IFS

IFS Helps Customers Accelerate Out of The Curve of Digital Transformation

Making Asset Intensive Industries Lighter on their Feet

Asset intensive industries are quite likely to be capital intensive industries. Cost of entry is steep, but once you are an established player, you are tempted to hit cruise control. Living in a world where product lifespans tend to be measured in decades, growth and change come slowly. Or at least that’s the way it used to be. The digital economy has thrown you a curve. And when you are speeding down the business highway, a serious curve causes you to hit the brakes in order to safely negotiate the turn. But if you are riding a performance engine, there is nothing more exhilarating than accelerating out of that curve.

Digital technologies of today, those that serve to connect operations, people and processes through the power of the Internet, fuel that performance engine. Eighty-two percent (82%) of manufacturers participating in the 2016 Mint Jutras Enterprise Solution Study agree and 86% understand that embracing digital technologies is necessary for survival. And yet, we find the vast majority still coasting or riding the brakes when it comes to digital transformation.

IFS, a global enterprise applications company specializing in solutions for asset intensive industries, is setting out to help its customers accelerate out of the curve. Asset intensive businesses are very likely to be sitting on vast amounts of data gathered from products, assets and equipment. Yet few are able to leverage it fully. IFS IoT Business Connector, recently introduced at the IFS World Conference 2016, helps bridge the gap between data collection and analysis and between analysis and action. Through plug and play connectivity with the Microsoft Azure IoT Suite, customers can identify actionable observations that can trigger user-defined, automated or semi-automated actions for predictive maintenance, service management, asset management and manufacturing.

Need a Little Push?

As noted above, the majority of manufacturers today have an appreciation for the significance of digital technologies. In our 2016 Mint Jutras Enterprise Solution Study we asked survey participants how much they agreed with various statements about these new, advanced technologies (Table 1).

Table 1: How strongly do you agree or disagree with the following?

ifs-table1Source: Mint Jutras 2016 Enterprise Solution Study

Only 3% to 6% disagreed at all with any of the statements above and a relatively small percentage was neutral. The majority of manufacturers understand that digital technologies can be truly transformative. This data is consistent with data collected by IFS from its customers on perceptions about the Internet of Things (IoT) in particular. According to IFS, 86% of its installed base realize the importance of IoT, but 40% have no IoT strategy in place.

Mint Jutras actually finds these findings refreshingly candid. When we asked survey respondents how well prepared they were for the digital economy, we found a high level of confidence, with over half (58%) of all respondents indicating they were very well-prepared or at least close. And manufacturers claimed to be even more well prepared (Figure 1).

Figure 1: How well prepared are you for the digital economy?

ifs-fig-1Source: Mint Jutras 2016 Enterprise Solution Study

Yet subsequent questions about digital systems of record, as well as how activities were monitored, managed and performed, proved otherwise. The vast majority were found to still rely, at least partially, on spreadsheets, paper and manual processes. This not only indicates that many, manufacturers in particular, overestimate their level of preparedness and underestimate the impact digital technologies can and should have on the enterprise applications that are used to run the business, as well as the business itself.

Those in asset intensive industries are perhaps even slower to respond. Because their businesses tend to be more capital-intensive, they can’t turn on a dime like those businesses that require less capital for growth and change, thereby making them lighter on their feet.

So what is IFS doing to make them lighter on their feet and more nimble?

Cloud Helps

First of all, we see IFS offering cloud options. Many of these businesses require capital to be invested in assets necessary to run their businesses. By running IFS enterprise resource planning (ERP), field service management (FSM) and enterprise asset management (EAM) solutions in the cloud, they lighten the load of capital required to manage back office and front office processes. Indeed IFS reports that 34% of new business closed is now cloud-based and running on the Microsoft Azure platform.

While preferences and perceptions vary quite significantly across the different regions in which IFS operates, at least within the United States Mint Jutras research finds software as a service (SaaS) is the most preferred option for new deployments. However, we expect the worldwide market will be in transition for the next ten years or more. This is partially because the United States tends to lead the world, and partially because there are simply so many on-premise deployments today. The inertia that keeps manufacturers from actively researching and investigating new technologies is the same inertia that keeps these solutions in place long after their glory years. IFS addresses this by providing multiple deployment options and also by adding other solutions that allow customers to make strides in digital transformation while leaving existing solutions in place.

Cloud-based IFS IoT Business Connector will play an important role, but perhaps equally important is IFS Enterprise Operational Intelligence (EOI), to which it is connected.

IFS IoT Business Connector

According to IFS, “IFS IoT Business Connector turns IoT insights into actions in IFS Applications” (including ERP, FSM and EOI). The goal is to observe the environment and turn perceived challenges into opportunities – a lofty goal. But what is it and how does it do that?

Before we answer that question, it is important to understand the different steps the IFS IoT Business Connector facilitates in order to transform challenges faced into opportunities for growth and improvement.

Data, Devices and Communication

The first step is in collecting the data itself. This might be done through sensors on assets or equipment on the plant floor or in products in the field. This is not especially new in the world of manufacturing and/or field service maintenance. Often data comes through:

  • supervisory control and data acquisition (SCADA) systems used for remote monitoring and control
  • programmable logic controllers (PLCs) for the control of manufacturing processes, or any activity that requires high reliability and process fault diagnosis
  • OLE (object linking and embedding) for Process Control (OPC), which is a series of standards and specifications for industrial communication of real-time plant data between control devices.

The connections might be made through local network protocols or Internet communication. It has never been hard to collect millions or even billions of sensor readings. The IFS IoT Business Connector isn’t about the data collection. It is more about connecting that data to make better use of it, in real-time where appropriate.

Discovery

In order to take full advantage of the data collected, it is necessary to go through a discovery phase. The IFS IoT Discovery Manager (a component of IFS IoT Business Connector) provides additional management and monitoring capabilities when using Microsoft Azure IoT Suite as the discovery platform.  It automates the creation and connection of all IoT Suite components (hubs, streams, buses etc.) in accordance with the IFS IoT Business Connector reference architecture.

However, it is important to note that Microsoft Azure IoT Suite is not a mandated requirement. A customer may use a different solution for discovery, in which case IFS provides an API (application programming interface) to receive observations to be used in subsequent steps of the process.

Operationalizing the Data

IFS IoT Discovery Manager can receive and store thousands, or even hundreds of thousands of “observations.” But how do you interpret what the data is telling you? In order to operationalize the data, you need to be able to take action.

You will want to analyze data streams in real time in order to mine the data to help you discover potential problems and/or opportunities. You will want to apply some sort of decision-making algorithms that work 24/7, even when humans are asleep, sick or busy with other value-add tasks. And finally you will want to visualize the data, presenting it in a way that highlights issues, both good and bad, quickly.

Often the action taken must be recorded or reflected in the enterprise software that is running your business. The IFS IoT Gateway (another component of IFS IoT Business Connector) enables communications between the cloud-based discovery and analytics of IoT data and the on-premise or cloud-based IFS applications.

The failure of a door to open on public transportation can trigger a service call. A pest trap that is full and requires emptying can alert a service engineer in a pest control company. Variations in vibration, temperature or voltage of a piece of equipment can send a warning signal that results in a call to a maintenance company during off hours, preventing a halt to production. These are just three examples of how early adopters of IFS IoT Business Connector are looking to operationalize the data collected, either with the help of human review and augmentation or through (prescriptive) automated actions, or both.

Business Optimization

But the real results will come only when you effectively use the data, discovery and operations to optimize your business. That means monetizing it to develop new sources of revenue. That may require a different way of thinking. Even companies that have exclusively made money from making and moving product in the past, will likely find new revenue streams through services and/or data. IFS likes to call it the “servitization” of business. Whether you replace or supplement your product sales, new revenue opportunities can come from maintenance or consulting services, software (as a service) or even outcomes like hours of successful operation or output.

IFS IoT Controller (the third component of IFS IoT Business Connector) helps you determine what actions to take based on the analysis of observations about your business. It helps you map your operational technology to your business applications like ERP.

Cascading Effect on Business Applications

However, the connection back to ERP (and perhaps other applications like Field Service) might not be so intuitive. New sources of revenue might require new methods of invoicing and revenue recognition. It is one thing to ship and invoice for a physical product, but quite another to create invoices (and recognize revenue) for services and/or subscriptions.

Guessing how new business models will impact invoicing, revenue and cash is just that – a guess. As the digital economy also becomes the subscription economy, companies today need to be able to handle new and different revenue streams, often in conjunction with more traditional ones. And with the upcoming changes to revenue recognition as a result of the merging of accounting standards (ASC and IFRS), this places new functional requirements on ERP.

Changes to existing accounting software are not insignificant. In fact, they can be quite extensive. IFS is still working on these changes, but with an eye towards the 2018 deadline for implementing new rules.

Apart from these (very specific) accounting requirements, the real key to business optimization lies just beyond the scope of the IFS IoT Business Connector. As we mentioned earlier, equally, if not more importantly, is enterprise operational intelligence. Notice the lack of capitalization. In this case we use the phrase as a goal. Hopefully we don’t confuse our audience in saying IFS Enterprise Operational Intelligence or EOI is the means to this end (goal). The level of importance of EOI is further amplified in that it is one of those solutions that helps customers take those transformative first steps without requiring the full-scale replacement of ERP.

IFS Enterprise Operational Intelligence (EOI)

IFS describes EOI as the the key that unlocks intelligent business operations for its customers, “integrating real-time analytics into business processes to empower organizations to make better, faster decisions based on [their] strategic objectives.” Of course analytics are becoming much more mainstream today, but there are two differentiators here – strategy and action.

The first is that last qualifier, linking analytics to strategy. This starts with the first of three core steps: Map, monitor and manage.

  • Map: capturing and visualizing the business model, which of course is subject to change much more frequently than in days gone by, due to the potentially disruptive nature of digital technologies.
  • Monitor: connecting and visualling performance. After mapping the business, you then connect various data sources, including IFS applications, the IoT, other databases and applications and even Excel spreadsheets. These are presented in “cockpits.” These are more than just pretty charts on a dashboard. IFS distinguishes these from your typical (passive) dashboard by allowing you to take action right from the cockpit.
  • Manage: analyzing and improving business operations. IFS has embraced continuous improvement methodologies including PDCA (plan–do–check–act or plan–do–check–adjust) and OODA (the decision cycle of observe-orient-decide-act).

Customers using EOI prefer embedding this type of solution into their IFS enterprise applications rather than purchasing separate business intelligence (BI) and/or business process management (BPM) solutions that either run stand-alone or must be custom-integrated into the solutions that run their businesses. But even more importantly, it allows them to take some incremental steps in digitally transforming their businesses, without the major disruption of a full-scale upgrade or replacement.

Wrap Up

It seems quite appropriate that IFS’s recent marketing efforts have led the company to sponsor a Formula One racing team. Earlier this year IFS announced it had become a Principal Partner of the Sauber F1 Team for the 2016 FIA Formula One Championship. Why is it appropriate? According to Mark Boulton, chief marketing officer of IFS, “This new partnership between IFS and the Sauber F1 Team is based on strong foundations, as both companies are commited to innovation, focused on design, and treasure the power of effective teamwork. It’s these qualities that … are lived by our employees and partners every day as we continue to empower our growing global customer base with IFS’s leading software and solutions.”

Mint Jutras agrees that IFS has built a strong foundation, but more importantly, one which helps customers face those upcoming curves in the road caused by the looming inevitability of digital disruption. Just as you don’t want to be changing the tires (or the engine) while you are speeding down the road, IFS customers won’t want or need to switch out the engine that powers their businesses, nor will they be blindly steering into those turns.

IFS Enterprise Operational Intelligence (EOI) can put them in the cockpit and IFS IoT Business Connector can keep them connected to the data they need to make the decisions required to accelerate out of the curve.

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Do you require industry specific functionality? 67% of survey respondents said yes.

Yesterday I mentioned a survey I helped IFS North America conduct on the impact of mergers and acquisitions on the enterprise applications market. In that same survey of executives and professionals of manufacturers with annual revenues in excess of $100 million we also investigated the requirements for industry specific functionality. We looked at the importance of industry-specific functionality in enterprise applications, investigated how well those needs are met and explored the impact lack of fit might have on the business.

We reached over 340 of these manufacturing executives and found 67% of them required industry-specific functionality and even those that did not still expressed a desire for it. Those who require industry-specific functionality were 12% less likely to have implemented ERP, leading us to believe that not finding a proper fit caused some to delay a purchase, but if implemented, those requiring industry specific functionality rate the fit of their current applications only slightly lower than those who have no industry-specific needs. Solutions are out there if you know where to look.

As you might expect, gaps are often filled with additional applications and spreadsheets. And those requiring industry-specific functionality were more likely to have implemented other applications like Customer Relationship Management (CRM) and Project/Portfolio Management (PPM). And those requiring this added functionality are 66% more likely to require multiple applications rather than being satisfied with a single integrated suite. Gaps in functionality definitely add risk and present barriers to serving customers.

While industry specific functionality is much in demand among the respondent base, vertical industry is not a good predictor of which businesses require greater specialization in ERP. A better predictor may be the types of processes businesses are involved in. Those involved with extensive customer collaboration in high value, complex projects reported a greater need, as did those involved with management of large fixed assets (think heavy duty machinery) and service management. Among those companies with the most pronounced need for greater specialized functionality were those where managing return on assets (RoA) is a core discipline. The need for ERP with enterprise asset management (EAM) functionality creates a “perfect storm” that many enterprise solutions do not handle well. Of course this was music to the ears of IFS since these types of businesses are exactly the type it targets with its extended ERP solution, which also includes Enterprise Asset Management (EAM) and field service functionality.

So how do gaps in solutions impact the business? Regardless of the need for industry specific functionality or not, the most likely impact is the need for non value added work like double entry in multiple systems, negatively impacting productivity. But where the lack of industry specific functionality had a more direct impact was in added risk resulting from not having the needed visibility to the business and in limiting the ability to adequately serve customers.

To see the actual results of the survey, click here.

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Did your software vendor get acquired? What now?

Earlier this fall, I helped IFS North America conduct a survey of executives and professionals of manufacturers with annual revenues in excess of $100 million. The purpose was to better understand the impact on customers when enterprise application solution providers are acquired. The ERP market in particular has been undergoing consolidation for years now. I remember back in the mid-1990’s Manufacturing Systems magazine used to publish a “top 50” ERP vendor list (solution providers were ranked by size). Soon that “top 50” list became a “top 100” list because there were so many ERP vendors. After more than a decade of consolidation, if that list existed today it would probably be a “top 20.”

As an interesting aside, the publishing industry underwent similar consolidation. Manufacturing Systems became Manufacturing Business Technology (MBT) magazine, owned by Reed Business Publications, who later sold it to Advantage Business Media. And in fact, Advantage Business Media was instrumental in collecting over 340 qualified responses to this survey.

Some of the areas we explored were:

  • What percentage of companies is impacted by acquisitions of enterprise application solution providers?
  • How are these acquisitions perceived?
  • What actions are taken by customers post-acquisition?
  • What concerns do customers have when the enterprise software they use is acquired?

Over half (54%) of the survey respondents have “experienced” one of these acquisitions. Acquisitions that result in broad portfolios of products are not necessarily viewed negatively but this will depend on the nature of the portfolio. Only 10% express no concerns whatsoever upon acquisition. Concerns primarily arise over the continued support and innovation of products that are acquired.

Most (86%) continue to run the acquired software post-acquisition. The majority (68%) simply intend to continue to run the software, hence the need for that software to continue to evolve.  But 18% are considering replacement and when they do, the incumbent vendor does not necessarily have the advantage. A search for replacement is more than 3 times as likely to be put out to bid. Fourteen percent (14%) plan to replace it through a competitive selection while only 4% plan to replace it with a product offered by the acquiring company. Of course even among the 14% the new company may be considered in the “competition” but aren’t necessarily any more likely to walk away with the deal. And in fact, where a replacement has already occurred, a new vendor was chosen 71% of the time, a new vendor is chosen.  Only 4% replaced it with a product from the acquiring company while 10% replaced it with an offering from a different vendor.

This isn’t surprising because throughout the consolidation that has occurred, I find companies develop much more loyalty to a product than they necessarily do to the company that owns it, particularly when ownership changes multiple times. The vendors often gain much more from the acquisitions than the customers.

GOALS OF M&A

Vendors may have a variety of goals when they engage in acquisitions, and these goals often have nothing to do with better serving the customer. One goal is to grow market share. Growing a customer base through acquisition often creates a step function. Instead of selling one customer at a time (gradually), the installed base grows in large blocks of hundreds or even thousands at a time. Because so much of an enterprise application vendor’s revenue comes from recurring maintenance revenue, this can be an immediate and significant boost.

 Acquisition can be a cheaper way of growing a customer base, but that assumes the acquiring company is good at it – good at integrating the new company, formulating product plans and executing that strategy. Some are better at it than others and some become good at it only after learning from mistakes of prior acquisitions. When you see ERP companies acquiring other ERP companies this is often the goal.

Yet another goal of acquisitions is to grow the share of the customers’ wallet. By acquiring complementary solutions that fill gaps in the product line, the acquirer creates more potential for cross sell and up sell opportunity. Now of course, this may not happen immediately. No acquisition comes with a magic wand that instantly integrates products, although in some instances, where the two vendors have previously partnered, the integration may already exist. But there is no guarantee that integration is seamless. For many acquiring companies though this fills product gaps faster than doing the pure development route. Although with the introduction of agile development methodologies the difference is not as dramatic as it once was.  But it also can be a means of strengthening internal expertise immediately.

And the final reason for acquisition is to enter new markets. These may be new geographies, particularly in emerging markets. Or they may be new industries.

SO WHAT’S IN IT FOR THE CUSTOMER?

 In some cases, acquisitions benefit the customer if they place an acquired vendor (or even the acquiring vendor) in a stronger financial position. M&A activity can “bail out” struggling companies, preserving legacy solutions and companies that may otherwise simply vanish. When vendors use M&A activity to grow their share of the customer wallet, customers may immediately benefit from having access to a broader solution from a single vendor. There may be synergies between merged companies/solutions and there could be an accelerated (or slowed) innovation processes’

When the goal is to enter new markets, there is little to no customer benefit unless the customer is in (or is entering) a market that is underserved by the original vendor. But that probably means the original selection of that product was questionable.

Given the fact that the vendors often have more to gain than the customers, it is not surprising to see concerns. These concerns can be summed up as follows:

  • We could wind up running a collection of separate point solutions owned by the same vendor instead of a well-integrated ERP (58%)
  • The product we use may not be well integrated with the rest of the product portfolio (55%)
  • The owner of the product may not continue to invest in or evolve the product in the future (48%)
  • The product may be discontinued, forcing us to move onto another product from the same vendor (33%)
  • While customer acquisition goals are always important, don’t neglect customer retention
  • Rounding out a solution portfolio is commendable, but don’t forget integration. If all you have done is reduce the number of vendors a customer deals with you are not really adding value in the eyes of the customer

SOME ADVICE TO ACQUIRING SOLUTION PROVIDERS:

ADVICE FOR USERS OF PRODUCTS THAT MIGHT BE ACQUIRED:

Get the facts. Hold your vendor’s feet to fire in terms of product road maps. But recognize that continued development of the product you are running might not be a good business decision for your new vendor.  But it also may not be best for you, particularly in the case of a legacy ERP developed on older technology. ERP used to be viewed as brain surgery. Don’t do it unless the patient is dying. Today I would recommend viewing it like joint replacement (think knees and hips). Even if the joint is painful, you suffer along with it as long as it doesn’t severely handicap your ability to function. But when it becomes too painful, or too limiting, it is time to undergo the surgery. ERP replacement can be like surgery – it can disrupt your life. But if the quality of life post-surgery is vastly improved, it was worth the effort.

To see the actual results of the survey please click here.

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How are you paying for ERP? Here’s how others are.

Back in May I posted some commentary and a warning not to confuse how you buy ERP with how you deploy it. There is much written today about deployment options in general and cloud computing in particular. Although how you pay for ERP is different from the way it is deployed, the two are definitely intertwined because you will either be paying for software or you will be paying for a service or both. This service is not to be confused with the consulting and implementation services you may contract for. This is either software as a service (SaaS) or hosting services, which may also be combined with Application Managed Services (AMS), where the company hosting the software also manages the applications and perhaps even the business processes the software is used to model (e.g. Accounts Payable or Accounts Receivable). But how are companies generally paying for ERP these days?

Just to recap:

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

A software license can be perpetual. Early findings from our Mint Jutras 2011 ERP survey indicate that 76% of responding companies have perpetual licenses. That means you pay for it once and can use the enterprise application forever. Maybe. This used to be the case, but more and more often today a perpetual license agreement might have a stipulation that you have the right to use that software only for as long as you continue to pay maintenance to the software vendor that provides the product. In fact, if you are buying ERP today, expect this requirement to pay a recurring maintenance fee in order to continue to use the software. In our survey 62% of those with perpetual licenses have this requirement.

A maintenance agreement, which is a recurring cost, typically provides both technical support and certain innovations. Some of those innovations will be included in your maintenance fee and others may still need to be purchased. Maintenance is typically priced as a percentage of the software license and the going rate at list price today is around 22% for ERP. While anecdotal evidence tells us that most companies actually pay less than this (closer to 16%-18%) this is largely due to specially negotiated rates and older rates that have not necessarily escalated at the same pace of increased list prices. But if you are purchasing a new ERP solution, expect this to be the starting point for negotiation.

But perpetual licenses are not the only type offered. Instead your license might be for a specific period of time.  This is generally referred to as a “term” license. At the end of the term, you must either renew the license or discontinue use of the software. In fact the application might have the equivalent of a kill switch in it that will disable it and prevent you from continuing to use it at the end of the term.  This type of license is less common and in fact only 7% of our survey respondents indicated this was how they paid for their ERP. Effectively managing this type of license requires some license management code to be embedded in the solution and this was not always done, particularly in older legacy software. If it was not, and you don’t renew, you are in breach of contract and you might find some software auditors on your doorstep.

Subscription-based pricing is another alternative, particularly for those who are looking to expense their investment as an operating expense rather than a capital expense. About 15% of survey respondents pay by subscription. You might pay a nominal startup fee, but you avoid the big front-loaded expense of a software license. Unless this is coupled with a SaaS deployment, this does not necessarily address the up-front cost or the on-going expense of the hardware. Only 28% of the subscriptions paid by our survey respondents were SaaS-based.  Running in a hosted environment where the supporting hardware costs are embedded in the subscription fees may indeed address these capital costs and allow you to account for payment completely as an operating expense.

The findings noted come from the 2011 Mint Jutras ERP Solution study. Look for more data to be shared in the upcoming weeks. If you are in any way involved in the selection, management, maintenance or use of ERP in your company, please participate in our survey. By doing so, you will receive the full executive summary and also have access for inquiry to Mint Jutras for a 6 month period. Your contact info is entirely optional but we will need your email address to deliver your report and an access code for inquiry. Mint Jutras makes it a policy to never share contact info under any circumstances.

To participate click here: 2011 Mint Jutras ERP Solution Study Survey.

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Does ERP mean Excel Runs Production? What Happens When Enterprise Software Is Too Hard to Use?

 “Ease of use” and the “user experience” are getting a lot of play these days. But what does that really mean? I currently have my inaugural Mint Jutras ERP survey live and have collected more than 200 responses thus far (just the beginning!)  So far, results show that ease of use most likely refers to time to complete tasks (50% picked this as a “top 3” in importance) and intuitive navigation (42%). Of course some other factors were also important including easy access to ERP from anywhere, any time (think access through the Internet and mobility) and the ability to stay in a workspace that combines ERP with other tools (e.g. email, Internet, dashboards, etc.)

In addition, earlier this year I helped IFS North America with a study conducted to explore how usability challenges may cause individuals to work outside the system of record, causing the manufacturer to lose value as employees use other systems. We looked at the degree to which corporate citizens will take action as the result of enterprise software usability challenges (including the use of various types of PC-based software and online free or low-cost applications). We were also looking for generational differences by comparing respondents in four different age groups:

  • 18 to 35 years old
  • 36 to 45 years old
  • 46 to 55 years old
  • Over 55 years

In general, we found there was a generational difference.  Once established in their careers, respondents were more likely to speak up about usability challenges in enterprise software. Instead, younger professionals (between ages 18 and 35) were more likely to change jobs as the result of poorly-designed enterprise software. So if you want to keep those future superstars, beware!

The quip “ERP stands for Excel Runs Production” is often true. When faced with usability challenges in the enterprise system of record, Microsoft Excel is the most frequent alternative. In addition, when faced with usability challenges, respondents indicated they may also use a number of free or low-cost online tools including Google Docs and Dropbox.

Speaking Up

Counter to popular perceptions of younger generations in the workforce, the 18-35 year-old group was least likely to definitely speak up or complain about the poor user experiences they were having with enterprise software. Those over 35 were most likely to definitely say something but extremely unlikely to simply suffer in silence. This pattern may be due in part to the fact that younger managers may feel, perhaps with justification, that they lack influence within the organization so speaking up would have no effect and possibly jeopardize their careers.

Meanwhile, those most likely to say something about their negative software experiences were respondents over 45 years, who would have more influence and also a good deal of experience with both business and consumer-level technologies and have begun to expect the same ease of use in business as they see in consumer technology.

Opting Out

More than 30% of respondents in each age group indicate that they would be likely to use enterprise software that was hard to use or poorly designed less frequently than software that was more thoughtfully designed or easier to use. A sizable majority of respondents also indicated that they were prone to using spreadsheets, including Microsoft Excel, instead of their enterprise system of record . In fact, respondents aged 18 to 35 were most likely to use spreadsheets (75%). Anyone graduating from college or business schools within the last 10 years (at least) has gained extensive experience with Microsoft Excel, seeking the comfort level of familiarity.

Commentary

Some comments and suggestions offered to Enterprise Application solution providers by respondents:

“The interface needs to be seamless and intuitive. We don’t have learning curve time anymore.”

“Make it able to be seen more easily from smart phones.”

“Take lessons from the most popular software interfaces – Microsoft Office, Google, iTunes, etc.  There is nothing more frustrating than using an interface that looks like it’s from an AS400 in the 80’s but was purchased last year.”

“Just show me the information I need and don’t waste my time with ‘pretty’ graphics.”

In general the message was clear. It is all about faster, simpler, cost effective.

Download the study, “IFS: Does ERP mean Excel Runs Production,” at http://download.ifsworld.com/Excel_Runs_Production.  (registration required)

 

 

 

 

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ERP: Join me in a stroll down memory lane

I’ve been “watching” ERP (Enterprise Resource Planning) for more than three decades now. You might even say I’ve been watching it before it even existed, before it emerged on the market, when it was still a twinkle in the eye of software companies. You see, back in the 1970’s most of the software industry looked with disdain on “packaged” software. Everything was pretty much home-grown or custom developed back then. After all, how in the world could you possibly write software that would really meet the needs of a wide range of companies? Back then of course, all companies were “different” and therefore software had to be developed to meet those unique needs. Right?

The answer even back then was really, “No, of course not.” Each and every company was not really that different. Every for-profit company took orders, delivered goods or services and paid their bills. Manufacturers bought components or ingredients and made things.  Distributors moved goods. Retailers procured, stocked and sold product. Even non-profits needed to balance their books and produce financial statements.  All but the very smallest companies had payroll to meet and taxes to pay. Yet business processes were/are not identical from company to company and each had/has their own nuances. Back in the 1970’s god forbid, if a software company dared to question how things were done, or worse, attempt to change policy or procedure. If something had to change, it was definitely the software. And back then, that meant mucking around deep down in the source code. And it was even worse if the file or database structures had to change.

When you look at it from this perspective you realize just how far we have come. Back 30 years ago, data entry clerks (dare I say even key punch operators?) and data processing (the predecessors to IT) departments were the only people who actually “touched” software. The only thing management touched was the mountain of paper produced as output and that paper was green bar, continuous forms that might or might not be “burst” into individual pages. Thirty years might seem like a life-time to those in Generation X, Y or the new iY. But to Baby Boomers who entered the job market during the 1960’s and 1970’s it seems like just yesterday.

ERP has of course evolved from MRP which originally stood for Material Requirements Planning, then expanded to include more than materials and became Manufacturing Resource Planning. Somewhere along the way there was an MRP II, but at this point in history the difference “II” added doesn’t much matter anymore. Then as the footprint of the software grew to encompass other aspects of the business, MRP merged with accounting applications and morphed into ERP. It broke free of the boundaries implied by Material and Manufacturing, to be an enterprise application for all types of industries. Some struggle to define ERP today. I don’t. I define it as an integrated suite of modules that forms the transactional and operational system of record of the business. But the boundaries of ERP have steadily grown to include a broader and deeper footprint, to the point where ERP is not really confined by any boundaries.

Back in the 1970’s, nobody would have conceived how far we could go in the next 30+ years, just as we couldn’t conceive of having the same (or more) processing power clipped to our waistbands  as that which used to require raised floor, climate-controlled rooms.  So where are we going now? All the rage of course is:

  • Mobility: accessing enterprise data from those ubiquitous mobile devices
  • Cloud computing: operating ERP in a hosted environment, public or private clouds, buying Software as a Service (SaaS) and connecting traditional on-premise solutions to those in the cloud
  • Two-tier ERP strategies: does it make sense for a multi-divisional company  to standardize on one ERP, or to have one (or more) operational ERP’s coexisting with a corporate, administrative ERP?
  • Mashing up data from ERP with other applications and even external applications like Google Maps, Outlook and anything you can reach through a url.
  • Processing huge volumes of data in seconds or even nanoseconds

But the real bottom line in implementing ERP is just that… the bottom line. How does it impact cost and efficiency? What business benefits does it bring? And is anyone measuring? This is the subject of my recently launched survey.

If you have ERP, you have a chance to weigh in on how important these trends are to you and then see a summary of the results and engage in the discussion. Even if you haven’t invested in ERP yet, jump in. We want to hear about what you are doing now, what’s holding you back and what are your plans?

You might be asking yourself, “What’s in it for me?” I will share a copy of the Executive Summary of the findings with all participants and I am also offering access to Mint Jutras for questions and inquiry regarding ERP for 6 months after you take the survey. While contact info is optional, I will need your name and email address to deliver this to you. Don’t worry, this exercise is not a marketing ploy asking for your permission to share your contact info. It’s really just about the research, so don’t be afraid to have your voice heard.

Please click on our Survey link to participate.

A note to solution providers: Feel free to take the survey but ONLY IF you answer questions honestly as a user (not a provider) of ERP solutions. Or, if you prefer, pass this along to your customers. For more information on how you might participate (see and benefit from the results) please contact me at cindy@mintjutras.com.

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IFS and Mint Jutras Study on ERP and Mobility: Access to Enterprise Data

“Mobility” seems to be all the rage these days.  While mobile devices free us from wired connections, they actually seem to tether us more firmly to our businesses. Professionals are “always on” and “always connected” even when traveling for business, attending a child’s soccer game or on vacation. But do we really have better access to the enterprise data we use to make decisions and run our businesses? Is that connection a tether or a lifeline to the business?

 Earlier this year I helped IFS North America with a study conducted to explore interest in and demand for mobile device access to enterprise applications.  The study involved a survey of 281  executives of medium to large manufacturers with revenues over $100 million. We were looking to find out:

  • how enterprise software is currently accessed via mobile devices
  • what types of mobile applications and interfaces respondents are most interested in
  • how mobile interfaces may change the way we work

The enterprise applications we were explicitly interested in were

  • Enterprise Resource Planning (ERP)
  • Customer Relationship Management (CRM)
  • Enterprise Asset Management (EAM)
  • Business Intelligence (BI)

Only small percentages (27%) are currently performing functions in an enterprise application from their mobile device. This is likely influenced by the limited mobile connectivity of the enterprise applications themselves. Connectivity requires a modern underlying technology not available on legacy applications and older versions of software. While a negligible few rate their level of accessibility as excellent, a third to almost one half (varying by application) have little or no access at all. Interestingly, respondents accessing CRM via a mobile device are more likely to have access, but no more likely to rate it as excellent.

In general, we found manufacturing professionals view the mobile interface as an important consideration in enterprise software selection. The importance of the mobile interface increases proportionally as the amount of personal time invested in the job increases. Not surprising. Efficient use of time is even more important when it is your own.

Today the lines between work and private life are blurred, even in a traditional brick and mortar industry. Mobile access to enterprise software can facilitate this blended lifestyle, but what impact will it have on the way people work, how often they work and where they work? Will this drive new productivity for people who spend time in transit or in other locations where a hand-held, mobile device is the only viable tool? Will it cause work to increasingly encroach on personal time? 

While 63% said that remote access would cause them to work more outside normal business hours, only 15% indicate remote access to enterprise data would be MORE disruptive. Easy access through a mobile device, anytime, anywhere, allows a decision maker to connect and act immediately without the disruption of finding an Internet connection and “firing up”  – hence the importance of easy and intuitive access.

Mobile access to enterprise software appears to be a tremendous opportunity to increase productivity given that additional work can be completed while in transit, both inside and outside of work hours. While mobility is far from universally available today in enterprise applications, as software users recognize the value, software providers must necessarily respond with features and functions. The ability to connect and respond immediately improves productivity and far outweighs the cost of the intrusion of a mobile device.

Interested in all the full  results of  the “IFS ERP Mobility Survey; Overview and Projections on Remote Access to Enterprise Data?” Download at http://download.ifsworld.com/ERP_Mobility. (registration required)

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IFS Touch Apps: at the Intersection of Two Driving Forces

I spoke with the folks at IFS today about their new IFS Touch Apps, which were announced at their customer summit last month. The first two applications in the series will go into early adopter stage after the summer holidays. Being headquartered in Sweden, those holidays are a bit longer and more pronounced than for those of us here in North America.  These two (Trip Tracker for travel expense reporting and Notify Me for approvals of purchases, time, invoices and expenses) are envisioned to be the first of what IFS hopes to be a steady stream of such applications anticipated for 2012. Designed for the Android and iPhone devices and delivered via the IFS Cloud, they will run within Microsoft’s Windows Azure public cloud.

During our conversation, IFS CTO Dan Matthews mentioned these new applications will connect back to not only the current 8.0 release of IFS applications, but also prior releases back to 7.5. While its customers are anxious to take advantage of new technology, and indeed recognize the power of new mobile gadgets, they, like any ERP users, tend to be reluctant to go through the time, cost and effort required of an ERP upgrade. Right now IFS has no plans to go any further back, but demand from its customers (if it arises) could affect that decision in the future.

So that got me to thinking about the real impetus for going mobile today and I realized two different drivers were converging.

You hear the phrase “the consumerization of IT” a lot these days. It is really about the impact consumer technology is having on the work force and the enterprise. Indeed much of this is driven by youth that grew up surrounded by visual and audio stimuli that couldn’t even be imagined in my “youthful” days. So I use the term “youth” rather loosely, just like I use the word “kid” loosely. Most everyone under the age of 40 is pretty much a kid to me. No offense intended. The technology kids carry around today in their pockets is more powerful than the first computer I ever programmed and its footprint was at least 50 square feet in a specially air-conditioned room. And that didn’t include the key punch machines.

But don’t get me wrong, I’m not exactly a Luddite when it comes to technology clipped onto my waist, partly because these devices have become just so pervasive. My personal mobile device is a Blackberry. I haven’t started carrying an iPad or a Playbook or other tablet simply because they don’t do everything I need to do. If I can’t leave my laptop at home, I’m not about to carry yet another device. These things are supposed to lighten my load, not increase it. As a result of just my laptop and Blackberry though, I, like other business people, am virtually constantly connected except when I am asleep, am staying at our lake house in Maine or when I fly. I for one am just as glad that the airplanes I typically fly don’t have wifi and we just haven’t bothered to connect our house in Maine (no phone or TV either). And unlike some others I know, I actually know how to turn these devices off.

But as a prior corporate executive and now as a business owner, the line between my business and personal life has continued to blur and sometimes blend. While the connection through the mobile device can intrude on my personal life, it also helps limit the disruption by making the connection that much easier and more efficient. It is actually the productivity gains that draw me to mobile devices.

But the mobile device alone doesn’t do it for me, because texting and calling my BFF’s aren’t why I carry them. I carry them to get work done in a quick and efficient matter. This is exactly what IFS had in mind when they designed Trip Tracker and Notify Me. If indeed I had Trip Tracker I wouldn’t have spent more than an hour and a half this morning gathering, searching for, organizing and recording all my travel expenses accumulated during the recent “conference season.” Instead, they would have been all collected, digitized and organized for me even before I arrived back home from each trip.

In my current situation, Notify Me wouldn’t be of that much use to me. But it sure would have been useful in my last job in terms of approving expense reports, paid time off and invoices to be paid. Where those activities involved enterprise applications, I would have had to fire up my laptop, get a wireless connection, VPN in and only then would I have been able to approve items. And indeed sometimes getting through hotel firewalls, dealing with low bandwidth and then getting through our parent company’s firewall was more effort than I wanted to expend if I was going to be back in the office within a day or two. Just a few clicks on my mobile device would have been infinitely easier. Of course, I would have to convince IFS to provide the same support for my Blackberry as they do for Android and iPhone, but perhaps some of their customers will take up that cause.

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Green and environmental reporting gets attention from ERP vendors

I read today (http://tinyurl.com/4schf9f)  that Oracle has acquired the IP for environmental reporting software created by Ndevr, a software firm based in Melbourne Australia. The software adds greenhouse gas and environmental reporting capabilities to Oracle’s E-Business Suite and JD Edwards Enterprise One. Ndevr has been a JD Edwards/Oracle certified partner for over 10 years.
This announcement comes just days after IFS announced the results of its Green Supply Chain survey (http://tinyurl.com/4oh92rh). IFS revealed in the announcement that almost 77% of manufacturers participating in the survey said they are currently required by their customers to report on their environmental impact and that of their products or require their vendors to do so. IFS went on to say, “…respondents indicated that their IT infrastructure, including enterprise resources planning (ERP) software, was not keeping up with their changing green supply chain needs, with 87 percent reporting that this data was handled at least in part through hard copy. Only five percent rated their ERP software as ‘excellent’ in its handling of green supply chain data while 54 percent rated their ERP solution as ‘poor’ or ‘not at all helpful’ in this regard. “
IFS addresses this apparent disconnect through IFS Eco-footprint Management which enables environmental impact to be traced along the entire value chain, from raw-material procurement and production to distribution and even through to the use of products post-shipment.
In addition, SAP has been particularly vocal about these issues and has been promoting its efforts in striving to be both an exemplar and an enabler. In fact Peter Graf, appointed as SAP’s Chief Sustainability Officer (CSO),  leads both the corporate sustainability strategy as well as product development in the area of sustainability, thereby lending cohesiveness to both efforts. SAP BusinessObjects Sustainability Performance Management, SAP EH&S Management and SAP Carbon Impact are all part of the SAP offering to address these issues.
Infor has a series of “green software solutions” including Infor Green EAM, Infor Green ERP, Infor Green, PLM, Infor Green PM and Infor Green SCM. You can also read how see how Bentley University and Mohawk Fine Papers are using Infor EAM to reduce their energy consumption and about Infor’s Green solutions at http://www.infor.com/enterprise-software/sus-hub/ .
These are just 4 examples of how the major ERP vendors are jumping on the sustainability band wagon for environmental protection.
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IFS promotes Lean methodologies in complex environments

I just finished reading an interesting white paper written by IFS (an ERP solution provider that specializes in addressing the needs of complex manufacturing). The title – Lean Enterprise in Complex ETO (Engineer to Order). Drawing from works by Lean experts such as James Womack and Jerry Kilpatrick, the paper does a great job of educating the reader on the principles and benefits of Lean methodologies.
The paper rightfully identifies Lean’s heritage in more high volume, repetitive manufacturing. After all it was pioneered by Toyota. But it also makes a case for Lean in a low volume, highly complex environment. Seems like some of these low volume manufacturers have been listening. According to data collected by The MPI Group for its 2010/2011 Manufacturers Data Report on manufacturing metrics and best practices, low-volume/high-mix manufacturers are actually more likely to have adopted Lean Manufacturing methodologies than an average of all plants surveyed (66.1% of low-volume/high-mix versus 60.8% of all plants) and are also more likely to use the Toyota Production System (TPS) (13.3% of low-volume/high-mix versus 10.5% of all plants). They are also more likely to use pull systems with kanban signals and one-piece flow techniques to manage inventory. As a result, they were able to shave an average of 26% off manufacturing cycle times (versus an average of 14% across all plants) over the past three years and more than half (53%) were also able to increase inventory turns, with 8.8% increasing them by more than 20%.
So if you happen to be one of those complex manufacturers dealing with the challenges of a engineer to order environment and have not embraced Lean methodologies thinking they only pertain to a more simple, repetitive environment… think again.
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