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Purposeful Innovation Helps Deltek Turn Challenges into Opportunity

Deltek is unique within the world of enterprise applications. Focused squarely on meeting the needs of project-driven businesses, on the one hand, it is like hundreds of other solution providers offering some flavor of project management software. On the other hand, it is unique in offering an Enterprise Resource Planning (ERP) designed specicially for projects-based businesses. Yes, other ERP vendors target similar industries and also offer complementary project management solutions, but no other vendor combines these two software categories quite like Deltek. In the realm of (just) project management, Deltek must face the challenge of differentiating itself in a highly fragmented market. But in creating a software category where only a single vendor qualifies, a different kind of challenge looms. Competitors bring validation.

While Deltek is laser-focused on project-based businesses, this “sector” also brings a tremendous level of diversity. Government contractors are starkly different than advertising, PR and marketing agencies. Architecture, engineering and construction (AEC) differs from legal, healthcare or management and IT consulting services. Energy, oil and gas is different than aerospace and defense. Operating a for-profit business is different than running a nonprofit. Some sectors are heavily regulated; others operate under few constraints. Some manage projects that last days or weeks and others span multiple years. And yet Deltek addresses the needs of all these different types of project-driven businesses – and does it very well.

A general-purpose kind of solution can’t do this effectively, and therefore over the years, through internal development and acquisition, Deltek has collected quite an array of products, leaving it with the added challenge of providing continued innovation across a broad portfolio. And yet it has proven over time its ability to leverage this portfolio to go beyond the traditional 80/20 rule of ERP to deliver last-mile functionality.

And of course, Deltek is confronted with some universal challenges all software companies face today. Technology is rapidly changing the way we do business. At the same time, the workforce is undergoing a generational shift and the access anytime, from anywhere, collaborative promise of the cloud is becoming a “must have.”

Can Deltek’s plans to leverage technology for “purposeful innovation” address these challenges and also unlock the potential for more opportunity for both Deltek itself and its customers? Let’s see.

The Challenge of Being “One of a Kind”

In today’s global, digital economy, competition is fierce and every company strives to differentiate itself. So at first glance, being the only software company competing for market share in a particular software category may appear to be a good thing. Yet while it does put that company in a position of strength, it never means winning business is a slam dunk. Every company has competition, and Deltek is no exception. On the plus side, Deltek recognizes this and never attempts to beat its chest and portray itself as truly “one of a kind.” But, the type of competition it faces will vary depending on what the prospect does and what it sets out to buy.

If a Deltek prospect, say a government contractor, is looking for ERP (think accounting, procurement, inventory, manufacturing, etc.), Deltek will face certain qualified ERP providers. The prospect may not even necessarily think, “I need to find an ERP solution to support my project-based business.” Instead it thinks, “I need a software solution to run my business.” And therefore, Deltek’s differentiation as ERP for project-driven businesses doesn’t necessarily narrow the field of competition at the outset. The door is open for any or all ERP competitors. It then falls on the Deltek sales team to educate the prospect on the differentiating features for a project-based government contractor. When that effort is successful, then the tables are turned and that “one of a kind” status will serve to eliminate the other contenders.

But if the prospect, say a professional services organization, is simply looking for a better way to schedule projects, Deltek has moved away from the “one of a kind” challenge. Here it faces a whole different set of potential competitors in the category of project scheduling software. And this field is  highly fragmented, with offerings that range from simple desktop solutions to robust, multi-faceted solutions for budgeting, project accounting, scheduling, risk management and analytics.

Here oftentimes the issue is the age-old debate between a suite-based solution or a “Best of Breed,” and this debate has been hotly contested for just as long. An integrated suite that provides a complete end-to-end solution (including project management) on which to run your business has been the holy grail of the ERP world for decades. For project-based businesses, this is the premise behind Deltek’s ERP. But if the prospect is just looking for something to help them manage the projects themselves, putting a full ERP solution in front of them will appear as overkill.

To better determine where we stand today in this debate, we asked survey participants in our 2019 Mint Jutras Enterprise Solution Study to choose between 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 (we use the term loosely) 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. Figure 1 paints an interesting picture, made even more interesting in the context of project management.

Figure 1: Which approach is most appealing to you?

Source: Mint Jutras 2019 Enterprise Solution Study

Over time the pendulum has swung back and forth between preferences for the two choices, predicated primarily on two factors. When the debate first emerged, the proponents of an integrated suite pointed to the ease of integration. If you used the functionality built into your ERP, there was no added cost or effort in integrating multiple applications. But the “Best of Breed” camp reasoned against this approach, using the “depth or breadth” argument. They implied integrated suites were a mile wide, but an inch deep, pointing out that the functionality built in was lighter and less feature-rich and definitely not “best of breed.” This is the exact assumption Deltek disproves with its project-based ERP.

And yet, Figure 1 shows the Best of Breed approach is favored over the full suite 2:1. There are actually some very good explanations for this preference amongst project-driven businesses.

Take, for example, a small professional services firm with 10 to 20 consultants. This type of small business may think it is too small for ERP. While Mint Jutras would disagree, we do recognize many might be adequately served by solutions like QuickBooks or desktop or cloud-based simple accounting systems. Yet projects are the lifeblood of their businesses and therefore they need robust tools to schedule and manage those projects.

At the opposite end of the spectrum you might also have large enterprises that have invested heavily in a corporate ERP system chosen for its depth and breadth of administrative and financial capabilities. Many of these corporate ERP solutions lack the operational capabilities required to help the business function efficiently. And therefore, divisions or entire corporations turn to Best of Breed solutions to better manage projects. Deltek not only has that base covered, but also makes it easy to integrate back to any ERP.

Deltek’s broad portfolio of products helps it turn the challenge of being “one of a kind” into a strength. Rather than attempting to serve the varied needs of a very diverse market with a single general purpose, horizontal solution, it offers several different suites targeting the needs of different verticals, as well as a more “best of breed” project and portfolio management solution. But the breadth of its product portfolio comes with its own set of challenges.

The Challenge of Last Mile Functionality in a Diverse Market

The ERP market has long been dominated by the 80/20 rule. 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 complexity, as well as invasive (and sometimes expensive) customizations that built barriers to further innovation.

Deltek has been unique in never succumbing to this 80/20 rule, choosing instead to acquire and develop purpose-built solutions that address the needs of specific industries, including what many view as the elusive “last mile functionality.” Its latest acquisition of ComputerEase is yet another example of this pursuit. ComputerEase is the recognized standard in construction accounting, project management, and field management software for contractors. 

Earlier in the year, Deltek acquired Avitru to bolster its Specification Solutions with a library of master specifications (MasterSpec®), specification writing software and professional and spec-writing services. These are just two examples of how Deltek delivers true last mile functionality to the AEC industry.

While these requirements are very unique to AEC, even functional areas that might seem quite generic to other businesses have some unique characteristics across different project-based businesses. Procurement for government contracts differs (a lot) from procurement in residential or industrial AEC sectors, and these differences carry over into accounts payable , otherwise typically a pretty generic function.

But as different as these businesses are from each other, they always share some common requirements.  General ledger is general ledger, even though projects may carry into the chart of accounts. Cash collection is cash collection. Currency conversion, tax rates and multi-company consolidations are applied universally.

Both of the acquisitions above are examples of how Deltek extends the functionality of its core solutions, rather than embedding features through invasive code changes. Yet the types of (potentially shared) services are typically built into the core solution, rather than included as extensions.

Embedding core functionality is reflective of how ERP has traditionally been built, and Deltek ERP solutions are no exception here. Early ERP solutions were monolithic structures. They were likely comprised of modules (e.g. general ledger, accounts payable, inventory management, purchasing, order management, etc.) and certainly some were optional, but none of these could stand alone. All modules shared a common database and all were developed using the same tools and technology. The good news: they all moved forward in lock step, data redundancy was eliminated along with any need for separate integration efforts. But this approach makes it hard for different solutions to share commonly required features and functions and means Deltek must develop the same or similar functionality within several different software suites.

Disruption: A Contributing Factor

This wasn’t too much of problem when requirements for this type of core functionality were quite stable. That is no longer the case. We live in disruptive times. The pace of change and the pace of technology innovation has accelerated beyond anyone’s expectations and it doesn’t show any signs of slowing down.

We asked our 2018 Mint Jutras Enterprise Solution Study participants to assess the level of risk their industries faced in terms of the potential for disruption.

Figure 2: What risk do you face in your industry being disrupted?

Source: 2018 Mint Jutras Enterprise Solution Study

While all but 10% acknowledged some level of risk, the majority (84%) feel the risk is low to medium rather than high or imminent. Yet we feel compelled to ask the question: How do you think the taxi industry would have answered this question on the eve of the launch of Uber? Nobody saw that disruption coming and therefore few (if any) were adequately prepared.

This type of disruption is unlike the disruption of the past that was largely due to new innovative products. Not only can it bring change almost overnight, but it can fundamentally change the way we do business. That kind of change has a cascading impact on the core requirements of ERP.

Technology Helps

Fortunately, today technology exists that can help companies like Deltek to address new or changed common requirements once and apply that solution across different solutions. This kind of technology is foundational.

While early ERP solutions were rigid, monolithic structures, today’s modern solutions are more component-based, also referred to as microservices architectures. Every technologist in our audience knows a microservice architecture is defined 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. 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 into 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.

With this type of architecture, enhancements, customizations and extensions can be built and consumed much more quickly, and companies like Deltek can develop functionality once and deploy it across multiple products. Not all of Deltek’s solutions today are there yet, but that doesn’t mean they can’t be refactored to take advantage of this kind of technology, and in fact its Vantagepoint product already does.

This noninvasive approach was instrumental in bringing a new, modern user interface, Deltek iAccess, to all its applications. While each Deltek customer will likely be running only one of Deltek’s ERP solutions, Deltek has been delivering more and more functionality via cloud-based add-ons, including Deltek CRM, Deltek Resource Planning and Deltek Talent Management. With iAccess providing that front end across all products, users experience a consistent look and feel throughout, making the integration appear seamless. Mint Jutras expects that this kind of approach will eventually be used to bring change and new innovation to the different cores as well.

In the meantime, iAccess is also a step in the right direction to address another challenge – that of the generational shift in today’s workforce.

The Challenge of A Generational Shift

This generational shift is a given today. Baby Boomers are retiring at an accelerating rate, passing the torch primarily (but not exclusively) to Generation X. But it is not the Gen Xers as much as the Millennials that are creating demand for access to data from anywhere, from any device, with a new and improved user experience. This generation never knew a world without the Internet, smart phones and on-demand access to technology. They never used software that came with (or needed) a user manual. And they are more transient. Employees don’t come to a company and stay forever or even for a long time. As more Baby Boomers retire, the tribal knowledge they have accumulated over decades goes out the door with them, contributing to a skills shortage.

Many of the younger generation have developed a dependency on technology. Without decades of experience, they have come to rely on it to guide them through business processes. At the same time, we’re all asked to do more, and we’d love to accomplish this without working longer hours and making sacrifices. Never before has the home/work life balance been more top of mind.

New intuitive user interfaces, like iAccess, are certainly a giant leap in the right direction. But this is just a start. Deltek is also taking two other, equally important steps through adding automation and intelligence.

Robotic Process Automation for the Mundane

Have you ever secretly wished for a personal assistant who could relieve you of the burden of repetitive, mundane and time-consuming tasks that really don’t require the kind of smarts or skills you hope you bring to your job? If you are a Baby Boomer who launched your career in a business setting back in the 1970’s, you probably had access to the services of a secretary or an administrative assistant. After all, you couldn’t survive without one to help navigate the administrative nightmare of a generation that was completely dependent on paper and manual processes. Today technology has made us far more self-sufficient, but we’re also expected to get more done – a lot more. While nobody misses those golden olden days, everyone from every generation sure could use some help today.

Often called “bots,” Robotic Process Automation (RPA) can in fact relieve employees of repetitive, mundane and time-consuming tasks. RPA is part user interface, making use of natural language processing (think Siri or Alexa for the enterprise) and part artificial intelligence (AI) to help people automate and complete repetitive tasks in a fraction of the time it has always taken, without introducing the occasional (but inevitable) human error. Adding bots to your workforce can boost productivity, thereby helping humans get more of the “real” work done. It sure would be nice if Deltek customers could say, “Hey Deltek! Help me out.”

And so…Deltek is partnering with Alirrium, an authorized reseller of UiPath, a leading Robotic Process Automation software provider, to offer Deltek customers RPA for automating processes within and across Deltek solutions, as well as between Deltek and third party applications.

In addition to natural language processing (NLP) for voice communication, it will also use optical character recognition (OCR) and in the future, combine it with machine learning (ML) in order to turn OCR into ICR or intelligent character recognition. For example, if you take a picture of your receipt, that added intelligence can distinguish a receipt for a meal from a parking receipt. In many of the industries served by Deltek even time and expense reporting is compliance driven. Deltek’s goal therefore is to make it easy by combining mobile, OCR, machine learning and GEO location tracking to not only improve efficiency and assure compliance, but also add a level of intelligence.

Building the Company Brain

While automation is a necessary step in making companies and people more efficient and productive today, it is really just the first step in a longer journey. As noted above, Deltek’s innovation strategy also includes adding intelligence to both processes and decision-making. Deltek views this journey as an evolution of the company brain.

Project-based companies today are awash with data from operations, customers, projects, the workforce… The question is: What to do with all this data. The possibilities are endless to augment human decision-making, making it more predictive with AI and ML. Whether they realize it or not, everyone makes decisions constantly that involve prediction:

  • What is the probably of winning a deal?
  • Is this prospect a good fit?
  • What is the probability of project success?
  • What will be the schedule outcome?
  • Will a vendor deliver on time?
  • What makes an employee a “good employee”?
  • Who should we hire next?
  • How can we improve days sales outstanding (DSO) and cashflow?

In order to make the best decisions, with the most predictable outcome, we consciously or perhaps unconsciously look for patterns in data to determine what makes projects, teams and resources successful.  But the human brain is limited in how much it can examine, absorb and analyze. AI and ML know no such limitations and can operate at speeds that can only be described as super-human. This is power Deltek is looking to leverage.

An early example of this is its recently launched Acumen Touchstone , the first product in the next generation of Deltek’s Project and Portfolio Management (PPM) tools and a key step towards its Project Intelligence Cloud (PIC). According to Deltek:

“The Project Intelligence Cloud is a technology refresh designed to solidify Deltek as the industry leader in the PPM space. This web-based technology will ultimately have many functions designed for project-based business, including cost, schedule and risk management, analytics and workflow.”

The immediate benefit of Deltek Acumen Touchstone is in its time-saving capabilities, automating the project schedule process. Schedule submissions are analyzed using schedule diagnostic AI for quality and deliverability. If it does not meet the required standard, the submitter is automatically emailed a report showing the metric score and deficiencies to be corrected.

This is the kind of purposeful innovation that not only helps Deltek overcome its own challenges, but also assists customers in seizing opportunity.

Wrap Up

In the world of project-driven business, Deltek is both unique and one of many. As a pure play project management solution provider, it must differentiate itself in a fragmented market. It does so through its depth and breadth.

But if you are looking for an ERP solution provider that focuses exclusively on project-based business, there is only one: Deltek. Yes, other ERP vendors target similar industries and also offer complementary project management solutions, but no other vendor combines these two software categories quite like Deltek.

However, the market in which Deltek competes is far from uniform. Government contracting, AEC, A&D, professional services, management consulting, legal, healthcare, creative agencies, energy, oil and gas are all very different from one another. A one size fits all solution simply doesn’t work. Deltek’s broad portfolio of products helps it turn this challenge into a strength. Rather than attempting to serve the varied needs of a very diverse market with a single general purpose, horizontal solution, it offers several different suites targeting the needs of different verticals.

This too presents its own set of challenges, but advanced technologies like microservices architecture, cloud-based computing and all the various forms of AI are the key to turning those challenges into real opportunity. But leveraging technology for technology sake is not the answer. Purposeful innovation that effectively leverages technology to produce real, tangible value is Deltek’s answer. But this is a long and evolutionary process – one that we will be watching closely, not necessarily from afar, but from the outside. If you are a project-based business, you might want to consider watching from inside the fold.

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