enterprise applications

SAP Leverages the “Power of Big” to Benefit SMEs

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

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

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

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

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

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

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

 

American Express and SalesForce Aid in Delivering Automation and Collaboration

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

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

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

Focus on Finance, but….

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

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

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

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

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

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

Intacct fig 1Source: Mint Jutras 2014 Enterprise Solution Study

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

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

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

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

Intacct Check Delivery Service Enabled by American Express Global Corporate Payments

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

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

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

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

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

Intacct Collaborate Embeds Salesforce Chatter Into Intacct

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

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

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

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

The result: heightened visibility and better collaboration.

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

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

Hans Schaedel, CFO, Canto, Intacct Collaborate early adopter

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

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

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

Conclusions

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

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

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Workday: Is it ERP or Not? Does it Matter?

You may have noticed I haven’t written much about Workday over the past few years. It’s not because I’m not interested. I am. But I haven’t had as much direct contact and interaction with the company as I would like in order to write from a basis of knowledge and experience. Having recently been invited to an analyst briefing call, I hope that is changing.

Some might assume this lack of direct contact is because I write a lot about ERP and Workday seems to go out of its way to characterize itself as not an ERP company. However, as an analyst, I always describe my coverage area as “enterprise applications with ERP at the core.” But the footprint of ERP has grown to the point where it is getting more and more difficult to determine where ERP ends and other applications begin. Those that know me well “hear” me talking about functions and topics (like performance management, talent and human capital management, etc,) that used to sit squarely outside of ERP, but today might sit either inside or outside that boundary. They also “hear” me talk about financial management, which can be an integral part of ERP, or a stand-alone solution. Both of these are certainly in Workday’s wheelhouse.

While Workday might be careful to say “We’re not ERP,” I hear other influencers refer to the company and its products as “ERP” all the time. In response I have been known to challenge those influencers, asking, “Is it really ERP?” I don’t do that to be contentious, or to denigrate Workday’s solution, but to better position it. Who should buy it and why?

I have always been careful to define ERP quite clearly, and in fact my definition outlasted me at Aberdeen. I left Aberdeen and founded Mint Jutras almost four years ago (January 2011), but my definition of ERP lives on there.

My definition of ERP is quite simple:

ERP is an integrated suite of modules that provides the operational and transactional system of record of the business.

Of course many (if not most) ERP solutions today do much more. But the minimum requirement is to provide an auditable record of operations, including any transaction that impacts the balance sheet (assets and liabilities) or the profit and loss statement. So does this mean an integrated suite of accounting modules qualifies as an ERP solution? It’s close, which is why I am able to collect so much data on financial management solutions in the context of my annual ERP solution studies, and in 2015 I am devising a way to capture data specific to each while distinguishing between the two. But the question is not as simple as it might seem and I have found the real answer lies in whether or not the solution handles orders: both purchase orders and sales orders. While purchasing is not strictly the domain of finance, it is not unusual for a financial management solution to include at least the basic requirements for purchasing transactions. It is less likely for these financial solutions to include the sales order.

An interesting aside: I attended the very first analyst call back in 2006 when Dave Duffield and Aneel Bhusri introduced Workday. I remember clearly that Workday was introduced as a ‘new ERP company”, although the first functions that would be developed would be for managing Human Resources (HR). The HR part came as no surprise given the founders’ background (Peoplesoft). But the reason I remember it so well is because Dave Duffield actually said something along the lines of, “You are probably wondering whether the world needs another new ERP system.” Of course Workday went on to fully develop its Human Capital Management solution, including HR, benefits, talent management, recruiting, payroll, time tracking and workforce planning and analytics. Financial Management came later.

So, what about the full operational and transactional system of record? Yes, Workday’s Financial Management solution handles the purchasing side, covering the full procure-to-pay process. And earlier this week, I got excited when I heard it also handles the full cycle from contract to cash. Aha! Is that the final piece of the puzzle that would qualify it as an ERP? While I might prefer a simple black and white, yes or no answer, I think there are at least a few shades of gray here, depending largely on the type of operations in question.

So I went in search of the sales order. I found a “contract” but not a sales order. But then remember that Workday specifically targets talent intensive organizations, including several for which it has developed new features in its latest Workday 23 release (the topic of the recent call):

  • Software and Internet Services
  • Financial Services
  • Business Services
  • Higher Education and Non-profits

Also noted on its website are healthcare, state and local governments, and retail and hospitality. These types of businesses don’t necessarily book an order in the classic sense of the term (e.g. when you think about an order for widgets). Colleges and universities don’t sell degrees. Hospitals don’t sell surgical procedures. Hotels don’t sell and deliver rooms. Business services are contracted for. Even software companies that might talk about booking an order are really more likely to sign a license agreement or offer a subscription (both are contracts). So in this case, the contract represents the commitment to buy and is the trigger for invoicing. In these cases, I would guess that Workday’s Financial Management suite can provide the full operational system of record for the business. In other words, by my definition, they are providing ERP to these types of businesses.

But if they were to stray outside these target markets, they can’t provide the full operational system of record, especially for a manufacturer. While Workday does target manufacturers, if you look closely you realize it is selling Human Capital Management to manufacturers, especially those looking to balance human resources to optimize revenue opportunities.

Flextronics, a global leader in design, manufacturing, distribution and aftermarket services, and one of the largest contract manufacturers in the world, is a Workday customer with over 200,000 employees in 30 countries. According to Mike McNamara, CEO, “We have to rebalance our workforce on a continuous basis for our customers. For example, we may be spending a lot more time in Malaysia and a lot less time in China. We may want to move more of our workforce into Mexico as opposed to Eastern Europe, depending on the markets we’re accessing. And Workday actually gives us the data to continuously analyze what our cost structures are—the average labor rates in each area. It has actually changed some of our investment policies for different countries as a result of studying the data and the trends in the data.”

Flextronics is running Workday’s HCM. I suspect Workday doesn’t sell a lot of Financial Management to manufacturers except maybe to replace corporate level financials. Manufacturing sites already have accounting functions embedded within ERP because it is hard for them to live without it. This is the perfect setup for a two-tier standard for ERP: manufacturing ERP at the divisions, rolling into a corporate ERP, which may just be financials, analytics and maybe even HCM (like Workday).

So this begs the question: Why does Workday go out of its way to characterize itself as not being ERP? Mark Nitter is the vice president at Workday responsible for setting the strategic direction of its products. He wrote about this in his blog post Why ERP Is Out, and Unified Finance and HR Is In, in which he assumes all ERP solutions were “designed for enterprises engaged in the manufacture and distribution of goods” and that “people were primarily seen as labor—a commodity whose cost is to be minimized.” He also assumes there is an arm’s length relationship between finance and HR. Mr. Nitter writes:

At Workday, we certainly don’t consider what we offer as “ERP.” From the beginning, our mission was to deliver an enterprise cloud for HR and finance, and this solution has been a key driver for many of our talent-driven enterprise customers, including AAA NCNU, Allied Global Holdings, Life Time Fitness, Sallie Mae, and TripAdvisor. For these companies and others, a business management system that unifies HCM and financials provides efficiencies and insights far beyond the capabilities of the ERP model.

An example: Imagine that a P&L analysis points to a revenue shortfall for your fiscal quarter. State-of-the-art financial drill-down analysis may help you identify which organization, product, or customer is responsible. But what if the reason for the shortfall cannot be determined through analysis of financial data? What if the reason for lower-than-expected revenue is that you have three open positions in the sales organization, and have had for six months?

The arms-length relationship between finance and HR that exists in ERP systems cannot deliver this insight. Separately, the finance department could identify where the shortfall occurred, and the HR department—if it knew where to look—could identify the hiring problem, but only a unified solution is capable of connecting the dots.

I would agree that most ERP solutions today couldn’t identify this hiring problem. But that is not because of any inherent limitations of ERP. It is because the ERP solution doesn’t have the same depth of functionality in HR that Workday has built into its solution. Yes, ERP evolved from MRP, which was originally designed to meet the planning needs of manufacturers. But ERP has evolved way beyond the realm of manufacturing and some ERP solutions on the market today – in fact those solutions that compete most directly with Workday – were never designed to support (physical) product-based businesses.

So, is Workday ERP? I would mostly agree with Workday and say, “Not really.” But does it matter what you call it? I would say, “Yes it does.” That is if Workday wants to be considered as a viable option in all the places where it could truly add value.

This is particularly true in companies that already have ERP and are not looking to replace it. Because HR has been largely underserved by ERP for many years, many ERP implementations lack a lot of specialized HCM functionality. Workday’s HCM can add very significant value, even without being sold as a “unified finance and HR solution.” If Workday portrayed itself as an ERP solution, that prospect would likely say, “No thank you. We already have one of those.”

Mint Jutras data indicates a dichotomy of preferences in satisfying HCM requirements. While there are some that have a strong preference for HCM functionality embedded within ERP, an (almost) equal number strongly prefer a separate (possibly stand-alone) applications. The remainder has no defined preference and will decide based on a combination of functionality and price (Figure 1).

Figure 1: Preferences for HCM Functionality

Figure 1 WorkdaySource: Mint Jutras 2014 ERP Solution Study

However, where the Workday solution might provide a complete system of record, this argument might work against Workday. Where those companies perceive the need for ERP, even though Workday might have all they need, if Workday says it doesn’t sell ERP, it might not be considered. This may also be true where companies might define a two-tier ERP strategy, with one ERP providing corporate financials and a second standard defined for units, divisions or business units. If the prospect has defined this as a “two-tier standard” for ERP, it will be looking for ERP at the corporate level, even though orders are managed at the divisional level and “unified finance and HR” is what it really needs. The difference in the label might make all the difference in which solutions they will consider.

Bottom line: I admire Workday for identifying the value of a unified finance and HR solution particularly for the “talent-driven enterprise” and for not portraying itself as something that it is not. Some of the influencers who refer to them as “ERP, just not for manufacturing” could learn a lesson or two from this. But at the same time, I would caution Workday against assuming that an ERP can’t and won’t unify finance, HR and a lot more.

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Acumatica Poised as ERP Trends Converge

 

Partners Attracted by Technology, Innovation and Choice

Acumatica held its annual Partner Summit earlier this week in Broomfield, CO, just outside of Denver. Attendance this year topped 400, with over 100 partner companies represented. Over the past year Acumatica has undergone some management changes, bringing in a new CEO and a new head of partner strategy, a key role considering 100% of its sales are indirect. There was a definite sense of excitement in the air this year, partly as a result of the new management, but largely due to a combination of technology, innovation and choice of cloud-based deployment options offered in response to the latest trends impacting Enterprise Resource Planning (ERP).

Mint Jutras has been writing a lot about four specific trends this year. Its report, 2014 Trends in ERP Converge, looked back over these “big trends” in enterprise software from 2013 and concluded that we don’t need any new or different trends for ERP in 2014. Cloud, mobile, social and big data will do just fine. However, we have concluded that it is no longer sufficient to treat them as independent movements. We need them to converge around a single common goal of making ERP easier to consume, thus bringing more value to the business. Enlisting the aid of OEM and VAR partners, Acumatica has set its sights on delivering on this promise of added value.

The Key Trends

As I have noted before (but it is worth repeating), the 2014 Trends in ERP Converge report talked about four specific trends. These should come as no surprise to anyone following enterprise software:

  • Cloud and software as a service (SaaS)
  • Mobile access and the consumerization of IT
  • “Social” as a way to deliver collaboration, connectivity and visibility
  • “Big data” for intelligence and decision-making

It is impossible to talk about the convergence of these trends without mentioning innovation that is easier to consume in a less disruptive way. This often requires new ways of engaging with ERP in order to change the whole ERP customer experience. So how does Acumatica address each of these trends?

Pure Cloud

Acumatica can be characterized as a pure cloud solution. The Acumatica solution was born in a browser and therefore has always had a zero footprint on the client, making it accessible any time, from anywhere. No legacy issues here. It is built from the ground up with cloud technologies: SOAP, web services, HTML5, Azure, Amazon, etc.

Many use the terms “cloud” and “SaaS” interchangeably, but indeed they are not the same. The distinction is quite simple and need not be over-complicated:

  • Cloud refers to access to computing, software, storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.
  • SaaS is exactly what is implied by what the acronym stands for: Software as a Service. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another’s) computer. It is accessed over the Internet and is generally paid for on a subscription basis. It does not reside on your computers at all.

Using these definitions, we can confidently say all SaaS is cloud computing, but not all cloud computing is SaaS. Acumatica is cloud-based but not always delivered as SaaS.

The downside of being “cloud only” often means less choice. Typically a cloud-based solution is only available as software as a service (SaaS). Not so with Acumatica. Lots of choices here: multi-tenant SaaS, single tenant SaaS (more like a hosted model), or even traditional on-premise deployments. You can purchase a perpetual license or pay a subscription. It is designed to be a multi-tenant cloud solution, but that doesn’t prevent Acumatica from offering it in a variety of different environments and Acumatica is quite unique in this regard.

Some industry observers, including those that have their own specific definition of what constitutes “true SaaS,” might argue against this approach. While Mint Jutras is seeing a major shift in acceptance of SaaS solutions, our research also proves that there is  continued interest in other delivery options for the access any time, from anywhere advantages of the cloud. But we see a decided decline in interest in traditional, licensed on-premise solutions (Figure 1).

Figure 1: Which deployment methods would you consider today?

Figure 1 AcumaticaSource: Mint Jutras 2011, 2013 and 2014 ERP Solution Studies

Many are simply looking to unburden themselves from the care and feeding of enterprise apps like ERP. They are attracted by lower costs, easier upgrades, less hardware and IT staff and are less worried about a single prescription of how cloud solutions are delivered. They are looking for business partners they can trust and having more choices in how they address these needs can be very attractive.

However, Acumatica does sacrifice some of the advantages of a pure multi-tenant solution through this approach. For those not familiar with the terminology, Mint Jutras uses the following simple definitions:

  • Multi-tenant SaaS: Multiple companies use the same instance of (hosted) software. Configuration settings will vary per company and data is protected from access by other companies (tenants).
  • Single-tenant (or Multi-instance) SaaS: Each company is given its own instance of the (hosted) software.

Those vendors that only support a multi-tenant environment have the luxury of maintaining one single line of code. By not having to worry about multiple instances at different (potentially customized) version levels, they are better positioned to deliver more innovation, faster.

However, at the Partner Summit, Acumatica announced a new Acumatica Grow Program, which leverages the multi-tenant capabilities of its solution within the partner community. FusionRMS for SMB Retail is one example.

Fusion Retail Management System (FusionRMS) is a suite of applications extending the reach of Acumatica to the SMB retail and wholesale distribution markets. Offering added functionality such as point of sale (POS) and warehouse management (WMS), its solutions are seamlessly integrated with Acumatica without effecting core functionality. Now, through the Grow Program, it is also offering multi-tenant SaaS back office accounting supported through Amazon Web Services (AWS).

While this might sacrifice some of the flexibility of choice other Acumatica customers enjoy, Fusion Retail Management manages a single line of code and can pass along savings to its customers. This helps them support clients that otherwise might not be able to afford Acumatica.

Fusion Retail Management not only sells direct, but also other partners bring them small retail clients that might be too small for Acumatica now. This is preferable to simply losing a deal, particularly in knowing they will get them back if the prospect grows. FusionRMS supports these small clients until they grow large enough to justify the purchase or subscription of Acumatica. At that point, FusionRMS turns the client back over to the partner.

A Mobile Framework

The trend towards mobile goes hand-in-hand with cloud, as mobile access is gained through web-enabled services. We are seeing different approaches to mobility in the ERP market these days. Some vendors are adopting a “mobile first” design approach. Any features and functions are being designed to “fit” on the real estate of a tablet or smart phone. Others are taking a “mobile apps” approach where they are releasing multiple, individual purpose-built apps that complement core ERP. Some are building these themselves and others are leaving this development effort to partners. Some are hosting “App stores” where customers can shop. Others simply bundle them into existing software licenses.

Acumatica is taking the approach of providing a mobile development framework, purposely leaving the actual delivery of the mobile apps to the partners in order to provide them more opportunity. But this framework isn’t built for a developer. According to CTO Mike Chtchelkonogov (aka Mike C), “You no longer have to be a developer to target the mobile market. In the past, partners may have needed to hire specialists to create iOS or Android applications, but with Acumatica’s new mobile development framework, any of our partners can do it.”

This is especially important to the Acumatica channel because many partners are business and implementation specialists and not technologists. According to Mike C, the partner [or the customer] can take any part of Acumatica and expose it on the mobile device. So what kind of opportunity are we talking about? That might be in delivering a customized solution through services, or building an app to be sold through Acumatica’s app store.

What About Big Data and Social?

There was not a lot of direct reference to “social” and “big data” at the Acumatica Partner Summit. But that doesn’t mean either is being ignored, only that these trends and concepts are being worked into the product roadmap naturally, not as separate and distinct efforts. In fact many of the new features of its upcoming new release 5.0 indirectly support the goals of a “social” enterprise.

Social can mean different things to different people. It has some intuitive connotations in the world of consumer goods where social sentiment can have a serious impact, both positively and negatively, when shared publicly. But the real impact in any industry, while perhaps not as intuitive, is quite real.

When you take the view that “social” should mean improved collaboration, visibility and connectivity, then you start to understand the connection with the ERP user experience. Much of the development effort that produced the latest release 5.0 has gone into the user experience. Probably the best testament to the result was the fact that several key top executives put their hands on keyboards, or their own mobile devices, and ran their own demos. Not only were these “real” demos (not mock-ups or a series of screen shots in PowerPoint), but no pre-sale consultant or sales engineer was needed.

Simply by putting access to an ERP directly in the hands of high-level decision-makers improves connectivity, which in turn fosters visibility and collaboration.

Another announcement at the Partner Summit reinforced Acumatica’s commitment to another type of connectivity: a deep partnership with Azuqua, a cloud connectivity platform. On stage Azugua demonstrated its recently launched cloud integration service featuring connectivity between a broad range of popular web services (including Salesforce, Office 365 and Hubspot) to Acumatica’s system. Interestingly enough, the integration demonstrated on the main stage was so dead simple that it led to skepticism from industry observers and influencers in the audience. Was it too good to be true? I suspect it is real, but time and partner experience will tell.

As to “big data,” Acumatica was quick to point out its approach was very different from those of ERP giants SAP and Oracle. Instead of building a “big data” platform outside of the ERP system and requiring retrofitting of existing systems, Acumatica is building this kind of capability into its solution. This speaks to speed and ease of handling large volumes of structured data, but downplays (ignores?) the inclusion of massive volumes of unstructured data. It appears this is also something Acumatica might leave to partners and it will take a special kind of partner to deliver on this.

The Convergence of Trends Toward a Goal

If you recall, in our intro, the goal was to have these trends converge around a single common goal of making ERP easier to consume. The better the experience, the more connected the people running the businesses are to ERP and to each other. In fact over the past few years, we’ve observed an increase in the percentage of employees who actually use ERP. Today that percent is about 55%, up from about 20% less than a decade ago. In addition, 62% of survey participants claim top-level executives have direct access to and regularly use ERP. So Acumatica executives are not the only execs in the driver seat when it comes to using ERP. Another 30% indicate these high level execs have at least some access to ERP.

This, combined with expectations raised by the consumerization of IT, is perhaps the catalyst in shifting priorities in terms of ERP evaluations. While fit and functionality was king for many years, it has slipped to number two in the priority of selection criteria. “Ease of use” has taken the number one spot.

But “ease of use” means different things to different people. In fact it means different things to a single individual (Figure 2).

Figure 2: What does ease of use mean? (top 3 priorities)

Figure 2 AcumaticaSource: Mint Jutras 2014 ERP Solution Study

While many vendors are focusing efforts on “beautiful” software these days, beauty is always subjective. Those using ERP today are more concerned about efficiency and productivity than in a visually appealing user interface. Being a relative new-comer to ERP, Acumatica (founded in 2007) might not have the same depth of features that other more mature solutions have. But the development team seems to be working on a good balance of features and functions, along with better usability and a web platform that helps partners further develop breadth and depth. If the reaction to the main stage demos is any indication, partners and the few customers in attendance at the Partner Summit agree.

Ehrin Dimitry, CEO of AME Corporation, an Acumatica customer said, “I thought I knew what our next steps were until I saw Acumatica 5.0. My wheels are turning!” Customers and partners seemed genuinely excited about this newest release, a clear indication of perceived value.

Summary and Key Takeaways

As a pure cloud solution provider, Acumatica is very well positioned to deliver the benefits of the cloud through a variety of different deployment options. Virtually every partner I spoke with at the Partner Summit was drawn to Acumatica for its technology. Few offer Acumatica exclusively and many of them have experience selling, implementing, servicing or developing other ERP platforms. But that seemed only to strengthen their opinion of and commitment to the Acumatica solution. They like the partner friendliness of a relatively small company that sells exclusively through the channel. They are drawn to cloud computing but like being able to offer choice.

Customers and partners alike were enthusiastic about the latest release and the roadmap forward. Overall Acumatica seems poised to deliver as major trends like cloud, mobile, social and big data start to converge.

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Can SYSPRO Put a Genius in a Manufacturing Executive’s Pocket?

Espresso Mobile Solution: a Single Portal to All Your Applications

As Mint Jutras has noted in prior reports, SYSPRO is clearly inspired by the genius of Einstein. Over the years Einstein has influenced many of its initiatives, including its “Simply SMARTER” strategy (an acronym that stands for Strategy, Methodology, Accountability, Resources, Technology, Education and Customer Rewards) and its SYSPRO Quantum Architecture. Back in December 2012 it announced its plans for a new mobile platform (a “wired” Einstein on Espresso) that would bring the customization capabilities of its Enterprise Resource Planning (ERP) solution for manufacturing and distribution natively to multiple mobile devices including Android, Apple I-OS and Blackberry. Now with the release of SYSPRO 7, more advances to this mobile platform are available. While in the past decisionmakers may have shied away from accessing ERP directly, assuming it was too complex and hard to use, SYSPRO Espresso now puts intelligence directly into the hands (and pockets) of executives with mobile devices.

Making the Business Case for “Mobile”

SYSPRO’s objective in this release is to provide “leading edge” solutions to a market segment not particularly well known for its aggressive and pioneering use of enterprise software. While manufacturers might be pioneers in their own industries, typically they are more interested in spending their capital budgets on new equipment for the plant or shop floor than on hardware and software to run their back and front offices.

In fact SYSPRO recently conducted one of its SNAP (SYSPRO Needs Answers Please) pulse surveys, this time on Information Technology (IT) priorities. The survey found a growing recognition of the impact IT has on a manufacturer’s ability to compete today: 87% said IT has a moderate to substantial impact on their competitiveness. While in the past manufacturers might have chosen to invest in facilities, people and equipment instead of enterprise software and the servers needed to support it, more and more of these same companies are realizing they need to invest in both in order to take full advantage of the new capacity.

According to SYSPRO’s survey, 9% of participants said they fairly regularly choose to undertake both such projects at the same time and 48% say this is a decision they have made at least once or twice. While the SYSPRO team was surprised by this, Mint Jutras is not. Once a manufacturer expands capacity, either through capital investment in existing facilities, or through expansion into new geographies or new markets, the game is changed. These same manufacturers now need new tools to manage that capacity for profitable growth.

While data collected in Enterprise Resource Planning (ERP) has always been important to executive level decision-making, in the past very few executives ever put their hands directly on ERP. Instead they relied on subordinates or super users to collect data and investigate, delaying decisions and sometimes even distorting the view from above. Why? Because the perception (and often the reality) was that ERP was complex and hard to use. Executives simply didn’t have the time or inclination to “figure it all out.” And yet today the pace of business has accelerated to the point where any delay in decision-making can be fatal.

The Mint Jutras 2013 ERP Solution Study first showed executive access to ERP on the rise and that trend continued this year (Figure 1). More and more executives are directly connected to ERP, with the percentage of manufacturing companies saying all have access and regularly use ERP increasing from 47% to 57% year over year.

Figure 1: What level of access does top executive management have to ERP?

SYSPRO figure 1Source: Mint Jutras 2013 and 2014 ERP Solution Studies

And yet we see little progress in putting dashboards from ERP on mobile devices or sending alerts or giving these executives the ability to take action directly from these devices. Whether they want it or not, whether they know it or not, they need immediate and direct access to ERP, and these mobile devices may just serve as the catalyst and the game-changer. But nobody wants to just lift and shift the same old monolithic ERP.

This might explain why even with the proliferation of these devices and the “always on” environment they create, the priority for access to ERP data and functions from a mobile device remains close to the bottom of the list of ERP selection criteria (Table 1).

Table 1: Selection Criteria in Evaluating ERP

SYSPRO figure 2Source: Mint Jutras 2013 and 2014 ERP Solution Studies

In the age of “there’s an app for that” few people equate ERP to that “app.” While only 21% of manufacturers ranked mobile access to ERP as a “must have,” 38% indicated that mobile access to business intelligence (BI) was a “must have.” And 32% wanted access to BI from their chosen device (BYOD). What seems to get lost in the shuffle: many don’t realize most data from which they are likely to derive that intelligence resides in ERP.

We need a catalyst that can bridge this perception gap.

SYSPRO 7 Espresso Mobile Solution

SYSPRO has taken many steps to insure that SYSPRO 7 Espresso is that catalyst. Its goal is to provide a “leading edge” solution without losing sight of what manufacturers and distributors really need.

A Strong Platform

First of all it needs a solid platform that supports the needs of a mobile deployment, including the following:

Device and platform independence: With “bring your own device” (BYOD) rapidly invading the business world, users expect to interact with enterprise data using the same user interface features that attracted them to the device to begin with. Even more importantly, users can easily change devices. Switching from a Blackberry to an iPhone? No problem. Use both an iPad and a Samsung Galaxy 5? No problem. Moving to a Surface tablet? Not a problem. SYSPRO Espresso can be used on all major mobile device operating systems and is compatible on all web browsers that support HTML5.

Users can personalize their user interface (UI): Customization is truly as easy as dragging and dropping different screen components.

Real-time or offline access: This is huge.What happens when you lose your Wi-Fi or mobile signal? SYSPRO Espresso lets you continue working offline. Any transaction made while working offline can be synchronized when you reconnect. Yes you have to press the button, but it really is that easy.

Secure communication: Often businesses ignore the possible vulnerabilities introduced through mobile devices. Either that or this potential scares them from allowing mobile access. Transmission between mobile devices and the SYSPRO server are encrypted using SSL secure communication standards. In addition, administrators of the SYSPRO system can configure menus and applications by company, role and user.

Enable alerts to be sent via push notifications: Receiving alerts on a mobile device is always the top priority for business users. According to our Mint Jutras ERP survey, 76% say they receive alerts based on enterprise data either often (35%) or occasionally (41%). Yet only 18% get alerts from ERP. We conclude that the vast majority of the alerts received are delivered via email or text messages as a result of some manual intervention. SYSPRO Espresso automates this and connects the user directly back to ERP, the source of the data.

Uses active tile technology: This too is huge. If you are monitoring certain metrics, a static image only shows you a moment in time. Using SYSPRO Espresso, an icon or tile is constantly refreshed and dynamically updated every few seconds. You are always looking at the real results.

Multi-lingual support: Supporting the same languages SYSPRO ERP supports.

Mobile applications packaged with Espresso and via the SYSPRO App Store: SYSPRO Espresso comes standard with a growing number of applications. But given the simplicity of developing new apps, and the simplicity of making them available on the SYSPRO App Store (for free or for a fee), SYSPRO fully expects partners to also contribute and this number will grow significantly.

A single app for all applications: Only one app needs to be downloaded from the App Store to a device. Mobile users only needs to log into the menu system once to gain access to any applications they have permission to use. As additional apps become available, they can be pushed to the user’s device, removing the need to download anything else. This brings the process of provisioning to a new level of efficiency.

Development platform that supports deployment to any device: A free plugin to Microsoft Visual Studio 2012 allows developers to build custom applications once, using one set of source code that can be deployed on all major mobile device platforms. This preserves the native operation of a device without a proliferation of code. This includes native device capabilities such as a camera and GPS tracking, both supported by SYSPRO Espresso. An ink component is also supported to allow capturing of signatures or drawing of simple diagrams.

Easy Movement Between Devices: Perhaps a sales rep begins entering an order in the field, but has not completed the task when it is time to pack up and head back to the office. Upon return, the sales rep can log onto a laptop or desktop computer and pick up exactly where he or she left off.

A Library of Pre-Built “Apps”

Part of the lack of urgency in providing access to ERP data and functions from mobile devices is likely due to the monolithic approach used in delivering legacy ERP in the past. ERP was this massive application, touching many different functions of the business. Figuring out how to navigate through the pieces and processes that impact any one particular user was hard. Contrast this to the typical mobile app. Because these mobile apps are purpose-built for a very specific function, they are intuitively easy to use.

SYSPRO has taken the same approach to delivering Espresso apps. There are a number of pre-built applications, which are free to any licensed Espresso user. Below is a list of apps that are immediately available with the initial release of SYSPRO 7, but this list will continue to grow over time and is also likely to be supplemented by others added to the SYSPRO App store by users and partners.

  • Aged Sales Orders
  • Bank Query
  • Customer Maintenance
  • Customer Query
  • GIT Reference Query
  • Inventory Maintenance
  • Inventory Query
  • Inventory Valuation (chart)
  • Job Query
  • Lost Sales Orders
  • Price Query
  • Purchase Order Query
  • Quotation Query
  • Ratio – Asset Turnover
  • Ratio – Leverage
  • Ratio – Liquidity
  • Requisition Query
  • Sales Analysis
  • Sales by Month
  • Sales Dashboard (charts)
  • Sales Order Commitment
  • Sales Order Entry
  • Sales Order Query
  • Sales Order Taken
  • Supplier Maintenance
  • Supplier Query

Summary and Conclusion

While more and more executives today are looking for answers and a return on their investment in ERP, many still struggle to connect through the same mobile devices that keep them “always connected” to the business. In spite of using these mobile devices to receive alerts, many still respond by turning the smart device, on which they receive the alert, into a dumb device. They call or text. They turn to others to further investigate, to track down answers. They won’t be able to take direct action until they are easily connected directly back to ERP.

Any kind of knowledge worker today needs new ways of engaging with ERP, ones that make the connection easy, ones that answer their specific questions and address their specific issues.

Just lifting and shifting a massive application like ERP to a mobile device, without these new ways of engaging is useless. Instead, workers need “an app for that.” Yes, that app is ERP, but it needs to be disguised as something else, something that is purpose-built to answer questions and resolve issues. The savvy executive today should be looking to put a genius in his or her pocket. For a SYSPRO customer, that means SYSPRO Espresso running on the mobile device of choice.

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

Plex Enterprise Edition Makes its Debut at PowerPlex 2014

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

Clearing Up Some Misperceptions

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

Figure 1: Willingness to Consider SaaS Grows with Company Size

Plex Fig 1Source: Mint Jutras 2014 ERP Solution Study

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

Why Might That Be?

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

Figure 2: Distributed Environments

Plex Fig 2Source: Mint Jutras 2014 ERP Solution Study

Defining Corporate Standards

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

Figure 3: Have you defined corporate standards?

Plex Fig 3Source: Mint Jutras 2014 ERP Solution Study

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

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

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

Plex Fig 4Source: Mint Jutras 2014 ERP Solution Study

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

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

Case in Point: Shape Corporation

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

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

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

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

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

The Desire for a Complete and Comprehensive Solution

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

Figure 5: Preferences for a Suite?

Plex Fig 5Source: Mint Jutras 2014 ERP Solution Study

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

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

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

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

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

Customers Help Define the Problem: Inteva Products

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

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

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

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

 A Phased Delivery Planned

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

Centralized accounting includes

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

Corporate cash management delivers:

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

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

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

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

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

Summary and Key Takeaways

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

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

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

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

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

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Can Running SAP Business Suite on SAP HANA Be a Game Changer?

It can if you change the conversation

Back in February I posted this update on SAP Business Suite on HANA after having spoken with Jeff Woods, former industry analyst, currently Suite on HANA aficionado at SAP.

As a follow-up I joined Katie Moser for a webcast.

Click here to listen to the webcast

And now for the original post:

Jeff had lots of good stuff to share, including some progress to date:

  • 800+ Suite on HANA contracts have been signed
  • 7,600+ partners have been trained
  • There are 200+ Suite on HANA projects underway
  • 55 of these projects have gone live (and the number is growing)
  • The largest ERP on HANA system supports 100,000 users

So the Suite on HANA is quite real. But the single message that resonated the most strongly with me: the conversation has (finally) changed. While we’ve been hearing about HANA as this wonderful new technology for several years now, for the most part, the talk was about technology and even when the technologists spoke about purported business value, they spoke in very technical terms. But the audience I write for, business leaders in various industries, don’t care about technology for technology sake. Many don’t (care to) understand tech-speak. But they do care about what technology can do for them.

A Year Later…

It was just about a year ago that SAP announced the availability of SAP Business Suite powered by HANA, complete with live and live-streamed press conferences in both New York City and Waldorf, Germany. I don’t think I have ever seen such genuine excitement from SAP folks as was displayed in this announcement, and yet the “influencers” in the audience were a bit more subdued. A year ago I attributed this to the fact that these same influencers tend to be a quite jaded bunch, hard to impress. We had also been hearing about HANA for a few years already. There wasn’t a “newness” or game-changing feel about the announcement. But impressing the influencers is only one step towards the real goal of engaging with prospects and customers.

A year ago I also wrote, “SAP is trying hard to change the conversation to be less about the technology and more about the business value.  What is the real value? In the words of one early adopter: HANA solves problems that were deemed unsolvable in the past.” But uncovering those previously unsolvable problems required some visionary thinking.  Tech-speak is not going to get the attention of the guy (or gal) that signs the check or spur that kind of thinking. And a year ago the conversation hadn’t changed. Just look at how the vision of HANA was portrayed:

  • All active data must be in memory, ridding the world of the “rusty spinning disk”
  • Full exploitation of massively parallel processing (MPP) in order to efficiently support more users
  • The same database used for online transaction processing (OLTP) and analytics, eliminating the need for a data warehouse as a reporting tool for OLTP to support live conversations rather than “prefabricated briefing books”
  • Radically simplified data models
  • Aggressive use of math
  • Use of design thinking throughout the model

Look carefully at those words. They mean nothing to the non-technical business executive. Sure, those words got the attention of some forward thinking CIO’s, and that was enough to kick start the early projects, projects that produced amazing results. But that’s as far as the message got. And even when the message was not articulated in technical terms, it was presented at too high a level of abstraction. Business executives faced with important decisions don’t think in terms of “becoming a real-time business.” Operational managers don’t seek out “transformative innovation without disruption.” They want to get through the day most effectively and efficiently and make the right decisions.

Asking the Right Questions Today

So how do you change the conversation? By asking a different kind of question. Because “faster” is universally accepted as a good thing, in the beginning the HANA conversation might have been kicked off with the question to the CIO: What processes are running too slowly today? But in talking to the business user, you need a different approach. SAP’s “cue card” below is a good start. You are now seeing conversation starters that make more sense to the business leader. Take the time now to read them carefully. If you are a business leader, they will resonate much more than discussions of MPP and column-oriented databases or even speed of processes. I especially like the business practice questions in the rightmost column.

Cue card

Source: SAP

But if I were sitting across the table from a business leader, I might ask questions that are even more direct and down-to-earth. For example:

  • Describe a situation where you have to hang up the phone, dig deeper and get back to your customer or prospect later. (By the way Jeff’s thought was that by hanging up you only encourage them to pick up the phone and call your competitor.)
  • What summary data do you get today that consistently requires more detail before you make a decision? Can you get at that data immediately (no delays) and easily (no hunting around)?
  • What level of granularity are you forecasting revenue? Is it sufficiently detailed? Are you forecasting by region or maybe by product line when you would love to be able to forecast by territory, individual customer and individual product combined?
  • Are there decisions that require you to consult with others? How much time does this add to the decision-making process? How easy or hard is it to keep track of who to contact? How quickly can you make contact? Quickly enough?

The goal really is to improve the business not only in small linear steps, but also to increase speed of decision and therefore efficiency exponentially. The first step is to provide new ways of engaging with the system, which means changing the user experience. But to change the game, you need to make improvements to the process itself. SAP’s new Fiori applications are a good example of this progression.

 Fiori: More Than Just a Pretty Face

Last spring, SAP announced SAP Fiori, a collection of 25 apps that would surround the Business Suite, providing a new user experience for the most commonly used business functions of ERP. While useful in pleasing existing users and perhaps even attracting new users within the enterprise, this first set of apps just changed the user interface and did not add any significant new functionality.

The latest installment has 190+ apps supporting a variety of roles in lines of business including human resources (HR), finance, manufacturing, procurement and sales, providing enhanced user productivity and personalization capabilities. The apps offer users the ability to conduct transactions, get insight and take action, and view “factsheets” and contextual information. The next round of Fiori apps are expected to add even more new capabilities, thereby taking them to the next level in changing the game.

The MRP cockpit is an example of this next generation Fiori app and a perfect illustration of how these new apps can recreate processes, even ones that are 30 years old. If you “know” manufacturing, you probably also know that the introduction of Material Requirements Planning (MRP) software back in the late 70’s was transformational, although nobody really called it that back then. “Transformative” innovation is very much a 21st century term. But it truly was game-changing back in the day.

Last year, even before the conversation had shifted, I saw the parallels between the potential for HANA and the automation of the planning process that MRP brought about. Today the MRP cockpit delivers on that potential.

For those outside the world of manufacturing, in a nutshell, MRP takes a combination of actual and forecasted demand and cascades it through bills of material, netting exploded demand against existing inventory and planned receipts. The result is a plan that includes the release of purchase orders and shop orders and reschedule messages. While the concept might be simple enough, these bills of material could be many layers deep and encompass hundreds or even thousands of component parts and subassemblies. Forecasts are educated guesses and actual demand can fluctuate from day to day. Without automated MRP there is simply too much data and complexity for a human to possibly work with.

As a result, prior to MRP, other ways of managing inventory became commonplace. You had simple reorder points. Once inventory got below a certain point, you bought some more, whether you actually needed it or not. You also had safety stock as a buffer, and the “two bin” system was quite prevalent. When one bin was empty, you switched to the other and ordered more. These simplistic methods may have been effective in some environments, but the net result was the risk of inflated inventory while still experiencing stock outs. You had lots of inventory, just not what the customer wanted, when it wanted it. And planners and schedulers still had to figure out when to start production and they knew enough to build a lot of slack time into the schedule. So lead times also became inflated and customer request dates were in jeopardy.

Once MRP entered the picture, these were seen as archaic and imprecise planning methods. Even so, most didn’t rush right out and invest in MRP when it was first introduced. In fact now, decades later, the adoption rates of MRP in manufacturing still sits at about 78%. Why? The existing practices were deemed “good enough” and, after all, that’s the way it had always been done.

It required a paradigm shift to understand the potential of MRP and the planning process executed by MRP was complex. Not everyone intuitively understood it. And if they didn’t really understand, planners were unwilling to relinquish control. Particularly since MRP runs were notoriously slow.

It was not unusual for early MRP runs to take a full weekend to process, and during that time nobody could be touching the data. This didn’t work so well in 24X7 operations or where operations spanned multiple time zones. Of course over time, this was enhanced so that most MRPs today run faster and can operate on replicated data, so that operations can continue. But that only means it might be out of date even before it completes. And MRP never creates a perfect plan. It assumes infinite capacity and “trusts” production run times and supplier lead times implicitly. So while most planners were relieved of the burden of crunching the numbers, they were also burdened with lots of exceptions and expedited orders.

Yet over time, MRP brought a new dimension to material planning. It brought a level of accuracy previously unheard of and helped get inventory and lead times in check. Manufacturers have experienced an average of 10% to 20% reduction in inventory and similar improvements in complete and on-time delivery as a result of implementing MRP.

But through the past three decades, MRP hasn’t changed all that much. Yes it has improved and gotten faster, but it hasn’t changed the game because it still involves batch runs, replicated data and manual intervention to resolve those exceptions and expedite orders. Now with HANA we’re not talking about speeding up the processes by 10% to 20% but by several orders of magnitude, allowing them to run in real time, as often as necessary. But if it was just about speed, we might have seen this problem solved years ago.

You probably don’t remember Carp Systems International or Monenco, both Canadian firms that offered “fast MRP”. Carp was founded in 1984, and released a product in 1990 bringing MRP processing times from tens of hours down to 10 minutes. It ran on IBM’s RS6000 (a family of RISC-based UNIX servers, workstations and supercomputers). But it was both complex and expensive for its time ranging in price from $150,000 to $1 million). Not only was it expensive and required special servers, in order it to work it needed to replicate the data and then apply sophisticated algorithms.

About the same time Monenco introduced FastMRP, also a simulation tool, but one that ran on a personal computer. While it cost much less than Carp’s product, it was also less powerful and had significantly fewer features.

You won’t find either of these products on the market today. If speed was all that was required they would have survived and thrived. In order to change the game, you also need to change the process, which is exactly what SAP intends with its new Fiori app for MRP.

The new MRP cockpit includes new capabilities, like the ability to:

  • View inventory position looking across multiple plants
  • Analyze component requirements with real-time analytics
  • Perform long term MRP simulations
  • Analyze capacity requirements and suggest alternatives

But this too requires a paradigm shift. Manufacturers, as well as other types of companies, are quite accustomed to making decisions from a snapshot of data, usually in report format, possibly through spreadsheets. They have become desensitized to the fact that this snapshot is just that, a picture of the data, frozen in time.

What if you never had to run another report? Instead, whenever you needed a piece of data or an answer to a question, you had immediate and direct access, not to the data as it was at the beginning of the day, or the end of last week, but to the latest data in real time? Not only will decision-makers need to adjust to thinking in real-time, but will also have to trust the software to automate much of the thinking for them. Will they be able to sit back and let the software iterate through multiple simulations in order to find the best answer to an exception even before it is reported as an exception? I suspect they will if it is fast enough. And HANA is now delivering at speeds that just a few years ago would have been impossible. But with these speeds accelerating by orders of magnitude, the ability to communicate and collaborate effectively must also accelerate.

Making the Human Connection

It is not enough to change the way users engage with the software, it is also necessary to change the way they engage with other people. How often do you or your employees today express sentiments like:

  • If I just knew who to contact for approval/help….
  • I don’t know what to ask
  • I wish I could check with (several) people on this quickly

What if the software could help? As work flows are streamlined, automated and accelerated, so must the lines of communication and potential collaboration. Whether employees are looking to move a process forward, resolve an issue or mature an idea faster, lack of communication and clumsy modes of collaboration can inhibit the game-changing effect of the technology. Which is why SAP has upped its game in the area of Human Capital Management and social collaboration tools. It took a significant step forward with the acquisition of SuccessFactors and JAM and has been blending these capabilities with the HANA platform.

Key Takeaways

Nobody today would disagree that the SAP Business Suite, powered by HANA combines deep and rich functionality with powerful technology. But can it be game changing in terms of how businesses operate? The potential certainly exists, but it’s not just about speed. Changing the game means changing the way we’ve been doing things for decades. Before we can change the process, we need to change the conversation. Are you looking to optimize business processes? Are you ready to talk?

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The Message from SapphireNow was Simple

Period.

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

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

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

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

SAP’s Organizational Structure

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

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

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

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

 

Simpler to Partner?

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

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

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

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

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

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

Easier to Do Business With?

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

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

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

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

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

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

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

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

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

A Simpler Solution?

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

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

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

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

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

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

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

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

Conclusion

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

 

 

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Thoughts From NetSuite’s SuiteWorld: What’s wrong with calling it ERP and CRM?

There seemed to be lots of talk and a bit of controversy floating around NetSuite’s SuiteWorld conference this week about the future of ERP (enterprise resource planning), CRM (customer relationship management) and other TLAs (three letter acronyms). NetSuite itself is a provider of ERP, CRM and ecommerce. Yet CEO Zach Nelson opened this door by attacking other vendors that don’t have solutions with footprints quite as broad as NetSuite. Zach said Salesforce wasn’t CRM because it didn’t capture the customer order. WorkDay’s HCM and accounting applications aren’t ERP. Zach has been known to go on the attack before, so this wasn’t out of character, and to a certain extent I agree with him. Sales force automation (which is Salesforce.com’s claim to fame) is often referred to as CRM even though I would argue it is only a subset. And Workday’s solution doesn’t fit my definition of ERP. (To be fair, I also haven’t heard Workday call its solution ERP.)

However, some “influencers” in attendance also picked up on this theme. One went so far as to suggest ERP and CRM should go away as software categories. Another stated that “cloud ERP” is redefining what we mean by ERP.

I disagree on both counts.

Companies in search of solutions to run their businesses need a frame of reference, a starting point to define what it is they need. They can’t start with a search for vendors offering “something to run my business.” As loosely as ERP and CRM are often defined, they do accomplish that. And I also don’t believe ERP needs to be redefined, at least not the way I define it.

Too often industry analysts and other influencers over-complicate definitions, perhaps in an attempt to prove just how much the average businessperson needs them, or perhaps to prove how smart they are. I prefer to keep it simple. I define ERP as follows:

ERP is an integrated suite of modules that provides the operational and transactional system of record of the business.

Of course, today most ERP solutions do more than this, and I have been saying for years now that it is getting more and more difficult to tell where ERP ends and other applications begin. But this definition is timeless. It also implies ERP cannot be static. The way companies operate is changing and therefore ERP must also evolve to reflect new ways of transacting business. NetSuite has been responding to this challenge over the past few years, through its approach to omnichannel commerce and with several announcements this week including:

  • A brand new, modernized, mobilized user experience (first available on Apple IOS, to be followed by Android)
  • The unveiling of a “next-generation services resource planning (SRP)”, a unified cloud solution to meet the combined needs of project- and product-based businesses. The solution can be configured as a stand-alone SRP solution or combined with NetSuite’s ERP. It targets software, IT services, consulting, advertising and marketing services companies.
  • A new SuiteGL, intended to “transform the general ledger from one size fits all into a custom business asset.” New capabilities are being developed to add

o   New custom segments to the chart of accounts (example: to support fund accounting and advanced managerial reports)

o   Custom lines (example: you might post additional journal entries based on the country in which the transaction originates)

o   Custom transaction types (example: vendor billing accrual, employee expense report accrual, payroll journal, depreciation journal, statistical account entries)

  • Mobilization of its newly acquired HCM solution: NetSuite TribeHR Mobile for iOS brings collaboration tools, enterprise search capability, time off management and employee recognition (kudos) to Apple iPhone, iPad and iPod Touch mobile devices.
  • A new B2B Customer Center built on NetSuite’s SuiteCommerce platform providing

o   A self-service customer portal

o   Customization, billing and payments, account and product management capabilities, including lists for seasonal purchasing

o   Responsive web design capabilities that can optimize sites for multiple devices

So NetSuite is in tune with the desire and need for business transformation, largely based on the new requirements of this digital age. But… back to the issue at hand.

What impact does the cloud have on this perceived need to redefine what we mean by ERP? Cloud does have an impact, but it is not so much changing what we mean by ERP as changing what we should expect from ERP, a subtle difference, but a very meaningful one. We still need to track inventory assets, record orders, deliver, invoice and collect payment. In a B2B environment, these end-to-end business processes (like order-to-cash and procure-to-pay) have traditionally spanned weeks or months. The cloud connects us and it might help us automate processes, compressing them to days, hours or even minutes. But we still need to keep that system of record. We still need ERP. We just need a better ERP.

I spent a lot of time evangelizing these new and better ERP solutions in 2013. I called them “next generation” ERP: providing better ways to engage with ERP, replacing invasive customization with configuration that is preserved from release to release, more innovation and better integration. Much of what NetSuite has done, and is still doing, is driven by the need for a modernized, technology-enabled ERP.

But what about CRM? Zach declared Salesforce wasn’t CRM because it didn’t manage the customer order. I will leave a formal definition of CRM to those that specialize in that category, but I would argue that the customer order doesn’t belong in CRM anyway. It belongs in ERP because it is a fundamental element of the system of record of the business. But does it really matter? Not when we’re talking about NetSuite’s solution, because ERP, CRM (and eCommerce) are all built as one system. And because it is all one system, everything works seamlessly together and there’s no redundancy of data. The end user doesn’t really know or care if it is a function of CRM or ERP, unless of course they only subscribe to one or the other and not both.

So yes, NetSuite certainly has a leg up on Salesforce in providing what CRM vendors traditionally promise: a 360o view of the customers. NetSuite can and Salesforce (or any CRM-only vendor) can’t. And that is because it is delivered all in one set of code: a fully integrated suite. If sales or support representatives need to see all outstanding quotes, shipped orders, open or paid invoices, they just go to NetSuite. They don’t need to worry about whether it is part of CRM or ERP.

Some analysts have started to call this “a platform.” While I would define “platform” differently, my definition really doesn’t matter. Whether you call it a platform, an integrated suite, or just extended ERP, I suppose it does strengthen the argument for making ERP and CRM go away. You don’t need ERP and CRM. You need this integrated platform. But now we’re just getting into semantics and we’re not really adding value to the conversation. For a prospect or customer buying ERP today, the real question is what are the boundaries of the solutions being considered and how much of the needed functionality does it provide?

The footprint of ERP has grown steadily over the past three decades. We’ve reached a point where the boundary of where ERP ends and other applications begin has become quite blurry. Those in search of solutions should strive to clearly understand these boundaries, which will vary from solution to solution. CRM is only one such complementary application now offered by ERP vendors. But not all CRM solutions offered by ERP vendors are developed and delivered like NetSuite’s solution. A NetSuite customer can subscribe to either of these as a stand-alone NetSuite application, but if you subscribe to both, they operate as a single tightly integrated solution. This is not the case with all solution providers. Just because you are buying both from a single vendor doesn’t guarantee the two (or more) applications have been designed and developed as a single integrated solution, particularly if the complementary solution has been acquired.

In the past an integrated module of ERP tended to provide lighter-weight functionality than that provided by separate, so-called “best-of-breed” applications. So there was a clear trade-off between specialized functionality, which came with the added cost and effort of integration. But the capabilities of those built-in ERP modules today often rival or even exceed the capabilities of stand-alone applications. And the connected cloud and other modern technologies have made integration easier. So the trade-off isn’t quite so clear.

We explored this a bit in our 2014 Mint Jutras ERP Solution Study, asking participants about preferences for a suite approach (like NetSuite’s ERP and CRM) or a more specialized solution (like NetSuite’s partnership with AutoDesk for PLM).

It is clear that while there is an overwhelming preference for an integrated solution, most will be cautious about sacrificing functional requirements for ease of integration or for the purposes of having either a single throat to choke or a single back to pat (Figure 1).

Figure 1: Preferences for a Full Suite

Netsuite fig 1Source: Mint Jutras 2014 ERP Solution Study

This of course puts added pressure on software vendors like NetSuite to continue to innovate and expand their solutions. The easiest way to deliver a seamlessly integrated, expanded solution is to develop it internally, rather than to go shopping for additional features and functions (through acquisition or partnership). Those solution providers that exclusively deliver through a multi-tenant SaaS model will have an advantage in this regard because they maintain a single line of code. NetSuite, for example, delivers two releases a year.

Those that offer only licensed, on-premise solutions, or the same solution through the cloud and on-premise don’t have that luxury. Minimally they will have to maintain multiple releases to accommodate those customers that can’t or won’t upgrade. And very often they offer the software on different operating systems and different databases. Any combination of these increases their support and maintenance efforts exponentially and leaves fewer resources to apply to pure innovation. These vendors are more likely to deliver releases every 12 to 18 months.

Of course acquiring functionality (like NetSuite did with TribeHR for HCM) and even partnering (like NetSuite did with Autodesk for PLM) are options as well, providing the integration is seamless enough. NetSuite has proven that it is capable of delivering on all these different fronts.

While vendors and industry observers argue over what to call these solutions, most good business decision-makers tune out to these discussions. Most are more interested in solving business problems than in redefining what we call the solution. The labels we have today: ERP, CRM, PLM, HCM… are all fine as long as we continue to ask and expect more from them. I, for one, am more interested in helping those business leaders better understand the almost limitless possibilities for business transformation, than in coming up with the next new label – or even worse, the next new TLA.

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Epicor Insights 2014: Epicor Responds to Trends in ERP

Epicor Software held its annual user conference this week. True to its name, Insights 2014 did just that… provided insight into recent innovations and roadmaps for the future. Epicor experienced some management changes this year, bringing in a new CEO, Chief Product Officer (CPO) and new General Managers (GMs) for the Americas for both its ERP and Retail businesses. But there were some familiar faces in the executive ranks as well, some with tenures between 15 and 20 years with the company, striking a nice balance between old and new blood, so to speak. The goal of these management changes is to raise the game in terms of technology-enabled products that turn customers into “raving fans for life.”

Throughout the conference, attendees heard reference to what have emerged as the top trends in the enterprise software industry: cloud, mobile, “big data” and social. In addition I believe Epicor addressed the different components that I have been touting as characteristics of “next generation” ERP: providing better ways to engage with ERP in order to encourage more and better use, focus on configuration to replace customization, more innovation and better integration.

Towards that end, Epicor made four announcements:

  • The availability of Epicor ERP version 10, redesigned for device mobility, deployment choice, accelerated performance and social collaboration
  • Support for SQL Server 2014: Not only is Epicor ERP version 10 fully optimized for SQL Server 2014, but Epicor has “purified the technology stack.” That means it only runs on SQL Server in a Microsoft .Net environment.
  • The introduction of the Commerce Connect Platform, fully integrated with Epicor ERP Version 10, to drive rich B2B and B2C online experiences for consumers, customers and suppliers, supporting mobile access and secure PCI-compliant payments
  • New Epicor Windows Phone 8 touch-optimized apps for time and expense tracking, supporting multiple devices and “bring your own device (BYOD)” strategies

Amidst these announcements and as a result of speaking with both Epicor executives and customers, here are my key take-aways from the event.

Protect, Extend Converge Lives On

This has been Epicor’s mantra for many years: promising investment protection and continued innovation that will extend the footprint of its customers’ solutions, while also converging multiple product lines acquired through the years. The “protect” and “extend” part isn’t unique. Many vendors promise the same, although some do a better job of delivering than others. However, Epicor is unique in having delivered on a convergence strategy. The result was Epicor ERP version 9, originally called Epicor 9, reflecting that it was the result of converged functionality of nine different ERP products. The “9” has now become “10,” but that is not because it has merged a 10th product, but is more reflective of a traditional “version” level.

With the merger of Epicor with Activant a few years back you might have expected Epicor to bring those new products into the fold, so to speak. Yet instead it appeared to diverge a bit from this convergence strategy. The lion’s share of Epicor’s ERP products target manufacturing, and to a lesser degree distribution, largely due to the overlap of the two industries. Manufacturers often distribute their own products and more and more distributors might engage in some form of light manufacturing. But I would call Epicor ERP a multi-purpose ERP. Activant brought multiple products to the party but each was focused squarely on distribution. Not only were Activant products purpose-built for distribution, but also over time each has become even more focused and fine-tuned to specific segments of wholesale distribution.

So it seemed to me at the time that Epicor was diverging from its convergence strategy. Rather than bringing a new ERP to wholesale distributors, instead Epicor began to converge them on a technology level, bringing its ICE technology to the distribution party. This seemed to me to be a smart move. Don’t get me wrong; I applaud Epicor’s convergence strategy. Back in 2012 I wrote:

Thus far Epicor has been not only first, but also unique in promising (and then delivering) a single rationalized ERP solution. Other ERP companies have toyed with the idea and even announced such plans, but then either pulled back upon encountering resistance from their installed base of customers or subsequently decided against such a strategy. While at first glance these decisions may have seemed to be in the best interest of their customers, these ERP solution providers may in fact have done customers a disservice in tacitly encouraging them to remain on old, outdated technology that simply cannot serve them well in today’s fast-moving and connected world.

And yet, the resistance from customers was typically not resistance to new technology (like Epicor ICE), but resistance against a perceived, or real forced march to a new product. Each customer wants to move forward and/or make a change at its own pace and on its own terms. And if its current ERP is not perceived to be “broken” the customer is not in any rush and procrastination is the result. At times this procrastination is the product of an older generation of IT professionals who would be content to manage familiar solutions right up until retirement. In fact many of them would benefit from a gentle push.

While Epicor has never forced anyone to move, by boldly declaring Epicor ERP as the future, it provided more incentive to consider moving to it, encouraging those stuck in the past to replace solutions with aging, legacy architectures. Most saw the value in re-implementing rather than carrying forward decisions that had been constrained by limitations of applications and technology in the past. Instead of a mass revolt, as feared by others, many customers embraced this and saw it as an opportunity to justify moving forward.

I still strongly believe in what they are doing with Epicor ERP and in fact Epicor executives still say they have a long-term convergence strategy that includes distribution and the Activant products. But I am not sure they need to bring the two together into a single ERP for two reasons:

  • Epicor is big enough and strong enough to manage two product lines, particularly if they are supported by the same underlying technological architecture (ICE)
  • ICE provides a framework whereby development efforts can be shared across product lines

There will be features and functions shared by all companies, some shared by distributors (or manufacturers) only and some required for niche markets or micro-verticals. For like needs, the Service Oriented Architecture (SOA) and Web 2.0 capabilities of ICE allow Epicor to build once and deploy across multiple solutions, freeing up resources that would otherwise be required to satisfy those requirements in each product line – freeing them up to work on more targeted functionality which has the potential of helping its customers in wholesale distribution (and possibly other markets) achieve a measure of competitive differentiation. This could also help Epicor reach into more narrow micro-verticals that might require more specialized features and functions. But (at least for now) Epicor will leave that opportunity to partners.

Developing “shared” components is the top priority for Epicor right now, not only to share across manufacturing and distribution, but also to add more value to its suite of solutions for retail. An example might be using the ERP functions to strengthen financial management options for retail. You will hear Epicor talk in terms of developing more “granular” functionality and other vendors and influencers will talk about “loosely coupled.” Regardless of the terminology, the net effect is to allow customers to add more features and functions on top of what they already have (with less disruption) and to allow vendors like Epicor to build features and functions once and re-use them across different products and customer bases.

Why is this so important? The obvious answer: to deliver more innovation.

Accelerating Innovation

I’ve written a lot about “next generation” ERP over the past year and I have also written a lot about cloud and SaaS. When it comes to more innovation, the two are connected. First of all the increased pace of innovation is supported through the use of web-based services, object-oriented data models and component architecture. All these combine to support more rapid development of new features and functions, which are more easily consumed as needed. ICE is a key factor in helping Epicor keep pace. So how does SaaS fit in?

A vendor that delivers a product exclusively in a multi-tenant SaaS environment has a clear advantage in delivering enhancements. Solution providers that deliver on-premise solutions are forced to maintain multiple versions of the software. Very often the software is offered on a choice of platforms and databases, and the vendor must support multiple release levels determined by its customers’ ability to keep pace with upgrades. For every person-day vendors spend on innovation, they spend another multiple of that day making sure it works across multiple environments. So if the vendor only delivers innovation in a pure, multi-tenant SaaS solution it needs only support and develop a single line of code. This means it can spend more time on pure innovation and that raises the bar for all vendors.

Epicor’s convergence strategy has helped it compete, but it does support both on-premise licenses and SaaS deployments and until now has offered its converged ERP on multiple platforms. Purifying the stack and limiting the solution to a SQL Server based Microsoft .Net environment reduces development efforts and allows Epicor to optimize for this environment, which adds (2X) speed and (4X) scalability. So while it doesn’t enjoy the same economy of scale as a provider of a pure multi-tenant SaaS solution, it has helped stack the deck for improved development productivity. In addition, it has honed its skills in rapid application (agile) development. And in case you are wondering how this will be received by existing customers, I am told that 90% of Epicor ERP customers are already running on the Microsoft stack. As a result, I expect user resistance to be low, particularly with the demonstrated improved performance.

So I would expect the rate of innovation to start to accelerate from here, at least in terms of Epicor ERP 10. To effect further gains, it will have to carry this strategy over to the distribution side of the house, or it will need to complete the convergence to include the Activant products.

In the meantime Epicor is leveraging the ICE technology to bring more “next generational” characteristics to all its products. Bringing its Epicor Business Activity Query (BAQ) tool to Prophet 21 (an Activant product) is an example. New features of Epicor ERP 10 like…

  • a social collaboration framework that lets users collaborate with one another and “follow” business activities and events
  • a live-tile-style browser interface that’s touch-enabled for any tablet

are enabled by ICE and therefore it is likely these features will be also made available to other Epicor ICE-enabled products as well.

So while Epicor doesn’t enjoy the luxury of maintaining a single code base, it is positioning itself to more rapidly replicate functionality across those different sets of code, thereby accelerating the delivery of new user experiences, better configuration replacing the need for customization and easier integration… all hallmarks of next generation ERP. Time will tell whether customers will turn into “raving fans for life” but if the mood and tone of Insights 2014 is any indication, Epicor has a clear runway ahead to achieve its goals.

 

 

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