SaaS

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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Anaplan’s Smart Business Platform

A Different Kind of Platform for Planning

Call something a “platform” today and most people intuitively think of a technology platform – a development tool. In the hands of a skilled information technology (IT) professional, it can do anything and everything. That’s the good news. The bad news is, business leaders must rely on limited IT staff to deliver all the functionality required to do their jobs. As a result, business leaders typically prefer pre-built business applications.

Now, the good news about these business applications is they are purpose-built to perform the functions needed right out of the box. The bad news: Those pre-built applications might not operate exactly as needed. So either the business leaders make some compromises or they get back in line and wait for the IT staff to work their magic.

What if you could have the best of both worlds – a platform that is flexible enough to adapt to your specific needs, but easy enough for a nontechnical business user to design, set up and configure? What if it was available with some “use cases” pre-built to use as a starting point in building your own? That’s exactly what Anaplan set out to deliver with its cloud planning platform. The team at Anaplan calls it “The Smart Business Platform™” and it can be used for any combination of financial and operational planning to create an integrated plan for your business.

A Business Platform for Planning

Anaplan focuses exclusively on planning. But in order to make the Anaplan plan a living plan – one that lives and breathes as business conditions and real-life plans change – it fuses planning with performance management.

The pre-built application approach tends to work quite well in supporting business transactions. After all, how many different ways can you move inventory, pay suppliers, invoice customers and collect cash? But when it comes to planning, you enter a whole new world… or rather a whole new set of different worlds.

Not only does each type of business have its own nuances when it comes to planning, all the different functions in the organization approach it completely differently. The finance department needs financial planning and budgeting. Sales operations need sales forecasting. Supply chain planners need sales and operation planning (S&OP) and demand planning. Manufacturing needs inventory planning and optimization and resource planning. Corporate strategists need some combination of revenue, workforce and facility planning. The CFO needs to predict cash flow. The CEO needs visibility across the board. The list goes on.

If you take a purely business application approach to address all of these disciplines, you run the risk of creating a solution that’s a mile wide and an inch deep. So a platform approach to planning makes sense in that it helps you perform all these different kinds of planning in whatever flexible way needed.

But how do you take a platform approach and not become over-reliant on IT? You do what Anaplan has done and turn it into a business platform. What’s the difference? A technology platform is a set of tools for the technologist, while a business platform is a set of tools for the business leader. That’s the first step, but Anaplan didn’t stop there. Anaplan made it The Smart Business Platform™.

It’s smart because it naturally integrates all of the different plans, making it a complete and connected plan, across (potentially) every functional area of the business. It’s smart because it fuses planning and performance management together. You essentially manage performance from the plan. All the reporting and analyses tie back to the plan, which makes it a living, breathing plan. It’s smart because the planning engine uses Anaplan’s patented HyperblockTM calculation engine to perform modeling, including the ability to do simulations prior to making changes. And it’s smart because its in-memory technology gives you the speed needed plan at the right level of granularity, with all the detail you need for accuracy without sacrificing productivity.

Click here to download the full report.

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Top 10 Quotes from NetSuite’s SuiteWorld 2016

It has been an extraordinarily busy spring conference season. I personally attended 10 events over the past eight weeks and missed a few more because of scheduling conflicts. Of all those I attended, I think NetSuite’s gets the prize for the best sound bites produced in an event. Here are my top 10 favorite quotes from SuiteWorld 2016.

“I love the smell of GL systems in the morning.”

Not. Of course this was said tongue in cheek by Zach Nelson, CEO, and was actually a veiled reference to the context of the next quote. Zach (somewhat proudly) noted that Gartner’s ranking of NetSuite’s Financial Management System (FMS) had progressed from #8 in 2014 to #6 in 2015.

“We didn’t set out to build a Financial Management System (FMS). Our goal was to build a system to run the business.”

Actually NetSuite originally started with three goals: to build an end-to-end system, deliver it only over the cloud, and include ecommerce natively. Of course, in order to deliver an end-to-end solution, it needed a back office accounting solution, but that was just one piece of the puzzle, not the end game. Through the years they were tempted to put servers on premise, especially in the early days before Software as a Service (SaaS) had come into its own. But they resisted. And they made sure even the early solution had a web store.

“We spent $1 billion so you didn’t have to.”

Continuing on the theme of including eCommerce, Zach touted the speed of Suite Commerce, giving some statistics on how it outperforms other leading sites. In a follow-on to Zach’s opening keynote, CTO Evan Goldberg (also one of the original NetSuite founders) noted they had delivered a 33% faster sales order save and 40% faster Suitecommerce advanced page load time. Obviously there is a cost associated with delivering speed and performance, but not a cost that comes directly out of NetSuite customers’ pockets.

“Security bugs? We find ‘em; we fix ‘em. The next morning, all are running with the appropriate patches.”

The reference to security bugs was in the context of a security bug, purportedly reported to and fixed by rival SAP three years ago. Yet some customers had yet to apply the patch and were therefore still vulnerable. My tweet with this quote sparked a bit of a push back from someone coming to SAP’s defense:

This was an SAP API fix that broke ISV integrations if applied, hence SAP made optional. Cloud companies have similar probs

To which I responded: would venture to say in a #SaaS environment, problems don’t linger 3+ years

His response: API fix is a little different, SAP gave customers option because fix could break ISV integrations – it was a useful defect

“Useful defect?” Is there really such a thing? And have we really become so inured to fixes of any kind “breaking” integrations? I hope not.

But the real point here is the value of a multi-tenant SaaS environment. First of all, the customer is relieved of the burden of applying patches. The SaaS vendor pushes them out in (hopefully) a timely manner. And with only a single line of code to maintain, more innovation should come along faster.

The other implied benefit is the value of a platform that allows partners and customers to customize and extend the code without fear of it breaking when fixes and enhancements are delivered.

“Customization is not a dirty word at NetSuite.”

The caveat to this is obviously… as long as you can upgrade. NetSuite customers are all running the same code, yet all are a little different. One of the unique features of NetSuite’s platform (unique for a SaaS-only solution anyway) is the ability to make even complex changes to the data model with no negative impact. This feature is becoming more and more popular among NetSuite’s customers. Within the last year, the ability to add custom fields went from the 5th most used feature to number 1. This actually comes as no surprise to me. My 2016 Enterprise Solution Study asked survey participants what type of customization they required. Fifty-seven percent (57%) selected user-defined fields. Only custom and ad hoc reporting were more widely selected (63% and 62% respectively).

In fact much of the “customization” that is typically required by NetSuite customers does not require you to muck around in code at all. Much can be done through tailoring and configuring, or personalizing screens. But let’s say you want to develop a whole new function that is either very industry-specific or helps you differentiate your individual business. NetSuite does provide development tools for this, including SuiteScript. Per NetSuite: SuiteScript is a JavaScript-based scripting solution for sophisticated coding and debugging within NetSuite that enables developers to build new applications, processes and business rules.”

In addition, a beta version of SuiteCloud Development Framework has recently been released after a multi-year effort. This framework includes all the tools for coding that you know and love, now with team development collaboration, richer code completion, version control, change and dependence management (i.e. discover what code might break if you make this change).

“SuiteScript allows you to do anything your wife wants you to do.”

This quote came from Evan Goldberg, one of the original NetSuite founders. When not performing his duties as NetSuite’s chief technologist, his alter-ego manages his wife’s ecommerce site, which she happens to run on NetSuite SuiteCommerce. The new release of the NetSuite Development Tools has had a profound impact on all developers, including Evan and his alter-ego as both took the stage. While it was quite hard to decipher everything going on (the font was way too small for my eyes, and I haven’t written code in almost 4 decades), it was clear the new code created for Mrs. Goldberg’s web storefront was a lot shorter and faster..

“Our goal is to stay out of your way [to innovate] in your business.”

While first spoken by Evan, this phrase proved to be thematic, popping up in other keynotes and sessions as well. Revamped developer tools were just the beginning. What the NetSuite development team has accomplished with the tools is equally important, if not more so. Among the new features and enhancements were many in the finance area, a new SuiteBilling module, complete with support for new revenue recognition rules for ACS 606 and IFRS 15, and “intelligent” order management. NetSuite places the dual goals of streamlining the development process and customers’ business processes on equal footing.

Disruption caused by today’s digital economy makes digital transformation compelling and the need for agility crucial. Traditionally ERP solutions were more likely to hold you back than to enable transformation. Can NetSuite be an enabler? They can certainly try. And trying is even more important than ever as business complexity increases.

“In the cloud economy everything gets more complex.”

Actually I would say it is the digital economy that makes things more complex. Perhaps in this quote, “the cloud economy” was meant to be synonymous with “the digital economy.” Indeed, it is hard to have a digital economy without the cloud. But I think there is a subtle difference. Cloud is an enabler in helping us participate in the digital economy, both as consumers as well as enterprises. On the one hand, the cloud has made our personal lives simpler. We can order dinner, entertainment, or a taxi ride online. We can shop online and have goods delivered right to our doors. But we can also still shop in a store. Or we can order online and pick up the goods in a store. This is the very definition of “omnichannel.” As we simplify our personal consumer experience, we complicate matters for the enterprise.

“Hybrid business models are the new black.”

Can one system handle all these different ways of conducting business? Certainly traditional ERP solutions made this difficult. They either catered to a retail/cash sale environment or an order-to-pay environment. But today blended environments are becoming more and more common. Many try to accomplish this with different systems. But when these systems don’t talk to each other the customer experience suffers.

But this isn’t the only example of a hybrid business model. We are rapidly entering a subscription-based economy. The software industry led the charge here. Enterprises and consumers alike used to license software and bring it on premise. While this didn’t really mean they “owned” it, as they might own a pair of shoes, in some ways they did own a copy of it. Today, these same software companies are much more likely to sell a subscription to the software.

Now even companies that sell and ship physical products are likely to sell a subscription either along with the product, or instead of it. Consider the water filter company that ships you a device that filters your water for free and then invoices you monthly based on how much water you filter. After a certain period of time, the filter needs to be changed and they charge you when they ship you a new one. Chances are you don’t own the DVR in your home. Your cable provider does. You simply pay for the cable service as a subscription.

More and more companies must invoice based a hybrid business model, invoicing for some combination of product, services or “as a service.”

“If you can sell it, we can bill it (and recognize it.)”

NetSuite’s SuiteBilling module not only supports all these different invoicing methods, but it can also combine them all on a single invoice. While this sounds simple, trust me, there are many solutions out there today that will struggle with supporting all these different billing methods at all, even without trying to combine them on a single order and then a single invoice. I applaud NetSuite for rejecting the option of trying to optimize for the intersection. Instead NetSuite chose to but have to optimize for each and make it easy to combine them.

And because many of these new ways of billing have a signed or at least implied contract, there won’t be too many companies that are not going to be impacted by the convergence of ACS 606 and IFRS 15 (Accounting Standards Update (ASU) 2014-9, Revenue from Contracts with Customers (Topic 606 and the International Accounting Standards Board (IASB) International Financial Reporting Standards (IFRS) 15, Revenue from Contracts with Customers.)

These converged standards for revenue recognition go into effect the beginning of 2018 for public entities, and in 2019 for privately held organizations, bringing very significant changes to financial statements and reporting for any company doing business under customer contracts. While revenue recognition, including expense and revenue amortization and allocation, has never been simple, with these changes, it is about to get harder – at least for a while.

Why? First of all, while you can prepare for the change, you can’t jump the gun. You can’t recognize revenue based on the new rules until those new rules go into effect in 2018. At that point public entities must report under the new guidance and private companies can, but they have an additional year before they are required to do so. So any public entity better be ready to flip the switch, so to speak. But flipping the switch doesn’t only mean recognizing revenue in a new way. For any contract with outstanding, unfulfilled obligations, you also have to go back and restate the revenue for prior periods under the new rules. And for some period of time, you will need to do dual reporting: old and new. In addition, when contracts change, this can potentially have an impact on revenue previously recognized, including reallocation and amortization of revenue and expenses.

NetSuite has been working on this for quite awhile, starting with the support for multiple sets of books, which is how it will accommodate the dual reporting. It is not too early to be planning for this change and using multiple sets of books, you can be looking at how the revenue will be recognized in the future. I have seen some of these before and after revenue reports and the changes are not particularly intuitive. Best to understand what is coming or your revenue predictions for 2018 are going to way out of whack.

Bonus Quotes

While those were my top 10 favorites coming out of SuiteWorld 2016, there were a couple more that you might find interesting:

“Luck should not be a business strategy”

No further explanation required. Real “luck” is a combination of careful planning and hard work.

“The Cloud is the last computing architecture, the last business architecture.”

Sorry Zach, I just can’t agree with this one. I am sure some will immediately think of the famous quote: “Everything that can be invented has been invented.” While some give credit to Charles H. Duell, the Commissioner of US patent office in 1899, others point to a more contemporary source, a book published in 1981 titled “The Book of Facts and Fallacies” by Chris Morgan and David Langford. Either way, whoever said it, was wrong. Maybe Zach is right, but personally whatever the last computing or business architecture will be, I’m pretty sure nobody has even thought of it yet.

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ACS 606 and IFRS 15 Revenue Recognition Rules Are Coming

Are You Prepared? Intacct Has You Covered.

In May 2014, FASB issued Accounting Standards Update (ASU) 2014-9, Revenue from Contracts with Customers (Topic 606). At the same time the International Accounting Standards Board (IASB) also issued International Financial Reporting Standards (IFRS) 15, Revenue from Contracts with Customers. In doing so, these two governing bodies largely achieved convergence, with some very minor discrepancies. These converged standards for revenue recognition go into effect the beginning of 2018 for public entities, and in 2019 for privately held organizations, bringing very significant changes to financial statements and reporting for any company doing business under customer contracts. And of course with these changes come new audit challenges.

“The core principle is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.”

Source: FASB ASC 606-10-5-3 and 606-10-10-2 through 10-4

As a result of these changes, revenue is no longer recognized on cash receipt, but instead on the delivery of performance obligations. In summary, there are 5 steps:

  1. Identify the contract with the customer
  2. Identify the performance obligations in the contract
  3. Determine the transaction price for the contract
  4. Allocate the transaction price to the performance obligations
  5. Recognize revenue when or as the entity satisfies the performance obligation

Sounds simple enough, right? Not really. Unless your business is dead simple and you operate on a completely cash basis, the process of billing, accounting for and forecasting revenue, in conjunction with expense and revenue amortization and allocation has never been simple. But with these changes, it is about to get harder – at least for a while.

Why? First of all, while you can prepare for the change, you can’t jump the gun. You can’t recognize revenue based on the new rules until those new rules go into effect in 2018. At that point public entities must report under the new guidance and private companies can, but they have an additional year before they are required to do so. So any public entity better be ready to flip the switch, so to speak. But flipping the switch doesn’t only mean recognizing revenue in a new way. For any contract with outstanding, unfulfilled obligations, you also have to go back and restate the revenue for prior periods under the new rules. And for a period of time, you will need to do dual reporting: old and new. In addition, when contracts change, this can potentially have an impact on revenue previously recognized, including reallocation and amortization of revenue and expenses.

If you are managing billing, accounting and/or revenue forecasting with spreadsheets today… good luck. If you are an Intacct customer, luck is on your side. Earlier this week Intacct announced a new Contract and Revenue Management module. Intacct claims it is the first solution to fully automate the new complexities created by ASC 606 and IFRS 15. They are certainly not the only company working on it. In fact QAD (which targets a completely different market: the world of manufacturing) highlighted its efforts in its own event in Chicago recently. But I have to say, Intacct seems to be right out front leading the charge in helping companies deal with what is sure to be a complex and potentially disruptive transition.

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Welcome to the New World of Exact Macola

Did you ever walk purposefully into another room and forget what you came for? It happens to me all the time. My pantry is less than 20 steps from my kitchen, and yet, 9 times out of 10, I open the door, step in and wonder what I came for. I wind up stepping out, looking back into the kitchen to see what I was doing. Usually that will trigger my memory. It’s gotten worse with age, but I’m not that old. It happens to all of us. When something we need is not visible and clearly within reach, it’s easy to get distracted and lose track of what you’re looking for.

It’s bad enough when you’re puttering around the house or making dinner. It’s even worse when it happens when you’re sitting at your desk at work. You get a call or an alert on your smart phone, or something doesn’t look quite right on that report you’re scrolling through, or you’re preparing to present performance results to your boss and you need to dig a little deeper. You have a question in mind but even though you know the answer is buried someplace in your enterprise data, it’s not immediately visible and clearly within reach. If you have to hunt and peck, traversing a series of menus, to find what you’re looking for, it’s easy to be distracted along the way. Sometimes you wind up going down a rat hole and 2 hours later, you realize you still haven’t answered your own question. No wonder the days just seem to get longer and longer.

This is clearly the problem Exact Macola is trying to solve in its newest version of Workspaces. A Workspace in Exact Macola 10 gathers together all the data you might need to perform a process, make a decision or monitor performance… in other words, to do your job. Some will come right out of the box. But because your role in your organization and your job is unique, new Workspaces must be easily constructed and standard Workspaces must be easily tailored.

Exact Macola describes Workspaces as “one of the most unique and powerful pieces of Exact Macola 10 – allowing personalized role-based views of your business information and creating a natural and intuitive experience.” I came into the Exact Macola Evolve conference last year with a pretty favorable impression of this technology and that impression became even more favorable as I watched the “Dueling Developers” session this year, which pitted a senior consultant (Thijs Verberne) against product manager David Dozer, in creating Workspaces on the fly as the audience watched.

That exercise proved development was fast and easy. But how does this keep users from wandering into the pantry and forgetting what they came in for? A new feature of Workspaces 2.0 is the ability to add Workspaces menus to transaction screens and/or perform transactions directly from Workspaces. Do you have a job where you spend the majority of your time in transaction screens (e.g. you’re a buyer researching and creating purchase orders)? You can stay there all day doing your primary job, but when you need to do some further investigation, (right from a transaction) you can bring up a Workspace from a pull down menu and it appears as a popup. This feature alone drew a huge round of applause from the audience.

Or maybe you are a manager that prefers to monitor status of a series of key performance indicators (think dashboard). But occasionally you need to perform a transaction like approving those purchase orders or requesting a change. You can stay in your dashboard-like Workspace, and attach a drop down menu (or 2 or 10) that allows you to divert and run a transaction without ever leaving your preferred space.

Marry these two features together and you don’t have to worry about anticipating all your needs up front. Get the basics set up and let your work naturally direct the evolution of your Workspaces. At first you might not think you would ever have a need to go directly to a transaction. But sure enough…. No problem, it can be added in minutes (really!)

While Workspaces 2.0 was (in my mind anyway) the highlight, it is not the only innovation that has been delivered by Exact Macola over the past year. Here are some other areas the team has been working on:

  • Phase 1 support for IFRS
  • Workflow conditional statements (rules, if-then statements, more control and flexibility)
  • Financial consolidation across divisions
  • Business Intelligence delivered through a partnership with Qlik, but sold by Exact under the Exact Insights brand
  • Forecast Pro integration
  • Avalara integration
  • New web services and some underlying architectural changes

All this innovation (and more to come) seemed to infuse a new energy and vibrancy into the Exact Macola community and created more urgency for those still running older solutions like Exact Progression or the Enterprise Suite (ES) to upgrade/migrate to the newer Exact Macola 10.

Not only has the Exact Macola team been delivering innovation at a much accelerated pace, it has also been responding to several trends in the market today. Beyond those features listed above, Exact Macola has been working on full web enablement and the overall user experience. In addition to Workspaces, the company has renewed its focus on ease of use, bringing in experts to help deliver a more natural user experience (UX). This includes both the access anytime, anywhere convenience of the cloud, as well as more mobility. After delivering mobile functionality on iOS last year, it added Android this year. And it has been delivering more analytics, as well as a more end-to-end integrated solution.

Indeed these are exciting times for Exact Macola and its customers. But for those still running those older solutions (Progression and ES), the excitement might soon fade, unless of course they decide to make the leap forward. I would strongly encourage them to do so.

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Epicor Announces It Will Grow Business, Not Software

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

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

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

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

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

Epicor tag line

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

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

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

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

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

Fig 1 EpicorSource: Mint Jutras 2016 Enterprise Solution Study

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

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

Fig 2 EpicorSource: Mint Jutras 2016 Enterprise Solution Study

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

  • Choice
  • Convenience
  • Cost Control
  • Customization
  • Collaboration

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

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

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

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

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

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

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

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

 

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Unit4’s Self-Driving ERP Gets a Digital Assistant

Don’t you envy those top-level executives with personal assistants who seem to sense and deliver on the bosses’ every demand, even before the bosses have figured out what they need? You see them on TV and in movies all the time. Unfortunately for the vast majority of us in the business world today, the trend is in the exact opposite direction. Even prior to the emergence of the digital economy, electronic communication changed everything. Back in the day, many of us (old enough to remember) first relied on secretaries and then administrative assistants, telephones and paper. Today we rely on emails, texts, instant messages, along with specialized apps for things like purchase requisitions, travel and expenses and personnel administration and management. This makes us administratively self-sufficient – all in the name of productivity and efficiency. Sure it’s faster. Sure, we’re better connected. But that doesn’t mean it’s easy. Or fun.

It also doesn’t necessarily relieve us of the burden of mundane tasks. Yes, we have elevated employees to become more “knowledge workers,” and we eliminated a lot of menial jobs, but we haven’t entirely eliminated all the grunt work. We’ve just distributed it more democratically across the organization. Wouldn’t it be nice if we could eliminate more of it?

That’s exactly what Unit4 has in mind in developing what it calls its “self-driving ERP.” I introduced the concept to my readers back in June 2015 with a blog post: What is Unit4’s “Self-Driving” ERP? Unit4’s latest announcements, coinciding with its customer conference in Amsterdam last week, showed the company is making headway in fulfilling its “promise of self-driving business solutions which free people from repetitive tasks and allow them to focus on high value activities.” In fact that is a direct quote from its press release on Unit4 Business World On! – the biggest release ever of its business suite for services industries.

Unit4 Business World On! is built on Unit4’s People Platform Premium Edition, which is the technology foundation for Unit4 applications, enabling self-driving capabilities based on predictive, event-centric and pattern recognition technologies. It is available as a true multi-tenant SaaS solution, but can also be delivered and deployed on-premise without sacrificing the mobile-access capabilities. Unit4 has put a lot of work into the user experience, but you need more than a visually appealing user interface to be “self-driving.” And I am a firm believer that the best user interface is often no user interface at all. (Refer back to my previous blog post to get a better handle of what makes it “self-driving.”)

But what really caught my eye this time around was the press release on its Digital Assistant. I was kind of hoping for someone (or even something) to shadow me (even if it is virtually), anticipating my every need. But if you look closely you see this is a “Digital Assistant for business software” not an assistant to industry analysts or presidents of small companies. Business software needs an assistant more than I do?!?

Actually yes. As I noted last June, enterprise applications like ERP are meant to capture transactional data (which happens to be the basis of a lot of our decision-making) and streamline and automate business processes. Yet while ERP was originally meant to make our business lives easier, it hasn’t always delivered on that promise. It’s gotten a lot better over time, but we still need to be expert navigators. We often have to fill some gaps. Sometimes we play the role of the (human) glue that holds everything together. If Unit4’s Digital Assistant can help the business software do all that for us, then sign me up!

The Digital Assistant is scheduled for general availability in 2017. In the meantime the glimpses I have had of Unit4’s “self-driving” capabilities are impressive.

Now, if only it could make a great cup of coffee!

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NetSuite In Transition

 From “Graduations” to Full-Scale Replacements

After years of supporting “graduations” from the likes of QuickBooks and desktop solutions, more and more larger, more well-established companies are turning to cloud native NetSuite for whole-scale replacement of entrenched Enterprise Resource Planning (ERP) solutions. This transition comes at an opportune time as the demand for scaleable solutions escalates and the acceptance of software as a service (SaaS) grows. NetSuite OneWorld’s cloud-based ERP, including support for global financial consolidation and embedded omnichannel commerce, along with its scaleable platform that supports customization and extensibility, makes it a viable contender as a replacement strategy for legacy solutions.

Cloud and SaaS, Not Just For the Little Guys

Many confuse the terms cloud and SaaS. In fact Mint Jutras has been guilty of using them interchangeably. But in fact they are not the same and this means not all “cloud” solutions should be viewed as equals.

  • Cloud refers to access to computing, software, storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.
  • SaaS is exactly what is implied by the acronym. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another’s) computer. It generally is paid for on a subscription basis and does not reside on your computers at all.

All SaaS is cloud computing, but not all cloud computing is SaaS. Traditional on-premise or hosted solutions might (or might not) be accessed via the cloud, although this is more likely to be a private cloud. NetSuite is a real multi-tenant SaaS solution, which puts it in a different class of applications than those that just deliver web-based access.

For many years, many also made the assumption that SaaS was just for small companies. And yet for the past several years, Mint Jutras Enterprise Solution Studies have found a growing preference for SaaS across all sizes of companies. Below we present those results in two different ways.

Figure 1 shows the progression of preference over the past several years, in intervals of two 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?

NS Fig 1Source: Mint Jutras Enterprise Solution Studies

* Option added in 2015

We found 2013 to be a turning point, where we saw a very sharp drop-off in willingness to even consider a traditional on-premise solution, and in 2015 we saw almost a 20% increase in willingness to consider SaaS. Very early feedback from our 2016 Enterprise Solution Study indicates both trends are continuing.

But this doesn’t answer the question as to whether SaaS is just for small companies. To answer this question we need to examine the responses by size of company. Figure 2 defines size of company by annual revenue and we find nearly as much interest in SaaS in large enterprises as we do in small companies.

Figure 2: Percentage that Would Consider SaaS (by company size)

NS Figure 2Source: Mint Jutras 2015 Enterprise Solution Study

Note: annual revenues determine company size:

  • Small: Annual revenues under $25 million
  • Lower Mid: $25 to $250 million
  • Upper Mid: $250 million to $1 Billion
  • Large: Over $1 billion

Mint Jutras believes this is largely fueled by the way companies grow and expand today. Gone are the days when companies grew to be large, monolithic giants. While companies may be large and centrally owned and operated, they typically expand into multiple operating locations, oftentimes distributed across the globe. Indeed 80% of companies surveyed in our 2015 study operate in more than one location (Figure 3).

Figure 3: Number of Operating Locations (by company size)

NS Figure 3Source: Mint Jutras 2015 Enterprise Solution Study

Even where these operating locations are semi-autonomous subsidiaries, when it comes to software that runs the business, it is no longer common to leave those decisions to the individual business units. The vast majority (87%) has defined corporate standards for these applications. As the company grows, along with the number of operating locations, the potential for complexity grows faster. What better way of managing and enforcing these standards than through a centrally maintained SaaS solution like NetSuite OneWorld?

Case In Point: Dent Wizard International

Dent Wizard International has been the leader in the development of Paintless Dent Removal (PDR) technology since its establishment in 1983, and today is North America’s leading provider of SMART Repairs (Small to Medium Area Repair Techniques). In 2010, Dent Wizard was acquired by a private equity firm, and therefore needed to transition off its legacy IT environment, including an on-premise ERP and custom accounts receivables and payroll applications running on an IBM AS/400. With over 1,800 employees, 1,500 of which are service technicians in the field, Dent Wizard needed a solution with access to business data any time, from anywhere capabilities, so cloud was a “must.” But beyond that, Dent Wizard sought added scalability and the ability to automate labor-intensive processes. Dent Wizard was specifically looking for:

  • a broad range of functionality to run complex and mission-critical business processes across multiple subsidiaries on the same platform;
  • speed of implementation and time to value;
  • a platform that removes the burden of having to manage upgrades and servers and dealing with version lock issues;
  • real-time visibility into and control of its business across all business entities and subsidiaries through a single version of the truth;
  • the agility, scalability and flexibility to support business growth.

When it first selected NetSuite in 2012, the majority of its invoices were entered manually, which necessitated a massive amount of data entry. Since then, the company’s revenue has grown by more than 60% and it now processes more than 1.8 million invoices per year, and has increased electronic invoice processing by 30%.

Many of those invoices are filed directly by field service technicians using its Wizard Pro mobile invoicing application running on mobile devices. This eliminates the need for the lion’s share of that manual data entry. The mobile application was developed using the NetSuite platform and integrates directly with OneWorld. It gives technicians the ability to manage tools and equipment on site through NetSuite inventory management.

Value and scalability were key elements of the decision to go with NetSuite OneWorld. “NetSuite gives us a platform for growth and scalability, and from an IT infrastructure standpoint—we don’t have to manage servers,” said Tammy Conner, Dent Wizard Chief Information and Accounting Officer. “NetSuite has enabled us to run a very lean IT department, and that makes our organization much more efficient. Our people are happy with NetSuite and routinely evaluate how we can optimize the solution for our business.”

Now Is the Time

Now is certainly an opportune time for NetSuite itself to be graduating into this new realm. Only 36% of Mint Jutras survey respondents gave us a definitive “no” when asked if they would purchase an ERP system within the next two years. Of course some (20%) of the remaining 64% are still undecided and some of these purchases will be “graduation” from a solution like QuickBooks that might not qualify as a full-fledged ERP. But a follow-on question lends a bit more clarity around those switching out old solutions versus supporting new sites or perhaps even a first time purchase. While 38% will be replacements, another 43% will combine replacement with accommodation for a new site not previously supported by ERP (Figure 4). Needless to say, this is a huge opportunity for ERP solution providers.

Figure 4: First Time Purchase or a Replacement?

NS Figure 4Source: 2015 Mint Jutras Enterprise Solution Study

We know the time is right for NetSuite, but is the time right for you? If you are in the “undecided” camp, it may be helpful to understand what spurs these replacements. We asked survey respondents to select the top three reasons that would prompt a replacement of a current solution. Figure 5 shows the five reasons with the most votes.

Figure 5: What Prompts Replacement? (select top 3)

NS Figure 5Source: Mint Jutras Enterprise Solution Studies

Interestingly enough these align quite well with what we find to be the appeal of SaaS (see sidebar). Quite often legacy solutions fail to meet the functional needs of their owners. Early solutions lack the depth and breadth of functionality available in newer solutions based on advanced technology, leading to customizations that further exacerbate the problem by building in barriers to upgrades and innovation.

Not only does a multi-tenant SaaS solution lend itself to more frequent updates (the vendor has only a single line of code to maintain), but also NetSuite’s platform makes extending the solution relatively easy. Dent Wizard’s Wizard Pro mobile invoicing application is the perfect example. This mobile process is quite unique to Dent Wizard and therefore not likely to be satisfied right out of the box. But in treating this as an extension to OneWorld the barriers traditionally built in with invasive code changes are removed. Even as NetSuite delivers innovation, this type of extension simply moves forward as well. Nothing breaks.

A SaaS solution also is a key enabler of growth. No capital expenditure required; no need to build out a data center, or even put hardware or a huge information technology (IT) staff in country. The access any time, from anywhere nature of a cloud solution is conducive to supporting distributed users and bringing up remote sites rapidly and easily while conforming to and enforcing those corporate standards mentioned earlier.

Those saddled with outdated technology can rest assured they will never wind up in such a situation in the future. A good SaaS solution also addresses the cost of obsolescence.

And finally, sometimes you need to spend money to save money. An old, outdated solution can be costing you in terms of time, effort and real money to maintain it. The good news is that with a SaaS solution such as NetSuite’s you don’t need a capital investment.

Based on survey responses gathered in past Mint Jutras surveys, NetSuite customers place a lot of emphasis on costs. Back in 2013, in rating the appeal of SaaS, 50% of NetSuite customers selected lower total cost of ownership (TCO). Two years later when we asked what actual benefits had been realized, NetSuite seemed to have over-delivered on this promise with 61% indicating they had realized lower TCO.

Conclusion

Indeed, the time is right for NetSuite to be coming up market, targeting not only those seeking their first ever real ERP solution, but also those who are hindered by older solutions that lack the functionality and the technology to keep pace with growth and change. NetSuite’s solution has been developed over its long history as a cloud-native solution to address the needs of larger, global and distributed environments with financials and consolidation. Customers have proven the solution can handle massive transaction volumes while helping organizations like Dent Wizard run lean and efficiently.

Do your current solutions allow you to grow efficiently? If not, perhaps the time is right for you. If so, NetSuite is definitely worth a look.

 

 

 

 

 

 

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Intacct Advantage 2015: Education, Collaboration, Inspiration and lots of Predictions

The tag line for Advantage 2015, Intacct’s annual user conference, was “Education, Collaboration, Inspiration.” But the real message I heard was this: The world is changing rapidly and Intacct is doing everything in its power to help customers survive and thrive by helping them keep up with change. In order to keep up today, you can’t sit back and wait for change to occur; you need to anticipate it. You need to make predictions, which was an additional theme running as an undercurrent on the main stage. Indeed Intacct’s CEO Rob Reid delivered some predictions of his own, promising customers, “We are your partner… thinking ahead, innovating ahead, scaling ahead.”

For those of you not familiar with Intacct, it is a cloud financial management solution provider. Bringing cloud computing to finance and accounting, Intacct’s applications are the preferred financial applications for AICPA business solutions and are used by more than 10,500 organizations from startups to public companies. The solution has evolved over time to provide all of the functions necessary to provide an operational and transactional system of record for the types of businesses the company sells to, bringing it more into the realm of an industry-specific ERP.

The Intacct system includes accounting, cash management, purchasing, contract management, financial consolidation, revenue recognition (a particular strength), project accounting, fund accounting, inventory management and financial reporting.

Here are Mr. Reid’s predictions:

Prediction #1: 20 is the new 80

While today finance executives spend 80% of their time completing tasks and 20% of their time planning for the future, Mr. Reid predicts that Intacct customers will flip these percentages, spending 20% of their time completing tasks and 80% planning strategically. I buy into the concept, but perhaps not at that level. Sure you can automate a lot of the tasks performed manually today, but I worry a little about leaders spending four times as much time planning as executing on the strategy.

Prediction #2: The business model is liberated

I view this as less of a prediction than an observation. New business models are disrupting whole industries. You’re already familiar with many of the consumer-oriented examples including Uber (transportation), Airbnb (hospitality), Netflix (entertainment), iTunes (music). But this business model disruption is affecting many other industries. More and more are moving away from simply delivering a product for a price and instead moving into subscription model pricing and delivery. Intacct is well positioned to support customers moving in this direction, including enhancements to its contract billing functionality. So this prediction is meant to exhort customers to adapt models to let their customers consume offerings the way they (the Intacct customers’ customers) want.

Prediction #3: Project finances get a freeze frame and zoom lens.

In this prediction, “project” is used as a noun, not a verb (as in “to project”). This is a prediction with about 100% probability of coming about, because it was simply a means of introducing Intacct Project Management. While Intacct has long been strong in project accounting, this new offering is an exception-based module meant to be used to evaluate progress and performance and predict profitability and utilization… i.e. manage the project rather than just do the accounting. In doing so, customers can assess project health and the impact on financials. Dashboards are meant to “freeze the frame” and give a snapshot of status in real time, also allowing managers to “zoom” in by drilling down to the detailed transactions.

Prediction #4: Finance is strategic planning

Mr. Reid is predicting that the finance department will become “the ultimate strategist.” This has actually been the goal of CFOs for a long time now and there was a time when many were marching determinedly in that direction. Then came Sarbanes Oxley and many took a U-turn and focused primarily on governance and control. By automating finance processes and reporting, many are now in a position to resume that march towards innovation and strategic purpose. But good strategy can’t be just guesswork and bright ideas. It needs to be based on real data and many CFOs still wait for the metrics needed to formulate a strategic plan. When finance departments spend hours, days or weeks gathering this data and formulating the metrics, they are often out-of-date, or even downright wrong, by the time they reach the desk of the CFO.

In days gone by C-level executives, including the CFO, rarely ever put their hands directly on accounting and ERP systems. It was far easier to get data in than to get data and insights back out, and they were just too hard to navigate. That is changing however. Today executives at the majority of companies have direct access to data within these systems, but some take more advantage of this access than others. Those running SaaS solutions (like Intacct’s) seem better positioned to take full advantage (Figure 1).

Figure 1: What level of access does your top executive management have to ERP?

Figure 1 IntacctSource: Mint Jutras 2015 Enterprise Solution Study

Intacct has been hard at working delivering several different vehicles of communication to make this enterprise data easier to consume, including dashboards and a particular delivery method called “ Intacct Digital Board Books.” With both, decision-makers have instant access to data organized for action. However, Digital Board Books are very industry-specific and the first one off the shelf is designed for software businesses that, like Intacct, deliver software as a service (SaaS).

So for those finance departments running Intacct in a SaaS software business, this prediction is spot on. For nonprofits that depend on fundraising, the prediction is likely to become a reality this fall, when Digital Board Books for Fundraising is scheduled for release. Intacct customers in other segments might have to wait a bit longer, but all the (technical) heavy lifting has been done in producing the first Digital Board Books. Now it is just a question of Intacct selecting and defining the right metrics and developing the content for the “books.” Intacct intends to produce these for each of the major segments in which it is strong, and will also continue to innovate those for SaaS software companies and nonprofits.

Prediction #5: You’ll do more with less. Others will fall behind

This sounded more like a promise than a prediction, a promise of new technologies, faster speed and more automation. This was actually a great segue to Intacct CTO, Aaron Harris, who approached the stage on a hover board. Once on stage he proceeded to demo the new Intacct Collaborate, a new “social” capability based on Salesforce.com’s Chatter product. Through Collaborate, Intacct customers can initiate conversations online, in real time, but more importantly, those conversations can be stored along with the business objects that are the subjects of the conversation: customers, orders, products, etc.

Mint Jutras research consistently finds “social” capabilities at the very bottom of the list of priorities for selecting finance and accounting and ERP solutions. However, when we separately ask how important some of those actual capabilities are (without calling them “social”), the ability to capture and retain conversations is consistently rated as valuable. Forty percent (40%) rate it as useful and 21% say it is a “must have.” And when we look at the responses by millennials, the percentage that rate it as “must have” almost doubles. No surprise there. These younger workers that never knew life without the Internet, are quite accustomed to electronic conversations. It is often their first communication method of choice.

Some of the baby boomers out there might need a little push in this direction, but once there, the value of keeping an audit trail of communication will become very obvious. And the good news is, even though it is based on Salesforce Chatter, you don’t have to be a Salesforce customer in order to use Collaborate. Even better news: it’s free (included in your standard subscription fee).

In addition to Collaborate, Intacct has been investing in its data centers, including the installation of new servers that are 35% faster, with 2X more application server memory. And beyond investing in more computing power, it has also been using newer technology (including in-memory computing) to speed the processing and analysis of data. It has achieved some pretty impressive results:

  • Intacct can now process 1 million customer invoices in 4 seconds
  • It can produce an analysis report on 20 million orders in 45 seconds
  • And it can produce a vendor ledger with 30 million transactions in 33 seconds

All of this investment puts Intacct customers in a very competitive position. We’ll be watching to see if they can make these predictions come true.

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What does fishing have to do with Salesforce? #DF15

A Quick Take on News from Dreamforce 2015

Last week I set aside some time to watch some of the big keynotes from Dreamforce, Salesforce’s annual extravaganza. Like Dennis Howlett, reporting for Diginomica, I watched from what Den calls “the cheap seats.” While thousands of attendees swarmed San Francisco, I was part of the virtual audience watching the live stream. As a result I was thankful to be insulated from the chaos and gridlock of a city pushed to its limits, but also missed what appeared to be a truly electric and energizing atmosphere.

There was no shortage of announcements surrounding products and partnerships, and I am certain I missed a lot. For more thorough coverage I might recommend Diginomica’s site. They not only had Den watching from the cheap seats, but a whole team covering it onsite. But from my vantage point, what struck me were the two very different faces of Salesforce – the application side and the platform side. Anyone who follows me knows that I research and write for business leaders about enterprise applications. So you would think I would primarily be interested in the applications, right? Not this time.

The category of applications Salesforce delivers is on the periphery of what I cover. As an analyst I describe my coverage area as “enterprise applications with ERP at the core.” Here is not the time or place to debate what ERP is, or is not. Suffice to say it is a convenient label for the applications that run the business, creating a fiscal and operational system of record. While Salesforce’s (or anyone else’s) CRM solution doesn’t fit that definition, it is still important for me to watch because the footprints of ERP solutions have expanded and oftentimes include CRM. Even if they don’t (e.g. the customer uses Salesforce), the intersection of ERP and CRM is important because it is often where the back office meets the front office where competitive advantage can be gained.

So watching from the sidelines has always seemed appropriate. Lately, however, I seem to be getting dragged from the sidelines to more center stage – but not because of its CRM solution. Instead it is its Platform as a Service that is calling me.

Platform as a Service (PaaS) is a category of cloud computing services that provides developers with a platform to create software without the complexity of building and maintaining the infrastructure typically associated with developing an enterprise application. Clearly developers benefit from using the services delivered with a platform, speeding the development process. Since I don’t write for developers, but for the businessperson, how does this translate to benefits to the business? The obvious answer is in delivering more features, functions and innovation in ways that help companies keep up with the accelerating pace of change.

And that is exactly what a growing number of Salesforce partners find appealing, including ERP and accounting solution providers who fall squarely in my line of sight. It has been those partners that have lured me from the periphery to better understand how Salesforce, as a platform company, can help them deliver more value. I also think that it will be the platform, not the applications, that has the highest likelihood to propel Salesforce on the growth trajectory on which Marc Benioff has his sights.

It’s sort of like the old proverb that goes something like this – give a man a fish and he eats for a day; teach him how to fish and he eats for a lifetime. Well, maybe not exactly like that. The platform itself might be appealing to large enterprises with teams of developers on staff looking to modify or even develop their own applications (i.e. learn to fish). But for every large enterprise there are dozens, maybe even hundreds or thousands of small to midsize businesses that are just looking for a fish. Of course, they don’t buy one fish and walk away – they sign up for the “fish a day” program (a subscription). So, sure Salesforce can sell a lot of fish, but that won’t get it to the $10 billion mark – not even close.

But the platform is a “Force” multiplier (pun intended). There are also those partner solution providers who are looking to not only fish, but fish with the latest and greatest fishing tackle and equipment on the market. Using Salesforce’s platform they have proven they can not only fill their nets, but also get to the dock and the fish markets that much faster. Or maybe they don’t go after fish at all because Salesforce CRM satisfies that nutritional requirement. They might be working on the meat and potatoes, the vegetables or the dessert. Together they will have all the other dishes that go with fish in order to make a whole meal and satisfy anyone’s appetite.

The better the development platform, the more likely it will attract more developers. The more developers attracted to the platform, the more applications get developed, which ultimately can be shared. Features, functions and extensions have the potential to start to grow, if not exponentially, at least much faster than the typical linear sequence of development. This is sort of a Catch-22, but in reverse. The strong keep getting stronger, while the weak (those that attract only a few developers) will struggle to compete.

In fact today the Salesforce AppExchange is the largest online marketplace of its kind, offering products built on the platform – all 220,000 of them. All products offered on the AppExchange are 100% native to the platform and share an integrated, secure data and identity management model. All go through a rigorous security review and all are equally easy to customize using developer tools available from Salesforce.

Several vendors I follow closely have based their offerings on the Salesforce Platform.

  • Kenandy used it to develop a modern, new ERP for manufacturing from scratch in a fraction of the time it would have taken with traditional development tools. Sandy Kurtzig, Chairman of Kenandy and also the founder of ASK Computer Systems, is an inspiring entrepreneur. My favorite Sandy quote from back in the ASK days (circa 1984): when asked if she was worried about competitors springing up, she said, “No. We’re in the software business. They have to match me line for line in code. Writing software is like having a baby. You can’t put nine women on it and do it in a month.” Yet that is exactly what Sandy set out to do when she started up Kenandy and saw the Salesforce platform as the means by which she could do it.
  • Rootstock, also ERP for manufacturing, switched from NetSuite’s platform to Salesforce.
  • FinancialForce, owned jointly by Unit4 and Salesforce natively developed its accounting solution on the platform and is now expanding more into the realm of ERP.
  • Conversely, Sage has recently abandoned the ERP moniker (but supposedly not its ERP customers) and simultaneously developedSage Live,a brand new “real time accounting solution” built on the Salesforce platform and brought to market in months, not years.

The new “Thunder and Lightning” hyped on stage at Dreamforce will only serve to make the platform more appealing to developers of all shapes and sizes. But just as in real life, while thunder and lightening add dramatic effects to a storm, it is the rain that makes the garden grow. It will be up to the software developers to capitalize on the drama from Dreamforce and make the rain (software) that makes our businesses grow.

Something tells me next year I might just have to brave the crowds at Dreamforce in San Francisco. My days of watching from the cheap seats may be numbered.

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