Sage ERP X3

Sage Technology Strategy Leverages Convergence of Trends

Innovation focused on Cloud, Mobility and Data, driving connectivity and collaboration

At the recent Sage Summit 2014 (July 29-31, 2014), Sage North America outlined the strategy driving the company’s technology roadmap, a strategy that leverages three key trends shaping the future of enterprise applications: cloud, mobility, and big data/business intelligence (BI). At the same time it also hit on the fourth trend rocking the Enterprise Resource Planning (ERP) world: the connectivity and collaboration of “social.” A roadmap is exactly what is needed for any Sage prospect or customer contemplating these trends and navigating the journey into the future.

A recent Mint Jutras report, 2014 Trends in ERP Converge, looked back over these “big trends” in enterprise software from 2013 and concluded that we don’t need any new or different trends for ERP in 2014. Cloud, mobile, social and big data will do just fine. However, it is no longer sufficient to treat them as independent movements. We need them to converge around a single common goal of making ERP easier to consume, thus bringing more value to the business. Indeed the key messages at Sage Summit – cloud, convergence and intelligence – were very much in line with this way of thinking.

The Key Trends

In 2014 Trends in ERP Converge we talked about four specific trends. These should come as no surprise to anyone following enterprise software:

  • Cloud and software as a service (SaaS)
  • Mobile access and the consumerization of IT
  • “Social” as a way to deliver collaboration, connectivity and visibility
  • “Big data” for intelligence and decision-making

It is impossible to talk about the convergence of these trends without mentioning innovation that is easier to consume in a less disruptive way. This often requires new ways of engaging with ERP in order to change the whole ERP customer experience. Sage’s approach to delivering on this promise is to reduce the footprint of core ERP, replacing those functions (over time) with cloud services, while making both cloud and mobility central to its technology strategy. There are some key advantages to this approach both for Sage itself, and its customers. With a diverse portfolio of ERP products, Sage is able to develop new features and functions once and deploy across multiple product lines, delivering more innovation that is easier for its customers to consume. It also facilitates a more incremental, and therefore less disruptive transition to cloud-based systems.

When Less is More

For some it may not be intuitively obvious why we characterize “reducing the ERP footprint” as a step in the right direction in delivering more innovation. Let’s explore how that works. First of all, Mint Jutras defines ERP as an integrated suite of modules that forms the operational and transactional system of record of a business, including all the master data needed to support the full order-to-cash cycle. This is a rudimentary definition because today ERP is likely to do much more than this.

What we refer to as “core” ERP is developed as a tightly integrated set of modules, using a single data base model; integration is built in and there is little or no redundancy of data elements, except where there is a specific need. Not only do all modules of an ERP solution share a common database, but also all are developed using the same tools and technology and they all move forward in lock step.

This eliminates data redundancy and any need for separate integration efforts. But it also means purchasing can’t move forward until order management, shop floor control and inventory management modules are ready to move. It takes massive efforts of coordination by the vendor to make sure all the pieces of the puzzle more forward together. And it takes similarly massive efforts of coordination for all departments within their customers’ organizations to take those next steps altogether.

But what if a supplier (or, even worse, a customer) demands that your enterprise change the way you conduct business with them? What if your current solution can’t support that new way of doing business? Maybe you need to upgrade, enhance or even swap out the purchasing (or order management) module for a new solution that does. If purchasing (or order management) was a separate application you could, although that would most likely require additional effort (and cost) to integrate that separate application with ERP. And when you make a change, the integration would likely require change as well.

What if, instead, you could take that tightly integrated purchasing module of ERP and loosely couple it, or better yet, deliver it as a service? That way, if you wanted to replace it, you would just have to uncouple it and swap in a new one. Or perhaps you just leave the original module in place and enhance it with new services.

In fact, Sage is taking exactly this approach as it develops much of its new functionality, and it is going one step further and placing those services in the cloud. This eliminates the headaches associated with expanding hardware configurations or incompatible infrastructure requirements and it responds to the growing preferences for cloud-based solutions.

Sage uncovered these preferences in its own survey of customers and prospects, but Mint Jutras data also confirms them. Its annual ERP Solution Studies perennially ask which deployment options would be considered if respondents were to purchase a new solution. For years software as a service (SaaS) lagged significantly behind traditional on-premises options, but today SaaS is more likely to be considered than on-premises solutions (Figure 1). In addition, hosted solutions are also favored over those on premises. Most hosted solutions today are also accessed securely through web-based interfaces, but usually employ a private cloud versus the public cloud of a SaaS-based solution.

Figure 1: Which deployment methods would you consider today?

Sage Figure 1Source: Mint Jutras 2011, 2013 and 2014 ERP Solution Studies

Sage presents this as a “hybrid cloud strategy” intended to help customers move incrementally to the cloud, with all the benefits of lower cost, faster implementation, and easy access. But perhaps the bigger benefit is in helping customers add incremental functionality without the usual cost and effort of a full upgrade.

Whether this is a “cloud strategy” or an innovation strategy or both, the net effect will be to surround ERP with a series of “Connected Services,” with cloud and mobility central to all that is developed and delivered.

 Cloud Announcements

With this focus on the cloud, Sage has made several announcements aimed at different segments of its target market (companies with less than 500 employees).

  • Sage 300 Online was launched at Sage Summit. Sage 300 Online targets the small and smaller midsize SMBs that have outgrown their basic accounting software and “are seeking to increase collaboration, streamline their operations and get a complete picture of their business anytime from anywhere.” Running on Microsoft Azure, it is a multi-tenant SaaS solution.
  • Sage also allowed a “sneak peek” of the new Sage One mobile app for “solopreneurs”, expected later this year.
  • And right after Sage Summit, Sage announced limited availability of Sage ERP X3 Online (for medium-sized businesses) in North America as of September 2014. X3 Online will be offered in a hosted environment.

In addition Sage has created the Sage Data Cloud, which is available to all customers whether they are running applications in the cloud or on-premises. Customers have access to 50 gigabytes (or more, if needed) of cloud storage. Three different types of data might be stored in the Sage Data Cloud:

  • Reference data: this is largely master data that would be defined by applications. If the source of the data is an on-premise application, that application is the master of that data and the data in the cloud is replicated, but automatically synchronized.
  • Transactional data: these are transactions (e.g. orders, invoices, payments, etc.) that might originate in a separate cloud application but may need to be processed by or stored in ERP, applying all the same logic and business rules ERP would use if they had been entered directly there.
  • Cloud-only data: This might be additional data used only by the cloud-based application, perhaps something like a reference to other products of interest that might be used by a sales person in efforts to up sell or cross sell.

What About Mobility?

As noted above cloud and mobility are central to all Sage innovation. According to Sage, it is, “Leveraging consumer trends in mobility, [and] making the cloud more actionable for SMBs.” The first of these applications have been Sage Mobile Sales, Sage Mobile Service, and Sage Mobile Payments. Using the Sage Data Cloud, Sage mobile applications are device-native and enable SMBs to use the Cloud in the way that provides real value to the business while imitating the real life of “mobile” individuals today.

Here at Mint Jutras we agree with Sage regarding the importance of mobility. In fact, we would contend that mobility has the potential to be the biggest game changer to impact ERP in the near term. And yet few of the Mint Jutras survey participants seem to recognize this enormous potential (Figure 2).

Figure 2: How important is the ability to access ERP through a mobile device?

Sage Figure 2Source: Mint Jutras 2014 ERP Solution Study

Why do almost half (44%) think mobile access isn’t all that important? Mint Jutras believes the answer lies in the fact that “mobile access” can be interpreted in many ways and because the real value does not lie in just lifting and shifting traditional ERP functions to a mobile device. The true value is in delivering access that is purpose-built for a particular person, playing an individual role, performing a specific function.

Most individuals that don’t spend the vast majority of their time sitting at a desk all day have specific functions they perform, or questions they are most likely to ask or be asked, or decisions they must make. And they need to make these decisions and answer these questions while not sitting at a desk. They don’t necessarily perceive running ERP as the solution to perform those functions, answer those questions or make those decisions; instead they want an “app for that.” However, that app is most likely to be powered by the data in ERP.

That is exactly what these new mobile apps from Sage do, delivered through the cloud as connected services. This is the convergence Sage is talking about: the convergence of cloud and mobile and the convergence of business skills and personal skills. With the consumerization of IT, individuals have come to expect the same type of ease of navigation and general usability they have become accustomed to in their personal use of smart devices.

 What About Big Data and Social?

While we didn’t see too many specific announcements about either “big data” or “social” coming out of Sage Summit, we did hear about intelligence and data access. In fact we got to see a preview of Sage Intelligence online (or Sage Intelligence Go!), which will leverage existing data inside of Sage ERP with Microsoft Excel to filter, analyze and summarize data. But Sage Intelligence Go! will not be limited to the data within ERP. It will also be able to import data from external sources and summarize it along with internal data. Sage Intelligence Go! will be the cloud version of Sage Intelligence and will be available in 2015.

An emerging trend in ERP discussion lately has been the shift from focusing on process to focusing on data. To that end, Sage presented additional results from its own survey. Sage claims its data shows that access to more intelligence leads to better usability of solutions, resulting in a 10% increase in productivity. Companies with more usable data, with more accessible intelligence grow 35% faster. Without direct access to this survey data, Mint Jutras cannot substantiate those claims, but we point them out because it shows a shift in focus from Sage to reflect these last two of our four trends.

And yes, the discussion of “big data” often leads to the discussion of “social.” Social can mean different things to different people. It has some intuitive connotations in the world of consumer goods where social sentiment can have a serious impact, both positively and negatively, when shared publicly. But does it have the same impact in other industries? The connection is there, although perhaps not so intuitive.

When you take the view that “social” should mean improved collaboration, visibility and connectivity, then you start to understand the connection with the ERP user experience. The better the experience, the more connected the people running the businesses are to ERP and to each other. Mint Jutras is already seeing a shift in the market to higher levels of engagement with ERP. Not too long ago a very small percentage of employees at most companies actually used ERP.

Figure 3: What percentage of your employees uses ERP?

Sage Figure 3Source: Mint Jutras 2014 ERP Solution Study

This percentage has grown to over half (55%). But here we see the cloud having a very definite impact (Figure 3). Those companies using SaaS ERP have a much higher rate of employee engagement (63%), further reinforcing the value of “access any time from anywhere.”

By combining the ability to share data in real time via the cloud with the convenience of mobility, Sage paves the way for better connectivity and easier collaboration – the real meaning of social.

Summary and Key Takeaways

Seldom has an entire market agreed on what trends are most influential, and yet today, here we are. But this level of consensus brings its own set of challenges. With all enterprise software vendors jumping on the cloud, mobile, big data and social bandwagons, the competition will be fierce. Vendors will have to deliver in order to capture the minds and wallets of both customers and prospects. They must accelerate the pace of innovation, while they improve connectivity, visibility and collaboration in order to draw the biggest crowd of willing users.

This makes the consumers of this technology the big winners.

Sage is well aligned with these trends, given its vision for cloud, mobile and intelligence and its “convergence” mindset. But given its long history of acquisition, in many ways it must reinvent itself. That is exactly what it has in mind. If it can successfully reduce the footprint of its (multiple) core ERP solutions and ramp up innovation through connected services, they just might be able to pull it off. At Sage Summit 2015 we’ll be looking to see if the “old” Sage shows up or if this transformation is complete or still underway. Mint Jutras votes for “still underway” since by this time next year, things will have (of course) changed even more.

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Sage’s Approach to Next Generation ERP: From Starship to Space Station

In our recent blog post series (ERP, The Next Generation: The Final Frontier?) we’ve had some fun comparing Enterprise Resource Planning (ERP) to the USS Enterprise, the starship made famous by the extraordinarily successful Star Trek entertainment franchise. Like the USS Enterprise, whose five-year mission it was to explore new worlds and “to boldly go where no man has gone before,” early versions of ERP charted new territory for enterprise applications. It evolved from MRP (material requirements planning) to MRP II (manufacturing resource planning) and then boldly set out to conquer the “final frontier” of ERP, managing not a small piece of the enterprise, but the enterprise itself. As a participant in the ERP space (pun intended), Sage is certainly a player.  It doesn’t just have its own ERP starship; it has a whole fleet of them.  But is maintaining a fleet of starships the right approach to conquering the final frontier of ERP exploration? Maybe not. Can Sage find another way without abandoning the fleet? Read on to find out.

Sage ERP:  A Fleet of Starships

Even with a fleet of ERP solutions and a massive base of installed customers, Sage has not dominated the ERP horizon. In fact it may very well be that fleet of starships that has prevented Sage from achieving the dominance in ERP that you might expect from a company of its size and reach. Sage spent many years acquiring a vast portfolio of products, although not all of which would be categorized as ERP. And throughout those very active years of acquisition, Sage also preserved many of the brand names it had acquired. Names like Peachtree, Simply Accounting, ACT!, SalesLogix, MAS, Adonix and ACCPAC might have better name recognition than Sage. And yet, they are all Sage. Or at least they were until recently.

This past year, Sage not only engaged aggressively in re-branding its products to fit under the Sage umbrella, but also made some divestitures (including ACT! and SalesLogix) in order to achieve more focus. And ERP is a prime target in that focus. But competing in the ERP market today is not for the faint of heart. Technology and innovation is advancing at a rapid rate and it takes a lot to compete.

 Does having a fleet of ERP starships help or hurt?

While a fleet of starships gives you more reach, there is an inherent problem. Innovation is key to achieving and maintaining a competitive position. Let’s say someone develops a new propulsion system that allows a starship to move at twice the warp speed previously possible. If your starship can’t achieve that speed, you become a sitting duck, just waiting to be attacked by those that are newer and more advanced. But with a fleet, if you need to innovate, it means each starship needs to be maintained and improved separately. Even with multiple teams this takes a lot of time. And it might mean in order to upgrade, you need to take the ship out of commission.

Upgrading ERP is similar. Although you should never have to take ERP out of commission (at a customer site) any longer than perhaps a weekend, the upgrade process can be very disruptive. As a result many customers delay implementing an upgrade. So even if the vendor innovates on an annual basis, consumption of the innovation lags behind.

Making matters worse, if a solution provider maintains multiple and disparate sets of code, it needs to enhance each separately. Let’s say it wants to add the same functionality to each. With multiple development teams, you may be reinventing the wheel several times over. Instead you might form a specialized development team that brings this new functionality to each product. These developers get very good at that piece of functionality. But they lose a lot of efficiency in moving from one development environment to another. And of course, this team can’t work on all products at once, so a queue will form. Customers will start to lose their competitive edge and the solution provider becomes vulnerable to attrition.

But this is a weakness only because new functionality has traditionally been built into ERP. What if it wasn’t? Just like a starship, which is a self-contained environment that sustains the life of a community (its crew), ERP has traditionally been developed as a tightly integrated set of modules that sustains the life of the business. In ERP, The Next Generation: The Final Frontier? we compared traditional “tightly integrated” to next generation “loosely coupled” solutions and concluded that adding components as a “service” made it much easier to add new features and functions to ERP with less disruption. It might even make it possible to develop functionality once and then re-use it across different ERP solutions. But that means it is no longer like a fully-contained, independent and self-sustaining starship. For this we need a new metaphor.

Transitioning From Starship to Space Station

In fact in ERP, The Next Generation: The Final Frontier? we introduced a new way thinking. Instead of thinking of ERP as a starship traversing the galaxy, think of it instead in the context of a solar system. Imagine ERP in the center. In a solar system, planets orbit around the sun.  In our ERP-centric system, picture loosely coupled applications surrounding it. In a real solar system it is gravity that holds the planets in orbit, and the source of gravity is the sun at the core. In our software solar system with ERP at its center, the gravity is drawn from the platform on which the ERP is built.

When you have a single ERP, gravity is strengthened by building ERP and all the surrounding applications on a common platform. Loosely coupled applications draw sustenance from data collected and managed by ERP. Combine this with standardized business objects (e.g. customers, suppliers, orders, etc.) and you insure a strong connection but with a loose coupling that can be easily disconnected and reconnected.

What happens though when you have multiple ERP solutions developed on different technology and architectures? This is the situation Sage finds itself in, with its “fleet” of ERP solutions. You don’t have a single ERP in the center. You might think we’ve “broken” our analogy because there is typically a single sun in any solar system. But with a little tweaking, the concept still works.

Imagine instead a Sage solar system, and each of its ERP solutions as a planet. In a real solar system, you find one or more moons circling each planet.  The planet and the moons are all made out of essentially the same “stuff” so they circle naturally. After all, these orbiting bodies are really nothing more than chunks of rock.

The moons in orbit around an ERP might be those made of the same “stuff” as the ERP – the same (or compatible) architectures and technology. But our moon isn’t the only satellite circling the planet Earth. We have a plethora of man-made satellites, including a space station, which is not only in orbit, but also sustains life. The space station requires some additional life-support systems, but it is orbiting and functional.  But it isn’t perpetually self-sustaining. It needs supplies (like food and other consumables) delivered on a regular basis. So it needs a means of connecting and communicating back to the “home” planet. Much like our space station, loosely coupled applications must be supplied on a regular basis with data from ERP.

In order to add functionality across a whole portfolio of products, a company like Sage will need to first build a standard space station. But in order to launch it into orbit around several, or all of its planet ERPs, it will need to clone it. Each of these clones might require a slightly different connector back to the planet it will orbit. Taking this approach, that specialized development team can focus exclusively on building the standard space station, while the regular product development team takes responsibility for connecting it to their planet.

Done effectively, this can turn the fleet from a disadvantage into an advantage. Individual ERP solutions can be enhanced and refined to address different markets and where new functionality can be shared, a company like Sage can develop it once and re-use it across multiple product lines. Providing the underlying architectures of the different ERP products allow these new components to be connected relatively easily, products that might otherwise have been relegated to “maintenance mode” might actually thrive with new and added functionality.

In fact, Sage is taking exactly this approach as it develops new functionality and it is going one step further and placing those services in the cloud. While presented as a “hybrid cloud strategy” intended to help customers move incrementally to the cloud, with all the benefits of lower cost, faster implementation, easy access, perhaps the bigger benefit is in being able to develop once and re-use across multiple product lines. In doing so it also brings more life to products that might have otherwise never been significantly enhanced.

Whether this is a “cloud strategy” or an innovation strategy, the net effect will be to surround ERP with a series of “Connected Services.” Sage Payment Services was one of the first of these Connected Services, launched back in 2010. Sage Inventory Advisor was announced in June 2013 and most recently, at Sage Summit 2013 in July, Sage announced new mobile solutions: Sage Mobile Sales, Sage Mobile Service, and Sage Billing and Payment. All are cloud-based subscription services running on Windows Azure, Microsoft’s cloud platform, and designed to easily integrate with Sage ERP systems. Additionally, at the same event, Sage announced two new business intelligence tools.

The strategy is sound, but with such an expansive portfolio, the devil is in the details in keeping track of which Connected Services are actually connected to which Sage ERP products.

For example, Sage Enterprise Intelligence is for Sage ERP X3 and Sage Intelligence Reporting Bundle is for Sage 100 ERP, Sage 300 ERP, and Sage 500 ERP. Sage Inventory Advisor is currently available, while Sage Enterprise Intelligence and Sage Intelligence Reporting Bundle will be available in the fourth quarter of 2013. As for the mobile solutions: They are currently available for those businesses running the latest versions of Sage 100 ERP and Sage 300 ERP. Presumably these would also be applicable to Sage 500 and Sage ERP X3.

This level of detail can be confusing to the market, and this confusion is compounded as Sage continues its efforts to build its brand. Focusing on messaging and marketing the Sage name has the potential of blurring the details product by product. Fortunately this is far less confusing for the customers. Each customer will only be concerned about what is coming down the road for the product they license.

And there is an added advantage to the customer in this approach. Think of these extensions as space station-like satellites that will surround an ERP solution. Many will support functions that were previously not supported by ERP. This may open doors to employees that never went near ERP before. Some of these users will only use these satellite products and never touch the core ERP solution. In other words, they will live on the space station, not the planet. Changes to the ERP shouldn’t affect them at all.

At some point if the size and complexity of the business grows, a company may decide to move to a Sage ERP solution that is better aligned with its needs (e.g. as it grows from small to mid-size). In this move, nothing changes for those living on the space station. It will be circling a new planet, but they might not even notice any difference. This makes the upgrade that much easier and insulates many users from the potential disruption of a reimplementation.

Moving Forward

Sage has some catching up to do in terms of modernizing and innovating its ERP solutions. ERP, The Next Generation: The Final Frontier? presented the next generation of ERP in terms of new technology that enables:

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

Sage is attacking each of these areas, most notably in new user interfaces and new ways of interacting with ERP. By being a bit late to enter the starting block, Sage does have the advantage of learning from others that might have gone before them in terms of what works and what customers want. A good example of this sort of leap-frog approach was demonstrated at the recent Sage Summit 2013. Himanshu Palsule, Sage Chief Technology Officer demoed voice-activated mobile technology to access customer data from ERP using natural language queries. Using a Siri-like interface, he was able to retrieve data such as credit limit, open receivables, and address information. Equipped with the address and web-based mapping functions he was able to get directions and initiate a call to the customer.

But Sage isn’t looking only at the competition to drive its future direction. It has also launched a Sage Listens RV Tour, a 50-day, nationwide tour where Sage executives met with more than 50 customers in order to gain a better understanding of how to develop features and services to better support its customers. While the mode of transportation is a little more mundane (and practical) than a starship, Sage executives literally hopped on the bus, a well-equipped recreational vehicle (RV), and visited 16 cities across the United States.

Sage’s approach to developing new functionality as cloud-based connected services is a smart move that will drive more innovation in a way that inherently provides better integration. We’ll be watching closely as it starts to make the important transition from maintaining a fleet of starships to developing standard space stations. If you are a Sage customer, or considering becoming one, look for a cloned space station launching around your planet soon.

 

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