manufacturing

Plex Systems Hits the Acquisition Trail

Earlier this month Plex Systems announced its first (ever) acquisition. On August 9, 2016, Plex revealed it had acquired DemandCaster, essentially stretching the end points of its end-to-end cloud-based solution for manufacturers. Adding DemandCaster’s Supply Chain Planning (SCP) solutions to its enterprise resource planning (ERP) and manufacturing execution system (MES) means Plex now has the most complete suite of products of any independent cloud-native solution provider targeting manufacturing.

As I noted in a recent post, there are several reasons for one company to acquire another, one of which being to:

Fill a product gap: It can be far easier to acquire functionality than to develop it yourself. This can make the company more competitive, provide cross-sell and up-sell opportunity, or both. But don’t assume there is any M&A pixie dust that will magically integrate products overnight.

This is clearly Plex’s intent here, adding SCP to an already robust ERP and MES offering. But in this case, no M&A pixie dust is required. Plex and DemandCaster have been partnering together for about a year and already 10 out of DemandCaster’s 50 customers are also Plex customers. The integration is complete and bidirectional.

Partnering turned out to be a great way for the two companies to get to know each other and Plex was already positioning (and white labeling) DemandCaster as its answer to supply chain planning, sales and operation planning (S&OP), practical forecasting and demand planning, distribution requirements planning (DRP) and multi-site master production scheduling (MPS).

The solution, which is based on Microsoft technology, is highly graphical and was built from scratch as a multi-tenant SaaS solution. And the functionality is 100% complementary. The company is based in Chicago, but has a team of developers in Bulgaria, which could prove to be an additional plus in being a great entry point for Plex in attacking the eastern European market.

While acquisitions have a tendency to cause disruption, fear, uncertainty and doubt, if there ever was one immune to that disruption, this is the one. The entire staff of DemandCaster, including founder and CEO Ara Surenian, will come on board as Plex employees. Customers should only see a continuation (or perhaps strengthening) of their relationship. There is no sales staff to integrate. Previously DemandCaster was sold online with a “try before you buy” approach, with a little product evangelism thrown in. Plex intends to leave that channel open. Who knows, other (ERP and MES) sales efforts might even benefit.

Plex should also benefit from being able to natively satisfy the needs of larger, multi-national, multi-site manufacturing enterprises. The largest DemandCaster customer already handles over 300,000 individual SKUs. This could help Plex move up market and DemandCaster will also provide an additional entry point into Plex prospects.

Plex will also continue to make DemandCaster available as a “stand-alone” solution. We use the term loosely because DemandCaster alone is pretty useless unless it is tied back to an ERP. DemandCaster handles the integration by placing a very simple piece of software on the customer’s system. No APIs or web services required. Of the 40 nonPlex customers, DemandCaster already successfully interoperates with 18 different ERP solutions. So who knows, this might even be a “land and expand” opportunity for Plex to lead with SCP and eventually replace an incumbent ERP.

As acquisitions go, this one seems to be nice and neat and clean – adjectives rarely used in the same sentence as M&A. Kudos to Plex Systems for starting small but knocking one out of the park!

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QAD Channel Islands: Multiple Stops on the Journey to the Effective Enterprise

QAD defines the Effective Enterprise as one “where business processes are operating at peak efficiency and perfectly aligned with strategic goals.” Yet given the ever-accelerating pace of change in our world today, QAD also recognizes that the Effective Enterprise is more of a journey than a destination. The journey is one of continuous improvement and carefully balanced objectives.

The same could be said for the software that runs the business. Which is why its “Channel Islands” initiative is divided into milestones that have QAD (figuratively) hopping from one island to the next. A year ago it released Anacapa and this year Santa Cruz is ready for early adopters. Next year, it will navigate to Santa Rosa and in 2018, San Miguel. With two releases a year planned, chances are San Miguel will simply be another stop along the never-ending journey, but by then QAD will likely be on to other additional adventures suitable to whatever the future might bring.

Channel Islands: An Appropriate Metaphor

In the meantime, QAD appears to have chosen the name of its latest initiative well. QAD’s Channel Islands initiative has a dual purpose. The metaphor is perfect because the first goal of the initiative is to re-invent the entire user experience of QAD ERP, making it more natural (intuitive), visually appealing and easy to use. The Channel Islands of California are a chain of eight islands located in the Pacific Ocean off the coast of southern California along the Santa Barbara Channel near QAD headquarters. The main attraction of the real Channel Islands is their natural beauty, providing relief from the cluttered, hard-to-navigate urban setting.

But the second goal of the initiative makes it even more appropriate. The islands are divided into two groups—the Northern Channel Islands and the Southern Channel Islands. The four Northern Islands used to be a single landmass, but as water levels rose (thousands of years ago), Anacapa, Santa Cruz, Santa Rosa and San Miguel emerged and evolved as separate islands. While QAD ERP was originally developed as a single, tightly integrated solution that needed to move forward in lock step, the goal now is to support more modular upgrades, allowing different modules and disciplines (think finance versus purchasing or production) to move forward independently at their own pace. Mint Jutras often refers to this approach as “loosely coupled” versus tightly integrated, but it should not be confused with a collection of point solutions with arm’s length interfaces. Just like the Northern Islands, under the surface all these different functional areas are still connected.

In fact that was why QAD named the first phase Anacapa. Of the four Northern Channel Islands, Anacapa appears to be the smallest, but in fact has an enormous land mass hidden under the surface of the water. This is representative of the work done to re-architect the underlying infrastructure, reworking the application programming interface (API) structure and protocols, and future proofing the user interface (UI), including the framework for connecting devices. This supports the theory that sometimes the best UI is no UI at all and paves the way for succeeding phases (Islands).

To better understand how QAD is delivering on this modular upgrade approach as well as a new and improved user experience, read the full report (no registration required):

QAD Channel Islands: Multiple Stops on the Journey to the Effective Enterprise

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Women in Manufacturing & Technology At PowerPlex 2016

I recently had the opportunity to participate in Plex Systems’ second annual Women in Manufacturing and Technology Forum. Held at PowerPlex 2016, Plex’s annual user conference, this year’s forum brought together over 85 women, providing an opportunity for networking and discussion. Plex also put together a moderated panel (on which I was honored to sit) to kick off the discussion. But in spite of the name of the forum, the topic of discussion wasn’t manufacturing or technology, but rather the challenges women face in working in what is still very much a man’s world.

So if the discussion didn’t touch on manufacturing or the Plex Manufacturing Cloud, or any kind of software for that matter, why did Plex do this? I believe it is ultimately because Plex cares deeply about its customers and their success. The depth of interest is evident in the level of customer engagement that strikes me as exceptional every time I meet Plex customers or attend one of its events. And while the software is the focal point of the engagement, customer success is always a combination of people, process and technology.

On the people side, amidst an overall skills shortage in manufacturing, women have so much to offer. Yet while our ranks are growing slowly, we remain a small minority. It is very challenging for a woman to get ahead and make it to the top and we need to support each other along the way. The best way to accelerate gender diversity in the worlds of manufacturing and technology is to create a supportive environment and highlight success. In the famous words of former U.S. Secretary of State Madeline Albright, “There should be a special place in hell for women that don’t help other women.”

Plex happens to have some great role models, with three women among its C-level executives: Heidi Melin, Chief Marketing Officer, Lilian Reaume, Chief Human Resource Officer and Elisa Lee, Chief Legal Counsel. These three women actively sponsored the forum. I applaud them for that. I would also like to share with everyone a couple of the main themes we discussed, as there are some good lessons both men and women can carry away from them.

Don’t Limit Yourself

While some women are indeed shattering the “glass ceiling” today, many (not all) of the limitations that hold others back are self-imposed. While no two women are exactly alike (just as no two men are), when asked to rate themselves on skills and accomplishments, women tend to under-estimate their own effectiveness, while men tend to over-estimate theirs. A woman will say she is good at A, okay at B and has never done C. A man with the same skill set will say he excels at A and B and could very easily learn C. It’s all about the presentation and the self-confidence with which it is presented. I am not advocating for shameless self-promotion, but whether this reticence stems from a lack of confidence or an overactive sense of modesty, it is equally detrimental in seeking advancement as it is in interviewing for a new job.

Believe in Yourself, But Don’t be Afraid to Ask for Help

If you are a woman and have trouble believing in yourself, you’re not alone. Many of the most successful women in the world today grew up believing they could do anything they set out to do. Very often they had the support of family or an early mentor who encouraged them to pursue their dreams.

I had the opportunity to hear Dr. Condoleeza Rice speak recently and walked away with a quote that I think is priceless. She was talking about growing up with the support of her parents. Dr. Rice and I are about the same age. But while I had the advantage in the 1950’s of growing up white in the northeast, she was a little black girl in Birmingham, Alabama where segregation was the norm. And yet she said, “Somehow my father believed that the little black girl that couldn’t order a hamburger at the lunch counter at Woolworth’s, could grow up to be the president of the United States.” That belief system carried Dr. Rice very far.

But just as many women (probably more) didn’t have that level of encouragement growing up and still don’t have it today. But it’s never too late. Seek out that encouragement. It doesn’t have to come from another woman, but it should be someone who is successful in his or her own right, either in business or just in life.

Be Yourself

One of the most common mistakes women make in entering a man’s world is trying to think, behave, act or communicate like a man. A piece of advice from someone who has worked in a man’s world for over 40 years … Don’t. Yes, develop your ability to think, analyze and be decisive. Yes, work on your communication skills, both listening and speaking. Yes, be conscious of how you come across (confidently or defensively). The list of skills you should develop will vary based on your role. Regardless of your role, trust me, it will be long. But as you work on that list, work just as hard to be yourself. Don’t try to be a man. It’s OK – even good – to be a woman in a man’s world as long as you remain you. If you haven’t figured out who that is yet, don’t worry, you will. I may not see it before I retire, but if we all do that, perhaps the man’s world will indeed give way to a world of diversity.

 

 

 

 

 

 

 

 

 

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Epicor Announces It Will Grow Business, Not Software

Epicor has a new tag line: “[We] grow business, not software.” The declaration is not quite as radical as it would first appear. In fact it appears to me to be much more evolutionary than revolutionary.

Epicor’s mantra for years was “Protect, Extend, Converge.” As in:

  • Protect its customers
  • Extend its solutions
  • Converge its product lines

However, in 2014 it appeared Epicor was diverging a bit from the convergence strategy, primarily as a result of the merger of (the original) Epicor and Activant. Both had grown through acquisition, but while Epicor’s ERP solutions were multi-purpose ERP (focused primarily on discrete manufacturing) and therefore ripe for rationalization, each of Activant’s products was purpose-built for distribution, and over time each had become even more focused and fine-tuned to specific segments of wholesale distribution. And then there was the SolarSoft acquisition (2012), which brought along an ERP which focused on more process-oriented industries, and also a “best of breed” manufacturing execution system (MES). And finally there was Epicor’s retail business, which was actually spun off last year.

So while the “Protect” and “Extend” sentiments of the message are still very much alive, convergence gave way to a new message. Last year, Epicor’s (new) CEO, Joe Cowan declared the company would be “totally focused on the customer.” This year’s tag line seems to me to be a simple extension of that customer focus. Software is not the end goal. The goal is to help Epicor customers grow their businesses. It just so happens Epicor will develop software and provide services to make that happen. And a lot of the software will be delivered as a service, as evidenced by the appearance of a fluffy white cloud in the middle of the tag line.

Epicor tag line

Of course in having a tag line like this, Epicor needs to be careful not to make the message itself too fluffy. And in promising to help customers grow, Epicor will have to execute a delicate balancing act, balancing what the customers say they want and what Epicor knows they need. This is particularly true of those customers still running older legacy solutions. Epicor has promised not to sunset those products. And yet if you really understand the demands and opportunities of the new global, digital economy, you know you can’t be competitive without modern, advanced technologies.

Customers running legacy solutions won’t benefit as much from the latest and greatest development, but that’s not to say they won’t benefit at all. Epicor has been a bit quiet on the technology front for the past few years, but that is not the result of lack of attention. In fact it has been doing a lot, sometimes at the expense of new features and functions. Its advanced technology architecture (ICE), visionary at the time of its initial release circa 2009, has undergone a technology refresh of its own, and it also paves the way forward for both strategic products like Epicor 10, Prophet 21 and others, as well as legacy solutions like Vista and Vantage,  etc.

Now that that refresh is complete (for now… after all, technology continues to advance at an ever-accelerating pace), you’ll see more aggressive development of features and functions. Epicor is picking up the cadence of releases, shooting for twice a year (spring and fall) for its strategic products, which of course will garner more of its resources. But even legacy solutions will benefit from the development of external components, which can be used across different product lines. Prime examples include web portals, dashboards, self-service functions, mobile apps and other new features. And developing these components as web-based services (delivered through the cloud) will have the dual purpose of extending solutions and gently pushing those running primarily (or exclusively) on-premise towards the cloud.

I agree with Epicor’s new CTO, Himanshu Palsule, who called the transition to the cloud “inevitable.” But it won’t happen overnight (Figure 1). Part of the reason for this slower, yet steady growth is the fact that there are so many on-premise solutions in production today. And many remain reluctant to simply rip and replace solutions that are essentially getting the job done.

Figure 1: What percentage of your business software is deployed as SaaS?

Fig 1 EpicorSource: Mint Jutras 2016 Enterprise Solution Study

In his main stage keynote, Himanshu also (very astutely) observed that for a topic that is so widely discussed, “cloud” is still misunderstood and means different things to different people. My research supports his observation. While many use the terms cloud and SaaS interchangeably (I find myself guilty of this at times), they are not the same. While all SaaS is cloud, not all cloud is SaaS. While only a small percentage (12%) in 2015 didn’t know how they preferred cloud to be delivered, that percentage didn’t shrink in 2016 (Figure 2). There is still some education to be done. If you count yourself among those that “don’t know,” don’t be afraid to ask. You’re not alone.

Figure 2: How would you prefer cloud to be delivered?

Fig 2 EpicorSource: Mint Jutras 2016 Enterprise Solution Study

I’ve written extensively about the anticipated appeal of SaaS, along with the benefits actually realized. But I wouldn’t disagree with Himanshu’s conclusions about what cloud should stand for:

  • Choice
  • Convenience
  • Cost Control
  • Customization
  • Collaboration

However, I would qualify two of his bullet points. A few years back, my survey participants placed a high value on choice of deployment options. They seemed to like the idea of portability and the ability to move from on-premise to SaaS and from SaaS back to on-premise. Today many are looking for a path that helps them move from on-premise to SaaS, but once they move to SaaS, they almost never go back unless forced to (e.g. they get acquired by a company running a licensed, on-premise solution). So having multiple deployment options available is no longer such a high priority. Prospects simply pre-qualify those solution providers based on the deployment option they prefer.

I agree that choice is important. But it is more important to Epicor as the solution provider than to its customers and prospects. There are still some environments where a real multi-tenant SaaS solution might not be the best choice – at least not right now. These might be heavily regulated industries that require solutions to be certified, and re-certified when they change. Or a heavily customized solution may be required. And customization is the other bullet from Himanshu’s list that needs to be well-qualified.

Not all customizations are created equal. First of all, some simply aren’t needed. They might be left over from an implementation of a solution with far fewer capabilities than available today. Or they might have resulted from a “that’s the way we’ve always done it” mentality. If customization does not differentiate you in your market, I would seriously question whether it is justified.

Furthermore, customizations can be implemented in a variety of ways. Invasive code changes and SaaS don’t make for a good combination. But if customizations can be added as external components and linked back to ERP through Web APIs, or if they can be implemented through configuring the software without mucking around in the code, they may be perfectly compatible.

So Epicor’s announcement this week of its “cloud-first focus to support digital transformation of wholesale distributors is spot on”. The Mint Jutras 2016 Enterprise Solution Study found wholesale distributors lagging behind other industries in preference for and adoption of SaaS solutions. We also found 47% to 73% still relying heavily on paper for their operational and transactional system of record (customer and purchase orders, expense management, payments, etc.). They lag behind other industries in spite of the fact that ecommerce and their proximity to consumers puts them at a higher risk of disruption from the digital economy. Perhaps this “cloud-first” focus will be the gentle push wholesale distributors might need to start down the path of digital transformation.

Indeed, Epicor says it will be “…doubling-down on helping distributors adapt to these shifting dynamics of the marketplace—with an added focus to ushering customers’ journey to leverage the power of cloud-based solutions to drive increased productivity and achieve a differentiated customer experience to grow their business.”

Indeed wholesale distributors aren’t the only Epicor customers that will benefit from this “doubling-down.” I heard similar plans from the Epicor 10 side of the house, including planned features and functionality, along with efforts to improve simplification and usability. Yes, it’s about the overall user experience, but those driving the products seem to understand it’s not just about the “pretty software” you hear so much about today. As business models change, as technology advances and as new innovative products come to market, Epicor’s product must be easy to use, easy to install, easy to manage, and easy to change when the need arises.

Epicor “gets” it. We’ll be watching to see if it delivers.

 

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A Changing of the Guard at IQMS

A new president and CEO took the stage at IQMS Pinnacle this week as customers and long time employees bid a fond farewell to founders and leaders Randy and Nancy Flamm. IQMS has been one of the best kept secrets in the world of ERP for manufacturing, but new investors hope to break out of the stealth marketing mode of the past and really put the company on the path to increased market awareness and a new level of growth. New CEO Gary Nemmers, previously with HighJump, stepped into this new role about six months ago and has been assembling a team that will shift the strategic focus, but also leverage successes of the past.

Under Randy’s leadership the customer base has grown quite steadily to about 500 customers (not too shabby!) and those customers have been instrumental in developing manufacturing functionality that is both broad and deep. Indeed product development has been almost exclusively driven by Software Enhancement Requests (SERs) submitted by customers. While that approach was smart in the early stages of the company’s growth, building “real world” functionality that expressly meets the needs of its users, at some point it also has some drawbacks.

The breadth of functionality that IQMS can deliver is impressive, particularly for a relatively small ERP player. Scratch the surface of other solutions from vendors comparable in size and you get more surface. Scratch the surface of EnterpriseIQ (IQMS’ ERP) and you find remarkable depth. And you also have a very engaged user community. But having been driven by existing customers, the development process has not been entirely well organized. One customer noted, “It’s like a house that started out small and then additions were added on piecemeal. In the end you might have everything you need, but not necessarily where you need it. You might find the oven in the living room.”

Development of some of IQMS’ mobile apps provides us a good example. The development team has produced some pretty cool features like its Android Bulletin Board, described as “Twitter for your shop floor” or “Messenger-like instant communication to workers on the shop floor.” This includes the ability to attach the equivalent of sticky notes to business objects (e.g. orders, work centers, etc.). As the status of these business objects changes, an update is automatically sent. But while most of this development work is now transitioning to HTML5, making it compatible with a range of devices including Android, iOS and Windows devices, many of the existing apps run only on Android – not very useful if your company has standardized on iOS or Windows.

This example is symptomatic of a larger limitation inherent in being completely customer-driven. Customers will never push a vendor to do a major revamp of the underlying technology – particularly small to midsize manufacturers They already have too much to worry about without asking their software provider to fix something that isn’t broken. And yet today that underlying technology is critical in building and/or maintaining a competitive advantage in our digital economy.

Questions inserted (new this year) in our 2016 Enterprise Solution Study lead me to believe many companies over-estimate their “digital preparedness.” A two thirds majority (67%) of manufacturers feel they are close to or very well prepared for the digital economy, yet Table 1 tells us a very different story.

Table 1: To what extent is your operational and transactional system of record digital?

IQMS Table 1Source: 2016 Mint Jutras Enterprise Solution Study

*B2C Commerce is Not Applicable to 18% of our respondents

Generally over half still rely heavily on paper for their transactional system of record – more proof no solution provider can rely on existing customers to push for a major technological shift (e.g. to full web-enablement, support of HTML5, social, mobile and cloud capabilities).

For this kind of progress, as well as growth and expansion into new markets, you need a strategic plan and a well-defined product road map. That is exactly what new VP of Product Management, Rob Wiersma, is setting out to do. This shift in overall product and corporate strategy will take some time to put in place, but this is not Rob’s first rodeo. He is only in his second month on the job, so right now customers and prospects will need to wait and watch for this. But I would expect to see some major progress within months, not years.

Another area that bears watching is IQMS’ cloud strategy. The catch phrase at IQMS Pinnacle was “Cloud is the new choice.” The choices from IQMS today include a traditional on-premise license, a hosted model or cloud managed services. Notice there was no mention of Software as a Service (SaaS). And just to be clear, we know that while all SaaS is cloud, not all cloud is SaaS.

While the two terms are often used interchangeably (I admit to falling into that trap as well), they are not the same thing. So let’s distinguish between the two:

  • Cloud refers to access to computing, software and 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 the acronym. 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 generally paid for on a subscription basis and does not reside on your computers at all.

Again – all SaaS is cloud, not all cloud is SaaS. While the IQMS customers I spoke with are not expressing a strong desire for SaaS (in fact some are still trying to understand the difference between client/server and SaaS and cloud), many are also faced with the challenge of aging servers that ultimately will need to be replaced… or not. Moving to a hosted model may eliminate the need for upgrading this hardware, but it also might not, depending on who and how it is hosted. Moving to SaaS eliminates this problem by eliminating the need to invest in hardware and its ongoing maintenance, among all the other potential benefits of SaaS. And I am now seeing a shift in preference away from hosting and to a real SaaS solution (Figure 1).

Figure 1: How do you prefer your “cloud”?

IQMS fig 1Source: 2016 Mint Jutras Enterprise Solution Study

So far IQMS “cloud” options provide reasonable choices to customers not demanding SaaS, but this could limit growth in the future. IQMS added about 100 new customers in 2015 and is expecting to increase that number to 140 in 2016. So it will be interesting to watch as IQMS continues to further define its overall strategy, including cloud and SaaS.

Mr. Nemmers has also made some other changes in his (so far) short tenure with the company. On the advice of his head of customer support (a 20 year veteran of IQMS) he deployed new call center software (Five9 Call Center), which went live about a month ago and is now operating 24X7 and providing faster response time and quicker resolution of customer issues. The software features skill-based browsing to connect the customer to the right support technician, and a nifty feature that facilitates an automatic call back (without losing your place in line) when high call volume precipitates a longer than usual wait time.

In order to emerge from its stealth marketing mode, IQMS also has a new CMO, Steve Biesczcat, on board now for almost a year. I think we will see some significant changes in the near future, since Mr. Nemmers has doubled the SEO and brand recognition budget from a year ago.

There have been some changes on the sales side as well with a new VP of Sales Operations (long time industry veteran Gary Gross) and the formation of a new Customer Success Team (think account management), leaded by Ken Kratz, providing a better front line link from the customer to IQMS. Also expect growth in EMEA (Europe, Middle East and Africa) through value added resellers (VARs) using the same model that has been successful in covering the Asia Pacific area.

In summary, I think 2016 will prove to be a year of transition for IQMS. I think fewer and fewer industry observers and potential prospects will be saying, “IQMS? Who’s that?” I look forward to seeing an aggressive and progressive road map and certainly more splash on the marketing side. I expect to see growth in North America and internationally. And through this transition I would expect customers to remain engaged and productive.

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Post-Modern ERP Meets #CommerceCloud: Infor to Acquire GT Nexus

Earlier today Infor announced it would acquire GT Nexus and its cloud-based, global commerce platform for $675 million. Pending regulatory approval, expect the deal to close within 45 days.

While at first glance this might seem to be a “me too” move following in the footsteps of SAP’s acquisition of Ariba, this is actually different in that it is all about direct (versus indirect) procurement, which is inherently more complicated because it must tie back to the sale of goods and the production process.

This is something Infor CEO Charles Phillips says he and Infor President Duncan Angove have been looking to do since coming on board in late 2010, pointing to the continued shift to contract manufacturing that moves much of the production process outside the four walls of the traditional factory. “Continued” is indeed the right adjective to use here.

This shift started decades ago when low-cost country sources made “outsourcing” very appealing. As companies have tended to become less vertically integrated, reducing costs and focusing instead on their core competencies, this necessitates new ways of doing business with each other. Through the purchase of subassemblies or finished products, the contracting of manufacturing or distribution services or the outsourcing of customer service or information technology, the value chain has lengthened and become more complicated. Yet expectations of response time and delivery performance have risen dramatically.

This is actually a topic that is near and dear to my heart. I went back and dug up something I wrote previously back in the day, before the digital age, when we talked about “E-business.” Here is what I wrote:

These new business models involve multiple companies working cooperatively and collaboratively together, in a seemingly seamless manner, as if they were a single virtually vertical enterprise. A company that can successfully interoperate in this way can claim to have reached the goal of full E-business integration.

As a result of this push toward full E-business integration, businesses face challenges that force them to push the envelope of business information systems. ERP grew from its predecessors of MRP and MRP II, constantly expanding its solution footprint to address more and more needs of the enterprise. Yet ERP was not conceived to look beyond the “four walls” of the enterprise, regardless of how expansive those walls would become, simply because the concepts of MRP and ERP were born in a time when companies were run as independent enterprises with arm’s length relationships with customers and suppliers.”

Mr. Phillips and Mr. Angove both acknowledged this situation today in announcing the proposed acquisition. They talked about “post-modern ERP” that (with the addition of GT Nexus) would push beyond those “four walls” and “provide customers with unprecedented visibility into their supply chains to manage production and monitor goods in transit and at rest.”

But none of this is really new news. That excerpt above is from my book, ERP Optimization, which was released in December 2002. Has it really taken more than a decade to deliver on this promise? Yes and no. First of all, when I look back on where we were when I wrote ERP Optimization, I realize just how far we have come. Back then “trading exchanges” weren’t much more than online dating sites for buyers and sellers, and very few offered value-added services like trade financing, logistics, electronic payment and settlement. Connecting these functions back to your ERP was difficult at best. Internet procurement was in its infancy. Most companies were still struggling with all the non-standard versions of “standardized” EDI. And the smart phone and other mobile devices (apart from the cell phone) had yet to be invented, so most of us couldn’t even dream of being as “connected” as we are today.

So yes, we have come a very long way. But through that progression, our expectations have also risen. We no longer simply “outsource.” We participate in a networked economy and we look to the cloud to keep us all connected. We also deal in a much more global economy, including emerging economies in countries that were hardly industrialized a short decade ago. The speed of business, as well as the speed of change has accelerated beyond anyone’s expectations.

So it is no wonder that the executives of Infor have wanted to fill this need since coming on board. They actually thought about building their own network. But I think they were smart in acquiring one. After all, the value of the network is largely measured by its size, scope and strength. And let’s face it, you don’t build one that is 25,000 businesses strong (like GT Nexus) overnight. And once networks like these are established and mature, it becomes harder and harder to build a brand new one. Once companies like adidas Group, Caterpillar, Columbia Sportswear, DHL, Home Depot, Levi Strauss & Co., Maersk, Pfizer, Procter & Gamble and UPS have joined, that network becomes that much more attractive with each new major brand added – hence the attraction to Infor.

GT Nexus is also a good choice because it is unique in that it includes supply chain financing partners that add even more value. Buyers and financial institutions offer pre and post export financing and payment protection. Infor admits that many of its own customers in manufacturing and retail aren’t even aware of financing options available, even though they might be struggling to finance procurement of materials and services in advance of collection of revenue. And who doesn’t want to get paid faster? Infor therefore sees a lot of opportunity to expand these offering even further. And the fact that Infor, GT Nexus and many top banks are all in Manhattan doesn’t hurt either.

The integration of GT Nexus and the Infor CloudSuites (there are several for different industries, including retail and fashion, which represents about 60% of current GT Nexus business) should be quite straightforward because both use standardized object models (Infor uses OAGIS). This is in fact one of GT Nexus’ strengths in being able to easily connect to back office solutions. Unlike traditional EDI where each connection is unique, this data model mapping allows suppliers to join the network once and talk to all buyers, avoiding custom maps and portals and invasive code development. So this leaves open the question of how the combined company will continue to work with other solution providers, including existing partners like Kinaxis.

Infor will continue to run the GT Nexus operation as a dedicated business unit. The entire management team is joining the larger corporation, a further testament to the cooperative and friendly nature of the acquisition.

All told this appears to be a win-win-win for Infor, GT Nexus and its customers. If not a match made in heaven, at least it is in the cloud.

 

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Enterprise Odd Couple: Plex Systems Partners with Workday

Pre-Packaging 2-Tier ERP for Manufacturers

Last week at its annual PowerPlex user conference, Plex Systems announced Plex Connect, along with several new partnerships and packaged connections. The goal of this new open integration framework is to “make it easier for manufacturers to connect people, things and applications to the Plex Manufacturing Cloud.” One of these partnerships stands out as being somewhat unique in that it is forged with another Enterprise Resource Planning (ERP) solution provider… Workday.

At first glance these two might seem like the proverbial odd couple. As another ERP vendor, Workday would appear to be a competitor. But it is not, because Workday is not a solution that is focused on the needs of manufacturers. And companies that “make things” are the only targets for Plex Systems. So if Workday isn’t for manufacturers, why would any Plex customer be interested in connecting to it? Because typically corporate headquarters doesn’t make anything, but might have sophisticated accounting requirements to support global operations. This partnership is all about delivering a pre-packaged 2-tier ERP.

Making the Case for 2-Tier ERP

Operating across a distributed environment has become a way of life for a large percentage of manufacturers today, even smaller ones. In fact 77% of all manufacturers that participated in the 2015 Mint Jutras Enterprise Solution Study had more than one operating location served by ERP (Figure 1). And 67% operate as a multi-national company. Even those with annual revenues under $25 million average just over 2 operating locations and that average grows steadily as revenues grow. This means very few companies today are able to conduct business as a single monolithic corporation.

Each operating division will have operational needs and must then feed to corporate financials for consolidation and reporting.

Figure 1: Environments Are More Distributed and Remote

Plex WDAY Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Note In Figure 1 company size is determined by annual revenue.

  • Small: annual revenues under $25 million
  • Lower-Mid: $25 million to $250 million
  • Upper-Mid: $250 million to $1 billion
  • Large: revenues over $1 billion

In years gone by all the different operating locations depicted in Figure 1 were likely to be left on their own to evaluate, select and implement a solution to run their operations. However, that scenario is quite rare today. The vast majority (90%) has established corporate standards for enterprise applications (Figure 2).

Figure 2: Have you established corporate standards for enterprise solutions?

Plex WDAY Fig 2Source: Mint Jutras 2015 Enterprise Solution Study

But this doesn’t necessarily mean a single solution runs the whole enterprise. Very often the ERP solution installed at corporate was selected for its ability to report and consolidate across multiple divisions. Very often these corporate accounting solutions (like Workday) don’t have the necessary functionality to run the operations of its divisions, especially if those divisions are manufacturing sites. In these cases, the standard solution for these manufacturing operations is a different solution – one like the Plex Manufacturing Cloud. Hence…

The Emergence of 2-tier ERP

In fact this 2-tier standard has become quite commonplace. Of those that have established corporate standards, less than half (47%) uses a single standard where all units, including corporate headquarters, use the same solution (Figure 3). At the same time, 31% have established a 2-tier standard and another 22% have a multi-tier standard. This latter category is most typical in a diversified corporation where you might see different types of businesses at the divisional level – you might have distribution warehouses or sales and service locations in addition to manufacturing sites.

Figure 3: Is this a single, two or multi-tier standard?

Plex WDAY Fig 3Source: Mint Jutras 2015 Enterprise Solution Study

It is this middle 31% that is targeted by the Plex Systems/Workday alliance, although it might work equally well in the multi-tier scenario. In fact if the non-manufacturing sites are sales and service operations, Workday itself might be the chosen standard for those divisions, eliminating the need for more than two different ERP solutions.

Plex Systems acknowledges that its solution is not the best for non-manufacturers. In fact Plex makes that point in its bold move to implement Workday for its own operations. The initial knee-jerk reaction might be, “What? They don’t sip their own champagne?” (An analogy I much prefer to eating one’s own dog food!) But while Plex knows and serves manufacturing very well, it isn’t a manufacturer. It makes software. While software companies that deliver on-premise solutions might burn CD’s, package them with documentation and ship a physical product to a customer, as a pure cloud provider, Plex sells software only as a service. The accounting for software, services and subscriptions is very different than accounting for shipping and delivering a physical product. But at the same time, this decision also underscores the fact that Plex is not afraid to make the right business decision in managing its own business.

But getting back to the 2-tier scenario, in the past we have seen solutions from SAP and Oracle dominate the corporate scene. Yet solutions like Workday, born in the cloud, are starting to chip away at the dominance of these two major players. And an alliance like this will only serve to accelerate this erosion. Very often a decision for SAP and Oracle might have been influenced by the efforts involved in integrating and rolling up financials from the distributed sites. While these have typically not been “out of the box” in the past, popular sentiment is that if you go with one of these “giants,” you will likely find systems integrators and other service partners who have done it before. That means they have a lot of experience with SAP and Oracle. You still pay for the connection, but you are at least dealing with a higher level of expertise.

With pre-packaged connectors, the need for this prior experience goes away and the expense of forging the connection drops dramatically.

Impact on Roadmap

So after hearing about this and other partnerships (with Salesforce and DemandCaster) the first question I posed to Plex was regarding the impact these might have on their own road maps. In terms of Workday, my specific concern was over enhancements planned to make its ERP more “global.”

Plex already has customers running the Plex Manufacturing Cloud from more than 20 countries, but it has let its customers essentially “pull” them into those countries and doesn’t necessarily support all the localizations and legislative regulations required in each… or all the complexities of growing multi-national companies. About a year ago Plex Enterprise Edition made its debut at PowerPlex 2014 along with an aggressive roadmap to support complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements.

In answer to my question, Plex has assured me none of these partnerships will result in taking planned innovation off the table. It will continue to invest in these globalization efforts. Similarly, other solutions such as DemandCaster will not prevent Plex from developing its own forecasting / demand and supply planning software. The alliance with Adaptive Insights will not prevent Plex from developing more robust financial planning and budgeting offerings. But I am thinking Plex doesn’t really need to compete against Salesforce for CRM.

 Conclusion

In the meantime and well into the future, Plex Connect should indeed make it easier for manufacturers to connect people, things and applications to the Plex Manufacturing Cloud. And in today’s connected, digital economy, isn’t that what it’s all about?

A Side Note: Is Workday ERP?

In the past I have posed the question about Workday: Is it ERP? Does it Matter? Many refer to Workday as ERP, but by my definition (an integrated suite of modules that provides the operational and transactional system of record of a business) an integrated finance and accounting solution that does not manage the “order” falls a bit short, But it does manage a contract, which for “talent intensive organizations” including software and Internet service companies like Plex) is equally, if not more important. Feel free to read my full analysis in the highlighted link above but for purposes of our discussion here in terms of 2-tier ERP, I am comfortable in referring to Workday as ERP.

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Plex Systems Takes a Page From Manufacturer’s Play Book

CONTINUOUS INNOVATION DRIVES ERP DEEP ON SHOP FLOOR

Continuous improvement has long been the mantra for many manufacturers. Kaizen and other formal programs like Lean, Six Sigma, and Total Quality Management (TQM) have dominated the manufacturing scene for years. But what about the world of enterprise software for manufacturing? Not so much. Many of the solution providers that serve the manufacturing sector understand the concepts, but don’t apply them to software development. Sure, these software vendors innovate, but not in a continuum, especially when it comes to broad applications like Enterprise Resource Planning (ERP). Except for one: Plex Systems. Believe it or not, Plex can and often does deliver enhancements to its Plex Manufacturing Cloud on a daily basis. Too much, you think? Not at all; its customers love it!

Why Do Consumers of ERP Expect Less?

Many consumers of ERP are conflicted over innovation and upgrades. On the one hand, when functional gaps or missing features or cumbersome processes are detected, customers demand enhancements. On the other hand, we find manufacturers unwilling and unable to actually go through the upgrade process. So the whole process becomes a Catch 22.

If these enhancements are delivered through the normal upgrade cycle, customers can find themselves waiting a long time. Major upgrades to ERP are typically delivered once every 12 to 18 months, or sometimes over a longer cycle, partly by customer request. They simply can’t accept and consume upgrades any faster. But that doesn’t mean the typical ERP client waits “just” 12 to 18 months for a requested enhancement. If your enhancement request just misses the planning phase of the cycle, you might have to wait for another cycle before it is even considered, which means you might wait two to three years for it to be delivered. And even then, it might not make the cut.

But let’s say it does and your enhancement is delivered with a major upgrade within a year (or maybe two or three). Do you jump right on the release? If you are like most of the manufacturers participating in our annual Mint Jutras Enterprise Solution Study, the answer is, “probably not.” Only 14% of manufacturers tend to be early adopters of releases (Figure 1). About a third (34%) upgrade on a regular basis but not as early adopters. This means they will likely wait for those early adopters to shake out all the bugs and for the solution provider to smooth out all the rough edges. This might take three months? Six months? Another year?

Or you might be like the 31% that are likely to skip releases. You might not get too far behind, but if you skip a release, and upgrades happen every 12 to 18 months, you won’t experience any real innovation for at least two to three years.

Figure 1: Approach to Upgrades

Fig 1Source: Mint Jutras 2015 Enterprise Solution Study

Why? Largely because upgrades can be disruptive and costly. We asked our survey respondents to stack rank five individual factors in terms of the likelihood each will keep them from upgrading when a new release is available. We used a scale of 1 (least likely) to 5 (most likely). The results are shown in Table 1. As you can see, potential disruption to the business is at the top of the list, but the rankings are very close. Your typical manufacturer understands the cost and effort of a traditional upgrade and will be reluctant to spend the time and money without expecting a significant payback.

Table 1: Ranking of factors preventing upgrades

Table 1Source: Mint Jutras 2015 Enterprise Solution Study

 As a result, although software development is typically a continuous process, the results are not delivered continuously. Most solution providers create enhancements, bundle them up, test them out and issue major upgrades periodically, hence the traditional 12 to 18 month cycle, with just some bug fixes and/or minor releases in the interim.

Plex Customers Have Come to Expect More

While this type of upgrade cycle has been generally accepted and expected by those running traditional, on-premise solutions, Plex customers have come to expect more. Perhaps they were frustrated by delays, got impatient and dissatisfied and were seeking more from their software vendor. Or perhaps they chose Plex for other reasons. Either way, they soon became spoiled by the “Plex way” of innovating.

Of course any solution provider that offers its software exclusively as a multi-tenant SaaS solution has a distinct advantage of only having to maintain a single line of code. 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 their customers’ ability to keep pace with upgrades. For every person-day they spend on innovation, they spend another multiple of that day making sure it works across various environments. The more choice they offer, the more permutations and the higher that multiple.

More and more we find vendors riding the cloud wave. They are taking on-premise solutions and moving them to the cloud and offering alternatives for deployment. Some of these moving to the cloud will be multi-tenant; others are single-tenant, delivering more of a hosting option. But even those that offer multi-tenancy will still be forced to maintain multiple versions and will be limited by their on-premise customers’ ability to keep pace with innovation. Only those that offer a multi-tenant SaaS solution exclusively can devote their entire development budget to innovation. That’s the real beauty of having (and maintaining) a single instance of the software, and nobody takes better advantage of that than Plex Systems.

The Plex Manufacturing Cloud is not the only ERP solution that is offered exclusively as multi-tenant SaaS, but it is one of a very few designed exclusively for manufacturers. And of these SaaS-only manufacturing ERP solutions, Plex’s is (by far) the most mature. But not all SaaS vendors take full advantage of the opportunity for continuous innovation. Some do offer more frequent updates and all relieve the customer of much of the burden of the upgrade process. But nobody else (that I know of) does it like Plex.

 Daily Updates – Responsibly

Plex can and often does update the solution every day. You heard (or read) that correctly: every day.

Of course Plex doesn’t pull the rug out from under its customers every day. The development team adds all new features in such a way that a customer must “opt in” to use them. Many of its customers evaluate these innovations on a periodic basis, much like a release cycle. But they are never faced with the “all or nothing” kind of scenario so common in upgrading on-premise software. If they know a valuable new feature is coming, they might jump right on it and not wait for that periodic review.

User Interface Refresh

Plex’s new, redesigned user interface (UI) is the perfect example of this. Plex is methodically updating every screen used by its users, including the navigation screens used to perform back office functions, as well as the control panels used on the shop floor. As each of these are completed, they are introduced into the live product, but the old screens and the old navigation methods are still there.

Of course Plex is only converting those functions its customers are actually using. Over time, newer and better features and functions may have replaced some of the screens, inquiries and transactions. Eventually people stop using the old functions and Plex can then get rid of them. In an on-premise environment, solution vendors have no visibility into what is actually being used and what is not used. So, once code is delivered, it tends to live on forever.

But because all customers are using a single instance of the software running in the Plex Manufacturing Cloud, Plex has full visibility into not only what is being used, but also how often it is used. While this might seem to be a bit big brother-ish to some, customers don’t seem to mind. And it puts Plex in the unique position of being able to eliminate code. In fact the development team recently deleted 30% of its existing source code. And as Jim Shepherd, Plex’s Vice President of Corporate Strategy noted, “If we couldn’t get rid of code, ours would get as big and unwieldy and ugly as everyone else’s.”

You know how good it feels when you finally clean off your desk at work, or clean out your closets at home. Think how good the software developers felt when they could clean out 30% of the code, making that much more room (figuratively) for all the new features, functions and innovation they continue to work on. And indeed the development team has been busy. Combine that with the fact that Plex perfected rapid application development processes more than a decade ago and you get a regular cadence of new features and new offerings.

Here’s an example of some of the areas they have been working on:

Investment in process manufacturing

In order to address the market sitting right outside its doors in nearby Detroit, Michigan, Plex got very good at addressing traceability. The strength of the traceability functions built for automotive discrete manufacturers have led Plex into a fair number of food and beverage and similar process-related industries. Further investment in lot management, lot attributes, lot tracing and unit of measure management will be made in 2015. That investment will also continue into the future with even more sophisticated unit of measure management, costing, yield management, recipes and pricing/promotion management, as well as further work on compliance and FDA validation.

Finite Scheduling

Plex has already released its Advanced Production (Finite) Scheduling modules, but work continues to bring attribute-based grouping (e.g. watch out for allergens!) and sequencing and sequence-dependent changeover time determination (better go from light to dark when applying coatings), and labor-driven capacity determination (knowing how many machines is not enough).

Plex Enterprise Edition

Plex Enterprise Edition is a suite of applications built to support complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements. It was first introduced at PowerPlex 2014, with finance and accounting capabilities (accounts receivable, accounts payable, general ledger and cash management). But work continues throughout 2015 on centralized sales and purchasing functionality, along with inventory work in progress. The team will then move on to enterprise manufacturing (engineering, scheduling, production) and enterprise asset management (fixed assets, treasury management and human resources).

Tech Gadgets and Automation

These are just a few examples of the types of feature/function development that has been underway at Plex. In addition, the team has also been busy experimenting with new technology. This team is led by the ultimate “gadget guys.” But this is not frivolous work. The team also “knows” manufacturing and is always in search of new ways to make manufacturers more efficient and productive. This means new ways of capturing data, automating processes and engaging with ERP both in the back office and on the shop floor. The shop floor was the prime focus of a very interesting demo the Plex team put together about a year ago, but has recently updated.

The demo a year ago was an interactive demonstration of a manufacturing process that took you from the receipt of material through to shipping of a finished product. It was, and still is, a good example of new and different ways of engaging with ERP. You see, we didn’t use a keyboard. But we did use scanners and sensors, a light curtain and yes, there was even a blue button that you might call the “easy button” that signaled an operation was complete. Never once did we go through a traditional menu structure. Each work center looked and felt a little different, and even the devices used for data capture varied, because the work being completed was different. This was a far cry from early days of ERP and confirmed my belief that the best user interface (UI) is really no UI at all.

And this year there were some new “wearables” on the (simulated) shoGoogle glassp floor, some of which were just being prototyped. Plex is participating in the new Google Glass @Work program including Google Glasses built into safety goggles. It is experimenting with smart watch and blue tooth technology and beacons that recognize when someone wearing these devices comes within range of a work center. The goal is to make smart watchdata capture as easy, automated and hands-free as possible.

Manufacturers are widely known for their pragmatism. Unlike some consumers today, they will not go out and buy the latest new gadgets just to look cool or simply because they can. These devices need to add real value Beaconand that is exactly what the Plex team is searching for in this experimental phase.

Not Slowing Down Anytime Soon

With a history that spans almost 20 years, and a product that has matured significantly, you might think innovation might be slowing down at Plex. Quite the contrary. The Plex development team has nearly doubled over the past couple of years. Even though it is already a complete manufacturing ERP solution, with particular depth in functionality in manufacturing execution (MES), there is still lots to do. Along with the wearable technology and the refreshed user experience, it is also working on a universal search capability, master production scheduling, advanced manufacturing intelligence, along with the additional process manufacturing, finite scheduling and multi-national, multi-location capabilities mentioned earlier. And much more.

As an industry analyst, it is my job to stay objective. But every once in awhile a company comes along that does something very unique. Plex’s combination of rapid application development, cloud delivery and commitment to customer satisfaction is the prefect trifecta for this uniqueness. And on top of that, Plex does it very well. Kudos to the Plex team for taking a page from the manufacturers they serve so well and delivering continuous innovation.

 

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What are you running your business with? Is it ERP?

Perhaps you’ve heard me ask the question, “Is it ERP?” about various solutions on the market. Maybe you were thinking, “Does it matter?” The answer to that question is, “Yes and no.” “No,” in that ERP, like any software category, is just that. It’s a category, a label and you shouldn’t read too much into that. “Yes,” in that the category is often misused and maligned.

While the acronym itself (short for enterprise resource planning) can be somewhat misleading, I have always been very clear on my definition of ERP:

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

The rest of the world doesn’t see it quite this clearly. Of course my definition is intentionally quite broad, but it needs to be simply because the operational and transactional needs will vary quite significantly depending on the very nature of the business. You can’t run a service business like a manufacturing or distribution business. Retailers, government and non-profits all have their own unique requirements.

This situation is also clearly exasperated by the fact that 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. Functions like performance management, talent and human capital management, etc, that used to sit squarely outside of ERP, today might sit either inside or outside that boundary. While operational accounting has long been a core competency of ERP, more robust financial management can be an integral part of ERP, or a stand-alone solution. Likewise, the footprint of solutions that have traditionally been marketed as financial and accounting solutions have expanded as well. No wonder there is so much confusion out there.

As a result, I thought it would be a good idea this year to see what people actually think they are using to run their businesses. While I have been conducting an annual ERP survey since 2006, much of the data I collect is relevant to other solution providers as well, particularly those that focus primarily on finance and accounting, with perhaps some project management and/or human resource management included. So this year I changed the name of the study to the Mint Jutras Enterprise Solution Study and added a new question at the very beginning.

Question: Which of the following best describes the software you use to manage your business?

  • Primarily enterprise level finance and accounting solutions (might include project management and/or human capital management)
  • Integrated enterprise level finance and accounting solutions supplemented with other operational applications (e.g. inventory, warehouse management, etc.)
  • An integrated suite of modules that provides a full system of record of our business (often referred to as ERP)
  • Desktop solutions such as Quicken, QuickBooks, Peachtree, etc.
  • Mostly spreadsheets and/or some low-cost or free tools (Google apps, Zoho, etc.)
  • Don’t Know

While data collection is still underway, we have collected almost 300 responses thus far and the results are quite interesting.

Note that participants checking spreadsheets and “Don’t Know” were disqualified and therefore will not be represented in any results. While those running desktop solutions qualified, only 1 participant checked this option and therefore I will only include the first three listed above in our discussion here.

During the course of the survey, participants are asked to check off all the different accounting/ERP solutions they have implemented across their entire enterprises and then asked to select one of those and answer implementation and performance questions for that specific solution. While 84% of the participants selected a solution that is clearly marketed as ERP, only 33% of this segment selected the third option above, which is reflective of the Mint Jutras definition of ERP. So they have purchased an ERP solution, but by my definition, they aren’t running ERP.

The remaining 16% selected solutions that are generally marketed as finance and accounting solutions. And yet 21% of these participants described the solution they were running as an integrated suite that provides a complete system of record of their business (i.e. ERP). So it would appear the majority of those running full ERP solutions are not making the most of what they have. And at least one in five of those running solutions primarily marketed as accounting solutions seem to have all they need to run their businesses. The full breakdown of responses is summarized in Figure 1.

Figure 1: What runs your business?

Figure 1 Blog postSource: 2015 Mint Jutras Enterprise Solution Study

These (somewhat surprising) results caused me to dive a little deeper, looking for, if not an explanation, at least a pattern. This early sample represented a pretty diverse group with the largest representation from manufacturing (41%) and service related businesses (36%). Given ERP evolved from MRP (material requirements planning), one would expect a higher adoption rate and more mature ERP implementations in manufacturers. While very few manufacturers run the solutions marketed primarily as finance and accounting solutions, 41% indicated the software running the business was primarily a finance and accounting solution. Another 26% had integrated finance and accounting solutions supplemented with other operational solutions such as inventory and warehouse management, presumably purchased from another vendor or a partner of their ERP solution provider. Again, only 33% described their implementation as full ERP. So no, manufacturers are not ahead of the pack.

I also looked at individual solution providers where I had a sample of at least 20 responses for smaller vendors or 40+ for larger ones. What segments were most likely to be running an integrated suite that provides a full system of record? The answer: Those running solutions that specifically target small to mid-size businesses. Does this mean small and mid-size businesses were more likely to describe what they were running as ERP? Not necessarily. It depends a lot on the solution provider and the solution itself.

Sixty-eight percent (68%) of those running Aptean’s solutions and 67% of those running SAP Business One described what they were running as ERP, per the definition above. Those running Acumatica’s cloud-based solution were also more likely to do so at 55%. And yet those running any of the four Microsoft Dynamics ERP solutions (AX, NAV, GP, SL), all of which target small to midsize enterprises (SMEs), were less likely, with only 28% indicating they were running a full ERP. Instead, they were more likely to report running integrated enterprise level finance and accounting solutions supplemented with other operational applications. My guess is that the partners that sold them the Dynamics solution (note: all Dynamics solutions are sold exclusively through partners) provide these other operational applications. Yet clearly these add-on’s are not so fully embedded and seamlessly integrated that they appear to simply be part of the ERP solution.

This is in stark contrast to solutions sold by Intacct partners, where I have noted previously that it is nearly impossible to distinguish where Intacct ends and the partner solution begins. As a result, 23% of Intacct customers indicated they were running an integrated suite that provides a full system of record, even though Intacct doesn’t portray its solution as ERP. It is one of those financial and accounting solution providers.

Another factor at play here is the whole concept of 2-tier ERP implementations. A full 85% of our survey respondents operate in more than one location and 69% are multi-national enterprises. This lends itself to the scenario where each operating location (division, subsidiary, business unit, etc.) may be run as a business all on its own. In fact if these units are in different countries they are also separate legal entities, requiring their own P&Ls. So you might have one system running at corporate headquarters (HQ) and other systems running the divisions.

The requirements at corporate HQ are largely financial, particularly if all orders are placed and fulfilled at the divisional level. This contributes to a larger percentage of respondents only running financials.

In days gone by these operating units might have been left to their own devices to find a solution to help them run their individual operations. Those days are long gone though. Today, 96% of our survey participants with multiple locations have established corporate standards and 64% of the time these are multi-tier standards, meaning a different ERP is used at the divisional level than at corporate. But even with a corporate financial solution in place, divisions still need some sort of finance and accounting in order to roll up to corporate. You can push the corporate financials down to the divisional level and then supplement them with other operational solutions. Or you can implement a full ERP at the divisional level and then integrate the divisional ERP with corporate financials.

This alone could be a very good reason why SAP Business One customers are more likely to be running a fully integrated suite. Of course if they are truly a small stand-alone business, they need a complete solution and probably don’t have the budget to be looking for disparate solutions that need to be integrated. Even if they are part of a large corporate enterprise, there is a pretty good chance corporate is running some version of SAP ERP. Because SAP Business One is pre-integrated with SAP ERP, the division has an integrated suite of modules providing a full system of record of the division’s business, that also happens to roll up to corporate financials.

With this as a likely scenario, you might think that the vast majority of SAP ERP customers are simply running integrated financials. They are not. Only 19% reported running primarily enterprise level finance and accounting, while 29% reported running integrated financials and other operational applications and a (relatively) impressive 52% reported running full ERP. Many assume SAP, being the 800-pound gorilla and therefore open to attack, is so complex and hard to implement that many never get beyond the basics of accounting. Yet in comparison to others, it is actually more likely to provide that full system of record.

This is not the case with Oracle, the other giant in the ERP industry. Almost half (46%) of Oracle users participating in the survey characterize their implementations as primarily accounting and only 28% describe them as ERP.

So while I would like to conclude that I found a distinct and recognizable pattern in all this data, the bottom line is that implementations vary quite significantly, particularly in comparing different solution providers. I am excited to have the beginnings of this new and extensive data set and look forward to sharing other insights as we move through the data collection and analysis phases.

Solution providers interested in collecting data from your own installed bases, feel free to contact me directly at cindy@mintjutras.com. There is still time but the window of opportunity will be closing soon!

 

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SYSPRO U.S. Provides Critical Visibility with Voyage & Container Tracking

Mobile, Cloud or On-Premises Supply Chain Management

In a world where international shipments are so commonplace, it is amazing how many global manufacturers and distributors lack visibility of goods that are in transit, often for weeks at a time. Even though the ownership of purchased goods transfers as soon as a container is closed, for most, particularly for small to medium-size businesses (SMBs), materials simply disappear into a black hole, before they (hopefully) are received from half a continent or half a world away. To solve this problem, and also add visibility to shipped products, SYSPRO U.S. has added a new Voyage & Container Tracking solution to its portfolio and made sure it is fully integrated with its enterprise resource planning (SYSPRO ERP) software and complemented with useful analytics. This is perfectly consistent with its “Einstein” market positioning favoring “simply smarter” solutions for what the mid-market customer actually needs, versus simply succumbing to industry hype.

A Real Solution for a Real Problem

Once upon a time, in the not-so-distant past, globalization was the domain of large, multi-billion dollar enterprises. Yet today, almost every company, regardless of size, trades internationally. Low cost country sources have sent even small manufacturers and distributors in search of lower cost materials and small companies themselves have become more distributed. The 2014 Mint Jutras ERP solution study found 66% of all manufacturers operate from more than one location and even small manufacturers (those with annual revenues less than $25 million) have an average of 1.6 operating sites (Figure 1). These types of changes in the business environment have brought an unprecedented level of complexity to supply chains and those supply chains extend across the globe.

Long lead times add uncertainty, which is difficult for any company to deal with, but particularly so for small to medium-size companies that have fewer resources and less clout with their customers — customers which often are very large and demanding. Yet shipment tracking, accurate determination of true landed costs and visibility into where goods are and where they are coming from, have typically been features only available in specialized software packages that are well beyond the reach of an SMB.

Figure 1: Even small companies operate globally

SYSPRO fig 1Source: Mint Jutras 2014 ERP Solution Study

Note: Size is based on annual revenue

SYSPRO U.S. turned to its customer base to help define and design the features and functions required to close this gap in visibility and then it spent the last two years refining it with the assistance of one company in particular: Wormser Corporation, a privately held cosmetics manufacturer and distributor based in Englewood, New Jersey. Wormser’s biggest challenge was in tracking shipments from its manufacturing location in Shanghai to its 40 warehouses in the United States.

Three Major Components

The embedded features of SYSPRO U.S.’s new Voyage & Container Tracking solution are delivered through three major components.

  1. Release Matrix: This component identifies and manages items that are available for shipment through a multi-part release operation. Items included in both purchase orders and sales orders can be combined in a single release. Users are provided visibility into what is available and can adjust quantities and view expected departure and delivery dates.
  2. Container Management: This component is used to determine which products or parts will travel in which containers. It provides the flexibility to consolidate releases from multiple orders into a single container or split a single order across multiple containers. While today the solution does not explicitly manage the capacity of each container, it does provide visibility into container usage. SYSPRO U.S. plans to enhance this capability in the future to include optimization of containers. Through the assignment of goods to these containers, the SYSPRO customer gets added visibility and predictability of departure and arrival dates as well as source and destination ports.
  3. Disposition Management: When a container reaches its destination, this component takes over. Each container may be processed separately or all containers on a voyage can be handled as a single shipment. Upon arrival at a port, the goods in the containers may be placed on quarantine hold or transferred to another segment of the journey (e.g. from ocean vessel to truck) for delivery to the next or final destination. This component performs the inventory and fiscal transactions necessary and provides more visibility. Charts and graphs are useful in analyzing elapsed time between ports, management of the number of containers shipped and landed costs.

These charts are just some of the analytical tools provided. SYSPRO U.S.’s survey of a sample of its own customer base convinced the solution provider that the vast majority of its customers found messaging within the enterprise software industry about “big data” and analytics either difficult to understand or only somewhat understandable.

Yet the lack of understanding does not mean there is no value in these types of analytical tools. It simply means small to mid-size manufacturers and distributors need help in understanding how to leverage these tools. And it also means they will only be receptive to learning more if the tools solve a very real and practical problem. They are not interested in elegant technical solutions in search of problems. They have plenty of problems of their own to solve.

Potential Benefits

The potential benefits of SYSPRO U.S.’s new solution should be very appealing to these pragmatic manufacturers and distributors. The potential benefits include:

  • The ability to track shipments both at an order line level, as well as a summary level. This tracking data will also be available for analysis for both strategic and operational decisions.
  • Better visibility to inventory, even with long lead-time items. This visibility will be helpful in improving full, on time delivery.
  • The ability to analyze performance by product origin through the recording of departure and arrival cities and individual ports.
  • Better vendor performance management through more detailed measurement of promised and actual shipments.
  • Full determination of not just material costs, but full landed cost, whether free on board (FOB) or not.
  • Improved communication and collaboration between departments, locations, and vendors, along with fewer mistakes.
  • A single source of the truth. Because of the seamless integration with SYSPRO ERP, all shipping and financial data is combined in a single source of data.

Proof Positive: Wormser Corporation

With six locations around the world, Wormser Corporation’s biggest challenge was in tracking shipments from its manufacturing location in Shanghai to its 40 US-based warehouses. All these different locations were using different systems and ultimately Wormser turned to SYSPRO for a full and integrated solution for its global operations. SYSPRO ERP was a great fit for daily operations, but Wormser approached SYSPRO U.S. for a custom tracking module for overseas inventory tracking. This was the genesis of the voyage and container tracking system now being released as a standard offering.

In October 2012, Wormser’s six international locations (New Jersey, California, Texas, England, Germany and China) went live with SYSPRO ERP and the newly- developed intercompany modules. All supply chain transactions between entities were automated. In addition Wormser tracks partial and full container shipments from vendors.

By collecting all this data, from all these locations, as well as from vendors, Wormser is able to produce analytical reports and graphs that aid in comprehensively managing a complete supply chain. Analysis can be done at an order line level, all the way up to and including location and the full company. Vendor performance is also tracked and Wormser now has data for strategic, as well as operational decisions.

Summary and Key Take-Aways

This new Voyage & Container Tracking solution provides an enormous opportunity for many of SYSPRO U.S.’s customers. Any that deal with long lead times, complex supply chains and/or international, containerized shipments can potentially derive a lot of value from this newest solution. And as a SYSPRO U.S. offering, it is both affordable and pre-integrated to the SYSPRO ERP solution being used to manage back and front offices across the installed base of SYSPRO U.S. customers around the world. By infusing analytics into the solution, it becomes a potentially powerful tool for decision-making – both from an operational and a strategic decision-making perspective. With this new option, SYSPRO U.S. companies faced with real supply chain challenges, particularly those with multiple locations, can gain new efficiencies with real solutions.

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