Small Company

SAP Leverages the “Power of Big” to Benefit SMEs

Some common myths and misconceptions in the world of ERP are hard to kill, particularly when competitors and pundits just won’t let them die. Among these common myths is the perception that SAP is just for the big guys. Yes, the SAP Business Suite and even some predecessors to the Suite are installed in a large percentage of the Fortune 500. And yes, some of them cost millions of dollars and took many years to implement. Of course there are some horror stories, but I would argue those exist for any major ERP vendor.

I have to admit, during my 30+ years of working for software companies (but never for SAP), I might have encouraged some of those misconceptions, just as SAP’s competitors do today. But now, as a recovering software executive turned data junkie, I tend to look beyond the rumors and misperceptions. I go for the facts. Here are a few that are hard to argue with:

  • SAP has about 263,000 customers
  • 80% of them fall in the small to mid-size (SME) bracket. Do the math. The answer is 210,400.
  • SAP does not sell just one product. There is the Business Suite, but also SAP Business One and SAP Business ByDesign (no it is not dead or dying). SAP Business All-in-One is the Business Suite repackaged, by industry, for medium size businesses. You might choose to call it a different product or not, but it really matters little. Repackaged with best practices included, it makes the Business Suite more attractive to smaller (but not too small) companies.
  • SAP Business One, which addresses the lower end of the SME market, is installed in over 45,000 small businesses.
  • SAP’s ecosystem of partners that support small to mid-size businesses is 700 strong and growing.

I am sure one of SAP’s goals for this year’s annual SAP SME Summit was (once again) to help dispel these myths and misconceptions. I am equally sure that SAP understands it will take more than just bringing together customers, press and analysts in its hip New York City office to counter these perceptions. Instead, it seems to be effectively leveraging its extensive resources in order to help small and medium size businesses. Here are a few of different actions it has taken recently:

  • SAP HANA 9 can now be run on less expensive hardware
  • Powerful data visualization tools are available with a copy of SAP Lumira, free to any SAP customer
  • Fiori apps, providing an intuitive and modern new user experience, are now included for free (with paid maintenance) with SAP Business All-in-One
  • A 0% financing program, designed specifically for small businesses, as well as SAP’s partners that sell directly to them. This is a “buy now, pay later” option that gives the small business free financing for 24 months, while the partner gets paid within 5 days.
  • A free connection to the Ariba Network, which connects over 1.6 million companies in 190 countries, allows the small business to list its products. Although the free version does not allow bidding and purchase from the site, this is an effective way for small businesses to reach a large potential group of buyers.

It takes a large company with deep pockets and extensive resources to be able to make these kinds of offers to SMEs. Yes SAP continues to be the 800-pound gorilla in the ERP space but that doesn’t mean it can leverage the “power of big” to the benefit of the little guy.

Tagged , , , , , , , , , ,

Technology and Best Practices Fuel Growth for SAP Brazil

SAP’s growth in Brazil has outpaced growth in not only other parts of the world but also growth in the Brazilian market. As an emerging economy, rapid growth is to be expected, but along with that growth comes the usual challenges. These obstacles are amplified in Brazil, a difficult business environment burdened by challenging tax and regulatory requirements. This demanding environment not only presents an impediment to growing Brazilian companies, but also the enterprise software vendors that would love to help, and in doing so, fuel their own growth. SAP’s exceptional success stems from a value proposition that combines new, innovative technology with localized business best practices. And a focused, purposeful plan doesn’t hurt either.

How Much Growth?

The first half of this year SAP Brazil grew its software business by 80%, far ahead of the growth of the overall software market.  Indirect business grew faster than direct, which for SAP means growth in small to medium size enterprises (SMEs), serviced exclusively by its channel partners.

Part of this growth resulted from a regional focus. While the concept of sales regions is widely accepted and even natural in other large countries like the United States, this type of sales approach was new for the vast territory that makes up Brazil. After introducing this regional concept, SAP Brazil saw triple-digit growth in some regions. Software revenues in the northeast part of the country grew by 400%. Just having undivided attention and a more local presence seems to pay off.

Is Brazil a Land of SME Opportunity?

Historically Brazil has been a country of extremes. It is home to some of the largest corporations in the world. And yet according to Endeavor, a non-profit dedicated to promoting long-term economic growth through mentoring and supporting entrepreneurs, about 90% of companies in Brazil are micro-companies. While definitions of a micro-company might vary around the world, they are generally very small. Small companies have tended to stay small in Brazil for two reasons.

Brazil is not a country known for entrepreneurship. Many more startups were born from unemployment than from an entrepreneurial spirit. And once a certain revenue threshold is exceeded, (still) small companies are subject to the same tax and regulatory requirements as very large enterprises. Where the small company lacks the manpower and expertise to handle these stringent requirements, it stays small by design. As many of these businesses are now being passed on to a new generation, the desire for growth is met with frustration. Most have yet to invest in solutions that can help fuel growth. Those vendors that truly understand these local requirements and can offer affordable services and solutions that meet these needs will be most likely to capitalize on this opportunity.

SAP obviously plays in the large enterprise and as a result has a lot of knowledge and expertise available to bring to bear on the problem. Much of what it has learned in supporting large multi-nationals is relevant and the knowledge is transferrable.

But the largest potential for growth in Brazil is in this SME segment. SAP identified 400,000 (out of a total of 2 to 2.5 million small businesses) as being in its addressable market. Today about 1% (4,000) of them are SAP customers and SAP is on a mission to significantly increase that percentage.

Is the Growth Sustainable? Partners Play a Big Role

But is the growth achieved thus far sustainable? Because SAP sells exclusively through the indirect channel in the SME segment, its continued success depends a lot on its partners. For the most part these partners are local (Brazilian) companies and with the exception of the big multi-national consultants and systems integrators, they too are SMEs. So they understand the market and are well positioned to help SMEs deal with Brazilian bureaucracy.

Combining this expertise with SAP’s investment in technology is key. Not every enterprise software vendor has deep enough pockets to address these local requirements. SAP does, and is going two steps further. Step one is in its investment in transformative (some call it disruptive) technology. Step two involves using that technology to embed localized best practices into its solutions.

Because partners are so critical to the success equation, I spoke at length with one of them about what has made SAP and its partners so successful this past year.

Partner Profile: Cienci

Cienci is a partner offering a broad portfolio of SAP products. I asked Ricardo Nobrega da Silva, Director of Cienci to share what he felt was the secret to SAP (and its own) recent successes. His answer: SAP has evolved from an ERP company to a technology company, providing businesses large and small the kind of innovation they need to compete and grow. This is reflected in Cienci’s own broad portfolio. Selling to the mid to large segment of SMEs in Brazil, it offers:

  • SAP ERP, both as ECC (Enterprise Central Component, the heart of the Business Suite) and packaged for the SME as Business All-in-One
  • SAP GRC Nota Fiscal Electronica (SAP NFE) to support companies in complying with the requirements of the Brazilian authorities for electronic invoicing
  • SAP Vendor Invoice Management (VIM) by OpenText, a prepackaged application that works with SAP ERP to stream-line accounts payable processes
  • HANA
  • Fiori, a new collection of 25 apps that will surround SAP ERP, providing a new user experience for the most commonly used business functions of ERP
  • Mobility solutions including
    • SAP Mobile Platform (SMP)
    • Sybase Unwired Platform (SUP)
    • Syclo, a work management mobile app for field service productivity and safety
    •  Afaria to manage devices
    • Apps it has natively developed for mobile devices
  • Integration services using SAP NetWeaver Process Integration (PI) and Gateway
  • Other services in support of SAP products and implementations

In addition, Cienci signed the first Managed Cloud as a Service (MCaaS) contract for Fiori in the world and is also certified for SAP CRM Sales Mobile Rapid Deployment Solution (RDS). It also focuses on SAP HCM solutions and SuccessFactors and signed the first OEM contract for SuccessFactors in the world.

“All the latest technology trends are important in Brazil, just as they are in other parts of the world. This includes social, mobile, cloud and big data. SAP is a big company and has invested a lot in bringing innovation to the market faster across a broad portfolio. Take mobility as an example. It is the only company that can deliver both a platform to manage devices [Afaria] as well as a development environment to develop mobile applications,” said Mr. Nobrega.

Is Technology Enough?

That said, even though Brazilians are generally receptive to new technology, Mr. Nobrega cautions they will only buy it if the technology adds business value. While he feels SAP is making the right response to the market with the right solutions, smaller companies need to be educated on the potential business impact. Like smaller companies around the world, they tend to focus on cost only and are reluctant to invest.

So educating these small companies is a necessary step in the process. The challenge for SAP and its partners is to prove the value, particularly if the technologies, and even sometimes the issues, are not well understood.

This issue is not unique to Brazil. Most small and medium size business executives are not technologists, and unless they are, they might not know or care about that underlying technology, because they don’t understand it. They might feel the systems they have today are the best on the market. In other words, they don’t know what they don’t know. Or they may simply feel they can’t afford anything better.

There is danger in this type of thinking. Those lagging behind in technology-enabling their businesses don’t need to understand how new technology works but they do need to understand what it can do for them.  They also need to understand that solutions today are more affordable than ever. And finally they need to be able to quantify the potential return on investment. This education process is a job for both SAP and partners like Cienci.

The first step in this education process might be in dispelling some SAP myths.

Myth #1: The first myth is that SAP is only for big companies. The reality is that a large majority of SAP’s customers, numbering more than 80,000, are SMEs.

Myth #2: The second is the SAP only offers complex and expensive ERP. In fact SAP offers three different solutions in Brazil:

  • The SAP Business Suite with ECC at its core
  • SAP Business All-in-One, which also has ECC at its core, but is pre-configured for specific industries and packaged with best practices to speed and ease implementation
  • SAP Business One, an entirely separate and distinct ERP product designed for small companies (generally with fewer than 100 employees)

Myth #3: The next myth is that SAP solutions are only offered as a traditional on-premise deployment. In fact there are several different cloud deployment options, including managed services in the cloud (MCaaS) and Software as a Service (SaaS).

Myth #4: And the final myth is that all implementations are long, slow and cost millions of dollars. The reality is the speed and ease of implementations has been steadily improving over the past decade and there are instances where first go-live milestones are achieved in weeks, not months and years. As to the cost, get a quote.

Of course any company, large or small, will need to cost justify a solution. For this, we would point to Mint Jutras research that quantifies the results measured since implementing ERP. And these results might surprise you.

Figure 1: Improvements Realized Since Implementing ERPSAP Brazil Fig 1

Source: Mint Jutras 2013 ERP Solution Study

The improvements shown in Figure 1 come from the 2013 Mint Jutras ERP Solution Study. These improvements were measured “since implementing ERP”. While it would be tempting to call them results achieved “as a result of ERP”, in reality improvements like these always result from a combination of people, process and technology. ERP can’t take all the credit, but is often the catalyst and vehicle by which they are achieved. World class denotes the top 20% in terms of performance measured by results, progress against goals and current performance in selected (universal) key performance indicators. Note that even those not world class achieve very significant results, typically enough to cost justify the investment.

Summary and Key Takeaways

The growth SAP has enjoyed in Brazil over the past year has resulted from combining its efforts with those of its local partners. Leveraging its heavy investment in development and its experience with large enterprises around the world, it has brought the necessary functionality to its solutions. Deep pockets and a focus on disruptive technology have allowed it to stay ahead of the technology curve. The challenge will be in not getting too far ahead of the adoption curve. SAP and its partners will have to work together to educate prospects and even existing customers to better understand the potential, not for technology sake, but in demonstrating the impact on the business itself.

But to pave the way for this technology-enablement, SAP and its partners first need to mentor and guide small growing businesses through the Brazilian jungle of bureaucracy, tax and regulatory compliance.

Tagged , , , , , , , , , , ,

xTuple: A Small Company with a Big Reach

Last week I had the opportunity to attend xTuple’s inaugural user conference. This is a small company that you might not have heard of. Or you might know it by its original name OpenMFG. Founded in 2001, it has always lived at the intersection of Enterprise Resource Planning (ERP) and open source software.  The premise behind open source is that it, or at least some version of it, is free. The source code is openly shared and the community is encouraged to contribute to it. Offering a free version necessarily affects the monetization of the software, and this can have a big impact in a space like ERP. There are many players, some very substantial, with deep pockets to fund R&D efforts. Also, ERP isn’t just a “nice-to-have.” It runs your business and therefore must evolve as you evolve. So the real question is this: Can an open source ERP vendor effectively compete in this competitive environment?

There is no single, universal answer to this question. The answer depends largely on two elements: the underlying technology and the community that embraces the solution. The xTuple community has strengthened over the past couple of years thanks to some very specific customer engagement initiatives that maximize the network effect realized by having ever-growing numbers of qualified ERP professionals getting involved with the software. And the latest xTuple version 4 (aka xTuple Mobile Web) puts the company in a much better position to compete. So in terms of competing, xTuple is in a very promising position.

Open Source: An Introduction to xTuple

If you are not familiar with xTuple, then you might also not be aware of the premise behind open source. The first and often most important concept is that it is free. Wikipedia actually has a succinct description: “Free and open-source software (FOSS) is software that can be classified as both free software and open source software.[1][2] That is, anyone is freely licensed to use, copy, study, and change the software in any way, and the source code is openly shared so that people are encouraged to voluntarily improve the design of the software.[3] This is in contrast to proprietary software, where the software is under restrictive copyright and the source code is hidden from the users, so that the rights holders (the software publishers) can sell binary executables.”

So if the software is free, how does a company (like xTuple) that offers open source software stay in business? How do they make money? Simple: not everything is free.

First of all, users pay for training and implementation services. They can also pay for a premium level of support that goes far beyond the ability to download bug fixes.

xTuple provides a version (the product is called PostBooks), which is completely free for download, but there are also ways to extend the solution that require purchase. Many companies running the free version outgrew something like Peachtree accounting software or QuickBooks, hence the name PostBooks. But there is also a commercial version of PostBooks that is available with an annual or perpetual license. And there are other different “editions” – Standard, Manufacturing and Enterprise – with increasing levels of additional functionality for larger and/or more complex companies. And xTuple announced a new version for wholesale distribution at last week’s event. In addition, there are some “add-on’s” like xT Connect (Email, EDI), xT OpenRPT Report Writer and xT Web Portal (B2B, B2C, Support) which require a license fee.

Open Source ERP: Not Exactly a Crowded Field

While there are numerous open source products on the market today, open source tools and technology (think Apache, Ruby, Java, PostgreSQL, MySQL) far outnumber open source applications. Open source ERP solutions are quite rare.  Indeed xTuple’s tag line reads “The World’s #1 Open Source ERP.”

While that is xTuple’s self-assessment, it is hard to argue against it. I don’t know of any other open source ERP that has achieved any kind of global brand awareness and survived and thrived on its own. Compiere is probably second to xTuple in terms of brand awareness, but it hasn’t been all that visible since Aptean acquired it in 2010. Yes, there are others. I even found a list of about 20 on Wikipedia, most of which I had never heard of. Compare that to the list of over 110 proprietary ERP solutions at the same url, although I would argue that some of those listed aren’t really complete ERP solutions. But then, perhaps some of those other open source solutions are really something less than full ERP.

Perhaps the reason I have not heard of most of those solutions is because my focus is on enterprise applications (with ERP at the core). Open source is simply the approach to development and delivery. If the order of business for a solution provider is open source first and ERP second, it would be easy for me to miss. xTuple reverses the order, focusing on delivering an out-of-the-box product, as opposed to what it calls more ‘toolkit’ efforts of other open source projects.  It is quite vocal in emphasizing that it is an ERP company first, and that open source is the ‘how,’ rather than the ‘what,’ of its solution.

Potential buyers should definitely look closely at both the depth and breadth of any of these offerings. Mint Jutras defines ERP as an integrated suite of modules that provides the full transactional system of record of your business. So make sure you are looking at a full solution, not just an accounting application or perhaps accounting plus human capital management. Consider how much more than that you might need. This will depend a lot on the kind of business you run. While we define ERP as the system of record, be aware that most real ERP solutions today do much more.

Competing on a Larger Playing Field

For xTuple, this means it isn’t competing against other open source ERP solutions as much as it is competing against ERP solutions in general. Open source ERP is not a particularly hot topic in ERP circles. So xTuple won’t win simply because it is open source, unless perhaps because open source makes it more affordable, a factor which is particularly important for small companies that have outgrown solutions like QuickBooks. While that is a target market for xTuple, it isn’t its only market. As CEO Ned Lilly puts it, “Our customers range from two guys in a garage to U-Haul.” That means it must compete on the same playing field as all ERP contenders, where selection criteria are quite broad.

While fit and functionality topped the list in terms of ERP selection criteria for years, Mint Jutras research finds “ease of use” has pushed features and functions into a very close second position.

Table 1: Relative Importance of Selection Criteria in Choosing ERP

Selection table

Source: Mint Jutras 2013 ERP Solution Study

Table 1 is the aggregate prioritization of all 2013 ERP Solution Study participants who rated the various selection criteria on a scale of 0 (not a consideration) to 4 (must have/most important).

Influenced largely by the consumerization of IT, users of enterprise applications today demand the same kind of intuitive navigation and visually appealing screens they have become accustomed to in consumer applications. But ease of use means more in terms of ERP. First and foremost is the element of efficiency: minimizing time to complete tasks. This means streamlining business processes as well as supporting a “natural” way of working.

Other selection criteria range from cost issues to support to ability to tailor the software, and many other factors. Selecting an ERP solution has never been a simple process.

But fit and functionality is still a close second, and the footprint of ERP solutions continues to grow, which puts more pressure on xTuple to innovate.  As noted above, xTuple’s ability to keep up with the big guys is dependent on the underlying technology and the community.

The xTuple Community: Crowd-Sourcing Innovation

One premise of sharing source code is to encourage the community to improve the code. In fact one of xTuple’s senior developers went so far as to open his presentation at the user conference by saying, “Open source ERP is all about customization and extension.” But leaving development entirely in the hands of the end users and partners is risky business. Yet xTuple doesn’t have the deep pockets of some of the ERP industry giants, so to better direct its own development efforts, it turned to crowd-sourcing.

Last August it introduced a program called xTuple Feature Mob 2. This is the second of these community initiatives. The first was a couple years back resulting in the integration of email into the xTuple Connect product. That was Feature Mob 1.  Feature Mob 2 is a social platform that enables micro-sponsorships of features, with levels of investment ranging from $100 (T shirt included) to $10,000, which comes with a 5-user perpetual license to xTuple Enterprise.

All feedback from Feature Mob 2 was entered into the xTuple CRM Issue Tracker, rationalized with existing feature requests and the top 30 most-requested xTuple features were identified. CEO Ned Lilly says, “This is a lot of work – a lot of development, testing, documentation. But, with [our community’s] help, we can incorporate all 30 of these features into the next three major releases of the xTuple software. And we only need a little under 250 individual sponsors to make it happen.

“So, there are some big, exciting features in here, including:

  • Integrating xTuple with leading open source business intelligence solutions, payroll solutions;
  • Expanded localization of VAT reporting and electronic payments, both issues that are very much top-of-mind for our users in Europe;
  • Importing and reconciling electronic banking transactions;
  • Better support for credit card purchasing, and
  • A supercharged search engine, which we’re calling a Regular Expression Wizard, to unlock the power of xTuple for maybe the less technical among us.”

As a result, xTuple’s development efforts are both directed and funded, allowing the company to compete at a more aggressive level.

Feature Mobs (1 and 2) aren’t the only way xTuple engages with the community however. In 2008 it released its first collection of “greatest hits” followed by volume 2 in 2013. All the features highlighted in the Greatest Hits Volume 1 and Greatest Hits Volume 2 were from individual customers – some of whom paid xTuple or a partner to develop the feature, others of whom contributed the code back directly. The open source concept encourages users (who may or may not be customers; thousands run the free version) and partners to develop their own extensions and customizations, often contributing back to the community.

A good example of a partner-developed extension that was featured at the conference is ShipIt for xTuple, a software extension that streamlines the process of delivering products with leading commercial shipping companies (UPS, FedEx and USPS (Stamps.com) in the United States.) ShipIt was developed by AKA Consulting, an xTuple partner. The extension, along with others, can be found on xChange, the xTuple Marketplace.

All the code that is contributed for embedding is reviewed by xTuple and may be incorporated into the core. The result is a product that continues to grow and evolve at a much faster pace than would be possible with the relatively small number of xTuple employees.

But the pace of innovation is also dependent on the architecture of the solution and the latest version of the product introduced some technology that should make a big impact on xTuple’s future.

xTuple’s Next Generation: Mobile Web

John Rogelstad, xTuple’s VP of Software Development, opened his “xTuple Updates” session with a question asking the audience to guess what he was most excited about in the latest version, xTuple 4 (also referred to as xTuple Mobile Web). The answer: object oriented programming. A clue as to why he finds this so exciting lies in the full title of the session: Mobile Web and the Technology Stack that Legacy Vendors Only Dream About.

As you might have noticed, I have been writing a lot lately about what I call “Next Generation ERP.” In this four part series I acknowledge that the footprint of ERP has been rapidly expanding, but it is not the features and functions of ERP that make it next generation, but the underlying architecture. It is the architecture that supports new and better ways of engaging with ERP. It is the architecture that allows you to configure and tailor ERP without invasive customization. It is the architecture that allows vendors to deliver more innovation, faster and to make it easier to integrate with other applications and also other businesses.

Object oriented programming is a big factor in the architecture that supports next generation ERP.  As John Rogelstad explained to his audience, “We needed to switch to object oriented programming at the data level – without it could we simply not deliver certain things. Had we switched earlier, the result would have been slow and clunky. But recent advances (including HTML5), had finally reached a point where we could build a web client that can compete with the [existing] desktop client. We wanted a unified experience whether using web, desktop or device. We also didn’t want to maintain different code for different devices.”

Although this latest version is called the “Mobile Web” it is not a mobile-only solution. It is a 100% JavaScript, HTML5-based application, which works on any modern tablet, smartphone or desktop Web browser. Version 4.0 implements the entire xTuple Customer Relationship Management (CRM) module in the mobile framework, including contacts, opportunities and pipeline management, to-do lists, projects and incidents/trouble tickets. Version 4.1 adds the Sales module, and integrates with open source business intelligence tools (Pentaho Open BI Suite). Over the course of the 4.x product releases, xTuple will make the entirety of its CRM and ERP solutions available in the Mobile Web client.

Summary

This new architecture is a huge step forward for xTuple. However it is actually a series of smaller steps on the journey to the final frontier of next generation ERP. But as a result of this architecture, a strong partner and user community, and a small, dedicated staff, xTuple is able to continue on its mission to “help companies of all sizes successfully implement powerful and easy-to-use open source ERP software to grow their business profitably.” While xTuple may not be going where no one has gone before, it is certainly leading the way into the final frontier of open source ERP.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

About the author:  Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 35 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 7+ years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.

Tagged , , , , , , , , , , ,

IS IT TIME TO PURCHASE A NEW ERP? THE SEQUEL

Just in time for your long weekend reading pleasure, I thought I would post an excerpt from a paper I recently completed. It’s a (not-so-subtle) reminder that ERP is not brain surgery.

In 2012 Mint Jutras posed the question, “Is it time to purchase a new ERP?” Based on data collected in the second half of 2011, only one in four of you said, “Yes!” Another 24% were undecided but over half (51%) gave us a resounding, “No.” We explored the possible reasons for replacing existing solutions and for taking the plunge for the first time. We shared with you the average and “World Class” results that could be achieved, suggesting that those of you not in the market for a new ERP might want to reconsider. New technology and robust feature functionality available today will put older solutions to shame and you might be missing out and missing out big time.

Many of you listened. The percentage of those looking to purchase a new solution more than doubled in our latest survey and therefore we revisit the topic here in hope that we can help you make the right decision for your company. And we’d like to remind you once again, it’s not brain surgery. Don’t wait until the patient is dying.

ERP is Not Brain Surgery

Last year we acknowledged that many of you do indeed regard ERP as you would brain surgery – don’t do it unless the patient is dying. We also suggested you might not want to wait that long and that perhaps joint replacement might be a better way of looking at it. After all, when do you replace a joint and why? You undergo replacement to improve your life. If you wait until you are on your death bed, it’s too late. You replace a knee or a hip when the pain becomes too great or you simply can’t function the way you want or need to. There are a lot of parallels when it comes to ERP and running your business.

It seems at least some of you might be reconsidering ERP as brain surgery, because in our most recent 2013 ERP survey,  when we asked the same question, many more of you (56% to be exact) said, “Yes, we intend to purchase a new ERP within the next 3 years.” Twenty percent (20%) of you are still on the fence but only 24% of you said, “No.” Of course some of you that said no may well have made that purchase within the past year and are well down the road to reaping the benefits. For those of you still on the fence, maybe we can help you decide. For those ready to make a move, we can definitely help you understand what to look for and what to expect from a new solution. In doing so, we might even convince a few more of you that perhaps it is, after all, time to purchase a new ERP.

New or Replacement?

Purchases of ERP solutions fall into two general categories: first time purchases and replacements. While some may find it surprising, it is sometimes hard to tell the difference. This is partly because the acronym is used rather loosely and many find it difficult to define ERP. Mint Jutras defines it as an integrated suite of modules that provides the operational and transactional system of record for your business. Although most ERP solutions today do much more.

This definition allows for a lot of variability in the scope of solutions. Some of that variability results from different types of companies having different needs. All companies, large and small, and even non-profits and government agencies have basic accounting needs. All make purchases, often controlled by purchase orders. Most have sales orders or contracts against which they deliver goods or services. ERP must be able to manage the basic business processes of procure-to-pay and order-to-cash and record all transactions in a general ledger in an integrated fashion. For manufacturers and distributors, this also means managing inventory.

It may be possible to address the basics (albeit inefficiently) without a fully integrated ERP. Therefore you might be purchasing your first ever ERP, but also replacing something. Or you might be calling your solution “ERP” when in fact you are running disparate commercial or home-grown applications with batch or real-time interfaces. Our research shows ERP solutions in place today replaced a lot of custom developed applications, some integrated, some not. Only a small minority replaced another ERP but also very few had nothing except manual processes and spreadsheets before implementing their current solution.

Many industry observers have been talking about the ERP market being saturated for years now. Yet Mint Jutras research estimates the overall adoption rate of ERP to be approximately 66%, although a bit higher (76%) in the manufacturing sector.   While all companies need to manage and maintain a system of record of their business transactions, some might think they can adequately serve those needs with something less than basic ERP. What is more likely is they need more (not less) than the basics of ERP. Indeed the footprint of ERP has expanded tremendously over time, reaching the point where it is often difficult to understand where ERP ends and other applications begin.

The bottom line: It really doesn’t matter whether you are making your first purchase of a “real” ERP solution, or replacing one. What is really important is that you make a decision that will bring significant value and return on your investment. Don’t underestimate the potential.

Motivation

So, why do companies purchase a new ERP? We asked this question of those that had actually replaced an ERP solution and also asked what might prompt a future replacement. Lack of functionality, outdated technology and the inability to scale with growth of the business have traditionally been the top three reasons prompting actual replacements and this year was no different.  In terms of potential replacements: functionality and technology also claim the top two spots, but the possibility of reducing the overall total cost of ownership through a replacement appeared as a significant driving force, along with the emergence of standards being applied across the enterprise. Compared with the quest for fit, functionality and enabling technology these are relatively new motivations.

Reducing Total Cost of Ownership

Sometimes you need to spend money to save money. Given the scope, purchasing an ERP will typically require cost justification in order to estimate the expected return on the investment. But return on investment (ROI) is different than total cost of ownership (TCO), particularly in terms of enterprise applications. ROI calculations often only include up-front costs. The cost of the software and services for installation, implementation and training are pretty straightforward. Traditional on-premise deployments also include hardware costs and the maintenance associated with that hardware. But these costs are also quite easily quantified, even if the hardware runs multiple applications. Alternative deployment options for hosted models or software as a service (SaaS) might re-classify costs from capital expense (CapEx) to operating expense (OpEx) but can be quite easily accounted for.

Personnel costs also must be factored in. These resources might also be shared across multiple applications and, particularly in smaller companies, might have duties totally unrelated to applications. The same people (or a single person) might support ERP and also keep networks, telephone systems and email up and running.

Harder to calculate are the post-implementation costs in managing change. And managing change remains as the top challenge identified in achieving the goals of ERP. ERP solutions based on outdated technology are likely to be rigid, making adapting to change expensive. If you are running something less than ERP, say multiple disparate applications (either commercially available or home-grown) the problem and the expense is compounded as it is likely to also impact interfaces or integration.

Change can occur as a result of changes to your business caused by market volatility or growth. Growth might be organic, through the introduction of new products or expanding territories. Or it might be through merger and acquisition. Change can be imposed on you through new or evolving regulatory requirements or it can be self-imposed with organizational restructuring, financial management changes or new or changed business processes.

If this business change was not anticipated when you first purchased and installed your current solution, it may also have resulted in the need for customization. Customizations have traditionally been implemented down in the depths of the source code and often had the unintended consequence of building in barriers to moving forward. This can be quite costly both in terms of ongoing maintenance of the customized code, but also in the lost opportunity cost in being able to take advantage of innovations and enhancements provided by your software vendor.

ERP solutions based on newer technology are far more flexible and adaptable than the rigid systems of old and they also change the very nature of “customization.”

With the most flexible and adaptable solutions on the market today, the vast majority of “customization” can be accomplished without ever touching source code or building in barriers to upgrades and new releases. And even some of what might be viewed as custom logic could also be accommodated through the use of externally defined business rules and other adaptations. So the cost to maintain these newer solutions is reduced considerably and this has a major impact on the TCO.

Definition of Standards

Very few companies today operate out of a single location. In spite of a large percentage of survey participation from small to mid-size businesses (SMBs), 75% have more than one operating location. These locations might be sales and service, distribution or manufacturing sites. In the past any location of any size and substance would likely have been left on their own to select and implement ERP.  Very small locations often struggled with no enterprise applications at all. If there were remote employees, they were not well-supported.

Today we live in a very different world. The need for collaboration and interoperability extends beyond the traditional manufacturing concept of feeder plants, where one division provides components to another, which ships a finished good to the end customer. Many global manufacturers have implemented the philosophy of “build globally; ship locally.” This means products might be built in any manufacturing facility around the world, generally the one closest to the customer. This reduces lead times and shipping costs and builds intimacy with the customer, but requires a level of standards and consistency across multiple divisions or operating units that is is impossible to achieve without careful planning and standards.

Even in non-manufacturing industries, customers shared across multiple operating units increases the need for standards and consistency in business processes and quality of products and service. Unless the enterprise is the equivalent of a holding company comprised of very diverse and autonomous business units, interoperability has become a core competency. And yet any level of competency is difficult to achieve without standard business processes and with a proliferation of ERP solutions.

As a result enterprises have been talking about consolidation or rationalization of ERP solutions across operating locations for years. But for years it just didn’t happen. Why? Because this was viewed as a “rip and replace” strategy that brought little value to the enterprise. Why invest all the time, effort and money to rip out a working system only to spend months and years to get back to where you started? But today it is happening. The majority of organizations have not only developed standards for business processes and metrics, but for ERP as well. Indeed, 100% of “World Class” ERP implementations have defined such standards and are 40% more likely to have successfully implemented them, with all business units in conformance.

The argument against rationalization made sense back in the day when ERP solutions evolved slowly and painfully. Those days are gone. Today as legacy systems are replaced with new state of the art technology and functionality, the effort to replace them should bring you to a very different place and produce very significant results. And yes, solutions have really changed that much. Not all, of course, but new enabling technology allows leading vendors to innovate faster and provide more flexible and feature-rich solutions.

The paper goes on to offer some help in cost justifying a move, and also some advice on selecting the best solution. It concludes with:

Conclusion and Recommendations

Still not sure if you should purchase a new ERP? If so, learn to recognize the signals. Here are some examples:

You lack control: Processes are manual; data is scattered in file cabinets, offline spreadsheets and across desktops.  Data is transferred between desks repeatedly, adding little value and introducing the risk of errors.

You want to grow but you are running blind: Your business is growing. But you have no visibility as to where you made your best profit. Was it in your newest product domestically? Should you expand into emerging markets? What about your established products? Are they still profitable?

You can’t meet customer demand: Your inventory levels (or maybe your service staff levels) are rising, yet you still can’t seem to meet customer expectations for delivery. How do you better forecast demand, best utilize staff, lean out your inventory, and produce product just-in-time?

Cash is tight: Should you finance your supply chain costs? Invest in growth? Credit is tight. Can you prove to yourself and your investors or creditors that you are credit-worthy?

As we said last year, deciding to purchase ERP is indeed a big decision. Our recommendations this year are quite similar to those we proposed a year ago, but while the cost savings and other improvements have always been quite dramatic, this year they were even better. Those of World Class ERP implementations were nothing short of spectacular. Are those companies really so different or is it just a question of discipline mixed with the right tools?

A reminder of those recommendations for a successful ERP journey:

  • Don’t wait until the patient is dying. Making a selection and running an implementation project when the business is under duress does not create an atmosphere of careful consideration, planning and execution. You will be tempted to take shortcuts that you may later regret.
  • Need it but can’t afford it? Consider the potential cost savings. Most ERP solutions pay for themselves within a two to three year time period. If capital funds are not available to support the project, talk to the ERP vendor about other licensing and payment options. Many solutions are available in a software as a service (SaaS) model that eliminates a hardware purchase and allows you to pay a subscription fee and account for costs as operating expense (OpEx) rather than capital expense (CapEx). Even if SaaS is not for you, special financing and/or subscription pricing models are becoming more common.
  • Set goals and measure. Before embarking on your ERP project, decide which metrics will measure success. Establish a base line, set goals and measure progress against those goals. When you reach them, set another goal. Continue to measure and continue to reap more benefits.

ERP should be an on-going source of cost savings and improvement. Managing change can be a challenge, but with a technology-enabled solution, you can embrace change and use it as a catalyst for growth and profits.

If you are interested in learning more or getting access to the full paper, along with its pretty charts and pictures, please contact Lisa Lincoln (lisa@mintjutras.com).

Have a great weekend!

Tagged , , , , ,

JAR SYSTEMS: Poised for The Future With SAP Business One

If your small to medium size business (SMB) grew out of advances in technology, you would think you would naturally turn to technology to  help you manage and grow that business. Unfortunately when it comes to investing in Enterprise Resource Planning (ERP) to support growth and provide control, many SMBs are like the proverbially shoemaker: The shoemaker’s children have no shoes.

JAR Systems could have easily found itself in this type of situation. Founded in 2004, JAR Systems provides “mobile solutions for education and training” in the form of carts to store, secure and most importantly, charge mobile devices. But instead of struggling along with something less than a true enterprise-class solution, as so many SMBs do, JAR Systems viewed the cost of ERP not in terms of the cost of the software, but instead in the potential for missed opportunities. JAR Systems chose to take control of its business in 2011 with SAP Business One and hasn’t looked back since.

Seizing An Opportunity

No modern classroom today would be complete without its share of electronic devices. These devices come in a variety of shapes, sizes and capabilities and include full-size laptops, notebooks and tablets. All have steadily been making their way into classrooms for more than a decade now. With the emergence of these new technologies, schools face new challenges in managing devices and maximizing their availability. How will schools keep the software on devices fresh and refreshed? How will they make sure the batteries are fully charged? How will they store and secure them when they are not in use? These are all quite basic issues, but if not adequately addressed can seriously reduce the effectiveness of these devices as learning tools. And let’s face it: These learning tools don’t come cheap.

In 2004 JAR Systems seized the opportunity these challenges created and began offering carts that offer more than storage; they can be used for device management and “intelligent charging.” Device management can be scheduled and performed automatically at night while the devices are being charged. With intelligent charging:

  • Power sensors evaluate demand from mobile device adapters
  • Charging logic determines when and where power should be distributed automatically
  • Devices recharge in the quickest, most energy-efficient way possible

As a result of intelligent charging, schools save money (in energy bills) and maximize the time the devices are available for use. JAR Systems sells almost exclusively through partners and in 2011 it was at a crossroad of growth.

Taking a Step Back

Like many SMBs JAR Systems had invested first in a tool that would help them manage its pipeline, choosing Salesforce.com. This was hardly unusual in two ways. First, startups often worry more about where that next big order is coming from than about having a back office system to put it in once it is closed. Second the “software as a service” cloud delivery mechanism is appealing for those that have yet to invest in hardware and Information Technology (IT) infrastructure.

Salesforce.com is often referred to as a customer relationship management (CRM) solution, and indeed Axel Zimmermann, President of JAR Systems referred to it as such. JAR Systems was in fact using it as a window into forecast of demand. But while Salesforce does indeed manage contacts, sales activity and opportunities, it doesn’t extend very far into the relationship with the customer after the sale is made. As a result, it is very easy to throw a lot of data into the system, but it doesn’t require the same level of organization and discipline ERP requires.

Also, in JAR’s case, the forecasted orders were coming from partners, with several of them potentially competing for the same account. The result was a distorted view and an inflated forecast. And the company still didn’t have a good handle on the business.

So when JAR Systems decided to move forward with SAP Business One as its ERP, it also decided to step back from Salesforce.com and use the CRM solution that is embedded within SAP Business One. Not only did that give them a deeper reach into the relationship with the customer, it also tied everything neatly together.

Flexible Control

While a stand-alone application like Salesforce.com provides a great deal of flexibility in how data is structured and processes are defined, it doesn’t force structure and organization. It doesn’t need to. Some might refer to it as a system of record of prospect and customer engagement, but it does not maintain a system of record of transactions and therefore doesn’t require transactional integrity be maintained.

Because it is so flexible and the next order is of course the lifeblood of the company, many are tempted to throw everything but the kitchen sink into the system and that is exactly where JAR Systems found itself: With lots of data, but little data that was actually useful in terms of decision-making… and no transactional integrity.

A single solution combining ERP and CRM was the answer. Yes, it was a bit of a step backward to start over with CRM. But it also gave the company the opportunity to reorganize the data and add a level of control. This was especially important since all products are serialized, which adds another level of integrity that needed to be preserved, something you simply can’t accomplish with a stand-alone CRM solution.

It Takes a Village

This move to an integrated SAP Business One solution was not one to be taken lightly. And it was not something JAR Systems felt comfortable in tackling all by itself. All told there were four important parties involved:

MCS Business Technology is an independent, employee-owned consulting firm that partners with SAP in delivering SAP Business One and complementary services. JAR Systems turned to MCS for help with their implementation.  MCS Business Technology in turn partners with Boyum IT, also an SAP partner that is authorized to develop add-ons to Business One. One of the add-on modules is used by JAR Systems to tailor and customize the screens of Business One. One of the compelling factors for the particular add on is that it is certified by SAP and comes already integrated with Business One.

The third constituent was SAP itself. Two aspects were key, according to Mr. Zimmermann, “The technology world is changing so rapidly, we wanted to be assured that we could keep up. So far, upgrades have been painless. Business One is easier to update than my Windows machine.“ JAR recently upgraded to the latest release of Business One (9.0).

Mr. Zimmermann added, “Secondly, we looked long and hard at the roadmap while we were evaluating our options. We are looking for fast response time. We want to be able to ask questions that we can’t answer right now. We see the most immediate potential value in Business One, analytics powered by HANA. It is inspiring to hear the message and see the examples of what it can do. Of course we will buy Business One, powered by HANA later, as long as we can afford it. We want to use IT to revolutionize this business in ways previously not possible.”

For more information on these two different versions of Business One and HANA combined, see Making Sense Of SAP Business One With SAP HANA.

And last, but certainly not least, was JAR Systems itself.

JAR Systems had the insight and the vision to see that a small step backwards would yield a giant step forward over time. It’s ability to recognize the cost of lost opportunity as far more expensive than the cost of new software was both visionary and practical. There is no doubt that new technology will continue to bring about change in mobile solutions for education and training. While others might be apprehensive about the future, JAR Systems is poised to capitalize on that change to better serve its customers, while also comfortably positioned to leverage technology for its own business.

Tagged , , , , , ,

Loosely Coupled or Tightly Integrated Enterprise Applications? Why Should a CFO Care?

It seems lately I have been hearing a lot about “loosely coupled” business applications. It started about a year ago at Infor’s customer event (Inforum) and then continued at SAP’s SapphireNow. More recently, with SAP’s introduction of Financials OnDemand, I heard it again. Financials OnDemand is a derivative of SAP Business ByDesign, a cloud-based, tightly integrated suite (that some might call ERP). SAP pulled out the financials that were previously embedded in Business ByDesign so they could stand on their own and be “loosely coupled” to other applications.

But is this what its customers and prospects are looking for? That’s hard to say because it is very unlikely its typical prospect or customer really understands the intended “benefits” of loosely coupled.  In fact, when you start talking about “loosely coupled” to CFOs you are likely to produce that glazed look that says, “I don’t know what you’re talking about… and I don’t really care.” If you refer to “loosely coupled” in contrast to “tightly integrated” you might get a glimmer of understanding, but not an immediate acceptance of the concept.

CFOs might intuitively understand the value gained from tightly integrated applications, particularly in reference to an integrated suite of modules like ERP. After all, who wouldn’t want a complete solution, one where all the pieces just sort of fit and work together, with no integration effort required and no redundant data? While there might be some inherent value to having a loosely coupled solution, that value is not intuitively obvious to a CFO. Yet the opposite is true for both Infor’s CEO Charles Phillips and representatives of SAP, including former SuccessFactor CEO, now SAP’s chief “cloud” guy, Lars Dalgaard. They see enormous value in loosely coupled. As a result they either don’t see a need to explain it, or they have difficulty in explaining something they just intuitively “get.” Either way, the message is just not very clear to your typical financial executive.

So let me try to explain. The biggest reason “loosely coupled” might be of very significant value to a CFO is because things change. Markets change. Companies expand (or shrink). Software is enhanced. Technology innovation happens.  In fact, technology innovation often results from change but is also often the catalyst for change. Yet responding to change is hard.

Let me give you an example that should resonate with a CFO. Let’s say you are the CFO of a mid-size manufacturer who has helped your company expand over the past 10 years.  You implemented an ERP solution back when you were small and your accounting needs were rudimentary. You chose a solution for its strength in managing inventory and production. While you started out operating from a single location, you have expanded globally and now operate in 6 different countries around the world. While the financial modules of your ERP met your needs when you first implemented it, now you struggle with compliance and tax regulations, multiple legal entities, multiple currencies and consolidation. This is a very real scenario. Our latest Mint Jutras survey on ERP indicates 75% of companies today operate with more than one location. Even small companies (those with annual revenues less than $25 million) have an average of 2.6 locations and this average grows to 7.5 in the upper mid-market (revenues from $250 million to $1 billion).

You’d like to move to a newer, more feature-rich accounting solution, but your ERP is still satisfying the needs of manufacturing and since you are continuing to grow, you don’t want to disrupt the business by ripping it out and replacing it. The very thing that attracted you to your solution is now holding you back. Because it is tightly integrated, you can’t just replace a piece of the puzzle without replacing the whole thing.

To make matters worse, your older ERP solution is not really meeting your needs for customer relationship management (CRM). This is not surprising. While the footprint of ERP has been steadily expanding over the past 10 years, the needs of sales and service organizations were not front and center from the beginning. If these needs had been met with early versions of ERP, companies like Salesforce.com would never have taken off like they have. Maybe you too are considering adding a stand-alone CRM to the mix. If so, SAP might be pitching its Customer OnDemand solution in addition to Financials OnDemand.

So is this building a case against tightly integrated, in favor of stand-alone solutions that might need to be integrated? Not necessarily. In a tightly integrated solution there is only one of anything – one chart of accounts, one customer master file, one item master, one supplier master, etc. But these master files are shared across different functions. Purchasing needs to access the supplier master to place a purchase order. But accounts payable also needs a supplier master in order to make a payment. Sales and order management need to maintain information in the customer master, but accounts receivable needs a customer master to apply cash receipts. Pull the accounting solution out and you still need the suppliers and customers. Does the new accounting solution have its own supplier and customer files? Does this mean maintaining two of each? Does the new CRM add yet another customer master? If so, how do you keep them in sync? Or maybe you don’t. But this adds all sorts of new wrinkles.

“Loosely coupled” applications could very well make your life easier. But what’s the difference between “loosely coupled” and what used to be called “best of breed?” This is where it gets harder to explain and I am not entirely convinced all vendors that claim to deliver it are talking about exactly the same thing. It took SAP several tries before I really saw the difference, and I live and breath this stuff. Your typical CFO doesn’t.

In trying to understand SAP’s definition of “loosely coupled” I described the scenario above to the solution marketing team for SAP’s cloud-based financials and asked how the combination of Financial OnDemand and Customer OnDemand would address this issue of redundancy. If each were sold separately (i.e. not delivered as the integrated suite of Business ByDesign) would the customer wind up with two different customer master files? SAP’s answer was no.

Here’s how it works: Think of the customer (master data) as a business object. An older ERP solution will build that customer master file (the business object) right into the solution. Instead, these OnDemand solutions treat the customer master as a separate business object that lives outside of the application. By doing this, both applications can point to, access and reference the same business object.

But what about maintenance? Instead of building the maintenance functions directly into each application, SAP treats that function as a separate function as well. Instead of building that directly into Financials OnDemand and Customer OnDemand, SAP builds it once and puts it in a “business process library” which both (and other) applications can use. The term “business process library” might be a bit confusing because most think of business processes in the context of processes like “order-to-cash” or “procure-to-pay” or “plan-source-make-deliver”. These are workflows that string together different functions. But in this case the business process is much more granular. It refers to the process of maintaining the customer master data.

So by loosely coupling these two applications, the customer still winds up with one customer master file. And both applications use the exact same functions to access and maintain it. These external business objects sort of plug into these applications.

This solves an important problem, but in our scenario, where we are replacing the accounting applications of an existing ERP solution, it is only half of the problem. If that existing ERP is still managing customer orders, it too needs to access the customer master file and it probably assumes the customer master file is the one that is delivered embedded in the ERP. So until or unless you do some potentially invasive surgery to the existing ERP, you are going to have to deal with some redundancy of data.

Of course if you replace that tightly integrated ERP solution with a newer or upgraded solution that has been assembled with loosely coupled external business objects, this problem goes away. In the meantime, SAP, and potentially other solution providers are beginning to re-architect their solutions to make this much easier. They are essentially performing this surgery and delivering applications that make better use of underlying supporting technology to make this happen. Remember the $6 million man and the bionic woman? They were still people, but with some of their “parts” significantly enhanced. Think of it as bionic ERP.

Tagged , , , , , , , , , , ,

Making Sense of SAP Business One with SAP HANA. Why Two Versions?

HANA, SAP’s in-memory computing engine has factored into SAP conversations for a couple of years now. Often HANA and in-memory computing are associated with “big data”, and hence associated with big companies. So the introduction of a HANA product for SAP Business One, SAP’s Enterprise Resource Planning (ERP) solution for small to midsize enterprises (SMEs) might not resonate immediately. And yet SAP has  not one, but two Business One products for SAP HANA:

  • SAP Business One Analytics, powered by SAP HANA
  • SAP Business One, version for SAP HANA

Given 79% of its customers are SMEs, SAP must know this segment of the ERP market, particularly the lower end, which is the target market for Business One, does not buy or implement technology for technology’s sake. There must be a perceived business value. Read on to discover when, why and how either or both of these offerings can bring value to the small business running Business One.

What are These Two Versions?

SAP Business One Analytics powered by SAP HANA is currently available while SAP Business One version for SAP HANA is still on the (future) horizon.

SAP Business One Analytics powered by SAP HANA

Back in June, SAP Business One Analytics powered by SAP HANA was in what SAP calls its “ramp up” phase.  This phase sits between the beta version and generally available (GA). During this stage, the software is delivered to a limited number of customers. Once a significant number of those customers have gone live, the product exits ramp up and becomes generally available. Currently there are 24 live customers, with 20 additional implementations underway. SAP originally expected the product to become GA in the fourth quarter of 2012 but ramp up went exceptionally well and GA actually occurred in July.

Analytics for SAP Business One includes predefined content (reports and dashboards) and provides interactive analysis based on an online analytical processing (OLAP) data model (also predefined). You can also create your own ad hoc reports using Crystal Reports. Enterprise search is also provided, allowing structured and unstructured free text search. Think of it as a Google search that crosses the boundary between your enterprise applications and the public domain of the Internet.

Customers running SAP Business One Analytics powered by SAP HANA continue to run the (transactional) ERP solution on their existing Windows servers using the Microsoft SQL database. The Analytics will run on a separate appliance, a Linux-based server where the SAP HANA database will also reside. Pricing will vary based on the actual configuration of the hardware and SAP does have a special pricing model for the SAP SME HANA products, but there will be an investment required. But before you assume that level of investment is out of your reach, talk with the SAP Business One partner that supports you. SAP has gone to great lengths to keep the price tag within reach for the SME.

SAP Business One version for SAP HANA

The second product, which went into ramp up in late September 2012, is SAP Business One, version for SAP HANA. A beta version was demonstrated during SAPPHIRENOW in Orlando on May 16, 2012, also demonstrating that SAP HANA is not just for the big guys. It is expected to be generally available late 2013. Think of this as SAP Business One with “HANA inside.”

This version will allow both the transactional and analytical processing to be run on the same server, both of which will be super-charged for speed.  While normally associated with “big data,” HANA is as much about speed as it is big data. And with speed, it is normal to add more and more data, reaching beyond that which is normally stored in enterprise applications. Think about the enormous potential of useful but unstructured data that is floating out there via the Internet.

While generally a database is optimized either for transaction processing (e.g. ERP) or analytics, can one solution be optimized for both? SAP says, “Yes, with SAP HANA.” However, even though both will run on one box, SAP Business One version for SAP HANA will not run on the box that customers run SAP Business One on today. So again, there will be some investment required; explore those costs with SAP and its partners. If you feel this would be a path you might take, there is no reason to delay your purchase of the Analytics powered by SAP HANA. You can take full advantage of the speed and functionality available today with SAP’s assurance that your investment will be protected.

Those that are satisfied with performance today or cannot justify the expenditure and transition to SAP Business One version for SAP HANA may choose to continue running SAP Business One on MSSQL. They will still have the option of purchasing the Analytics powered by HANA on a separate appliance.

Case in Point: Nashua Communications (Pty) Ltd

Nashua Communications is a good example of an SAP Business One customer that has been and will continue to evaluate different options presented by SAP. As a leading provider of converged enterprise network and communications solutions, the company is based in South Africa. It specializes in the design, implementation and support of converged networking and security solutions that use open, standards-based architecture to unify communications and business applications for a seamless collaboration experience. Nashua Communications is running live on SAP Business One Analytics powered by SAP HANA.

The company has a long history with SAP. Up until a few years ago it was part of Siemens and its global enterprise communication arm (Siemens Enterprise Communications PTY).  As part of the Siemens family, it had been using SAP R/3 for the prior 15 years. This changed when Siemens divested this group and it became part of the Nashua Group (within the Reunert Ltd Company).

According to Darren de Vries, Nashua Communication’s Chief Information Officer (CIO), “During our 15 years on SAP R/3 we had accumulated a lot of IP [intellectual property] around reporting. When we migrated to SAP Business One, this was one of our biggest challenges – 15 years of custom-written reports and queries were no longer there. The challenge had not so much to do with functionality – we had all we needed with some customization to SAP Business One and add-on software, but the standard SAP Business One reporting just couldn’t replace 15 years’ worth of time, effort and knowledge.

“In response to the challenge, we purchased the Business Objects (BOBJ) Business Intelligence (BI) tool and started implementing it. We were working with a South African partner of SAP’s that had BOBJ skills but not in conjunction with SAP Business One, so we found the project not the easiest; and progress was slower than expected.”

At this point SAP approached them directly about SAP HANA. “HANA was all about speed, in memory. But what appealed to us the most was that we could buy it off the shelf to work with SAP Business One right away. It was a no- brainer to our CFO. He said, ‘I want this. Go ahead.’”

When Nashua Communications signed on with SAP HANA it was still in the ramp-up phase and therefore the company was instrumental in identifying some problems, but these were resolved. Most had to do with the customizations and add-on functionality it had added to SAP Business One. This was a thorough test since Nashua Communications puts the solution through more paces than the typical SAP Business One customer. At the 300 user mark, if not the largest, it is at least one of the largest SAP Business One customers.

Because of the “newness” of the solution both to the market and to the company, Nashua Communication chose to roll it out first to a selected group of about 10 power users. Mr. de Vries goes on to say, “We are running now on a live environment and once we resolve the odd little glitch here and there, we are very keen to roll it out to the entire user base. We see enormous potential in terms of enterprise searching, speed and access to real-time data. We will empower each and every user as much as possible, but will keep report and query writing to a more technology literate group of people.”

So what about taking the next step to SAP Business One version for SAP HANA when it becomes available? Mr. de Vries states, “We see value in taking transactions to SAP HANA; performance is like night and day. If there is a cost to upgrade, we would have to come up with a business case to justify, just as we have done for the analytics side.

“For the Analytics powered by SAP HANA, the basis for cost justification was our fairly complex needs in terms of data and reporting. Quite frankly, we had struggled to get Business Objects up and running on Business One. The improved speed we experienced was a major factor. Equally important was access to live data rather than data that was 12 to 24 hours old.

“We also experienced a benefit that is quite unique to the South African market. Unlike the US where good telecommunication service is expected and people talk (rather loudly) about bad service, it is just the opposite in South Africa. Expectations are lower and people sing praises when good service exceeds expectations. We are hoping this access to live information will give us a competitive advantage to provide excellence in products and service.”

Key TakeAways

It is clear that a key value proposition for SAP HANA is speed, and even small to midsize enterprises can be faced with a growing challenge of making sense from and managing more and more data. Whether you consider this “big data” or not, the ability to apply analytics in real time without bogging down the transactional system of record can lead to a competitive advantage.

If you are an SME running SAP Business One now, or considering transitioning to this solution, don’t overlook the added strength of analytics powered by SAP HANA today. The enterprise search capabilities alone may suffice to justify making the transition. As SAP Business One version for SAP HANA becomes available later this year, this version, together with speed and the ability to better handle the growing data challenge should be a no-brainer for those just starting out. Existing customers will need to carefully review the business case for making the transition. For these customers, don’t assume SME means small data and don’t overlook the need for speed.

Tagged , , , , , , , , ,

Epicor Comes Up-Market with Multi-tenant SaaS ERP

Today Epicor announced expanded availability of its next-generation cloud enterprise resource planning (ERP) solution. Previously Epicor Express was offered as a simplified version of its flagship product Epicor ERP. Epicor ERP is a multi-tenant software as a service (SaaS) solution; the simplified Express editions were configured specifically for small companies (both Manufacturing and Distribution editions have been available). Epicor Express for Manufacturing was configured specifically for job shops and discrete manufacturers and, like Epicor Express for Distribution, was delivered only using a SaaS model. The “simplification” process involved hiding selected features and functionality in order to remove some of the complexity inherent in a comprehensive enterprise-level ERP solution, making it more digestible for smaller companies with less complex environments.

With this announcement today at the International Manufacturing Technology Show (IMTS) in Chicago, IL Epicor’s cloud ERP offering is now available to midmarket manufacturers, distributors and service organizations. The same full-featured Epicor ERP solution, previously only available as an on-premise solution, is now offered as a multi-tenant SaaS solution as well.

After having accumulated experience selling and supporting the Express editions this move makes a lot of sense for Epicor. While many still think of SaaS only in the context of small companies, the latest Mint Jutras ERP Solution Study found that interest in and willingness to consider a SaaS version of ERP grew with the size of the company. While 42% of small companies (those with annual revenues under $25 million) were willing to consider SaaS (along with other deployment options), that percentage grew steadily through the lower and upper midmarket (48% and 51% respectively) to 59% in large enterprises (those with revenues over $1 billion).

Increasingly distributed environments can at least in part explain this escalating interest. Even small companies reported operating out of 2.5 locations and this number grew to 10.7 in large enterprises. Combine this with the increased likelihood of establishing standards for ERP implementations across the enterprise, and it is not surprising that many find SaaS a viable way to establish and enforce these standards. Often these standards are two-tier, particularly in larger companies, where one or more standards for operating locations may be implemented in addition to a corporate ERP. This explains why even Epicor’s early editions for small companies have taken hold. Many operating locations are essentially run as small companies within larger enterprises. But these small companies can also grow and need features and functions beyond the scope of the Express editions… but not beyond the scope of Epicor ERP.

Mint Jutras’ latest survey on “Understanding SaaS” has gathered data on levels of understanding and preferences for SaaS solutions. It found 82% of (over 300) survey respondents had established standards for some or all applications and 93% reported that these standards influenced their choices for deployment.

However, there is still a lot of education that needs to be done. Fifty-seven percent (57%) admitted to not understanding the difference between multi-tenant and single-tenant solutions. Cost is still viewed as the most important potential benefit of SaaS, followed by ease of upgrade in 2nd and support of distributed environments in 3rd. The advantages of not having to purchase hardware and maintain systems and to not have to grow their IT staffs were also considerations.

For more information on cloud deployment of Epicor ERP, visit http://www.epicor.com/Solutions/Pages/CloudComputing.aspx.

Tagged , , , , , , , , ,

Exact America: Emerging from Stealth, Repackaged

Last week I had the opportunity to spend some time with the Exact America team. Exact has been pretty quiet the last couple of years, so in case you aren’t familiar with the company, here’s a quick summary:

Exact America provides business solutions (think extended ERP) for Manufacturing/Distribution small to midsize businesses (SMBs). Its parent, Exact is a Dutch company that has been around since 1984 when it was started by a few students in a garage. As a result Exact has always related to and served entrepreneurial businesses, and these often start out very small. In fact the Americas team targets SMBs with 2 to 250 employees. They do that with 4 different product lines:

  • Exact Globe is an ERP for project-based manufacturers, distributors and service providers. It includes Integrated Financials/Business management software, as well as Web-based field project management, integrated with project accounting. Also sold by Exact worldwide, it includes support for multiple legislations, language and multicurrency for international sites.
  • Exact Macola comes in two flavors: Exact Manufacturing Pro (for manufacturers requiring full shop floor control) and Distribution Pro (for light manufacturers, distributors and service providers). Both versions offer eCommerce, payroll and warehouse management as well.
  • Exact JobBOSS is packaged as management software for job shops, make-to-order and contract manufacturers. It provides these small “to order” shops with the ability to quote jobs, track labor and material, and control shipping, invoicing and job-costing processes.
  • Exact MAX reaches down into the small business sector as a Material Requirements Planning (MRP) add-on, to be run in conjunction with Microsoft Dynamics GP and QuickBooks or QuickBooks Enterprise Solution.  Exact MAX targets regulated discrete manufacturing companies in segments such as medical devices and aerospace, with its serial and lot tracing capabilities.

But there is also another very “horizontal” Exact product offering, known as Synergy. It had been quite awhile since I had last gotten a briefing from Exact and in fact, at the time (maybe 2007-2008 perhaps?) Synergy was the center point of discussion. Even back then Synergy was kind of hard to categorize. I remember walking out of the briefing thinking I wish I had it as a tool to manage my research projects. But it managed projects without being a project management application. It could also do customer relationship management, but it wasn’t CRM.  When asked what Synergy did, Exact would likely respond with, “What do you want it to do?”

That made it very flexible, but I suspect it also made it very hard to market. And something that is hard to market is also usually hard to sell. In reality, Synergy was being sold as a tool. And SMBs tend not to buy tools. They prefer to buy business applications that solve specific problems.

So now Exact is taking a different approach. In fact I would characterize this and much of what they have been doing the last couple of years as “re-packaging.” For example, a Total Quality Management offering was recently released as part of a JobBOSS update, and a CRM template is available for Macola users.  Expect some big announcements in the near future regarding this with the outcome being the transformation of Synergy from a tool into an application. Other re-packaging efforts include the two Macola products noted above: Macola Manufacturing Pro and Distribution Pr. Macola used to be sold as individual modules, with configurations tailored for each prospect or customer and priced accordingly. Now those same modules are available as two different “bundles” and the pricing complexity has been shrunk down to an all-inclusive per user price. Ultimately this makes the pricing and selling much simpler. Exact has also added a Quick Start program to make installation and implementation easier. And Macola is available “on demand” in a hosted environment, allowing customers who don’t want the burden of infrastructure on site to take advantage of a cloud deployment.

These changes were all made with customer satisfaction in mind. Exact is not setting out to position itself as the best bleeding-edge technological solution, but rather as the most trusted solution provider. Recognizing that a satisfied customer is not enough to guarantee customer references or retention, Exact’s goal is to create “extremely satisfied” customers and to become the customer’s trusted advisor. With a very long track record in the markets they serve, and a good stable of long-time, customers, loyalty and referrals are the ultimate goal.

Tagged , , , , , , , ,

Is it “SaaS” or is it “Cloud”? But Wait – Are You Asking the Right Questions?

You would think with all the talk about SaaS and cloud today that by now we would all be talking about the same thing. But in spite of, or perhaps because of the huge volume of discussion around SaaS and cloud computing, there remains much confusion over the terminology. Many use the terms “cloud” and “SaaS” interchangeably, but there are some important differences. So let’s distinguish between the two:

  • 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 (short for Software as a Service) 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.

What about “On Demand?”

In the past I personally have used SaaS and “on demand” interchangeably. However the inclusion of this moniker in many product names today has led me to think I need to stop implying they are synonymous. Many companies that want to check the cloud box will append “On Demand” to their product name. But it doesn’t always mean the same thing. The use of the qualifier “on demand” can mean anything from a hosted model to loading and shipping it on an “appliance” that is monitored and managed remotely, to a single-tenant or a multi-tenant SaaS offering.

Even the difference between hosting and SaaS remains a source of confusion. I am always reminded of that when a survey respondent who I know is running a SaaS solution (because that is the only way their solution can be deployed) tells me they would not consider SaaS, but they would consider a solution hosted by their ERP solution provider.

I’ve cautioned in the past against confusing the way you purchase software with the way you deploy it. Refer back to that post for more information, but in short, in a hosted environment, the software is usually licensed, just as it would be if it were going to be run on-premise by the company who licenses it. But someone else is taking care of it. When the software is then accessed through a web browser, it becomes difficult for the end user to tell whether it is hosted or SaaS.

Hosted models are far from new. In fact they pre-date the existence of the Internet. Early hosting was called “time sharing” (and it had nothing to do with vacation homes).  The hardware resided “someplace else” and the software was accessed through a modem, via shared or (preferably) dedicated telephone lines. This was quite popular in the early to mid 1980’s until the price of hardware came down low enough to be affordable for small to mid-size companies.

But let’s say the solution is deployed in a SaaS model. If the solution is offered as a service, there are indeed different flavors SaaS. And here is where the arguments start. Some analysts, experts and industry observers insist their definition of SaaS is the only “true” definition. Most that insist on “true” SaaS also insist on a SaaS environment which is multi-tenant.

Multi-tenant SaaS: Multiple companies use the same instance of hosted software; configuration settings, company and role-based access personalize business processes and protect data security.

Single-tenant (or Multi-instance) SaaS: Each company is given its own instance of the (hosted) software, but may share common services, such as an integration platform, and security.

The truth is most consumers of SaaS enterprise applications don’t necessarily understand the difference between multi-tenant and single-tenant (or multi-instance) and may prefer the latter over the former for a variety of reasons.

The most significant difference between the two of these flavors lies in the frequency and flexibility of delivering upgrades, and the ability to customize the solution. Many assume that little or no customization is allowed in a SaaS solution. The general perception is that vendors are more likely to support customization and less likely to force upgrades in a single-tenant solutions. But don’t make this assumption because each vendor addresses the situation differently. Some single-tenant solutions discourage or forbid customization. Some multi-tenant solutions allow customization.

So instead of asking whether it is hosted or SaaS, or whether it is single-tenant or multi-tenant, determine first your requirements and secondly ask questions that will help you choose the solution that is best for you.

Do you think you need customization now, or that you might in the future? Instead of simply asking whether the solution is single or multi-tenant, ask what the policy is for customization. Ask how upgrades are delivered. How frequently? Are they “scheduled?” Or do they happen transparently? If they happen automatically are you able to selectively opt in to turning new features and functions on? Or might you be surprised by some new features or behavior that you are not expecting or prepared for?

These are just some of the questions that can be useful in deciding on purchase and deployment options. For a full analysis, see a full discourse on The Pros and Cons of SaaS ERP.

Tagged , , , , , ,