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Cloud ERP: Is Kenandy and Force.com a marriage made in heaven?

When Marc Benioff talked Sandy Kurtzig into coming out of retirement and founding Kenandy back in 2010, it was clearly seen as a business marriage of sorts. You can define marriage today any number of different ways, some of which are very controversial, some quite safe. Erring on the side of safe, I would define marriage as a “union of two things.” In this case the marriage is between an application development platform (Force.com) and an Enterprise Resource Planning (ERP) application. While the marriage between Kenandy Cloud ERP and Salesforce Force.com might not be made in heaven, the wedding at least was right up there in the cloud.

While I am not overly superstitious, when I got married I wanted to stack the deck in favor of marital bliss. I wore something old, something new, something borrowed, something blue. It must have worked because more than 37 years later, I am still happily married. So amidst all the seemingly obligatory predictions for the New Year (no I don’t publish mine), let’s apply the same old adage to Sandy’s new venture and see if we can predict its success. Can we find something old, something new, something borrowed, something blue in this union?

Something Old

When I look for something old, my thoughts first go to “old friends.” I joined Sandy’s first company (ASK) exactly 30 years ago today: January 2, 1984. While this is a new company for Sandy, there is a lot to be gained from the experience in building that first one. During her 20 years as founder, chairman and CEO of the ASK Group, she grew the company from a one-woman show to one of the ten largest software companies in the world.

Her first product, MANMAN, short for Manufacturing Management, was an enterprise application that helped manufacturing companies run their business. In fact it still is. Having survived several acquisitions, MANMAN is now owned by Infor and still has fans in manufacturers around the world. In spite of running on what is now old and outdated technology, for more than a few, you will have to pry MANMAN from their cold, dead hands. Their perception: It just works.

Her new product, Kenandy Cloud ERP, has similar aspirations. Like MANMAN, its target market is manufacturing. Those that “know” manufacturing intimately understand the complexities associated with this type of business. Those that don’t tend to over simplify the solution needed. Fans of Workday for example constantly laud the company for its simplicity. Workday has a great product, but of course it is simpler. First of all it is Human Capital Management (HCM) and financial management (accounting) software, but it isn’t full ERP. And second, it doesn’t even try to address the manufacturing market. It takes a lot of manufacturing experience to satisfy this market. Sandy “knows” manufacturing.  You might say she is an “old hand” at it.

Something New

But it is not MANMAN that Kenandy is selling. It is a completely new product. As I mentioned before, MANMAN is now based on old and outdated technology. While many are satisfied with what it can do, quite frankly, they shouldn’t be. Any company still running MANMAN, or any number of other older business applications, are at a very serious competitive disadvantage today.

I wrote a lot about “Next Generation ERP” in 2013. If you are running an older ERP solution, especially those implemented prior to the year 2000 (Y2K), you may not even be aware of what you can expect from a modern, technology-enabled, next generation ERP. A lot of the basics required by a manufacturer today are the same, but the basics aren’t enough any more. The footprint of ERP has grown steadily, to the point where it is sometimes hard to figure out where ERP ends and other applications begin. So you need a very broad footprint to compete.

But it isn’t the depth and breadth of functionality that qualifies an ERP solution as “next generation.” It is the underlying technology. And conversely, it is that new technology that enables ERP footprints to expand at an accelerated rate. This is what makes the marriage of Kenandy Cloud ERP with the Force.com platform so important. When Kenandy decided to enter the market, the company started by building a new product from scratch. In one way, this made it much easier. As you are developing a new product, you don’t have to worry about keeping any existing customers happy with product or implementation decisions they may have already made. You can start from a clean slate. It is sort of like building a new house. It is much easier to start with an empty lot and a design plan, than it is to remodel an existing structure.

And yet Kenandy set out to build a very big and complex structure. One of my all-time favorite quotes from Sandy Kurtzig dates back to that year I joined ASK. I don’t remember who we were talking to, but I remember what she said just as clearly as if she said it yesterday, not 30 years ago. We were talking about the software competitive landscape. ASK was a market leader at the time and Sandy was very confident in its ability to maintain that leadership role. She said, “To get into the software business and compete, you have to match me line for line of code. It’s like having a baby. You can’t put nine women on it and do it in a month.”

Yet when I first communicated with Sandy in the early days of Kenandy, what she emphasized most was the speed of development that was possible with the Force.com platform. I reminded her of that quote from 30 years ago and asked her if she was trying to put nine women on it and do it in a month. Sandy chuckled, but didn’t really answer. I think time has answered the question. It is now almost three years later and Kenandy has delivered the baby. In order for it to be a real “baby” it needed to live and breathe on its own. That means for any company running it, it must provide a complete operational and transactional system of record for a (potentially complex) manufacturing business. I can’t tell you exactly when the baby was first delivered so it is hard to say whether it took the traditional nine months or more like three. But it is living and breathing in a handful of companies.

And I would say it meets the qualifications I have been promoting as necessary to be classified as a next generation ERP. It must include new technology that enables:

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

Many of these capabilities are derived directly from the Force.com platform.

The Kenandy baby didn’t necessarily need to walk or run when it was first delivered. But if it wants to compete against the big guys, those mature ERP solutions offered by big companies with deep pockets for continued development, it better help the baby grow up quickly. The more advanced features it can add easily through the Force.com platform, features like mobility and social collaboration, the faster the baby will grow and mature.

This will be particularly important to Kenandy because the target customer is also somewhat different from the old ASK customer. Yes, Kenandy is still squarely focused on manufacturing, but it is diverging from the MANMAN target, as well as the prime target for most other cloud companies. The sweet spot for MANMAN was in the lower end of the mid-market, often a division of a large company, but seldom a large enterprise. This has typically also been the target for emerging Software as a Service (SaaS) providers. Not so for Kenandy. It has its eye squarely on the large multi-national enterprise. While my data does confirm that the interest level in cloud ERP actually increases with the size of the company, I question the size of the target market. There are far more small companies in the world to sell to than large, and selling to the large enterprise is typically a replacement sale. So Kenandy not only has to sell into a large enterprise, they also have to oust the incumbent – certainly not an impossible task, but count on it being a long and involved sales cycle.

Something Borrowed

Quite frankly, no company could produce a product from scratch and make it competitive in three years without borrowing. Much of the technology that supports new and advanced features will come from the Force.com platform. So in a way, you could say it is borrowing those features. The best news about borrowing in this context: you never have to give it back. You gain the benefits for life.

But perhaps even more important is borrowing that knowledge of manufacturing from prior experience, and also the philosophy that made ASK a leader in its day.  Part of the evaluation process in selecting business software has always included checking references. As in any major purchase, before making a capital investment (or even taking on operating expense in a cloud environment) a prospect wants to talk to someone else that has walked in its shoes. Typically the software vendor provides one or more references.

But how much confidence does this really build in the prospect? By definition, any reference provided by the software vendor will be a good reference. Would it voluntarily provide a bad reference? Of course the prospect could instead get involved in user groups and/or do research on its own, but that is time consuming. And will the prospect even be able to get beyond the screening processes that occur naturally today? ASK used to handle references differently. When asked for a reference, the sales rep would hand over the entire customer list. As the customer list grew the “thud factor” alone was enough to win business. It will be awhile before Kenandy achieves that thud factor, but it fully intends to provide its entire customer list as references.

Something Blue

OK, so have we run out of our analogy with this final “something?” Hardly. Blue could represent any number of factors. Back in the ASK days, blue meant Big Blue, or IBM. In the early days when ASK was delivered on minicomputers, they were definitely not blue. The likes of BPCS (owned by SSA, now Infor) and PRMS (owned by Panasophic, then Computer Associates, then SSA, now Infor) ran on Big Blue. ASK ran on HP and DEC. But that all changed with UNIX and open architectures. Underlying hardware was no longer a point of differentiation. And with the entrance of SaaS and cloud, it is no longer even a consideration.

Blue could refer to blue sky. And blue sky could be exactly where the cloud resides, which is where the wedding took place: Kenandy Cloud wedded to ERP Force.com the cloud-based development platform.

But I prefer to consider blue sky in the context of: creative, knowing no limitations or boundaries. The sky’s the limit. After all, isn’t that the case if a marriage is made in heaven? As a woman and as an entrepreneur, perhaps I am a bit biased. While I will continue to watch and even be critical where appropriate, nothing would please me more than seeing this marriage achieve exactly what I was seeking in wearing something old, something new, something borrowed, something blue: marital bliss.

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Is there a “social revolution” happening?

Cloudforce 2011 Boston attracted record crowds yesterday. The ballroom was packed, as well as a large overflow room. At first glance you might have thought the Stanley Cup champion Bruins were going on stage instead of Salesforce.com CEO Marc Benioff. Mr Benioff and company were in town to usher in what they call a “post-PC social revolution” and to inspire both people and companies to become entirely social, mobile and open.

I don’t generally present myself as a “CRM analyst” so you might wonder what I was doing there. I do consider myself an “enterprise application” analyst, with an emphasis on business (don’t think of me as a “techie.”) At the center of enterprise applications lies Enterprise Resource Planning (ERP), but the boundaries of ERP have been blurring for the last few years and you have probably heard me say it is getting more and more difficult to determine where ERP ends and other applications begin. So I spend almost as much time on the periphery as I do deep inside ERP. Certainly the products and services Salesforce.com has to offer directly impact the performance of the business and hence are on my radar in terms of making enterprise applications pay dividends.

However, getting back to the theme of the day… I am not quite the cloud purist that Mr Benioff appears to be, but I do value the benefits cloud has to offer. In terms of this social revolution, being rather old school and somewhat of an introvert, I still need to be convinced that all businesses will be social businesses and social media is the answer to all the ills of the business world. But I do look around and acknowledge that we are indeed in the midst of a form of revolution in terms of communication and expectations.  Much of the basis of communication in social media is sound bites. So in the spirit of “social”, I’ll recap yesterday’s keynote by sharing a few quotes from the stage. In doing so, of course I risk presenting something out of context, but rest assured, I just present them here as food for thought. Munch away….

On cloud computing…

“We were born cloud. We are being reborn social.”

“We need a cloud computing test… if it’s about hardware, it’s not about the cloud.”

“These are the ghosts, the forbidden elements. If you don’t have automatic upgrades, the elasticity, the scale, the energy efficiency; if it is still only for the elite; if it’s not democratic, it’s not cloud.”

 “We will have transitionary technology. Private clouds are the screen scrapers of this generation.”

“Beware of the false cloud.”

“We are making this movement to public cloud; nothing can stop this.”

“For those who didn’t get into the cloud, I’m sorry; we’re moving on.”

On Social…

“We have reached an inflection point. The number of social users now exceeds the number of email users.”

“Facebook is rapidly becoming the Internet – it is where people are going for information. Twenty-two percent (22%) of Internet time is now social.”

“The social revolution is creating a social divide. Is your company social?”

“It’s not enough to know your customers. Delighting customers is knowing who they are and what they ‘like’.”

“Make employees, partners and customers your “friend.”

“Lotus Notes was conceived before Mark Zuckerberg was.” [I’m still trying to figure out the context of this, but couldn’t resist]

“Marketing is no longer about eyeballs and ears. It’s about hearts and minds.” Marcel LeBrun, Radian6

“You can’t just move into the future. We need to bring the past into the future.”

“A ’brand’ is no longer a series of memories, but a series of engagement.”

OK, apart from these few sound bites, was there anything else that convinced me that the social revolution is really about business? Yes, a few. For example, I learned about the value of a private social network based on Chatter and Sales Cloud. I saw the value of following not just people, but deals (think sales process) or accounts (think servicing customers). I saw Pepsico monitoring its Gatorade brand through a Network Operations Center and Dell doing the same from its social media command center.  I was very impressed to learn about KLM’s Surprise program. The airline watches for people who announce (through Facebook or Twitter) they will be traveling on a KLM flight, find out a little about them from their social media communications and then surprises them with a small gift at the gate. The result…

“It is so much more rewarding to put a real smile on someone’s face than to see a smiley face emoticon.”

Which is exactly why I think “social” media isn’t necessarily all that social. I guess it is good that it helps those with no social skills connect. And it’s great if it can be used as a tool to develop the kind of personal and business relationships that are based on trust. But there is a risk in becoming so absorbed with social media that it becomes the only way of “engaging” and good (and real) relationships are the heart and soul of good business. I’ll take a hand shake and a real conversation any day over the impersonal tweet and post. But then, what will be the first thing I do after posting this to my blog? I’ll tweet it.

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