Next Generation

Sage Says ERP is Dead. What (I think) They Really Mean Is….

At Sage Summit 2015 earlier this week, new CEO Steven Kelly announced the company would drop the moniker ERP from its product names. Sage NA CTO Himanshu Pasule followed up by announcing that ERP is dead. This announcement produced a mixed response. There was some applause (ding dong the wicked witch is dead!) There were some shrugs (I don’t really care what you call it.) In conversations with clients I got some eye rolls and one actually said, “This too will pass.” My reaction? Yes, we need new ways of designing, delivering, consuming and innovating ERP. But you don’t say the automobile is dead just because there are some old clunkers still on the road.

Of course proclaiming ERP to be dead is not new news. Headlines along these lines started appearing shortly after Y2K (which proved to be somewhat of a non-event.) They were attention grabbing for a while and then they began to fade away, only to reappear periodically. So… with this revival does Sage intend to stop selling products that have been labeled “ERP?” No. It just won’t call them that anymore, explaining that instead of standing for Enterprise Resource Planning, what ERP really means is “Expense, Regret, Pain.”

Thanks to Derek du Preez of Diginomica who actually captured Mr. Kelly’s quote: “We believe ERP is a 25 year old industry term, characterised by cost overrun, and in some cases even business ruin, that has been imposed on you for the benefit of others.

“To the finance directors of the world, ERP stands for Expense, Regret, Pain. Sadly our industry has a long history of invasive, disruptive initiatives that have been carried out at the expense of their customers.”

Hearing this or reading it, you somehow get the sense that all ERP implementations are failures. I would disagree and can share some very impressive results from those I have determined to be “World Class.”

You also might get the sense Mr. Kelly was implying this involved some malicious intent – certainly not by Sage, but by all those other ERP vendors. Personally I think a lot of ERP vendors did the best they could with the technology they had available at any given time. But that technology is nothing like what is available today, just as the Model T is nothing like the Masserati, or even the Ford Taurus today.

Old, monolithic ERP solutions have been notorious for being hard to implement, harder to use and sometimes impossible to change as business conditions and businesses themselves change. Over time they have grown more complex and more unwieldy. I agree we need to fix that. Today the industry must find new ways to design, develop, implement and run these systems if they are going to keep pace with the rapid evolution of both technology and business today.

We need solutions that are easier to consume, using new ways of engaging users, over a wide range of devices. We need software that can be easily extended and/or configured without invasive customization that builds barriers to innovation. And we need more innovation, but it must be easier to consume with less disruption to the business. And finally, we need better integration capabilities.

Does any of this sound familiar? It should if you have been following me for the past couple of years. This just happens to be how I describe and define Next Generation ERP. Type that in the search box on my blog and you’ll get lots to choose from, starting with this first post. Could I have labeled it something other than ERP? Sure, I could have named it with the symbol . But if anyone referred to , they would always add, “used to be called ERP.” So I didn’t bother. Maybe we could start just calling it “the software previously known as ERP.” It seemed to work for Prince for a while, but ultimately he went back to being known as Prince.

Some are suggesting it be called Business Management Systems, although that too is far from new. Many have tried using this term in the past and it just hasn’t caught on, largely because those using the term tended not to have a complete ERP solution and were also targeting very small companies that typically lived in fear of ERP. So that sort of sets a precedent, and not one that is to Sage’s advantage.

And in an industry so enamored of acronyms, Business Management Systems would become BMS. So perhaps the reason it never caught on was in part based on the fear we would soon lose the “M” and we all know what BS stands for… again, not particularly advantageous.

In the end, ERP is simply a convenient label for software that runs your business, although I do use a more specific definition:

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

This includes the customer order, which seems to be missing from Sage’s declared focus on the “Golden Triangle” of accounting, payroll and payment systems. Indeed it is typically the management of the customer order that sets a full ERP apart from a financial/accounting only solution. While some of Sage’s products are definitely accounting only, Sage assures me the intent was not to exclude the customer order and does include the full system of record in its Golden Triangle. So customers and prospects can feel safe in assuming at least some of the Sage products will continue to deliver on my definition of ERP.

Note also that my definition is intentionally quite broad. 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.

ERP evolved from MRP, which was originally short for material requirements planning, but later expanded to become manufacturing resource planning and then eventually grew beyond the realm of manufacturing to encompass the entire enterprise – any kind of enterprise, in any kind of industry. While some ERP vendors do have a very narrow vertical focus, others have taken a more horizontal approach. This has resulted in broader solutions designed to satisfy so many different needs that any one company winds up using only a small fraction of the full functionality. Not only are they encumbered by all that functionality they don’t use, but also there still might be gaps in meeting their specific requirements. So ERP winds up being too much and not enough, all at the same time.

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. To be considered part of the ERP solution they must be seamlessly integrated. That used to mean tight integration that required the whole system to move forward in lock step, which made it rigid and very hard to upgrade. ERP users increasingly felt like they were steering a battleship, understandably so.

Expanding footprints, combined with a broader range of industries means complexity no longer grows linearly, but exponentially. Which I believe is the real problem Sage is attempting to solve. Changing the label won’t fix that. Taking full advantage of enabling technology and changing the way you design, develop, package and deliver it will.

I also believe Sage is making tremendous progress in making these changes, but that progress and the value actually being delivered to its customers is being overshadowed by the rhetoric around the death of ERP. Sage’s journey began several years ago under the guise of “hybrid cloud.” In a nutshell, this approach left on-premise ERP solutions in place and surrounded them with cloud-based connected services. The advantage was to allow customers to migrate pieces of their information systems to the cloud over time.

But there was yet another advantage to this approach, one that I wrote about most recently in describing Sage’s approach to Next Generation ERP. This component-based approach allows Sage to deliver more innovation by extending or complementing existing solutions rather than continually mucking around in the original code base. Today seamless integration can be delivered without old-style tight integration. A more component-based approach is typically referred to as “loosely coupled.” If you aren’t familiar with that term, you might want to read through my 4-part series on Next Generation ERP. For purposes here it is suffice to say that this approach allows you to consume more innovation, with less disruption.

Sage began to take a more component-based approach to development with its “hybrid cloud” strategy. Not only did this facilitate the addition of features and functions without invasive changes to the original code base(s), it also allowed Sage to develop new features and functions once and let different products and product lines take advantage of that effort. That means more innovation and easier integration.

This is also something Sage is getting better at in general. It began to implement rapid application development (RAD) methodologies about two years ago and is really starting to hit its stride. Its goal is to offer two upgrades each year. Of course, the real question will be whether its customers can and will pick up these new releases at an increased pace. According to the results of the 2015 Mint Jutras Enterprise Solution Study, 30% of respondents running on-premise or hosted solutions still skip releases and 11% would actually prefer to stay where they are forever.

This changes however as companies move to a SaaS deployment model (Figure 1). It is much easier to deliver more innovation, more frequently in a SaaS model. And there are fewer barriers to consumption because the SaaS provider does all the heavy lifting when it comes to upgrading the software.

Figure 1: Approach to Consuming Innovation in a SaaS Model

Fig 1 SageSource: 2015 Mint Jutras Enterprise Solution Study

After several years of promoting the concept of “hybrid cloud,” with an on-premise ERP at the core, Sage is moving more aggressively to SaaS, although it is still fully supportive on on-premise deployments. Sage X3 is a perfect example. As of its 7.0 release about a year ago, X3 became a true multi-tenant SaaS solution, although it does provide single tenancy at the data base level (which allows for portability between on-premise and cloud and supports extension of the data model). More recently it announced the official launch of Sage X3 Cloud on Amazon Web Services (AWS).

With this introduction, Sage will be competing more directly with SaaS only ERP providers. Those SaaS-only solution providers that offer multi-tenant solutions are able to deliver more innovation, with higher frequency, because they have the luxury of only having to maintain one line of code. Those that offer both cloud and on-premise versions must minimally support multiple releases (and often offer solutions on different databases and operating systems). Sage has indeed been gearing up for this and the proposed 6-month release cycle is evidence of very good progress.

Further evidence of Sage’s ability to innovate faster is the introduction of several new products including Sage Live, a brand new “real time accounting solution” built on the Salesforce1 platform and brought to market in months, not years. While existing customers don’t benefit directly from this product, they do benefit indirectly. Not only does this demonstrate Sage’s ability to apply RAD methodologies and new technologies (like those capabilities provided by the Salesforce1 development platform), but presumably other product like X3 will indirectly benefit from components developed for Sage Live that might easily be incorporated into the X3 landscape. As Himanshu described, “First the very high end, luxury cars introduce heated seats and pretty soon they become a standard feature.”

Conclusion

Let me repeat my initial reaction to Sage’s proclamation of the death of ERP: Yes, we need new ways of designing, delivering, consuming and innovating ERP. But you don’t say the automobile is dead just because there are some old clunkers still on the road. When it comes to solutions that help (or hinder us) in running our businesses, there are a lot of clunkers on the road today. Many were hard to implement, and are even harder to use and sometimes impossible to change as business conditions and businesses themselves change. Over time they have grown more complex and more unwieldy. I agree we need to fix that. Solution providers, including Sage, have made some great strides in doing that.

Those still driving those old clunkers should definitely think about trading them in. Those with some pretty good engines should look to turbo-charge them. ERP is a convenient label for the software that runs businesses across the globe today. Does it really need a new name? If so, I think we should call it Fred.

 

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ERP, The Next Generation: The Final Frontier? Part 4

This is a short one – the 4th post of a series on Next Generation ERP. If you missed the first three in the series, take a moment and catch up with Part 1, Part 2 and Part 3. You can find the links to the right in “Recent Blog Posts.” Next up after this will be a series of posts featuring some of the major ERP players.

A Final Step “Into Darkness

Have you forgotten how we started with our Star Trek analogy? The latest movie, Star Trek Into Darkness, has the crew of the USS Enterprise saving the world from destruction. So the story line doesn’t really support our analogy. ERP might help your business gain competitive advantage, but it doesn’t save the world. The title “…Into Darkness” is however quite relevant to the final stage, and perhaps the final frontier of ERP.

As the basics of ERP become more of a commodity it becomes all that much more of a basic necessity of business, including the more advanced technology that enables easier access and configuration (without customization), better integration and more innovation. As those basics become commoditized, ERP might appear to slip into the background: “The darkness” of uniformity, of non-differentiation. While all companies have common needs, specific industries create specialized needs and it also becomes increasingly important for companies to seek competitive differentiation. But it is not in the core functionality where this source of differentiation lies, but in the services and functions that surround the core.

So let’s continue our space analogy and imagine ERP in the center – as in the center of the solar system. Circling the sun are planets drawing sustenance in the form of light and heat, which makes them habitable. Equate habitable to easy access and intuitive user interfaces that can be configured and personalized. In a real solar system it is gravity that holds the planets in orbit, and the source of gravity is the sun at the core. In our software solar system with ERP at its center, the gravity is drawn from the platform on which the ERP is built. Building ERP and all the surrounding applications on a common platform and standardized business objects will insure a strong connection but with a loose coupling that can be easily disconnected and reconnected.

What about other components not developed on these native platforms – components that might be based on pre-existing or acquired technology? Of course other satellites can also be circling the sun, but it might take some additional propulsion to keep them in orbit. Similarly, it might take some remedial effort to make that older technology compatible enough to reap some of the benefits of the next generation platform.

Key Takeaways

Next generation ERP is a far cry from traditional ERP solutions of the past. New technology platforms allow users to engage with ERP in new and different ways with intuitive and visually appealing user interfaces, which don’t rely on intimate knowledge of how the system or the data is structured. This opens doors to a whole new level of executive involvement.

Next generation solutions are more easily custom configured, eliminating invasive customization that prevents companies from moving forward with updates and upgrades. This is particularly important in light of the increased pace of innovation that is supported through the use of web-based services, object-oriented data models and component architecture. All these combine to support more rapid development of new features and functions, which are more easily consumed as needed.

If your current ERP solution has you stuck in the 20th century, look for an ERP solution that can take you into the darkness and into the light, both at the same time. Look for an ERP solution that can satisfy all your basic, generic needs, quietly in the background, but one that is built on a next generation architecture that supports rapid development and innovation and rock solid but easy integration. Pick one with sufficient gravity to hold all the necessary components in place and let your competitive advantage

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UNIT4’s Next Generation ERP for Businesses Living in Change

Don’t BLiNC, Change is Coming at Warp Speed

In a recent report, ERP, The Next Generation: The Final Frontier? we had some fun comparing Enterprise Resource Planning (ERP) to the successful entertainment franchise, Star Trek and the voyages of the USS Enterprise. The starship Enterprise had at its disposal some amazing technology that allowed it to change course and even reverse direction immediately, while traveling at warp speed. Although Star Trek was, and still is science fiction, next generation, technology-enabled ERP solutions are very real. Yet few can turn on a dime and respond to business change at “faster-than-light” speed. UNIT4’s unique VITA architecture is the key to making Agresso Business World the exception. Not only is business change supported, minimizing the resultant cost and disruption, but changes can be made by those who best understand the business impact: the business users themselves.

What Makes an ERP Next Generation?

Not every ERP solution on the market today qualifies as a “next generation” ERP. While the depth and breadth of functionality has increased over the past three decades, that is not what makes a solution “next generation.” It is the underlying technology and the benefits it delivers. In UNIT4 terms, it is the VITA architecture.

Mint Jutras defines the next generation of ERP in terms of new technology that enables:

  • new ways of engaging with ERP
  • more innovation
  • custom configuration without programming
  • better integration

UNIT4 adds another dimension to this definition with its unique ability to aid companies in adapting when changes in their business occur as a result of new financial or regulatory requirements, organizational restructuring, mergers and acquisitions, or new or changed business processes.

Unless you are a technologist (and most business executives are not), you might not know or care about that underlying technology. But it is dangerous to ignore it, largely because of what it can and should deliver. You don’t know how the USS Enterprise achieved warp speed, but you know that it could. You don’t know how the transporter beam worked, but you know what happened when Captain Kirk said, “Beam me up, Scottie.” You don’t need to know how the underlying platform allows UNIT4 to support business change quickly and easily, but for those dealing with an accelerating pace of change (and who isn’t today?), it is important to understand that it does.

While it is less important to know how technology works than it is to know what it can do for you, understanding a few of the supporting concepts certainly helps distinguish between those that really support change and those that simply profess to.

UNIT4’s VITA architecture is a layered architecture that tightly integrates three components: data management, process modeling and delivery of information (analytics and reporting). This concept of component architecture is not unique. Most modern service-oriented architectures today will support a presentation layer (user interface), an object-oriented data model representing standard business objects (think of a customer or an order as a business object) and business logic. This business logic might be a combination of hard-coded programs and externally defined business rules.

To understand how UNIT4 is unique, consider what needs to happen when a business process changes. In first generation ERP, this always meant mucking around in the source code. In next generation ERP, a process change might or might not mean modifying source code. It might just mean changing some business rules. But it also might mean a change to the data model. And it is very likely it will mean a change to the presentation layer to modify what the user sees. That’s potentially a change to each of the individual layers or components. With UNIT4 you make a single change and it is permeated throughout all the necessary components of the solution.

Even in other next generation ERP solutions, the information technology (IT) staff generally needs to implement the changes. But with UNIT4, these changes are implemented through a graphical user interface (GUI) and can generally be done by a business user. Of course, if the business user can implement them, we’re not talking source code modifications. We’re talking about customizing the configuration without programming, one of the hallmarks of a next generation ERP. Some changes will require some knowledge of the system, but others are simply accomplished by an intuitive drag and drop. Which brings us to the first of the four requirements for next generation ERP…

New Ways of Engaging with ERP

Users of ERP used to be a pretty select bunch. First generation ERP required extensive education and training. And it was always easier to get data into ERP than to get answers out. Most executive decision-makers never laid their hands on ERP and had little knowledge or appreciation of how the data and the processes were organized. So they also had little appreciation for the impact change had on ERP implementations – change like that annual reorg or that new compliance requirement. More often than not, they simply blamed IT for being unresponsive or difficult.

One approach might be to educate those executives as to why change should take so long to be reflected in an application like ERP. After all, ERP essentially runs your business. But that’s not the approach UNIT4 has taken. It has instead eliminated the delay with a “do it yourself” approach. Here’s an example:

Let’s say a reorganization is planned at the end of the quarter which requires many changes in the personnel reporting structure. Groups or individuals might be reassigned to new departments. Perhaps entirely new departments must be created. Think about how that change might be implemented in your own organization, with your current software.

Perhaps all the changes get made on paper first. After all, some of them might be sensitive or confidential. And you can’t really “touch” the employee records until the date of the reorg anyway. The big day rolls around and this paper probably gets turned over to an administrator. And then it is a mad scramble to implement the changes. Murphy’s Law says in the rush something won’t be reflected properly and it will probably take a couple of pay/reporting periods to get corrections made.

Wouldn’t it be nice to instead get all the changes lined up, checked and double-checked, without having to turn them over to administrators that have no involvement in the decisions? Wouldn’t it be nice to have them magically take effect on the prescribed day?

Picture this: The decision-makers bring up a visual representation of the current org chart in a planning meeting. They create a new “leg” in the tree structure. They drag and drop groups from one department to another. They might do it by role first and then move some individuals separately as they tweak the new structure. As they discuss the changes either immediately or over a period of time, they continue to refine the organizational structure. On the big day the changes become effective automatically.

That’s what can happen with UNIT4’s new user interface (UI). These decision-makers don’t have to “figure out” ERP. They just need to “figure out” the structure of the organization.

UNIT4 also intends to add social collaboration capabilities in October 2013, opening up yet another avenue for engaging with ERP. These new collaboration capabilities will allow any user of UNIT4 to connect and be connected to other employees with similar skills, roles and reporting, interests and experience. This is most valuable as organizational reporting structures change as a result of reorgs or mergers and acquisitions when old and familiar ties in the organization may be disrupted.

This new UI is the culmination of a focused effort over a period of four years, starting with an extensive research project. Throughout the project, UNIT4 interviewed users and observed how they interacted with ERP. The research focused on how people work, the processes they complete and the flow of work. It included people in different age groups, people with different jobs, playing different roles. It included people from around the world, primarily in service-based organizations, which is UNIT4’s target market. And service-based businesses have seen more than their fair share of change and the pace of that change continues to accelerate.

The resulting user interface was then incorporated into a new release concept that UNIT4 calls Experience Packs. In fact Experience Packs are not entirely new, but the way UNIT4 is delivering them and the innovation contained therein is both new and very “next generation.”

More Innovation, Easier to Consume

UNIT4’s Experience Packs eliminate the “all or nothing” approach to innovation that is common for enterprise applications. One problem that has plagued software vendors for decades is the fact that they could often deliver innovation a lot faster than their customers could consume it.

Generally speaking, even though most new features are delivered as optional, customers still need to take on a new release in its entirety, and then decide which of the new features to turn on. This upgrade process can be both costly and disruptive and therefore according to the 2013 Mint Jutras ERP Solution Study, almost one in five companies (18%) are likely to skip releases and another 10% never upgrade, leaving new innovation unused.

Experience Packs are delivered in such a way as to allow UNIT4 customers to pick and choose what new innovation they will implement and when. The first wave of Experience Packs includes People Planner and Project Planner, both targeting professional services organizations. Also available is Organizational Modeler, highlighted above. UNIT4 plans to release new Experience Packs every four months. The next wave will feature expenses, time, tasks, absence and travel requests and will be launched in the fall of 2013.

This approach allows UNIT4 to deliver more innovation, faster, while also making it easier for its users to consume it. These Experience Packs can be further enhanced with a series of UNIT4 mobile apps. Many say that the modern cell phone was inspired by Star Trek’s tricorders that allowed crew members to communicate even after they had been beamed to another planet. While employees have yet to venture to other planets, they do need to stay connected even when they are half a world away. Even as we become less and less tethered to a wired connection, we become more and more tethered to the business. UNIT4 mobile apps, natively built for IOS and Android devices, are designed to enrich UNIT4 Agresso Business World ERP and “increase the comfort and efficiency for users,” ensuring they are able to take full advantage of future developments in mobile technology.

Summary

Do you need to change course and even reverse direction immediately, while your business is traveling at warp speed? If you are a business living in change yet still struggling with a first generation ERP solution, change itself may appear to be coming at you at warp speed. Being able to accommodate that change through easy and rapid (non-coding) adjustments rather than exhaustive code modifications may seem as likely as traveling to the far reaches of the galaxy.

  • Changes implemented by business users?
  • Executives that actually put their hands on ERP, working collaboratively with other decision-makers?
  • Business users taking action from mobile devices?
  • The ability to selectively implement new innovation without a long upgrade process?

If this all sounds like the stuff of science fiction, then take a look at UNIT4. You may be surprised to find, the future is now.

 

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