchmarking of course requires access to large quantities of external data.
And don’t worry if you don’t have data scientists on staff. Infor has over 100 of them ready and waiting to help.
Conclusion and Recommendations
For a company of its size Infor has been exceptionally quiet over the past several years. In the software industry staying quiet often means there is little or no new innovation to share. In the case of Infor, this could not be farther from the truth.
Infor is led by a group of executives with both the vision and the expertise to understand the true potential of advanced digital technologies today. Oftentimes before you can ever hope to take full advantage of this advanced technology you must lay a strong foundation, and this might go largely unnoticed as it is being developed behind the scenes. But Infor’s executives were not afraid to dig in and lay that foundation.
Infor is now starting to reap the rewards of these efforts. It is time to share them with the world, not quietly, but loudly and proudly. Even many of its own customers remain unaware of all that Infor has developed. There are over 90,000 Infor customers and many are still running on old versions or older, non-strategic products. They seem to think none of this new technology is for them.
Mint Jutras would caution them (and other companies running non-Infor legacy applications) against this train of thought. If not for you, then who?
To those running these old solutions: Don’t expect massive (any?) innovation for your old products. They aren’t going to get you where you need to go in order to compete effectively in the global digital economy. For decades ripping and replacing ERP solutions was avoided at any and all cost. Those days are over. If you are running an old, outdated solution, it is unequivocally time to rip and replace. You’ll be happy you did.
To Infor: You’ve developed a lot of great stuff. Get on your bandwagon and shout!
Cognitive capabilities are highly valued in human beings. They make people smart, and smart is good. According to the Oxford Dictionary, cognition is “the mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.” Yet as automation becomes more and more prevalent, we expect more and more functions and processes to be performed without human assistance. Can technology really imitate human cognition? Why not? After all, we live in a world where self-driving cars, although not yet ubiquitous, are a reality. And in a world where terabytes of data are being replaced with zettabytes, is it even possible for a human to process data at the speed and granularity necessary for timely, data-driven decisions?
Enterprise applications have been used to streamline and automate transactional processes for several decades now, particularly where simple and straight forward rules can be applied. When inventory falls below safety stock, order more. But how do you know when to change safety stock? How do you balance inventory across your distribution network or work off excess inventory? How accurate is your forecast? Is it possible to automate the cognitive functions that understand (recognize patterns and learn from the past), predict the future, and not only make recommendations, but also take action? Aera Technology not only thinks it is possible, it is delivering on that promise today to enable the Self-Driving Enterprise.
Aera is quite a unique kind of company. Headquartered in Mountain View, California, it serves some of the world’s largest enterprises from its global offices located in San Francisco, Portland, Bucharest, Cluj-Napoca, Paris, Munich, London, and Pune. Using proprietary data crawling, industry models, machine learning and artificial intelligence, Aera’s goal is to revolutionize how people relate to data and how organizations function. It offers what it calls a “cognitive operating system.”
The Self-Driving Enterprise
Aera starts with the premise that if built-in intelligence can drive a car, then it should be able to drive a company. Like a self-driving car, a self-driving enterprise must connect all the different data points both inside (engine, accelerator, steering wheel, brakes) and outside (roadways and road conditions, other vehicles, pedestrians). It must do all this in real-time, because speed and direction changes must occur immediately as any of those conditions change. And it must be always on and always thinking. No snoozing at the wheel allowed. It also must be able to operate autonomously. With no driver, a self-driving car has to take action without being told what to do.
A self-driving enterprise will still have humans at the helm. Aera is not setting out to eliminate the decision-makers, but it is trying to make them smarter and more effective, able to use all the data available, not just the usual subset contained in an enterprise resource planning (ERP) solution.
If this has you curious to learn more, click here to read the full report.
Sage Intacct describes itself as a “best in class cloud financial management software company, 100% invested in meeting the needs of financial professionals.” Bringing cloud computing to finance and accounting, Sage Intacct’s applications are the preferred financial applications recommended by the American Institute of Certified Public Accountants (AICPA) and are used by more than 11,000 organizations from startups to public companies. The solution has evolved over time and today the company has a broader impact on its customers than just transactional accounting, bringing not only governance and control, but also insights necessary for effective tactical and strategic decision-making.
The theme of its most recent user conference, Sage Intacct Advantage 2017, is reflective of this evolution of both the company and its solutions. The theme: “Lead the future.” Let’s take a look at what this means for Sage Intacct, its customers, and the finance leaders in those organizations.
Leaders Are in For the Long Haul
Intacct was acquired by Sage in July 2017, becoming Sage Intacct. All the top executives from Intacct remain in place post-acquisition. They are led by Rob Reid, former Intacct Chief Executive Officer (CEO) and current Executive Vice President (EVP) and Managing Director (MD) of Sage Intacct. Mr. Reid and his direct reports remain commited to leading the company, not just through the transition, but for the longer term, providing stability and continuity. But not content with the status quo, Mr. Reid is inspired by Abraham Lincoln’s famous quote, “The best way to predict the future is to create it.”
It would appear that both Intacct and Sage gained from the acquisition. According to Sage President Blair Crump, Sage was attracted to Intacct because of its leadership, not only in terms of the people, but also in terms of growth within North America and in customer satisfaction. It was also a good strategic fit with respect to Sage’s commitment to being “cloud 1st.” Born in the cloud and offered exclusively as a multi-tenant software as a service (SaaS) solution, Intacct’s portfolio of products makes a nice addition to the newly announced Sage Business Cloud. While Sage itself is already strong at the low end of the small to medium size business (SMB) market, with its Sage 50 and Sage Live products for small businesses, Sage Intacct’s cloud financial management solutions are complementary. With very little overlap in target companies, Intacct should help Sage be stronger up market. While it is quite easy to outgrow those low-end solutions, it is much harder for companies to outgrow Sage Intacct. Together Sage and Sage Intacct intend to offer the “only financial management solutions a company will ever need.”
Good for Intacct = Good for Its Customers
Obviously Sage benefits tremendously from this acquisition. But can the same be said for Intacct? We believe so, if for no other reason that it paves the way for global expansion. Expansion into new global markets means customers must deal with the complexities of new tax, regulatory and compliance requirements, and potentially new accounting standards. With its focus on finance, this is not entirely new territory for Sage Intacct. Yet it has mostly been successful in North America, while Sage is more global, bringing both functional experience as well as global reach, including expanded local support.
And a side benefit to Sage: While it has become almost a household name in the United Kingdom and parts of Europe, it does not enjoy that level of brand awareness in North America. So the strengths of Sage and Sage Intacct are complementary.
As part of Sage, Intacct also has access to more resources and technology. For example, Sage Intacct can benefit from the experience gained by Sage in natural language processing (NLP) through the development and introduction of its virtual assistant (chatbot) Pegg.
However, this type of technology transfer is hardly a one-way street. Intacct appears to have been far ahead of its (now) parent company in developing artificial intelligence (AI) through deep machine learning. But because Sage can also benefit from this effort, Intacct will likely be able to draw on more resources than it could afford on its own.
The third component in terms of “leading the future” is helping people evolve as leaders. More specifically, helping the finance leaders that are playing key roles in the companies that are Sage Intacct customers. Sage Intacct is not stopping at just streamlining and automating tasks in the accounting department. Those are table stakes in today’s financial management applications. Mr. Reid feels, “Our job is to transform the way people think and work, removing barriers to achieve success and lifting them up so they can achieve more.” A lofty goal indeed, but what does that really mean?
Mr. Reid acknowledges three different styles of leadership within the community of finance leaders: the historian, the business analyst and the data scientist. The historian relies on traditional reporting, while the business analyst leverages data and analytics to drive decisionmaking. The data scientist takes that analysis to a whole new level in terms of cognitive, predictive and prescriptive analysis.
Mint Jutras takes a slightly different view, looking at these, not so much as styles of leadership, but rather skills sets that must grow and evolve progressively. The business analyst can’t afford not to be a historian. And the data scientist can’t afford not to be a business analyst. Can finance leaders today be all three? Not without the right set of tools. While analytical skills might be a common trait amongst good finance leaders, they are not data scientists. Which is why Sage Intacct must build business analysis and data science into the solution. That takes aggressive innovation.
Leading with Innovation
As the pace of change accelerates today, the need for more features and better functionality doesn’t stop once you get a new solution up and running. We live in an age of disruption. As a result, the pace of innovation must accelerate. We asked participants in our 2017 Enterprise Solution Study how the pace of innovation had changed since they had first implemented (Figure 1). Indeed, 39% report that upgrades are now delivered more frequently.
Figure 1: Change in Pace of Innovation Since Implementing?
Source: Mint Jutras 2017 Enterprise Solution Study
However, it is one thing to deliver innovation more frequently, but quite another to consume it. If we average the frequency of delivery across all our respondents, we find upgrades being delivered just about every 6 months. We also asked our participants how often they upgraded and found they consumed those upgrades about once every 13 months. If we contrast SaaS deployments to those licensed, we found upgrades consumed far more frequently (Figure 2) when delivered through SaaS. And yet we know this can vary quite significantly from vendor to vendor.
Figure 2: How frequently are these upgrades “consumed?”
Source: Mint Jutras 2017 Enterprise Solution Study
Delivering more innovation through more frequent (and robust) updates not only delivers more value, but is also one of the most differentiating factors in comparing cloud solutions. While some of the potential benefits of a cloud-based solution are inherent in the cloud itself, the cadence and method of delivery of innovation are not among them, varying significantly from one solution provider to another.
With four releases a year, including about 30 enhancements in each, Sage Intacct is keeping pace with the top SaaS solution providers. Below are some highlights by industry of the 150 product enhancements that have been delivered over the past year.
Sage Intacct, along with new partner GuideStar, introduced the Sage Intacct Nonprofit Financial Board Book. The concept of a “guide book” or “Intacct Digital Board Book” was introduced back in 2015. They are designed as vehicles of communication , making enterprise data easier to consume, with instant access organized for action.
These Digital Board Books are very industry-specific and the first one off the shelf was designed for software businesses that, like Intacct, deliver software as a service (SaaS). This new one is designed specifically for nonprofits along with the assistance of GuideStar, the world’s largest source of nonprofit information.
The Nonprofit Financial Board Book is based on the framework developed by GuideStar to monitor the financial performance of nonprofit organizations. It uses real-time transactional data from the system of record in Sage Intacct to automate the calculation of key financial and operational metrics that GuideStar uses to not only demonstrate the financial health of nonprofit organizations, but also ensure the organization is on track in accomplishing its mission – a key element in attracting donors for funding.
Professional Services and Project-based Businesses
Sage Intacct also recently unveiled its new Project Manager Digital Board Book, which also includes new project budgeting capabilities. It is designed to empower project managers with better insight into project status and performance, keep projects on track so resources are available for the next highest priority, and uncover key insights to eliminate waste and improve productivity.
Software and SaaS Businesses
For software and SaaS companies, the contract is at the core of managing the lifecycle of the relationship with their customers. Sage Intacct recognizes the transition to the new ASC 606 revenue recognition guidelines is making the contract the new “unit” of Accounting. Back in May 2016 Sage Intacct Contract and Revenue Management was one of the first solutions to address the new complexities in revenue recognition created by the upcoming changes. Further enhancements were announced to enable companies to more fully integrate and automate the entire sales and finance process.
These are are just some highlights from the 150 product enhancements delivered over the past year by Sage Intacct via four quarterly releases. While these continue to supply Sage Intacct customers with a steady stream of useful and consumable enhancements, it was a preview of the future that was perhaps the most innovative and the most exciting of all.
Vision of the Future: Taking Intelligence to the Next Level
To sweeten the pot even more, Sage Intacct introduced its vision for a new digital assistant to the CFO. Its name is Pacioli. Think of it as a Siri or Alexa for enterprise applications. Pacioli will dramatically change the way the user interacts and interfaces with the software.
What’s in a Name? Pacioli
“Fra Luca Bartolomeo de Pacioli (sometimes Paccioli or Paciolo; c. 1447–1517) was an Italian mathematician, Franciscan friar, collaborator with Leonardo da Vinci, and a seminal contributor to the field now known as accounting. He is referred to as “The Father of Accounting and Bookkeeping” in Europe and he was the first person to publish a work on the double-entry system of book-keeping in this continent.”
On the surface, Pacioli might look a lot like some other “virtual assistants” offered by other vendors recently, including Sage’s Pegg. Sage calls Pegg “the world’s first and only accounting chatbot,” but it’s not the only virtual assistant that can capture expenses from your mobile device and give you some visibility into cash flow.
While Pacioli is not yet ready for prime time and Sage Intacct may very well leverage Sage’s work with NLP, it is far ahead in terms of true AI – a good example of how the acquisition could have mutual benefits to both parties.
Although Pacioli makes use of advanced new technology, including deep machine learning, Sage Intacct doesn’t want to deliver it as a general technology tool, but instead will look for problems to solve and develop specific solutions to solve them. This is smart since its typical customers will not seek out or purchase technology for technology’s sake. Other vendors, far bigger than Sage Intacct, have struggled to gain traction when they released elegant new technology in search of a problem. Current and future Sage Intacct customers start with a problem and search for a solution.
Pacioli will have to start out with fairly simple questions, much like Siri, Alexa and even IBM Watson do. All these digital assistants must be trained to answer anticipated questions. Current AI technology isn’t good at coming up with brand new answers to questions nobody has thought of before. It is good at recognizing the question as one with a (stored) answer. Even with current limitations it can add tremendous value because we’re not talking about a few questions and answers; we’re talking thousands or more.
While many today have begun to fear that AI will take jobs away, much like the automation that occurred in the latter part of the 20th century, one Sage Intacct customer, Meals on Wheels doesn’t fear it. The nonprofit’s chief financial and administrative officer, Don Miller welcomes it, “If it saves us time and gives us more time to work strategically, that is useful progress. Some might worry about job security. But if it takes five hours to pull data together and AI can do it in minutes, I’m all for it.” This is consistent with the objective Mr. Miller had when he came on board: It’s all about eliminating “stupid work.”
For Intacct, it’s all about delivering a tool that will maximize the human potential. It has the potential of automating and eliminating the tedious, time-consuming tasks that keep a knowledge worker from working efficiently and effectively, without wasting time searching for data, policies or processes.
But… Is Intacct Getting Too Far Ahead of its Customers?
Sometimes software companies must take a leadership role in terms of innovation, inspiring customers and prospects to apply leading edge technologies in new and creative ways to create a competitive advantage. Without this push, many (most?) companies can become complacent. If the software that runs the business isn’t broken, there’s no need to fix it.
Eighty-four percent (84%) of survey respondents participating in the 2016 Mint Jutras Enterprise Solution Study agree that digital technologies of today (those that serve to connect operations, people and processes through the power of the Internet) have the potential to fundamentally change the way we all do business. Furthermore, 88% understand that embracing digital technologies is necessary for survival. And yet, we found the vast majority still coasting or riding the brakes when it comes to digital transformation.
Last year we also found that while 58% of participants felt they were well prepared for the digital economy, in peeling back the onion, we concluded that many were perhaps over-confident in their progress, often held back by old ways of thinking and a lack of understanding and appreciation of what is possible today.
So in our 2017 study we dug a little deeper to assess how well companies understand these technologies, and the potential they hold for their businesses. We selected 14 different kinds of technology and asked respondents to assess their level of familiarity with each in terms of how they relate (or not) to their business. The technologies that Pacioli might utilize are shown in Table 1 (in no particular order).
With the exception of predictive analytics and IoT, those that are unfamiliar, only somewhat familiar and/or don’t perceive the value outnumber those that have embraced these technologies. And yet these technologies have actually insinuated themselves into the lives of many consumers. And most of us don’t even realize it.
Table 1: How familiar are you with these technologies as they relate (or not) to your business?
Source: Mint Jutras 2017 Enterprise Solution Study
Anyone using Siri, Alexa or Cortana has used a virtual assistant and natural language processing. Google, Spotify and Pandora all employ “deep learning” (aka machine learning) to create a better play list for you. Did you ever notice that your GPS seems to get smarter over time, suggesting the routes you actually prefer? And the more you use any of these “apps”, the smarter they get.
These technologies are no longer science fiction. They are woven into the fabric of our lives. Apple, Amazon and Microsoft didn’t require you to buy something extra. They just made it part of what you got with your new device. And didn’t those features make you want the latest and greatest device?
That is exactly what Sage Intacct is setting out to do: take the lead in weaving these technologies into the fabric of the software we use to run our businesses.
Sage Intacct, with the backing of its new owner, Sage, has indeed set its sights on “leading the future.” The global reach and resources of Sage, combined with the stability and continuity of a strong leadership team positions it quite well. It will need to continue to aggressively provide innovation, continue to listen to its customers, while also leading them in new and innovative directions. It must continue to support the historians, while making them better business analysts. If it can deliver on its vision of the future, effectively incorporating artificial intelligence into decision-making, it can bring data science into the world of finance, without requiring its customers to be data scientists.