SaaS

Meet Unit4’s Wanda

Your New Co-Pilot In “Self-Driving” ERP

Have you ever secretly wished for a personal assistant who could sense and respond to your every demand, even before you have figured out what you need? 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 clumsy olden days, a lot of us from all generations sure could use some help today.

If you are a Unit4 customer, help is on the way. Her name is Wanda. On May 2, 2017 Unit4 released its new enterprise digital assistant, Wanda, a completely new out-of-the-box ERP user experience. According to Unit4, Wanda is a core component of its Spring 2017 launch, and an important milestone on Unit4’s journey to deliver self-driving enterprise resource planning (ERP) software. As a solution provider to people-oriented businesses and non-profit organizations, Unit4 has made ERP “self-driving” by leveraging technology to optimize user interaction, allowing employees to focus on activities where people make the difference.

Who (or What) is Wanda?

Wanda is a new way of interacting with Unit4’s ERP. She makes use of natural language processing (think Siri or Alexa for ERP) and machine learning to help people automate, prioritize and complete repetitive tasks in a fraction of the time it has always taken. She makes an effective co-pilot for your self-driving ERP. As a digital assistant, Wanda is embedded in the user interface and accessed through Skype, Slack or Facebook messenger. This allows users to communicate and interact with the solution through a “chat,” much like they would with a colleague. And Wanda is smart enough to understand when multiple topics might be mixed in a single conversation, so no need to artificially compartmentalize… all without formally logging into ERP.

This is made possible through the use of Microsoft’s Language Understanding Intelligent Service (LUIS). This is the underlying technology that gives Wanda the ability to understand what a person wants through the spoken word, not codes or clicks. Five new assistants are currently available to assist customers’ employees with some of the most common (and repetitive) tasks:

  • HR Assistant helps employees with human resource (HR) related tasks like requesting paid time off and enquiring about vacation balances and pay slips.
  • Purchasing Assistant assists in finding products and suppliers, generating requisitions and managing approvals.
  • Time Assistant automatically generates timesheets based on multiple data streams. It can use GPS and beacons to determine work location and track time.
  • Travel Assistant generates travel requests and manages approvals based on travel patterns and preferences and can auto-populate expense claims using receipt recognition technology.
  • Approval Assistant notifies and reminds managers to approve tasks and flags important tasks where deadlines are looming.

An added benefit: The more you use Wanda, the smarter she gets. That’s the “self-learning” part. The travel assistant provides the perfect example. If you frequently travel to a particular location – corporate headquarters perhaps – Wanda will recognize this as a frequent destination and assist throughout the entire process, from requesting approval for travel to submitting expenses for reimbursement. She will know if you typically park your car at the airport, fly on Delta, rent a car or book a taxi or Uber. So she can auto-populate those cost elements of the travel request based on past trips. And when you scan your receipts at the end of the trip, she can distinguish between the airport parking garage and the kiosk where you buy a sandwich close by the office.

Unit4 Getting Ahead of the Curve

While not the only solution provider on the market to be working on chat bots and virtual assistants, Mint Jutras would say it is ahead of the curve in terms of the depth and breadth of the offering. Adoption, and even familiarity with this type of technology is still nascent.

Our 2017 Mint Jutras Enterprise Solution Study sought to determine the level of familiarity with several different digital technologies, including virtual personal assistants for employees. We found almost half (47%) of our respondents either not familiar or only somewhat familiar with this type of technology and only 12% with it deployed or in the process of deploying. However, we find those with World Class implementations are far more familiar and more than three times as likely to be deploying (Figure 1). While having a World Class implementation of ERP doesn’t automatically make you a World Class company, we do see these top performers exceeding their peers when we look at efficiency (cost reduction) and current performance in metrics like complete and on-time delivery to customers.

Figure 1: What level of familiarity do you have with virtual personal assistants for employees?

Source: Mint Jutras 2017 Enterprise Solution Study

By using technology such this from Microsoft as building blocks, Unit4 can now take people productivity to completely new levels. Self-driving ERP automates manual tasks, freeing up people to do what automation can’t. Let Wanda do the repeatable, repetitive tasks while you handle the exceptions. Let Wanda sense potential problems or bottleneck while you concentrate on discovering potential opportunities. Let Wanda make intelligent and sensible recommendations while you make informed, data-driven decisions. Make room for Wanda, your new co-pilot, right beside you in the driver’s seat.

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Are Digital Technologies for Everyone?

Understanding Just How Well They are Understood and Valued

Industry pundits have been hyping “digital transformation” and “digital technologies” for several years now. This hype tends to make ample reference to the consumer technologies that are indeed making an impact on our personal lives: connected homes, self-driving cars, wearable fitness devices and every kind of “app” you can think of on your smart phone or tablet. That’s easy. The hard part is connecting this transformation to the workplace and the enterprise in a way that seems to bring real value. The pundits make the assumption that these technologies are well-understood and perceived as valuable. But are they?

I don’t make any such assumptions and the results from questions on digital preparedness in my annual enterprise solution study last year confirmed many decision makers are fooling themselves with a false sense of security. While 88% agreed that embracing digital technologies was necessary for survival, the majority still rely at least in part on spreadsheets for something as common as the system of record of business transactions. That contradiction led me to investigate just how well understood various technologies are, and whether value is perceived as real.

How Well Do You Understand?

We are still actively collecting data from this year’s study, but at this point in time we’ve captured over 500 responses – enough to make some early observations. Participants represented a wide range of industries and companies of all sizes, from small to very large.

We selected 14 different kinds of technology and asked respondents to assess their level of familiarity with each in terms of how they relate (or not) to their business. All respondents were asked about all 14, even though we realize some are more relevant to some industries than to others. Those shaded in the lighter green are primarily applicable to those making and/or moving a physical product, while those in the darker green are likely to be applied more universally.

Table 1: How familiar are you with these technologies as they relate (or not) to your business?

Source: Mint Jutras 2017 Enterprise Solution Study

There is a lot of data and insight buried in this table and there are countless different ways we can cut it and present it. One way of analyzing the data is to divide participants into two groups: those that have no familiarity or are only somewhat familiar with a technology, and those that understand it well. We presume those that have deployed or are deploying it fall into the latter category. Figure 1 depicts this dichotomy graphically.

Figure 1: Either you “get it” or you don’t

Source: Mint Jutras 2017 Enterprise Solution Study

We seem to be all over the map here, with those that utilize increasingly large volumes of data to provide intelligence most well understood. And yet we don’t see a big uptake in terms of deployment (Figure 2). Only 10% to 20% have even begun deploying the technologies that are most well understood and many just don’t see the applicability to their business.

Figure 2: Deployment Lags Understanding

Source: Mint Jutras 2017 Enterprise Solution Study

Is this due to a lack of education or is it because they really don’t apply? I think it is a little of both. While I still want to do a deeper dive by industry, two preliminary data cuts told me a whole lot. First of all, those that fall into my category of “World Class” have a far greater knowledge and appreciation for these technologies. Just look at the difference in adoption rate (Figure 3) between World Class and All Others.

Figure 3: World Class Deploy More

Source: Mint Jutras 2017 Enterprise Solution Study

Note that I define World Class (the top 15%) through the results achieved since implementing the software that runs the business and progress against company goals. This is not a “world class company” as much as world class use of technology, although better use of technology very often correlates with better company performance in terms of growth and profits. So we’re not surprised to see a higher level of understanding and more adoption in companies that have achieved World Class status.

However, we also recognize that while deployment is about the company, understanding and perception of value is more about the individual. And this is where the second data cut was quite revealing. I looked at levels of understanding based on the age of the survey participants, the vast majority of which fell into the categories of Baby Boomers (23%), Gen Xers (53%) and Millennials (23%).

Figure 4: Millennials Understand Better

Source: Mint Jutras 2017 Enterprise Solution Study

It is quite clear that the level of understanding of these technologies is inversely proportional to age. This doesn’t mean Millennials are smarter. They were simply born in an age where we rely on technology to make life easier, while Baby Boomers grew up doing things the hard way. In terms of seeing the value, Baby Boomers are definitely harder to convince.

As a Baby Boomer, I am skeptical of technology making us stupid and lazy. I see many examples of this in consumer technology. Smart refrigerators are the perfect example. A simple, online search came up with this:

The Samsung Family Hub fridge has a giant touchscreen built into one of its doors, complete with an app you can use to order groceries online. A line of cameras on the inside will send a picture to your phone when you’re out shopping. An app on the fridge for Samsung’s SmartThings smart home service will let you control your lights, your thermostat, and other connected products right from your refrigerator door.”

My reaction: Really? You need this to manage the inventory of your refrigerator? Are you constantly running out of milk? You can’t flip a light switch or remember to turn down the heat when you leave or go to bed? You want your refrigerator to do that? You really think you’ll save a measurable amount of energy by not having to open the door?

The reaction of my 28-year-old nephew? While he didn’t spring for the Samsung $5,000 model, he did buy a smart refrigerator.

The risk I face is overlooking something that will make a significant impact. The risk my nephew faces is spending too much for too little real value… while perhaps becoming stupid and lazy. But there is hope for both of us. I did invest in a video doorbell this past year, resulting in improved security. Not to mention the fact I actually know when someone is at the door even though my hearing isn’t what it used to be. And my nephew never runs out of milk now and still saved enough money to renovate his kitchen, increasing the resale value of his home.

The lesson for businesses to learn: educate yourself on the real value, but scrutinize the return on investment. Over the next few weeks and months, look for me to dive deeper into these different technologies for help in both areas.

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What Acumatica Customers Want – And Get

Openness, Collaboration, Innovation, Acceleration

Talk to any Acumatica customer and very quickly you hear the word “open.” That’s most often cited as a primary reason the company chose Acumatica’s Enterprise Resource Planning (ERP) over other solutions. Why? Because these customers value fit and functionality and completeness of a solution, but they also need flexibility, and often “best of breed” and/or customized functionality to help them differentiate themselves from their competition. But customizing the solution can’t build barriers to growth and change. And for these small to midsize enterprises (SMEs), a flexible, differentiated solution can’t add unwanted complexity and it can’t break the bank.

While many ERP providers today try to be “one stop shops,” the downside of this is added complexity and cost. Acumatica instead chooses to provide an open platform and take a collaborative approach to accelerate innovation, collaborating with customers to plot a product roadmap and with partners to fill gaps and provide specialized functionality. While Acumatica customers don’t necessarily expect ERP to satisfy all their needs, they also don’t want to wind up with a hodge podge of disparate, disconnected solutions. In fact, that is what many are replacing. They turn to Acumatica to facilitate easy integration and connectivity.

This “open” approach provides the added benefit of agility. Face it: We live in disruptive times and disruption can have a cascading impact on business application requirements, making the ability to easily innovate, evolve and change – equally, if not more important than current functionality.

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Does Oracle’s Acquisition Mean More, More, More for NetSuite?

Something New or More of the Same? Yes

On December 7, 2016 Oracle completed its acquisition of NetSuite. While Oracle acquisitions are nothing new – the company has executed dozens and dozens of them over the years – this one is indeed a unique mix of new and “more of the same.” NetSuite is not the first Enterprise Resource Planning (ERP) player to be acquired by Oracle, but there are some “firsts:”

  • The first ERP acquired that was born in the cloud, bringing along that all-important cloud revenue (not to mention SaaS DNA)
  • The first time Oracle has openly and loudly declared the “products will go on forever”
  • The first time the acquired company will be run as a separate global business unit, preserving the brand identity and keeping the leadership largely in tact

Oracle and NetSuite have always had close ties. Larry Ellison invested early in the company and owned close to 40% of the stock prior to the acquisition. Zach Nelson, former CEO of NetSuite, has a very close relationship with Mr. Ellison. And the foundation on which NetSuite’s products are built takes advantage of the “Oracle stack.” That said, they were still rivals. In fact, prior to closing, both companies claimed they were the #1 Cloud ERP company. By combining the two, Oracle is now declaring victory in that battle.

But there are also a couple of “softer” firsts. Perhaps because of the Ellison-Nelson relationship, or perhaps because of NetSuite’s proven success in the market (or both), never before have we seen such respect from Oracle for the accomplishments of the target company or such a welcoming embrace. Mark Hurd, in addressing a group of influencers (including press, industry and financial analysts) lauded NetSuite for “serving a community we have not served well.” That statement alone is one for the record books: Oracle (the company which previously claimed to be the #1 Cloud ERP company) admitting it had not served a market well.

All combined, this bodes well for the NetSuite community.

What “More” Did NetSuite Gain?

When the announcement of Oracle’s intent to acquire NetSuite first hit the wire in July, it was quite clear what Oracle was looking for: more share of the cloud market. “Cloud” is where it’s at today. Mint Jutras has been following perceptions and preferences for SaaS versus on-premise software for years now. Between 2011 and 2013, the demand for traditional on-premise deployments went over a cliff. Since then, preference for SaaS (versus hosting) has continued to climb.

Figure 1 shows the progression of preference over the past several years. The question posed to survey respondents was this: If you were to select a solution today, which deployment options would you consider? Respondents are allowed to select all that apply.

Figure 1: Which Deployment Options Would You Consider?

Source: Mint Jutras Enterprise Solution Studies

*Option added in 2015

Combine these preferences with Mr. Ellison’s publicly stated goal of being the first company to reach $10 billion in cloud revenue and you have a pretty good idea of what Oracle was looking to achieve.

The benefit to NetSuite was perhaps not quite as clear. The company was already successful on its own. While it never seemed to record a profit under GAAP reporting, it did show positive cash flow and was profitable by non-GAAP measures. This was largely due to the way GAAP treats stock-based compensation and the fact that just about every employee owned a little piece of NetSuite. So NetSuite was able to invest in the development of its products and was already making steps to expand globally.

But that’s the key to unlocking the motivation… from the NetSuite point of view they couldn’t do either fast enough. As a public company, the leadership was often forced to focus on metrics other than those most conducive to growth. As a business unit of Oracle, the team can focus on what matters most to them, not Wall Street. And it is clear, what matters most is bringing more products to more markets faster.

Being part of the Oracle family means NetSuite gains access to Oracle resources in the form of:

  • Supporting products (think platform and infrastructure). This includes Oracle’s Platform as a Service (PaaS), Infrastructure as a Service (IaaS) and Data as a Service (DaaS).
  • More applications to sell (think complementary extensions like supply chain management, human capital management, enterprise performance management and configure-price-quote). NetSuite already had some of these and partnered for others, but this significantly adds product to the bags the sales representatives carry.
  • More people to develop NetSuite products. Oracle has pledged increased funding. It is not clear whether these will be new hires or people who already work for Oracle today on other products. It is likely to be some combination of both.
  • Global presence (think people and business infrastructure around the world) – instantly. NetSuite had started to expand, but only offered support in English and Japanese. Oracle not only has the additional language skills in support, but many more support locations. It also has far more data centers around the world to address the issues (both real and perceived) of where data must be stored when operating in the cloud. This of course, also puts additional feet on the street globally, not only to support, but also to sell.

Conclusion

We go back to the initial question posed: Does the Oracle acquisition of NetSuite represent something new or is it more of the same? The answer is yes. While Oracle is an old hand at acquisitions (so more of the same), this one does have some “firsts,” so there is indeed something new. Oracle has declared the NetSuite products will “live forever,” so this is an instance of “more of the same.” Yet while NetSuite has poured as many resources as it could afford into developing the products, Oracle has deeper pockets and can also bring its own resources to bear in terms of products, people and global reach. So NetSuite will enjoy “more of the same” …but “more” is a relative term. In this case, we believe “more” means “lots more.”

While there may have been some initial trepidation, particularly from NetSuite customers who specifically chose not to purchase a solution from Oracle, it would appear that Oracle is intent on allaying those fears. By operating the acquired company as a global business unit, it preserves the perceived value of NetSuite as a pioneering SaaS vendor. By committing to the continued development of the products while adding depth and weight to its offerings, it would appear product development will be accelerated. And NetSuite gains entrance to global markets instantly. From the outside looking in, Mint Jutras is actually surprised (and pleased) to say that it seems like a win-win.

PS: For those of you not familiar with NetSuite, here is a quick primer:

NetSuite is a leading provider of cloud-based business management software, delivered exclusively as software as a service (SaaS).

Some quick facts about NetSuite at the time of the acquisition:

  • Founded in 1998
  • Publicly traded on NYSE: “N”
  • 5,350 employees
  • $741.1 million in annual revenues for FY 2015, ending 12/31/2015
  • Grown by 30%+ in each of the last 16 consecutive quarters, as of June 30, 2016
  • Used by 30,000+ organizations (includes subsidiaries and affiliates) in more than 100 countries
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Is SAP Still in SMB Stealth Mode? Watch Out, Changes are Looming

Many think SAP is just for the big guys. The company is the closest you get in the ERP market to a household name, and, after all, it was in the large enterprise where it made that name for itself. In reality though, SAP plays in markets that include companies of all sizes. A good 80% of its customers are in the small to midsize enterprise range. And yet today small to midsize companies in search of a solution don’t immediately think “SAP” and they will have a difficult time discovering all that SAP has to offer them.

SAP’s competitors perpetuate the “big guy only” misconception, along with  “expensive” and “complex” qualifiers. They are like a dog with a bone, refusing to let go, hoping to lead prospects away from the 800-pound gorilla. Pundits who largely follow the large enterprise space contribute as well, along with the publicity (both good and bad) from high profile customers that are also household names. But SAP must also share some of the blame because of one thing it is so very good at: Speaking in one voice.

SAP employees stay on message. And the message is couched in the native language of SAP, which is the language of IT in the large enterprise. Although the latest overarching message these days is “Run Simple,” that alone doesn’t say enough. SAPers either talk at such a high level of abstraction that it becomes meaningless (your world will be a better place), or they talk technology.

In speaking to the decision makers and business leaders in small to midsize businesses (SMBs), you might as well be talking Klingon. They have their feet firmly planted on the ground. They want to hear how a solution will solve their immediate problems, address their challenges and bring value to the business. They want specifics. And they want to buy from a company they can trust.

The combination of negative hype and the “one voice” of SAP also might lead SMBs to think SAP is a one trick pony, with only a single product to offer, one that is clearly beyond their reach. Nothing could be further from the truth. Not only does SAP have three separate and distinct ERP offerings, it also has other offerings that sit on the periphery, outside the boundaries of ERP. These include talent management (SuccessFactors), travel and expense (Concur), a supplier network (Ariba), analytics (Business Objects) and a front office (SAP Anywhere). And this is just a partial list.

Let’s start with core ERP. At the top is SAP ERP, which has been brought to market under different names during its evolution. But make no mistake; this is definitely a solution that is meant to satisfy the needs of the largest, most complex enterprises in the world. Older versions were known as SAP R/2 and R/3 but more recently it was simply referred to as SAP ERP or ECC, providing the core of a larger Business Suite(adding CRM, SRM, SCM and PLM to ERP). The latest incarnation is S/4HANA, which is both evolutionary and revolutionary at the same time. It provides the same functionality as SAP ERP but has undergone a rewrite to take advantage of the powerful in-memory technology of SAP HANA. This is the large enterprise ERP for which SAP is famous (infamous?).

But this is not a “one size fits all” solution. SAP also offers SAP Business One and SAP ByDesign. Up until recently, it also marketed Business All in One, but in fact that was/is not a separate product. It was a version of SAP ERP packaged with industry templates and best practices, purportedly designed to simplify the implementation, thereby making SAP ERP more digestible for the mid-market. Because it was essentially the same product but with a different name, it also added some confusion. SAP appears to be backing away from that branding. I think that is smart. Can SAP S/4HANA work for this midmarket? The answer is yes, particularly where that smaller, midsize company is a division of a large enterprise that has standardized on SAP solutions. But these will be the exceptions to the rule.

SAP is also getting smarter about how it targets these three products to different segments. SAP has formed an SMB team to specifically address the market of companies with 1500 employees or less, and has defined “small” as companies with less than 250 employees. It will market SAP Business One to small companies looking for an on-premise or hosted solution (partners will provide the hosting). It will be sold largely through partners, which will provide both advocacy and intimacy to the customer. SAP Business ByDesign is available exclusively as a multi-tenant SaaS (software as a service) solution supported by SAP itself. The target is generally the mid-market but can come down into the small company range for those interested in a true SaaS solution from SAP.

However, both SAP Business One and SAP Business ByDesign have suffered from a lack of respect in the market. Competitors often write Business One off, telling me they hardly ever see it in a competitive deal. And yet Business One is implemented in over 50,000 small companies around the world and SAP is adding about 1,000 new customers a quarter. That tells me there are hundreds of deals where these competitors never get invited to the party.

Rumors of the death of Business ByDesign have been rampant for years and unfortunately SAP has allowed its critics to have had a louder voice in the market than SAP itself. In the meantime, SAP has been (rather quietly) growing the installed base to about 1,000 customers, which is larger than many customer bases of some of those competitors. Respected journalists and analysts have recently admitted ByDesign is in fact not dead. I couldn’t/can’t resist saying, “I told you so.”

This might all seem like SAP 101 to veteran industry observers. But it also might come as a surprise to learn that your typical decision maker and business leader of a small to midsize business doesn’t follow the (ERP) space that closely. Those business leaders are too busy following their own industries. So they are easily confused by the progression of product names and even more easily confused when target markets for different products overlap. And they are not well equipped to distinguish hype and myth from reality. To convince them one way or the other, you have to understand how they approach software selection and you have to speak their language. And you have to speak it loudly and clearly. That is where SAP has not done a good job.

I am optimistic that is about to change under some new leadership at SAP. Barry Padgett took over as President of the SMB team last July. He came over from the Concur team, bringing a new perspective. Barry “gets” SMBs. They need a lot of the same features and functions that their larger counterparts need, but they don’t have the large IT staffs or the deep pockets. They expect products to work seamlessly – open and connected. They don’t go out looking for technology. They go out looking for solutions to problems and answers to questions. They expect value. They need to see a path forward. And to connect with them, you need to be talking in terms they clearly understand.

Barry and his new CMO Mika Yamamoto (who came to SAP from Amazon) also understand how most software searches begin these days. Much of the legwork and due diligence is done before a prospect ever engages with a potential solution provider. Today an online search for solutions for SMBs does not lead directly to SAP. And even if you land on SAP’s website, there is no clear path to show you what you need or how SAP can help. So clearly SEO and website redesign is top on Mika’s priority list.

But both Barry and Mika know that it can’t end there. They must have a louder voice than their critics. And remember all those products in SAP’s portfolio that sit on the edges of a solution: talent management, supplier networks, analytics, travel and expense, eCommerce (front office)? SMBs have the same kind of needs as their larger counterparts in all of these areas. But they don’t have the internal expertise to assemble a solution that is not already seamlessly connected.

It is not enough that these edge solutions are available from SAP; they must be both affordable and integrated to SAP Business One and SAP Business ByDesign. These kinds of connections are certainly on the roadmap, but they can’t come too soon.

The Internet has leveled the playing field, allowing SMBs to participate in a growing, global market. But many won’t be able to compete effectively with their existing solutions. This opens up a world of opportunity to SMB solution providers. Look at the success SAP has had in the small to mid-market already. I am not advocating the SMB folks at SAP go off message, but I am advocating they articulate that message in a different voice. That voice needs to be loud and proud. They need to keep the dialogue going with existing customers and keep the development engines churning. While I also believe there is plenty of opportunity for all those with good, solid, technology-enabled solutions, if the new leadership team can deliver on these fronts, they will truly be a force to be reckoned with.

 

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What Acumatica 6 Means to Digital Transformation

Productivity, Analytics, Technology

The Internet levels the playing field in our global economy, allowing companies of any size to establish a presence and compete on a global scale. But in order to fully participate in this global, digital economy, most companies must undergo a digital transformation. Digital technologies of today, those that serve to connect operations, people and processes through the power of the Internet, have the potential of fundamentally changing the way we do business. Eighty-four percent (84%) of companies participating in the 2016 Mint Jutras Enterprise Solution Study agree and 88% understand that embracing digital technologies is necessary for survival.

And yet we find evidence most have not embraced “digital” with the level of priority and urgency that will give them a competitive advantage. Almost half still rely on paper and/or manual processes for maintaining their operational and transactional systems of record. And 71% to 82% still rely at least partially on spreadsheets or manual processes to plan and manage key elements of their businesses. Why is that?

Oftentimes it is because the “digital” hype focuses either on consumer technology (social, home, shopping, fitness, etc.) or is discussed at such an advanced (and abstract) level that your typical business leader just can’t figure out how to get from here to there.

Acumatica is looking to change that and its latest release of its cloud ERP, Acumatica 6, provides us with some good examples of how it is going about it.acumatica6

Click here to read the full report.

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Plex Systems Hits the Acquisition Trail

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

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

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

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

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

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

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

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

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

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

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Infor Partner Network Continues to Mature

In the End, It’s All About the Customer

Back in February 2015, Mint Jutras observed that The Infor Partner Network (IPN) was coming of age. After four years it had laid a solid foundation with fair contractual terms, rules of engagement and segmentation, marketing programs, training and certification. Entering its 5th year (2015), Infor continued to strengthen those areas, but shifted its focus to help its partners with cloud business enablement, micro-vertical specialization, value engineering and solution portfolio expansion. Those efforts are paying off, as evidenced by more (and larger) deals in the pipeline, more “declared” verticals and value-add extensions to Infor’s CloudSuites. And yes, accelerated movement to the cloud.

All of these efforts are continuing in 2016, but the IPN team is not sitting back and resting on its laurels. Instead it is charging ahead vigorously with new partner enablement programs aimed at attracting more customers through delivering more value. That includes “waking up” existing customers that may be suffering from inertia. And throughout we see increased sensitivity to helping customers and prospects evaluate, select and purchase/subscribe to solutions on their own terms.

Freeing Customers from the Bondage of Legacy Systems

Prior to 2011 (which is when the current management team took the reins) Infor had grown exclusively through acquisition. This resulted in a very broad portfolio of products that includes some very old, legacy solutions. Many of these solutions have retained some very loyal customers, in spite of turmoil and transition throughout the years.

MANMAN is a classic example, originally created and sold by ASK Computer Systems (there are two versions, one vintage 1974 and the other vintage 1984), which was later acquired by Computer Associates and subsequently divested to SSA Global, which was acquired by Infor in 2006. Written in FORTRAN for the HP 3000 and DEC VAX computers, believe it or not, there are still maintenance-paying customers running their businesses on the product. Throughout the years they remained loyal to the product, irrespective of which company owned it.

MANMAN of course is an extreme example, but Infor also owns many other products based on old technology that’s not going anywhere. Throughout these years of acquisition, Infor always promised never to “sunset” a product. Although Infor provides no real innovation to them, it does continue to support these legacy products. On the surface this might seem quite noble, or perhaps simply the right thing to do. But is it? Does Infor (and its predecessors) actually do a disservice to these customers by making it easy to simply stay where they are and continue to be severely limited by this old technology? We understand the fear of disruption of ripping out an existing solution and replacing it, but in reality this fear and these older solutions are holding these customers hostage.

The Software Equivalent of the Stockhom Syndrome?

So are the customers that are refusing to replace these old solutions simply not aware of the capabilities and potential benefits newer solutions can bring? Maybe they simply don’t know how far software has come over the last couple of decades. Or are they suffering from the software equivalent of the Stockholm syndrome? Mint Jutras suspects there is a little of both at play here. Either way, the Infor partner can play a very significant role… or not. The IPN team is trying very hard to make sure it’s the former, not the latter.

The Stockholm syndrome, also called “capture-bonding,” is a phenomenon where those held captive start to identify and sympathize with and defend their captors. Older solutions prevent their users from achieving the interoperability, collaboration, visibility and transparency needed to maintain a competitive edge today, not to mention the inefficiencies that result. Older solutions (and their customers) suffer from lack of features and functions and clumsy user interfaces that are anything but intuitive and “beautiful.” And yet the users of these solutions often complain about them on the one hand, demanding more features and functions, and vigorously defend them on the other.

This phenomenon is not confined exclusively to the Infor customer base. We find evidence of this in some of the questions we place in our Mint Jutras Enterprise Solution Studies. We capture satisfaction, levels of automation and digitization, buying intentions, as well as preferences and perceptions about Software as a Service (SaaS) and cloud. SaaS and cloud provide a perfect example of how older software can take you hostage.

For years now we have been asking a hypothetical question: If you were selecting a solution today, which deployment options would you consider?

We define the different deployment options as follows:

  • Software as a Service (SaaS): Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another party’s) computer.
  • Hosted and managed by your ERP vendor: Software is licensed by you but you pay your ERP vendor to manage and maintain (host) hardware and software.
  • Hosted by an independent 3rd party: Software is licensed by you but you pay another party to manage and maintain (host) hardware and software.
  • Traditional licensed on-premise: You license the software and are responsible for managing and maintaining it on your own premises.
  • Hybrid: Parts are licensed and maintained on premise and parts (e.g. add-on modules) are cloud (SaaS or hosted).

The most popular deployment option is now SaaS and less than 30% of participants will even consider a traditional on-premise solution (Figure 1).

Figure 1: Which deployment options would you consider today?

IPN Figure 1Source: Mint Jutras Enterprise Solution Studies

* This option was added in 2015

Given the preference here, you might expect cloud solutions to dominate over the next few years, right? Wrong.

We went on to capture the percentage of all business software (not just ERP) that is now or will be SaaS over the next 10 years and beyond (Figure 2). While that percentage increases steadily over that time period, there is no hockey stick growth here.

Figure 2: What percentage of all your business software is/will be SaaS?

IPN Figure 2Source: Mint Jutras 2016 Enterprise Solution Study

The reason? There are just so many solutions already installed on-premise. Yet while less than a third would even consider an on-premise solution today, we don’t find an overwhelming percentage with immediate plans to replace those that currently exist (Figure 3). Even though many are underperforming.

Figure 3: Do you intend to purchase a new solution within 2 years?

IPN Figure 3Source: Mint Jutras 2016 Enterprise Solution Study

We offer these general observations in an attempt to understand what is going on in the Infor installed base, where there is an unusually high number of legacy solutions still in place, even after all these years. If these customers are anything like the rest of the ERP population represented by our survey sample, they could use a little push. Here’s where the Infor partners come in.

By now, most customers running these older solutions “get” the fact that the stream of innovation has slowed or, in some cases, completely stopped. So they turn to partners for consulting and customization. Those partners that continue to only sell and provide services around these older products are contributing to the problem. Of course it is good they can continue to support these long-time customers, but they should be educating customers on the advantages and benefits of moving to a newer, technology-enabled next generation solution. With over 90,000 customers, Infor relies heavily on the partners for customer intimacy. And of course, Infor wants to stack the deck in favor of that next generation solution being one its industry-specific CloudSuites.

Before that can happen, the partners also need to be convinced this is the key to continued growth and success in their own businesses. Those that simply ride this customization and consulting business into retirement will not be influencers or participants in the Infor community (or the digital economy) for the long term.

Up until recently many partners chose to stay in their own comfort zones. But that is starting to change and even die-hard Visual, Adage, Baan, PRMS (and other) partners that were inherited from acquisition are starting to come around. Infor is encouraging these partners to take on new products and even “declare a major” around one of its vertical CloudSuites, perhaps with one or more micro-verticals.

Encouragement is backed up with serious investment in helping these partners make the transition. As more partners take advantage of Infor’s investment, this is good news for their customers. It means they are committing to stay in for the long haul, and can provide continuity even as the customers modernize. And perhaps they can provide that added “push” to do so.

Infor CloudSuite Academy

Infor’s CloudSuite Academy is one such investment. It is a series of practical training courses designed to help alliance and channel partners jump-start their Infor CloudSuite businesses. The first session a partner attends concentrates on product. All of Infor’s CloudSuites are (as the name implies) suites of individual products. There is quite a variety of different industry-specific CloudSuites, as well as several “horizontal” CloudSuites that might be sold stand-alone or in conjunction with one of the industry CloudSuites.

At the core of each of the industry-specific CloudSuites is an ERP solution. Yet while there are 15 different industry CloudSuites, they are not powered by 15 different ERP solutions. For example, both CloudSuite Fashion and CloudSuite Food & Beverage are powered by M3. CloudSuite Industrial and CloudSuite Business are powered by Syteline. Lawson S3 powers CloudSuite Financial, CloudSuite Healthcare, CloudSuite Hospitality and CloudSuite Public Sector.

It’s actually a challenge to keep them all sorted out. The good news: Customers don’t have to keep them all straight. Customers just care about their industry and what is included as part of the Suite and perhaps the (optional) add-ons. In some industrial sectors for example, Enterprise Asset Management (EAM) would be part of the suite, while it would be an optional add-on for others.

This may get a little trickier for the partners, particularly those selling into more than one vertical. But in fact each partner is most likely to concentrate on a particular ERP solution and then move out from the product to perhaps include a multiple of the CloudSuites powered by that ERP. From a market perspective it really doesn’t matter what is under the covers, but it certainly does from a support and service perspective. Partners need to know their stuff in terms of both industry, as well as software solution. So the CloudSuite Academy product training extends beyond the core ERP to the other complementary solutions included in the suite.

Other CloudSuite Academy sessions follow with a comprehensive agenda for partner business owners, management and practice managers. They include sessions on the process of marketing, selling, supporting and renewing cloud business, as well as value engineering (benchmarking results). And the most recent sessions have also featured other partners sharing tips for a successful transition to the cloud.

While all the CloudSuites are available as multi-tenant SaaS solutions, they can also be purchased and deployed either as single-tenant SaaS or on-premise, allowing customers to choose their own path on their individual journeys to modernization. The end goal is to better enable the Infor partner to become an effective and knowledgeable guide in that journey.

The Prospect’s Journey

In order for an Infor partner to have a thriving business, it is not enough to just service existing customers. Partners must also be in search of new customers – new to the partner and new to Infor. That means they must also provide the same level of consultative service to prospects. Today this assistance is required even before a prospect becomes a prospect.

Percentages vary depending on the source of the data, but industry observers today agree that most prospects conduct between 60% and 70% of their evaluations before ever reaching out to a potential solution provider. This includes researching aspects of their goals and aspirations, as well as different technologies. And it all starts online. These researchers are first looking to educate themselves. Only after that education is well underway are they open to discovering a potential solution and solution provider. Marketing materials that are thinly disguised sales pitches provide little value in this research.

Which is why Infor is investing so heavily in providing educational materials authored not only by Infor employees (subject matter experts), but also by industry thought leaders. Topics include digital transformation, the factory of the future (think Internet of Things) and omni-channel, as well as more traditional topics such as improving profitability and productivity. Infor is investing in research and reporting on these topics so that you, the prospective or current customer, doesn’t have to.

The benefit to the customers is direct, providing impartial and objective materials for their research. The benefit to the partner is a bit subtler, but equally clear. A well-educated prospect is a better-qualified lead. The partner’s role will be in helping the prospect to understand how Infor solutions can help address those needs. This is where “value engineering” skills are paramount.

Infor is also providing tools and training to assist partners in this phase as well, by helping partners to help customers engineer more value from their solutions. This training introduces a methodology that supports a more strategic way of doing discovery – discovery of the potential for improvement in alignment with the goals of the customer. It includes “discovery templates” for 16 solutions and industries, which assist in benchmarking current performance and quantifying opportunities for improvement.

It also helps the customer when the partner truly understands its business. While it is quite common for solution providers (and their partners) to specialize in a general category like manufacturing or distribution, Infor, with its CloudSuites, goes a step further into industries like food & beverage, aerospace and defense, automotive, industrial machinery, etc.

But Infor then encourages partners to go even a step further. Instead of “just” specializing in an industry like food & beverage, Infor is looking for partners to specialize in micro-verticals like dairy, bakery, grains and cereals or prepared foods. It is through this more focused specialization that partners can showcase unique strengths and capabilities and Infor customers can better achieve the “last mile” of features and functions that so often eludes customers and forces them down a path of customization.

Summary and Key Take-aways

Infor’s Partner Network continues to mature. While it has already come a very long way, we don’t see the IPN team slowing down any time soon. With the strength of Infor’s portfolio of technology and applications, and the support of a dedicated IPN team, partners still have a long runway ahead of them to continue to build speed and momentum.

Yet too many Infor customers have built their own roadblocks along that runway, allowing themselves to be held hostage by their own aging solutions. It now falls to the partners to help those customers overcome the software equivalent of the Stockholm Syndrome. Even while they continue to support those customers running legacy solutions, partners must now make them understand they are indeed bound by these limitations. They must educate them on the potential benefits of newer, more modern and technology-enabled solutions and then lead them out of bondage.

Education and thought leadership is a key part of the process for not only these legacy customers, but also new prospective customers. Recognizing that the way enterprise software is bought and sold has dramatically changed over the past decade, Infor has brought resources to bear to help partners transition to this new world, giving them the skills to bring both customers and prospects alike along on that journey. Will you come along?

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Host Analytics: Where Planning and Performance Management Meet

Today we live in a new world where the Internet levels the playing field for small, mid-size and large enterprises, breaking down barriers to entering new emerging markets. And yet we also face new challenges with rapidly changing commodity prices, fluctuating exchange and interest rates and an accelerating pace of business across a global economy. Whether you are looking to grow and expand or just accelerate profits, you need a plan.

A recent Mint Jutras report posed the question: Is Planning & Performance Management a Marriage Made In Heaven? We concluded that having a comprehensive plan is the first step towards achieving any specific outcome. But to optimize growth and profits, that plan needs to be a living plan, capable of evolving as goals and business conditions change. The key to breathing life into your plan is to actively link it to enterprise performance management. While that might seem intuitively obvious, too often the plan simply goes on the shelf as you go about business as usual. To monitor, manage and predict performance against the plan, you need to marry the right solutions with the right data.

The tools available to help you succeed range from spreadsheets to suites of applications that also might range from simple, basic tools to comprehensive solutions built on modern, enabling technology. Host Analytics provides a comprehensive Enterprise Performance Management (EPM) platform that is simple and affordable enough for the small to mid-size enterprise, but comprehensive and robust enough to support a growing mid-size company as it transforms itself into a large enterprise. Delivering its solution exclusively as Software as a Service (SaaS), Host prides itself in offering an EPM solution you can’t outgrow.

The Right Mix

In our report, Is Planning & Performance Management a Marriage Made In Heaven? we found companies with World Class implementations use a more extensive set of tools to plan, monitor and manage performance (Figure 1). The tools shown in the figure below fall into four general categories: specific applications, reporting, analytics, and, of course, the ubiquitous spreadsheet. Host Analytics provides the first three as part of a comprehensive suite and also helps you control the inevitable use of spreadsheets.

Figure 1: Tools To Monitor, Plan and Predict Corporate Performance

Host Figure 1Source: Mint Jutras 2016 Enterprise Solution Study

Note that Mint defines “World Class” in terms of the performance of the implementation of enterprise software that runs the business. Survey responses are used to measure cost savings and other improvements since implementation, progress made in achieving goals and selected current performance metrics that can apply universally to any business. The top 15% in performance is categorized as “World Class” and the remaining 85% are referred to as “All Others.”

While its solution is quite comprehensive today, being a cloud-only solution allows Host Analytics to offer frequent enhancements and improvements through monthly maintenance releases and quarterly feature releases. Over the past year Host Analytics has delivered about 185 enhancements and announced some very strategic partnerships. Key investment areas include:

  • User Experience
  • Performance
  • Consolidation
  • Data integration
  • Planning
  • Modeling
  • Productivity
  • Analytics
  • Security

“We Speak Finance, not Klingon”

According to Dave Kellogg, Host Analytics’ CEO, “Our first language is finance.” Hence the applications delivered serve the office of finance. He goes on to clarify with, “We speak finance, not Klingon.” That tongue in cheek reference to the language of the alien culture encountered in the journey of the USS Enterprise (of Star Trek fame) is a subtle reference to competitors who speak only in the language of information technology (IT), which will mean little to the finance department.

As an interesting side note, the Klingons appeared in the original Star Trek series as enemies of the Starfleet Federation, but became allies in later generations of the entertainment franchise. We can only assume Mr. Kellogg is referring to Klingon in those later series because Host Analytics is actually quite IT-friendly, building on a modern technology foundation. Certainly IT is not viewed as the enemy, even if the staff does speak a different language.

However, Mr. Kellogg goes on to point out that while those in the office of finance might speak finance, they don’t care exclusively about finance. They care about the performance of all departments and disciplines across the enterprise. This is an important factor, and one covered in depth in our prior report. You need more than a financial plan. You also need an operational plan. This could potentially present a problem to a solution provider focused exclusively on the office of finance, which is why it weighs heavily in determining Host Analytics’ strategic approach to its product portfolio.

Focus, Partner and Unite

Mr. Kellogg described the company’s strategic approach at the recent Host Analytics World 2016. “We have three options to choose from. As a solution provider we could ignore the problem. But that would most likely mean the plan would be retired to a drawer and used only for executive compensation purposes. We could go a mile wide and an inch deep, attempting to build functional performance management applications for all functions. Or we could focus, partner and unite.”

Host Analytics chooses the third option, focusing on building financial apps and partnering with other companies that speak the languages of supply chain, manufacturing, services, marketing, sales, etc. Key to that decision: Host allows partners to build these apps within its Modeling Cloud. When they do, Host can bring the financial plan together with the full operational plan in a single cloud model. In doing so, Host is hoping to eliminate the need for “shadow finance” organizations that tend to spring up across the enterprise when departmental and functional needs aren’t met by a financial (only) plan.

Planning modules within the suite allow you to plan, budget, forecast and report all from one application. Modeling helps you create operational plans that align with financial plans. Multidimensional modeling helps you anticipate outcomes using financial and non-financial drivers. New dimensions can be added for granular “what if?” scenarios.

Analytics Tie It All Together: Think Quick and Qlik

Analytics are important tools in bringing the financial and operational plan together. In our prior report we noted that World Class implementations were 43% to 180% more likely to use various types of analytics.

Host Analytics has had a long-standing relationship with Qlik, who is also its customer. That relationship has now been strengthened and Qlik is embedded within the Host Analytics suite. No more exports from Host to Qlik required. Access and data is available in real time right from Host.

This partnership and integration brings data discovery and visualization tools to the Host Analytics suite. Pre-built dashboards can be easily tailored and configured by business users, adding a level of self-service and independence for the business user without over-reliance on IT. Presentation quality story boards can be created and integrated with Host’s Financial Package Publisher. The (combined) solution becomes browser agnostic (Windows and Mac), and fully supports mobile devices.

Direct integration with Host financial data comes right out of the box, but customers and partners will also be able to integrate other models and third party applications in order to mash up data from a variety of sources. Host has also expanded in-memory support and implemented incremental updates of data cubes and dashboards. Early results have yielded 50% to 90% improvements in performance across various planning and reporting scenarios.

Expanding the Circle: Workforce Planning & Analytics

While Host Analytics’ primary focus is on financials, it is not drawing a circle too tightly around finance. In fact it is expanding its boundaries to include an element of workforce management, including the delivery of workforce planning and analytics. Workforce planning is a logical extension of the financial plan since headcount determination and resulting costs are often included as part of the financial plan. The new analytics will provide improved visibility to headcount, compensation, benefits, open requisitions and other employee detail. But for more specific planning activities, such as incentive compensation planning, Host has chosen a partner that speaks that language. A partnership and integration with Xactly was also announced at Host Analytics World 2016.

How Does Host Analytics Stack Up?

We concluded our prior report with a checklist of sorts to be used in looking for a solution that effectively manages planning and performance management. So how does Host Analytics stack up?

  • Look for planning and performance management tools that complement each other. While Host positions itself as an EPM player, its planning and modeling capabilities are a good fit for many companies, particularly in the small to mid-size range. While the volumes very large enterprises must deal with might have over-taxed its solution in the past, the new in-memory capabilities might just address that.
  • Make sure you can connect your overall financial plan to your operational plan. Host Analytics focuses on the financial plan, but has recently expanded to include workforce planning. Partners are required for other operational plans, but the partnership and integration with Qlik should help bring it all together in the end, provided the necessary operational plans are available. Expect some setup work to be required if bringing together data from applications in third party applications, but those offered by certified Host partners should slide in more easily.
  • Select tools that encourage rather than prohibit collaboration. Host Analytics has embedded social collaboration with in-context discussion threads and activity streams and the ability to annotate a plan. Host has partnered with SocialCast, but also supports integration with other collaboration tools such as Slack and Yammer. In addition, new “reporting” capabilities also support export to Google Sheets and Google Drive and Host will continue to build out this integration for bi-directional updates.
  • Consider a cloud approach. Host Analytics’ solution is delivered entirely and exclusively as Software as a Service (SaaS).
  • Evaluate not only the traditional desktop/laptop user interface but also the overall user experience, including the ability to support the mobile executive, on the device(s) of choice. Ask for a demo to evaluate the overall User Experience. Host is browser agnostic and adapts well to various devices.
  • Look for solutions that play well with others. Host has designed its solution with this in mind. But don’t be afraid to ask for specifics on your own configuration of solutions.
  • Work with your information technology (IT) staff, but seek a level of independence in the planning and performance management process itself. Think of your most complex test case for planning/modeling. For example, do you need driver-based planning? Host Analytics supports it. But does Host support all the methods and/or algorithms you might need? Make sure you ask. With the embedding of Qlik, data discovery and visualization took a giant leap forward, but always ask for a test drive. It’s one thing to watch an expert make the software sing and dance. How does it look and feel and how flexible is it when you are in the driver’s seat?
  • Understand clearly what kind of reporting and analytics are available right out of the box. Same as above: look at the demo but the proof of tailor-ability is in doing. Again, ask for a test drive.
  • How much data can the solutions handle? How fast can they process it? Host now supports SQL Server 14, which provides new in-memory capabilities. In addition, Qlik dashboards preload all data needed into memory. This combined with the ability to incrementally update reporting cubes and dashboards provides good support for high speed, real-time access to data.

Conclusion

Host Analytics’ claim to be a leader in cloud-based enterprise performance management (EPM) is valid. Its platform of financial applications for modeling, planning, consolidation, reporting and analytics effectively marry the planning and performance management activities in companies from small to large. While Host “speaks finance” it has also created a platform on which partners that speak other functional languages (supply chain, sales, marketing, etc.) can add their own value. Together with those partners, along with its special partnership with Qlik, the happy couple expands to become a true blended family.

If your current financial plan sits in a drawer for the majority of the year…

If you can’t align your financial plans with your operational plans…

If you are struggling to make sense out of a collection of spreadsheets…

If you find yourself in fear of mistakes buried in those spreadsheets leading to bad decisions…

You owe it to yourself to look for a new solution that can help you plan, monitor and manage your performance. But of course, only if you want to maximize your opportunity to optimize growth and profits.

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Oracle and NetSuite: Separate Fact from Speculation

Since last week when Oracle announced it had entered into a definitive agreement to acquire NetSuite, I have been amazed at the volume of incorrect information and speculation and opinions thrown around as fact. Just this morning I read an article referencing the projected $9.3 billion transaction as the largest acquisition by Oracle since the Peoplesoft acquisition for $10.4 billion in 2014. Well… the author was only off by about a decade. Oracle announced the proposed merger in 2004 but the deal was not consummated until 2005. The article also stated that Oracle would run NetSuite as an independent company. That too is inaccurate. What Mark Hurd was quoted in the press release as saying was, “Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever. We intend to invest heavily in both products—engineering and distribution.” That is a far cry from saying the company would stay independent.

These are just a couple of examples. Many others are disclosing “the real reasons” for the acquisition as fact, when in fact these are just opinions and personal conclusions. I stayed silent because I never simply regurgitate a press release, and beyond the price of the offer and a few quotes by Oracle co-CEOs, NetSuite founder, CTO and chairman, Evan Goldberg and NetSuite CEO Zach Nelson, everything else is just speculation. NetSuite can’t talk about it and Oracle won’t. But with all the commentary, I feel compelled to remind my readers not to misinterpret opinions as fact.

I consider myself somewhat of a reluctant expert in M&A. During my 40+ year career I have survived 15 of them, sometimes as the acquirer, sometimes as the one acquired. Sometimes I was intimately involved in the details; other times I simply observed from the sidelines. Acquisitions often generate excitement, but also fear, uncertainty and doubt. Sometimes they go smoothly, but more often they are disruptive – to the companies involved, the individuals (employees) and even sometimes the market. In the end, they can be very unpredictable.

There are a few very common motivations for one company acquiring another:

  • Grab market share: Some companies would prefer to acquire new customers in blocks of hundreds or thousands, rather than closing them one by one. This can apply to grabbing more share of your existing market or entering a new one.
  • Fill a product and/or talent gap: It can be far easier to acquire functionality than to develop it yourself. This can make the company more competitive, provide cross-sell and up-sell opportunity, or both. But don’t assume there is any M&A pixie dust that will magically integrate products overnight.
  • Upgrade technology: Similar to filling a product gap, but at the foundational level. It is much easier to build a new product from scratch with newer technology (or acquire one) than to retrofit new technology into old products.
  • Eliminate a competitive threat: If you can’t beat ‘em, buy ‘em.

So… what do I think is the motivation behind this acquisition? I think it is mostly about cloud market share. Of course, this is my opinion, but Larry Ellison’s stated goal of being the first company to reach $10 billion in cloud revenue is a pretty good hint. A secondary factor may very well be the cloud DNA, so to speak, that would come with a company and solution born in the cloud.

And there is no doubt in my mind that is the direction most prospective buyers are pointed in as well. I have been asking the same hypothetical question in my enterprise solution studies for the past 10 years: If you were to select a solution today, which deployment options would you consider? While back in the 2006-2007 time period less than 10% would even consider SaaS ERP (back then I called ERP the last bastion of resistance to SaaS), those preferences have slowly shifted. Between 2011 and 2013 the percentage that would even consider a traditional on-premise deployment dropped off a cliff and today SaaS is the most widely preferred option (Figure 1). And while Oracle was late getting out of the SaaS gate, NetSuite was a pioneer.

Figure 1: Deployment Options That Would be Considered for ERP

SaaS Fig 1Source: Mint Jutras Enterprise Solution Studies

But I also believe the other 3 reasons contribute to the attractiveness of NetSuite to Oracle.

Oracle probably already has all the different pieces that NetSuite brings to the table (and more), but NetSuite brings them all together in a seamlessly integrated, end-to-end solution. When I ask my survey respondents to stack rank 10 different selection criteria for ERP, fit and functionality still takes the top spot, but is followed closely by completeness of solution. This is particularly important for small to midsize businesses that don’t have deep pockets or the IT staff to roll their own solution or even integrate different parts. While Oracle does play in the SMB space, NetSuite plays better, as evidenced by some competitive wins against Oracle (usually in the upper midmarket). And it is built on a solid architecture of advanced technology.

So there is a lot on the plus side of the equation for Oracle. What’s in it for NetSuite? If you can believe Zach Nelson’s enthusiasm (his quote: “NetSuite will benefit from Oracle’s global scale and reach to accelerate the availability of our cloud solutions in more industries and more countries. We are excited to join Oracle and accelerate our pace of innovation.”), NetSuite will be able to expand its solution footprint and its global reach faster. Only time will tell on both aspects and a lot depends on how and how well the acquisition is executed and the companies are integrated.

While it is true that NetSuite never achieved a GAAP profit, that was heavily influenced by stock-based compensation and it did not really suffer from cash flow problems. As a result, it also didn’t suffer from a lack of innovation. And there is more overlap between products than some enthusiasts would lead you to believe.

And what about global scale? NetSuite could benefit from Oracle’s global reach. But integrating sales efforts might prove tricky. So the jury is still out on that front as well.

And then there is customer sentiment. Anecdotally, you can find NetSuite customers that made a conscious decision to avoid doing business with Oracle. When the acquisition actually happens, will that cause NetSuite customers to jump ship rather than become Oracle customers? My guess is no. ERP is just too big an investment (of time and money) to make such an emotional decision. Will there be some attrition over time? Probably. But again, a lot depends on how the acquisition is managed and the net impact on support, prices and contracts. NetSuite has never been the cheapest date, so there is not likely to be any immediate sticker shock.

All told, I think there are a lot more questions than answers right now. In the meantime keep your ear to the ground, but be wary of those who think they already have all the answers.

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