microservices architecture

The Secret Benefits of ERP You Can’t Afford to Ignore

                                                                                    April 2020

And the Key to Unlocking Them

Is the ERP that is running your business able to help you effectively achieve your goals in the current market? Does it take advantage of the kind of advanced technology that we have all come to rely on in our personal lives? Is it agile and flexible? Does it adapt easily to our rapidly changing world? Does it provide the level of connectivity needed to successfully operate in today’s global, digital economy? Or are you running a solution that may have once been state of the art, the best of the best available at the time, but is now stuck – stuck on an older release because of customizations that built barriers to innovation? Or stuck because you simply can’t justify the cost and effort of upgrading for the limited business benefit, because you’ll still be constrained by older technology?

If you are indeed stuck, your best path forward is most likely replacing it. But for decades ERP replacement was likened to brain surgery. It was reserved for dire cases only. “Rip and replace” was to be avoided at all costs. Today these perceptions are just as outdated as the solutions to which they apply. Yes, early ERP solutions were rigid and inflexible, limited in functionality, hard to install and implement and even harder to use. Innovation was painfully slow due to rigid architectures and older technology.

You can’t really blame those early solutions or the software companies that created them. The kind of technology needed for flexibility, ease of use and agility simply didn’t exist, making those conclusions justified. Why go through all the blood, sweat and tears, not to mention the cost, of implementing a newer solution just to wind up right back where you started?

But the world, and your business continued to change, and so have newer, next generation ERP solutions. Solutions now are far more flexible and technology-enabled, provide many more features and functions, are easier to install, easier to implement and easier to use. They bring far more benefits than ever before, but for those with lingering (mis)perceptions about ERP today, they remain hidden. And in today’s fast-moving, global, digital economy, you simply can’t afford to ignore them. The key to unlocking these secret benefits is in understanding the potential and then mapping out a plan to realize them.

Advanced Technology Holds the Key

What makes today’s next generation ERP so different? A variety of different type of advanced technologies can be embedded in enterprise applications today. It is through these kinds of embedded technologies that new ERP systems provide additional value. Of course, some vendors do a better job than others in leveraging them, and hence provide more value than others. This is why I’ve included a section later that provides some insight on how to best evaluate ERP solutions in order to ensure success. In the meantime, Table 1 presents some results from my 2019 Enterprise Solution Study, on the perceived value of several of these technologies. Note this study collected feedback from 464 survey respondents from companies of all shapes and sizes.

Table 1: Perceived Value of Advanced Technologies

Source: Mint Jutras 2019 Enterprise Solution Study

While a growing percentage of respondents perceive these technologies as providing strong value, on average (across all) 30% are unsure of the value. Essentially, they are saying, “Show me.” More than one in five (22%) see little or no value and another 10% simply don’t know. And therefore, it falls to industry experts and the vendors themselves to educate their audiences in order to prove the value and unlock these secrets. Let’s start that process by exploring a few of these.

Platforms and Architecture

Development platforms and microservices architectures, on which applications are built, provide the perfect example of those secret benefits. For the reader with a technical background, a microservice architecture is defined (by Wikipedia) as an architectural style that structures an application as a collection of loosely coupled services. For those nontechnical readers, think of it as constructing a solution from a set of Lego building blocks.

Think about how you build a structure from Legos. Each Lego block is made of the same kind of material and is attached (connected) to the other Lego blocks the same way. In many ways they are interchangeable. But by choosing different colors and sizes, and connecting them with a different design, you can make a structure that is very unique. And once constructed, if you want to change it, decoupling some of the blocks and replacing them doesn’t destroy the parts that are not affected. There is far less disruption introduced than if you had constructed it with a hammer and nails.

These platforms and technologies provide a level of agility, configurability and extensibility to today’s applications to help us respond to change.

Cloud and SaaS

We see more interest in cloud enablement and Software as a Service (SaaS). Indeed, whether you run a solution on your own premises or in a private or public cloud, the ability to access anytime, from anywhere is a significant advantage and cloud-enablement opens the door for the kind of connectivity you need as a full and active participant in the digital economy. Yet still, last year only half of our survey participants perceive it as bringing strong value. We suspect that if we were to ask this question today, given the current need for distancing and remote work, this might change.

But there are other benefits to moving to the cloud in general and SaaS in particular. We see subscriptions to software rapidly replacing the traditional license. When you license a copy of the software you take on the responsibility for maintenance and upgrades. This is especially important in light of the fact that when asked to select the top three challenges in achieving maximum value from ERP, “cost and disruption of upgrades prevent us from innovating” was at the very top of the list, selected by 40% of our respondents. With a SaaS solution, the solution provider assumes that responsibility and does the heavy lifting for you.

Artificial Intelligence

Technologies like machine learning, natural language processing and other forms of artificial intelligence have become quite prevalent in consumer technology (think Siri and Alexa, or GPS that learns your favorite route). Now is the time to bring them into the enterprise, much like they were insinuated into our personal lives – by adding value and embedding them.

Apple customers didn’t demand the ability to converse with their mobile devices. Apple just delivered it, not as an option and certainly not without adding to the cost. But they didn’t charge extra for it. Other device manufacturers followed suit. Pretty soon virtual assistants became commonplace features. And people got hooked. It was only after this secret was unlocked that people willingly went out and bought stand-alone devices like the Amazon Echo Dot and Google Home.

Make no mistake – the same thing is happening with applications for the enterprise. Modern platforms add a level of configurability and extensibility that adds agility needed to keep pace with the unprecedented pace of change in technology and business. Cloud and SaaS add speed and contribute to affordability. Pretty soon all sorts of artificial intelligence technologies will be generally available for the enterprise, but you won’t be able to take advantage of them if you are still stuck on old legacy solutions.

Automation

Robotic Process Automation (RPA), as the name implies, is all about automating routine tasks in order to free up time available to perform tasks which require more strategic thought and therefore contribute more value to your business. For decades ERP has claimed to streamline and automate these processes, but the term “automate” was used quite loosely, to say the least. Today’s technologies truly enable these tasks to be performed with little or no manual effort. Automating the filing of travel expenses, reconciling data for a month or year-end close, three-way matching and applying cash to outstanding invoices are all examples of routine tasks that can be largely automated, requiring manual intervention only when exceptions are detected.

And of course, the more intelligence you can add to these automated processes, the fewer the number of exceptions that require manual intervention. Embedding artificial intelligence and machine learning enables RPA to better detect anomalies and prevent errors. With these added capabilities, the more they are used and the more data that is collected, the more they continue to learn, adding more intelligence over time. Today’s “intelligent ERP” solutions are nothing like legacy applications of yesteryear.

Advanced Analytics

The addition of advanced analytics, often in the form of predictive or cognitive analytics, is another way to make ERP smarter. Early ERP solutions were notorious for being far easier to get data into than information out of. You had to know exactly where to look and how to get there if you had any hope at all of getting answers to business questions. And you had to ask all the questions because the solutions didn’t offer up much to notify you of issues.

That has all changed with new next generation solutions. Today decision makers are often greeted with role-based, personalized dashboards with data presented in charts, graphs and other visually appealing and meaningful ways. These dashboards become their portal, a gateway so to speak, to all the data previously hidden in applications. They get alerts and notifications on those dashboards and on their mobile devices. Not only have user interfaces become more intuitive, making systems easier to use, some have even learned to “listen” and “speak.”

All next generation solutions today do a better job of presenting data to you. But data driven decision-making requires more than just reporting. Predefined reports help you answer relatively static questions like: How much did I sell by customer type or region? Analytics present the bigger picture and can help you figure out what questions to ask like: Where and how will I have the most success in regaining and /or growing revenue? In your quest to answer that you might ask: Are all sales down, or only by region or customer type or sales rep or product? This might take several iterations and the exact path you will take in your questioning won’t be apparent until you start to drill down.

Smarter analytics (like predictive and cognitive analytics) can spot patterns that produce fewer sales. Smarter analytics can do predictive scoring and modeling to identify those patterns early and exploit them for guided decision- making. The smartest solutions will then continue to learn, getting better at spotting issues earlier, hopefully in time for you to course correct.

Tips For Your Evaluation

Looking for a new ERP solution is not something you do every day. If it has been awhile since you have been through this exercise, take note: A lot has changed.

Whereas fit and functionality once drove most decisions, basic and even not so basic features and functions are table stakes today. While an 80% fit used to be acceptable, today’s flexible and technology-enabled solutions should get you much closer to 100% than ever before, without the need for invasive customization.  Of course, you still need to perform due diligence and confirm robust functionality, including industry-specific features and functions, but if you haven’t looked around for awhile, expect to be pleasantly surprised.

Yet while features and functions are indeed important, there is danger in making a decision solely based on what you need today, because it might not be what or all that you need in the future. Last year my Enterprise Solution Study found 90% of companies believe they face some level of risk in their businesses and/or industries being disrupted by new innovative products, new ways of selling or pricing existing products or services, entirely new business models, or some combination of all of the above. And don’t forget all the traditional forms of disruption like expansion, reorganizations and regulatory issues. All this disruption can have a cascading impact on business application requirements, making agility – the ability to easily innovate, evolve and change – even more important than current functionality. For that you need the right approach to innovation and the right architecture and platform to support it.

Also equally important today is the whole user experience, including easy navigation, visual appearance and personalization. And don’t forget integration capabilities and the quality of built in reporting and analytics. Any evaluation today requires you to raise the bar in terms of your search.

So…Where do you Start?

The answer to that question may be closer to home than you think. Just because you are not running a next generation ERP, enabled with the latest and greatest technology, doesn’t necessarily mean your current ERP solution provider hasn’t stepped out ahead of you.

SAP might be the perfect example of this. A longtime leader in the market, SAP is perhaps one of the very few, if not the only “household name” in ERP. However, many of its customers have yet to move to its latest, most technically advanced product, SAP S/4HANA. While SAP also has products that target the small to midsize market (SAP Business One and SAP Business ByDesign), it is also the incumbent in many very large multi-national enterprises that have invested heavily in predecessors to S/4HANA. And if these solutions date back far enough, chances are they have been heavily customized. Without the advantage of platforms and architectures available today, any kind of modification or invasive customizations created barriers to moving forward. And therefore, the move to S/4HANA is certainly no simple migration.

However, if you are currently running your business on an outdated solution, whether it is an older version of SAP’s ERP or a legacy solution from any vendor, simply migrating to a newer, more technology-enabled system means you will drag along decisions that were made when ERP was far less feature rich, technology enabled and flexible. You shouldn’t be looking to recreate what you are doing today, but instead automating, improving efficiency and productivity, providing added visibility and giving yourself the ability to make more data-driven, strategic decisions. You should also look for a return on your investment (ROI) in terms are real cost savings and/or the generation of increased revenue. For this, you need to treat it like a re-implementation, with all the careful planning and commitment that implies.

Not sure where to look for this kind of ROI? I would strongly encourage you to examine these real-world SAP Success Stories.

Conclusion and Recommendations

If you are currently running an ERP solution that you cannot legitimately call modern, intelligent or next generation, you might still be viewing its replacement like brain surgery. I prefer to treat it more like joint replacement. You suffer with that bum knee or hip until you can’t stand the pain any longer, or you simply can’t function properly. Many ERP implementations today suffer from pain, and prevent you from being flexible and able to do what they need to do.

Whether you view ERP as brain surgery or joint replacement, there is no such thing as non-invasive surgery. It can and should have a serious impact on your business, but hopefully in a positive way.

Here are a few recommendations for a successful ERP journey:

  • Don’t wait until the patient is critical. Making a selection and running an implementation project when the business is under duress does not create an atmosphere of careful consideration, planning and execution. You will be tempted to take shortcuts that you may later regret.
  • Need it but can’t afford it? Consider the potential cost savings. Most ERP solutions pay for themselves in less than two years. If capital funds are not available to support the project, consider SaaS deployment with less up-front cost.
  • Set goals and measure. Before embarking on your ERP project, decide which metrics will measure success. Establish a base line, set goals and measure progress against those goals. When you reach them, set another goal. Continue to measure and continue to reap more benefits.

An ERP implementation is not easy. Just like surgery, there will be some “recovery” time. But that doesn’t mean your business stops during that recovery period. It just means you need to take extra care to insure a full recovery, with the result being a healthy business that is able to function better than ever.

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Plex Systems Delivers Flexible Manufacturing Execution Suite

Available Stand-Alone or Fully Embedded within Plex ERP

Late last year (November 2019), Plex Systems announced its manufacturing operations capabilities were available as a best-of-breed, shop floor-specific offering called the Plex Manufacturing Execution Suite (Plex MES). This cloud-based suite is designed to satisfy a full spectrum of manufacturing needs from MES to manufacturing operations management (MOM). While MES capabilities are not new to the Plex solution, this is a departure from the past when those capabilities were always deeply embedded within its Enterprise Resource Planning (ERP) suite. Plex MES can now stand alone, alongside any ERP.

Since 2001, Plex Systems has been dedicated to serving the needs of manufacturers (originally targeting small to mid-size companies and more recently serving larger enterprise organizations), not only in the back offices, but also deep down into the shop floor. Its solution reaches well beyond the typical features and functions of ERP and includes strength in quality, inventory and production management. In the past, some industry observers and competitors made the assumption that many Plex customers simply used Plex as a point solution. That assumption was (and is) just plain wrong.

A good representative sample of Plex customers has been participating in my annual Enterprise Solution Studies for many years. Over the years I have collected data on completeness of solution and employee engagement. Year after year, Plex customers tend to purchase and deploy a more complete solution than the typical manufacturer, and the percentage of employees that use the Plex Manufacturing Cloud (ERP) on a regular basis far exceeds the norm – the average over the past five years was 77%.

That begs the question: If Plex has been successful providing a complete suite, why carve MES out now? Does this reflect a change in philosophy or purpose? I don’t believe so. I think it is more reflective of the changing times and the needs of today’s global, digital economy. For those prospects that fit the profile of a current Plex customer, I don’t think a lot will change. They will continue to reap the rewards of a complete solution. But it allows Plex to satisfy the needs of more manufacturers now, not just when (and if) they ever get around to replacing underperforming ERP solutions. And who knows… perhaps a little (or a lot) of added value might just provide enough incentive to get rid of those old solutions that might be holding them back.

Changing Times

What kinds of changes are we talking about? First, the Internet has changed the world. It has leveled the playing field, bringing unprecedented opportunity to all manufacturers, but it has also significantly increased the risk of disruption and the need for speed. The accelerating pace of business only serves to increase the need for visibility. And yet, even today, the shop floor remains a black hole. While basic capabilities of ERP help with planning production and procuring materials, once material is issued to the shop floor, visibility is  quite often lost.

Larger companies struggle with this when their corporate ERP solutions, chosen for their financial capabilities (think multi-company consolidation), can’t adequately support their (manufacturing) operations. Small to mid-size manufacturers are often saddled with legacy solutions that might have once been “state of the art,” but now simply don’t have the technology needed to provide the connectivity and agility required. Can you significantly improve all of the above, but especially this visibility, without a wholesale replacement of ERP?

The answer is yes, and Plex MES is one way to do it. But is the market ready? To answer this question, we need to re-examine a debate that has been waged throughout the world of enterprise applications for decades: choosing an integrated suite or “Best of Breed” approach. Many ERP vendors have been preaching the benefits of a complete, end-to-end solution and arguing against the proliferation of disparate applications for almost as many decades. This is exactly what Plex has been delivering, but Plex is also changing with the times.

To get a better sense of preferences today, we asked the survey participants in our 2019 Enterprise Solution Study to denote their preference for a “Suite in a Box” – a complete end-to-end solution that is pre-integrated and ready right “out of the box,” or a more “Best of Breed” approach with a strong core, coupled with the ability to purchase or develop additional functionality and easily connect it back to the core. We recognize the choice is not always so cut and dried, and therefore added some options that are more of a mix but leaning in one direction or the other. Best of Breed was preferred more than 2 to 1 over a Suite in a Box (Figure 1).

Figure 1: Which approach is most appealing to you?

Source: Mint Jutras 2019 Enterprise Solution Study

We combined these results with follow up discussions with many manufacturing companies. While most are interested in a fully integrated, fully functional solution, they also want the freedom and flexibility to implement incrementally, in their own determined sequence. They want the ability to attack their most pressing needs, without creating a nightmare of disparate and disconnected solutions. In other words, they want to have their cake and eat it too.

We find many articulate their desire as a “Best of Breed” approach because they equate the suite to a monolithic architecture and an “all or nothing” kind of decision. In some ways that is true, but not entirely so. Most any ERP solution is comprised of modules (e.g. general ledger, accounts payable, inventory management, purchasing, order management, shop floor control, etc.) and certainly some are optional. There is always a preferred logical sequence to implementation because of dependencies in the data. Foundational data like charts of accounts, customers and part or product masters must be established early. But once the foundation is built each company is free to decide what comes next and how far to go. This is certainly the case with Plex ERP customers. Most go live when they have the basics established, but then have further steps planned.

But with a monolithic architecture few, if any of the modules are designed to stand alone. Sure, you can just implement general ledger, or inventory management perhaps, but you can’t just implement the MES that is built into ERP. Or the Quality Management System (QMS). Which is one of the primary reasons why Plex Systems is actively engaged in decomposing its monolithic solution and reconstructing it as loosely coupled components. This represents the first fruit of that labor.

Development platforms and microservices architectures are key to this decomposition. For the reader with a technical background, a microservices architecture is defined as an architectural style that structures an application as a collection of loosely coupled services. This is the process of decomposition to which Plex refers in its roadmap. For those nontechnical readers, think of it as constructing a solution from a set of Lego building blocks. Purists hate this analogy, and yes, it is an over-simplification. But it is an effective analogy that resonates with most business users that don’t have the interest or inclination to dive deep in technical jargon.

Think about how you build a structure from Legos. Each Lego block is made of the same kind of material and is attached (connected) to the other Lego blocks the same way. In many ways they are interchangeable. But by choosing different colors and sizes, and connecting them with a different design, you can make a structure that is very unique. And once constructed, if you want to change it, decoupling some of the blocks and replacing them doesn’t destroy the parts that are not affected. There is far less disruption introduced than if you had constructed it with a hammer, timber and nails.

Plex is actively engaged in developing this type of platform and has already successfully de-coupled MES, but with an eye on integration capabilities. Importing of data and/or access to data from external systems is designed into the architecture. Plus, it is delivering value through other associated technologies, starting with the Industrial Internet of Things (IIoT).

Plex’s customers aren’t asking Plex to “decompose” its full suite, but enterprise customers that operate Plex in some of their divisions, while also running other “corporate” solutions such as SAP and Workday, see the benefit of being able to insert (Plex’s) MES in other divisions not currently running Plex.

Other Plex prospects are also in the midst of a transition to cloud solutions. This may mean a complete shift, starting with the migration or replacement of an on-premise ERP solution. Or it may mean a more gradual shift, often leaving in place on-premise ERP solutions and surrounding them with cloud-based added apps. Offering MES as a stand-alone solution falls into this latter category, allowing those running on legacy solutions to take an incremental step into the cloud, perhaps leaving on-premise ERP in place (for now).

Summary and Conclusion

All this potential for change and disruption, shifting priorities and technology innovation makes the foundational work Plex is doing invaluable. And so are the new technologies it is introducing to its solution. If you are a small to mid-size manufacturer today, or perhaps an operating division of a large corporate enterprise and you don’t have the operational visibility you want or need to compete effectively today, Plex MES may just be your ticket to a whole new view. And it also may be a good first step in becoming a connected and agile manufacturer.

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Introducing QAD Adaptive Applications

Adaptive ERP and More, all built on the QAD Enterprise Platform

QAD Adaptive Applications is a portfolio of flexible solutions for manufacturers, with QAD Adaptive ERP at its core. Founded in 1979 by Pamela Lopker, QAD has always set out to provide an integrated system, laser focused on manufacturing. That focus has never wavered, but over time the underlying technology and the functional footprint have evolved. Just as Material Requirements Planning (MRP) evolved into Enterprise Resource Planning (ERP) for manufacturing, QAD’s solutions have also grown and matured. Even as disruptive technology is killing off older companies, QAD is still growing strong. But the leadership is smart enough to recognize, “What got us to here won’t get us to where we are going.”

For years now the company has been committed to the Effective Enterprise, defined as “every business process running at peak efficiency and perfectly aligned to the company’s strategic goals.” QAD remains just as committed as ever to this goal, but now adds the ability to adapt. In the words of CEO Anton Chilton, “We need the Adaptive Enterprise to sense – plan – act. For this you need a different kind of technology.”

The journey that led to this different kind of technology began at a pivotal point in 2013 when QAD mapped out what it wanted to achieve:

  • full functionality operating in the cloud
  • easy extendability with no or low code
  • modular upgrades without redoing extensions
  • Internet of Things (IoT) support
  • real-time analytics
  • a powerful, web-based user experience

This realization led to the launch of a multi-phased internal project, called the Channel Islands Initiative. By 2018, what started out as a user experience initiative had been been transformed into an enterprise platform. The result: a re-architected underlying application infrastructure, a fresh set of RESTful application programming interfaces (APIs), and a new future-proofed user interface (UI), including the framework for connecting devices.

While features and functions are still important today – actually more important than ever – the secret to “adaptive” applications lies in the QAD Enterprise Platform.

Click here to read the full report.

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SAP Business ByDesign: SAP’s Best-kept Secret

It has been almost 10 years since SAP Business ByDesign was first introduced. This enterprise resource planning (ERP) solution has always and only been offered as software as a service (SaaS). It was born in the cloud and launched in September 2007 with great fanfare. This came at a time when SaaS ERP solutions were still quite rare and just beginning to gain acceptance. Since then it has been deployed in more than 3,600 companies in 109 countries. And yet while customers seem very happy with their choice of solutions, in many ways SAP Business ByDesign is the Rodney Dangerfield of ERP – it just doesn’t seem to get any respect. While some of its most direct competitors would be thrilled with the level of success it has achieved, somehow pundits and some industry observers just won’t give SAP a break on the ByDesign front. Rumors of its death have surfaced periodically, and yet it lives on, but quietly. Perhaps that “quiet” is to blame for the apparent lack of respect. Perhaps it is time for SAP to raise the volume and build trust in the market, beyond its customer ranks.

The Evolution of SAP Business ByDesign

Before SAP Business ByDesign was first introduced, SAP already had two ERP products and deep market penetration. SAP ERP (which has gone through its own evolution and several different names) targeted the large (and very large) enterprise, while SAP Business One was aimed at small to mid-size businesses (SMBs). There was (is) also SAP Business All-in-One, but in reality that was never a separate product, but rather SAP ERP packaged with “best practices” aimed at simplifying the (large enterprise) solution for mid-size businesses in specific industries.

In order to offer a SaaS solution, SAP could have taken a few different paths, including moving either of these products to the cloud. SAP ERP was the more robust solution, but to come down market, it would have had to shed some of that complexity or be overkill for an SMB or even for a subsidiary or division of a large enterprise.

Ultimately, starting over allowed SAP to architect the solution specifically for the cloud, drawing on acquired and organically developed leading edge infrastructure. And even more importantly, SAP was able to draw on the thousands of person-years of experience accumulated by its staff in addressing the needs of the large enterprise. After all, the needs of mid-size companies are not all that different from the needs of their larger counterparts. But they don’t have the deep pockets of a large enterprise and can’t afford the time it takes to wade through the complexities that had evolved with the large enterprise solution. The initial goal of SAP Business ByDesign was to simplify for the mid-market, while also delivering a 100% cloud-based solution, a clear differentiator at the time.

Both of those goals were achieved early on in its life, but that proved not to be enough. The earliest version of SAP Business ByDesign was a single-tenant solution. While the first charter customers were perfectly happy with this choice, SAP was not. Single tenancy proved to be an obstacle to the profitability needed to sustain a level of aggressive development of both the software and the market. This resulted in the need to re-architect the product, causing SAP to go quiet as it developed this new architecture.

The re-architected SAP Business ByDesign became the platform of choice for development of all cloud offerings at SAP – for a time. But then came the acquisition of SuccessFactors and the accompanying infusion of “cloud DNA”. All of a sudden the ByDesign platform wasn’t important. The powers that be at the time (SapphireNow May 2012) said, “Customers don’t care about platforms. They only care about beautiful applications.”

Then came Sapphire Madrid (November 2012) and there was a new platform in town: The HANA platform. It was decreed that SAP Business ByDesign must now run on HANA, SAP’s “game changing” in-memory database and the basis for this cloud platform. From a database perspective, SAP Business ByDesign gained little from this since it already had in-memory powers built in. The real benefit would come later in conforming to SAP standards and therefore benefiting from technology being developed by other groups (under other budgets). And thus another quiet time ensued as the development team was (again) working under the covers.

What’s Next? A 3-Pronged Strategy

Now that the heavy lifting has been done in terms of re-architecting for the HANA platform, it’s time to kick things into high gear. So, what’s next? SAP has a three-pronged strategy for SAP Business ByDesign:

  • Deliver best in class innovation
  • Drive meaningful demand
  • Develop successful partnerships

Sounds simple, but then the most successful strategies usually are. Interestingly enough, while it was the shifts in platform that kept the lid on SAP Business ByDesign in the past, Mint Jutras believes it will be the platform that could potentially blow the lid off, or at least provide a stronger voice in the future. And the first part of the strategy (best in class innovation) is likely to play a very meaningful role in enabling the other two.

Delivering best in class innovation

Innovation encompasses both technical strength and functionality. The underlying platform brings the technical muscle. But yes, functionality is also still important, and SAP is setting about enhancing the functionality built in to SAP ByDesign, specifically for the core verticals where it has enjoyed the most success. While it has been sold into 29 different industries, its strongest presence is in professional service organizations, wholesale distribution, high tech and consumer products, industrial machinery and components (IM&C), the public sector and higher education. We expect to see the team place more focus on manufacturing and production in the coming months as well.

But SAP will choose where to invest within these industries carefully in order to fill gaps in the market. Higher education provides a good example. SAP has chosen not to invest in student management or student loans, simply because those needs are already well addressed by other solutions. The focus here instead will be on integration.

But integration swings two ways. Solutions for student management or loans are most likely to come from existing or potential partners. But SAP will also be integrating SAP Business ByDesign with apps and tools from its own portfolio. Some of the apps fall into the category of what SAP calls its own “best of breed line of business (LOB)” applications. These include SuccessFactors Employee Central for employee management and Concur for expense management and the Ariba supplier network. It will also take advantage of the business intelligence tools from the Business Objects side of the house and layer analytics on top of SAP Business ByDesign.

The user experience (UX) provides a good example of how the SAP Business ByDesign team is now able to leverage innovation developed by other SAP teams – one of the advantages of the prior work done “under the covers.” The team was able to use the underlying UX libraries created by the teams developing the SAP Fiori apps for SAP ERP. SAP Business ByDesign doesn’t have to develop any style guides. They simply use those developed by the Fiori team. This was how the SAP Business ByDesign team was able to completely renovate its user interface from Silverlight to HTML5 quickly.

The conversion to the HANA platform is SAP Business ByDesign’s ticket to other services as well, services that lead to more features and functions. Like invoice as a service – the ability to take a picture of a document and turn it into an invoice with no optical character recognition (OCR) software required. To the business user, this conversion appears to be magic. The HANA platform is the pixie dust sprinkled on (or rather under) SAP Business ByDesign that makes the magic happen.

And the other advantage of the HANA pixie dust is the dramatic simplification of the data model. How is that possible? Doesn’t the operational and transactional system of record of your business require the same level of complexity, perhaps even more complexity, as even the smallest companies deal in global markets and a digital economy? The simple answer is, “No.”

Think about how and why the data in systems has become more complex. A single transaction needs to capture essentially the same pieces of data it always did. Getting this kind of transactional data into ERP has always been fairly easy. Getting insights, answers and decisions out? Not so easy. Just sorting through all the raw transactional data each and every time you had a question simply took too long, even with simple questions like, “How much inventory do I have?” You couldn’t very well add up all the stock going in and out since the beginning of time. It would simply take too long.

So you had to anticipate what you would need up front and address those needs by adding aggregates (totals). But a single aggregate wasn’t enough. Over time you learned you needed to know the total receipts and issues in a given month. And having monthly totals led you to ask for quarterly and annual totals. You anticipated that and added those aggregates in. It works for a while, but then you find you need those totals by country or region or business unit. But you didn’t anticipate that, so you can’t answer that question without long processing times (to find and add up the transactions), or an invasive and disruptive change to the system. And what happens when you reorganize territories or business units?

The speed of HANA now allows you to eliminate many of those aggregates. For very complex join operations it still makes sense for SAP Business ByDesign to pre-calculate rather than re-calculate each time (and it does). But why bother to keep track of simple transactional data month-to-date, quarter-to-date, year-to-date, by country, region or business unit, when in the blink of an eye you could add it all up? And if all of a sudden you need to slice and dice the data a different way? No problem. And think of the amount of code no longer needed just to maintain those totals. That is development time that can now be spent providing real and impactful innovation. A simplified data model leads to added agility in the solution, which translates into added agility in your business.

The Value of Agility

We live in disruptive times. The 2016 Mint Jutras Enterprise Solution Study found 88% of companies believe they face some level of risk in their businesses and/or industries being disrupted by new innovative products, new ways of selling or pricing existing products or services, entirely new business models, or some combination of all of the above. And then of course there are still the more traditional disruptive factors like expansion and growth, organizational restructuring and regulatory changes, just to name a few. All this disruption can have a cascading impact on business application requirements, making agility – the ability to easily innovate, evolve and change – even more important than current functionality.

Our 2017 Enterprise Solution Study confirmed many solution providers have increased the pace and volume of upgrades (Figure 1).

Figure 1: How has the pace of innovation delivered changed?

Source: Mint Jutras 2017 Enterprise Solution Study

But Mint Jutras knows of no other solution provider other than SAP that has gone down the path of removing aggregates to simplify the data model and the associated code – certainly not to this extent.

Driving Meaningful Demand

So will this innovation immediately drive meaningful demand? Not necessarily and not if SAP remains quiet. It must raise the volume with new and different ways of marketing the solution, new ways that are reflective of how searches for new software are conducted today. Like other functions in any organization today, marketing must go through a digital transformation.

The SAP Business ByDesign team is responding by building out a Digital Demand Generation Engine (DDE). They understand people don’t respond to the same efforts that used to work. They know the majority of B2B potential buyers conduct research outside of the normal 9-to-5 workday. Search engine optimization (SEO) is critical. Does SAP Business ByDesign even show up in online searches? And what happens when it does? The speed with which SAP responds and acts on any inquiries will have a direct impact on whether it is even invited to the party. The goal is to respond immediately 24/7.

This of course, will have a significant impact on its success in the third prong of its strategy. By developing a “virtual agency” that delivers all components of a campaign (emails, landing pages, supporting materials for telemarketing and social media), SAP can provide real (and much needed) marketing support to its partners.

Developing Successful Partnerships

Much of SAP Business ByDesign’s early success was achieved through direct sales efforts. But that has changed. In 2016 partners wrote 70% of SAP Business ByDesign contracts. Indeed it would appear the platform has continued to bolster this transition, as evidenced by the 2,641 partner-built add-ons available today.

This is necessary in order to get to the next level, and if successful could lead to explosive growth. A partner strategy is at the very root of SAP’s prior success in the SMB market with SAP Business One. That means building a successful indirect channel. It may indeed tap into the existing SAP Business One channel, which has grown that installed based to over 55,000 customers, supporting over a million users. Or it could recruit from its competitors. Either way, SAP plans to double the SAP Business ByDesign partner capacity in the next year.

ConClusions

It’s about time for SAP Business ByDesign to leave its Rodney Dangerfield image behind. SAP’s three-pronged strategy for SAP Business ByDesign…

  • Deliver best in class innovation
  • Drive meaningful demand
  • Develop successful partnerships

… seems to cover all the bases. It will continue to invest in the core functions of ERP. In fact SAP has vowed to add an additional 100 developers to the team. It will begin to leverage its investment in the underlying architecture to improve the user experience and integrate to other “best of breed” functionality within its own portfolio, in its partner community and perhaps even beyond.

And it plans to raise the volume of its marketing beyond the whisper that it has been, with the hope of attracting new partners and even more new customers.

In combining these three, Mint Jutras would contend that the platform – the very thing that caused SAP to go quiet in the past – should now be the reason to shout. A word of advice to SAP: Shout loud and clear.

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SAP Business One: The Next 20 Years

Becoming an ERP Platform

SAP Business One turned 20 last year. If it were a human, that would mean it was poised to enter the prime of its life. If it were a dog, it would be getting very long in the tooth, unable perhaps to learn new tricks. In software years, 20 is often thought of as mature, but equally as often viewed as ancient. Indeed some 20 year old enterprise resource planning (ERP) solutions are truly approaching “end of life.” Often referred to as “legacy” solutions, these are the ones that are still based on outdated technology, have changed very little over the last decade or more, and are still based on their original, outdated technology and architectures. Fortunately for the more than 55,000 customers running their businesses with SAP Business One, this ERP solution for small to mid-size businesses (SMBs) has come a very long way since it was first introduced.

But SAP believes it still has a long life ahead and is aggressively planning for the next 20 years. But, just as today’s solution bears very little resemblance to the original single-user system (running on a Mac), the SAP Business One of the future will look, feel and be something different than it is today. SAP Business One is becoming more than just ERP. It is becoming a business process platform. That means it will be open, extensible, and poised to meet very specific needs across many different verticals… and fully capable of being delivered through the cloud as a service.

Why a Platform?

Periodically pundits in the software industry try hard to kill off ERP, largely based on old perceptions. Let’s face it: Nobody recalls the early days of ERP as “the good old days.” Early ERP solutions were rigid and inflexible, hard to install and implement and even harder to use. Functionality was limited (and limiting) and implementations were not for the faint of heart. Horror stories of failed implementations costing millions of dollars were fairly common. For many, those perceptions live on.

Some solution providers jump on this bandwagon and try to reposition their solutions as something else without really changing what they actually do. Is SAP’s move a similar tactic? We think not. We believe it is an indication that the leadership of the SAP SMB team has a firm grasp of the needs of these smaller enterprises and is committed to satisfying those needs.

Over the years, SMBs in general have been turned off by ERP, thinking of it as a huge, disruptive and expensive undertaking. SAP in particular has suffered from these perceptions as a result of its penetration into large, multi-national enterprises. Overlooking the fact that SAP sells a completely different solution to SMBs, many mistakenly believe all ERP implementations to be overwhelmingly complex and overkill for their smaller operations. They fall into the trap of thinking they can get by without it. Or they think they need “something else.” In reality, based on the way Mint Jutras defines ERP, they not only need it, they need ERP and more. We believe this is the rationale behind SAP’s platform approach.

Some of the problems with the early versions of ERP resulted from software vendors trying to be all things to all businesses. With few exceptions, most early solution providers cast a wide net. Unwilling to turn any potential business away without a try, they came to market with very broad solutions. By trying to please everyone, they never had a complete solution for anyone. The 80-20 rule prevailed. Nobody expected a solution to satisfy all their needs (an 80% fit was often the goal), resulting in invasive (and sometimes expensive) customizations that built barriers to further innovation.

SAP seems to agree with our conclusion: All businesses need some flavor of ERP. But a “one size fits all” solution is not the most effective approach, because of the fact they also need “more”. But the “more” needed by a brewery is very different from the “more” needed by the company providing field services to the oil and gas industry, or the fitness club selling gym memberships. Even in food and beverage, the “more” needed by growers is very different than the “more” needed in the poultry industry.

And while brewers, growers, field service providers, fitness clubs and poultry providers all have similar needs in finance, accounting, booking and revenue and inventory management, they are not willing to spend a lot on these back office functions, preferring instead to invest in solutions that help them directly grow their businesses. These companies want to invest in a gym club solution, or a beer brewing solution, or a field service solution, not a generic ERP.

But wouldn’t it be nice if you could satisfy all your needs, including those basic functions, with the specialized solutions that help you directly drive your business? You can if those specialized solutions are built on top of a strong foundation – an ERP platform. That is the plan for SAP Business One.

SAP will continue to invest (and invest heavily) in the ongoing development of the generic core ERP, including new features and functions, as well as the user experience. It will modernize the user interface, including access from mobile devices, and embed analytical capabilities. But perhaps equally, if not more importantly, it will invest in the underlying architecture and technologies that enable partners to more easily enhance and extend the solution for the specific needs of different vertical, and in some cases even more specialized micro vertical industries.

Click here to read the full report on SAP’s plans and Mint Jutras’ analysis please click on the link below (no registration required).

 

 

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