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Acumatica Poised as ERP Trends Converge

 

Partners Attracted by Technology, Innovation and Choice

Acumatica held its annual Partner Summit earlier this week in Broomfield, CO, just outside of Denver. Attendance this year topped 400, with over 100 partner companies represented. Over the past year Acumatica has undergone some management changes, bringing in a new CEO and a new head of partner strategy, a key role considering 100% of its sales are indirect. There was a definite sense of excitement in the air this year, partly as a result of the new management, but largely due to a combination of technology, innovation and choice of cloud-based deployment options offered in response to the latest trends impacting Enterprise Resource Planning (ERP).

Mint Jutras has been writing a lot about four specific trends this year. Its report, 2014 Trends in ERP Converge, looked back over these “big trends” in enterprise software from 2013 and concluded that we don’t need any new or different trends for ERP in 2014. Cloud, mobile, social and big data will do just fine. However, we have concluded that it is no longer sufficient to treat them as independent movements. We need them to converge around a single common goal of making ERP easier to consume, thus bringing more value to the business. Enlisting the aid of OEM and VAR partners, Acumatica has set its sights on delivering on this promise of added value.

The Key Trends

As I have noted before (but it is worth repeating), the 2014 Trends in ERP Converge report talked about four specific trends. These should come as no surprise to anyone following enterprise software:

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

It is impossible to talk about the convergence of these trends without mentioning innovation that is easier to consume in a less disruptive way. This often requires new ways of engaging with ERP in order to change the whole ERP customer experience. So how does Acumatica address each of these trends?

Pure Cloud

Acumatica can be characterized as a pure cloud solution. The Acumatica solution was born in a browser and therefore has always had a zero footprint on the client, making it accessible any time, from anywhere. No legacy issues here. It is built from the ground up with cloud technologies: SOAP, web services, HTML5, Azure, Amazon, etc.

Many use the terms “cloud” and “SaaS” interchangeably, but indeed they are not the same. The distinction is quite simple and need not be over-complicated:

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

Using these definitions, we can confidently say all SaaS is cloud computing, but not all cloud computing is SaaS. Acumatica is cloud-based but not always delivered as SaaS.

The downside of being “cloud only” often means less choice. Typically a cloud-based solution is only available as software as a service (SaaS). Not so with Acumatica. Lots of choices here: multi-tenant SaaS, single tenant SaaS (more like a hosted model), or even traditional on-premise deployments. You can purchase a perpetual license or pay a subscription. It is designed to be a multi-tenant cloud solution, but that doesn’t prevent Acumatica from offering it in a variety of different environments and Acumatica is quite unique in this regard.

Some industry observers, including those that have their own specific definition of what constitutes “true SaaS,” might argue against this approach. While Mint Jutras is seeing a major shift in acceptance of SaaS solutions, our research also proves that there is  continued interest in other delivery options for the access any time, from anywhere advantages of the cloud. But we see a decided decline in interest in traditional, licensed on-premise solutions (Figure 1).

Figure 1: Which deployment methods would you consider today?

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

Many are simply looking to unburden themselves from the care and feeding of enterprise apps like ERP. They are attracted by lower costs, easier upgrades, less hardware and IT staff and are less worried about a single prescription of how cloud solutions are delivered. They are looking for business partners they can trust and having more choices in how they address these needs can be very attractive.

However, Acumatica does sacrifice some of the advantages of a pure multi-tenant solution through this approach. For those not familiar with the terminology, Mint Jutras uses the following simple definitions:

  • Multi-tenant SaaS: Multiple companies use the same instance of (hosted) software. Configuration settings will vary per company and data is protected from access by other companies (tenants).
  • Single-tenant (or Multi-instance) SaaS: Each company is given its own instance of the (hosted) software.

Those vendors that only support a multi-tenant environment have the luxury of maintaining one single line of code. By not having to worry about multiple instances at different (potentially customized) version levels, they are better positioned to deliver more innovation, faster.

However, at the Partner Summit, Acumatica announced a new Acumatica Grow Program, which leverages the multi-tenant capabilities of its solution within the partner community. FusionRMS for SMB Retail is one example.

Fusion Retail Management System (FusionRMS) is a suite of applications extending the reach of Acumatica to the SMB retail and wholesale distribution markets. Offering added functionality such as point of sale (POS) and warehouse management (WMS), its solutions are seamlessly integrated with Acumatica without effecting core functionality. Now, through the Grow Program, it is also offering multi-tenant SaaS back office accounting supported through Amazon Web Services (AWS).

While this might sacrifice some of the flexibility of choice other Acumatica customers enjoy, Fusion Retail Management manages a single line of code and can pass along savings to its customers. This helps them support clients that otherwise might not be able to afford Acumatica.

Fusion Retail Management not only sells direct, but also other partners bring them small retail clients that might be too small for Acumatica now. This is preferable to simply losing a deal, particularly in knowing they will get them back if the prospect grows. FusionRMS supports these small clients until they grow large enough to justify the purchase or subscription of Acumatica. At that point, FusionRMS turns the client back over to the partner.

A Mobile Framework

The trend towards mobile goes hand-in-hand with cloud, as mobile access is gained through web-enabled services. We are seeing different approaches to mobility in the ERP market these days. Some vendors are adopting a “mobile first” design approach. Any features and functions are being designed to “fit” on the real estate of a tablet or smart phone. Others are taking a “mobile apps” approach where they are releasing multiple, individual purpose-built apps that complement core ERP. Some are building these themselves and others are leaving this development effort to partners. Some are hosting “App stores” where customers can shop. Others simply bundle them into existing software licenses.

Acumatica is taking the approach of providing a mobile development framework, purposely leaving the actual delivery of the mobile apps to the partners in order to provide them more opportunity. But this framework isn’t built for a developer. According to CTO Mike Chtchelkonogov (aka Mike C), “You no longer have to be a developer to target the mobile market. In the past, partners may have needed to hire specialists to create iOS or Android applications, but with Acumatica’s new mobile development framework, any of our partners can do it.”

This is especially important to the Acumatica channel because many partners are business and implementation specialists and not technologists. According to Mike C, the partner [or the customer] can take any part of Acumatica and expose it on the mobile device. So what kind of opportunity are we talking about? That might be in delivering a customized solution through services, or building an app to be sold through Acumatica’s app store.

What About Big Data and Social?

There was not a lot of direct reference to “social” and “big data” at the Acumatica Partner Summit. But that doesn’t mean either is being ignored, only that these trends and concepts are being worked into the product roadmap naturally, not as separate and distinct efforts. In fact many of the new features of its upcoming new release 5.0 indirectly support the goals of a “social” enterprise.

Social can mean different things to different people. It has some intuitive connotations in the world of consumer goods where social sentiment can have a serious impact, both positively and negatively, when shared publicly. But the real impact in any industry, while perhaps not as intuitive, is quite real.

When you take the view that “social” should mean improved collaboration, visibility and connectivity, then you start to understand the connection with the ERP user experience. Much of the development effort that produced the latest release 5.0 has gone into the user experience. Probably the best testament to the result was the fact that several key top executives put their hands on keyboards, or their own mobile devices, and ran their own demos. Not only were these “real” demos (not mock-ups or a series of screen shots in PowerPoint), but no pre-sale consultant or sales engineer was needed.

Simply by putting access to an ERP directly in the hands of high-level decision-makers improves connectivity, which in turn fosters visibility and collaboration.

Another announcement at the Partner Summit reinforced Acumatica’s commitment to another type of connectivity: a deep partnership with Azuqua, a cloud connectivity platform. On stage Azugua demonstrated its recently launched cloud integration service featuring connectivity between a broad range of popular web services (including Salesforce, Office 365 and Hubspot) to Acumatica’s system. Interestingly enough, the integration demonstrated on the main stage was so dead simple that it led to skepticism from industry observers and influencers in the audience. Was it too good to be true? I suspect it is real, but time and partner experience will tell.

As to “big data,” Acumatica was quick to point out its approach was very different from those of ERP giants SAP and Oracle. Instead of building a “big data” platform outside of the ERP system and requiring retrofitting of existing systems, Acumatica is building this kind of capability into its solution. This speaks to speed and ease of handling large volumes of structured data, but downplays (ignores?) the inclusion of massive volumes of unstructured data. It appears this is also something Acumatica might leave to partners and it will take a special kind of partner to deliver on this.

The Convergence of Trends Toward a Goal

If you recall, in our intro, the goal was to have these trends converge around a single common goal of making ERP easier to consume. The better the experience, the more connected the people running the businesses are to ERP and to each other. In fact over the past few years, we’ve observed an increase in the percentage of employees who actually use ERP. Today that percent is about 55%, up from about 20% less than a decade ago. In addition, 62% of survey participants claim top-level executives have direct access to and regularly use ERP. So Acumatica executives are not the only execs in the driver seat when it comes to using ERP. Another 30% indicate these high level execs have at least some access to ERP.

This, combined with expectations raised by the consumerization of IT, is perhaps the catalyst in shifting priorities in terms of ERP evaluations. While fit and functionality was king for many years, it has slipped to number two in the priority of selection criteria. “Ease of use” has taken the number one spot.

But “ease of use” means different things to different people. In fact it means different things to a single individual (Figure 2).

Figure 2: What does ease of use mean? (top 3 priorities)

Figure 2 AcumaticaSource: Mint Jutras 2014 ERP Solution Study

While many vendors are focusing efforts on “beautiful” software these days, beauty is always subjective. Those using ERP today are more concerned about efficiency and productivity than in a visually appealing user interface. Being a relative new-comer to ERP, Acumatica (founded in 2007) might not have the same depth of features that other more mature solutions have. But the development team seems to be working on a good balance of features and functions, along with better usability and a web platform that helps partners further develop breadth and depth. If the reaction to the main stage demos is any indication, partners and the few customers in attendance at the Partner Summit agree.

Ehrin Dimitry, CEO of AME Corporation, an Acumatica customer said, “I thought I knew what our next steps were until I saw Acumatica 5.0. My wheels are turning!” Customers and partners seemed genuinely excited about this newest release, a clear indication of perceived value.

Summary and Key Takeaways

As a pure cloud solution provider, Acumatica is very well positioned to deliver the benefits of the cloud through a variety of different deployment options. Virtually every partner I spoke with at the Partner Summit was drawn to Acumatica for its technology. Few offer Acumatica exclusively and many of them have experience selling, implementing, servicing or developing other ERP platforms. But that seemed only to strengthen their opinion of and commitment to the Acumatica solution. They like the partner friendliness of a relatively small company that sells exclusively through the channel. They are drawn to cloud computing but like being able to offer choice.

Customers and partners alike were enthusiastic about the latest release and the roadmap forward. Overall Acumatica seems poised to deliver as major trends like cloud, mobile, social and big data start to converge.

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SAP Launches Strategic Division: SMB Solutions Group

Yesterday a press release from SAP crossed the wire announcing a new division focusing on small and midsize businesses (SMBs). Here, SMB is defined as companies with fewer than 500 employees and is a subset of SAP’s traditional view of small to midsize enterprise (SMEs). This appears to be another step in the larger plan to make everything about SAP simpler. It is no secret in the industry that smaller companies can easily be intimidated by the likes of an SAP, or (in all fairness) any company of its size and dominance. While many smaller customers take refuge behind their first line of support, SAP’s channel partners, the presence of the giant behemoth behind those partners looms large.

At this point this is largely an organizational change. Dean Mansfield will head up the new division. Dean is an industry veteran, perhaps best known in the market for his senior leadership position at SaaS ERP provider, NetSuite. But, although he is an industry veteran with a career that spans more than 20 years, he is a relative newcomer to SAP, having joined last October. He is based in Hong Kong. But if this were just an organizational announcement, it would probably elicit a big yawn. I see it as more than that, largely because of the strategy behind it.

SAP’s board is putting in place a strategy to “redefine the SMB business solutions market by creating the next generation of simplified business applications powered by SAP HANA, delivered via the cloud that will solve tomorrow’s complex SMB challenges.” That’s a mouthful. But if you look below the surface, you find several, wide-reaching implications.

First of all it is a bold and perhaps presumptive statement. In “redefining” a whole market of business solutions by creating next generation, simplified applications, it seems to imply that all business solutions targeting SMBs need to be simplified. I think this is a gross over-simplification in of itself. Not all products in this market are overly complex. In fact I am not even sure I would call SAP Business One overly complex. If Business One has a weakness, and of course all business software does, it might be in some of the gaps that remain in functionality. After all, it’s not on par with the SAP Business Suite in terms of features and functions…or complexity. The complexity with SAP is more about having a diverse product portfolio. And SAP could certainly benefit from simplifying the selling and consumption of the software. So simplification extends beyond software products, and I think SAP gets that.

But there is a product element to the announcement. This strategy seems to imply that the SMB Solutions Group will be developing a brand new product. SAP has made it very clear that it is not making a new product announcement; it is announcing a strategic division focused on defining what is needed in the future. But the implication certainly is that a (new?) simplified product is needed. I can see why SAP doesn’t want to construe this as a new product at this point in time, because it could very well be that it takes one of its existing products and transforms it into this new generation of simplified, integrated business applications. The simple truth is, SAP has not made any firm decisions yet as to direction and roadmap, and wants to leave all its options open. That is fine for now, but with this announcement, the pressure will be on to better define this strategy.

A couple of things are certain though. Whatever direction SAP decides to go in, it will involve HANA and it will be delivered via the cloud. This might lead you to believe that SAP will leverage its existing products to the fullest in order to bring a solution to market faster and more cost effectively (for SAP). This is exactly what the market would expect an SAP, or any other dominant player with a huge portfolio, to do. That and a bigger development budget than its competitors give SAP an edge. But that is not the stated direction.

Instead, SAP has a stated intention of doing what makes the most sense in meeting the needs of the customer, rather than looking first to leverage prior investments in other product lines, both in terms of core ERP and those “edge” products that might surround it. Why (possibly) create a whole new product from scratch when you have so much component inventory on your shelves? The answer is, because it is a cleaner and simpler solution for the customer. Remember, the overriding goal is to simplify.

On the one hand, it is refreshing to hear SAP express this as an objective, but on the other hand, you have to feel a bit of déjà vu here. Isn’t that what it intended to do with Business ByDesign? The whole reason SAP started from scratch in writing Business ByDesign was to reduce the level of complexity that becomes inherent in a solution that starts out as a large enterprise solution, and grows more complex through evolution.

While many love to attack ByDesign as a “failed” product, I would caution both industry observers and competitors against labeling ByDesign as a failure. No, it has not met a lot of the lofty goals originally bandied about, like 10,000 customers. No, SAP has not sold that many subscriptions, but SAP can boast more ByDesign customers than some of its smaller competitors claim as their entire customer base. Of course everyone has their own personal definition of success and failure, but I would still propose that the rumors of its death have been greatly exaggerated. That said, if you harken back to the goal of this new redefinition of the SMB market to simplify the offering, it certainly has a very familiar ring to it.

Will this effort be more successful? I believe it will be, for a couple of reasons. First of all, it is supported by a rather dramatic organizational change, which is driven by a new strategy. But probably more importantly is another consideration not immediately visible from the press release. Some of us in the analyst community had the opportunity to meet Dean both in person and virtually, and it was through these meetings that it became clear there was another change afoot. While product strategy at SAP in the past has always been driven by a technology focus, this new organization will have more of a business focus and will be guided and driven by business needs. To some, this might seem a minor point, but I think this could stack the deck heavily towards the new division being more successful than prior efforts.

HANA is a prime example. Yes, it was/is new and groundbreaking, some might even call it game-changing. But it was inspired by technology and created by technologists. And when it first came to market, it was incredibly elegant technology in search of a business problem. While this might go over well in the large enterprise, that is not how SMBs make decisions or acquire business solutions. Even Business ByDesign was driven largely by the development organization working with a few charter customers.

This new team understands that it is not selling IT. Technology is part of the solution and critical to the success, but first and foremost, it is selling a business solution. While simplicity is the goal, this team understands, the business needs of the SMB may not be simple. In fact complexity has a way of creeping up on SMBs over time, particularly as expectations are elevated by consumer technology. SAP wants to help fix that. Its goal is to deliver a solution that can satisfy those needs and can be implemented and deployed in a modular fashion, adding new pieces as needs evolve or budget becomes available.

While this team might not have all the answers today, it is being thorough and methodical in evaluating all the different possible avenues to meeting the goal of redefining the SMB business solution market. But now that the cat is out of the bag, the pressure is on for them to come up with a more specific product strategy and roadmap. The clock is ticking.

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Einstein Inspires SYSPRO USA Brain Trust

Boosting US Manufacturing In 4-Part Partner Program

In December 2013 SYSPRO USA launched a program targeting US manufacturers. The four-part program has ambitious goals, designed to be facilitated by the company’s extensive partner channel.  While SYSPRO has been committed to supporting the global small and mid-sized manufacturing and distribution community for over 30 years as a provider of Enterprise Resource Planning (ERP), this program reaches far beyond the usual objectives of an enterprise software company. Labeled as a new Brain Boost program, it consists of four “trust” initiatives focused on:

  • Product trust
  • Deployment trust
  • Micro-vertical trust and
  • Economic or community trust

While the first three components are fairly straightforward and less unique-sounding competitively, the fourth “trust” initiative extends beyond the aspirations and scope of most ERP providers. Yet SYSPRO has always emphasized its customer, hence community, focus. Unlike many other enterprise software vendors focused exclusively on increasing market share and share of the customers’ wallet, SYSPRO has always genuinely cared about making its customers both happy and successful.

Now it is stepping beyond the customer, to the manufacturing community at large. This economic trust initiative is all about creating an environment that protects intellectual property, supports job creation and keeps US-based manufacturing companies strong and profitable. Can an ERP company really have this kind of impact? Certainly not all by itself. That’s why it needs a Brain Trust.

Inspired by Einstein

SYSPRO is clearly inspired by the genius of Einstein. Over the years Einstein has influenced many of its initiatives, starting with its “Simply SMARTER” strategy (an acronym: Strategy, Methodology, Accountability, Resources, Technology, Education, Customer Rewards). SYSPRO also built out its own theory of ERP relativity: S=MC2, where M stands for material, and C2 is cost and cash management. S, of course, stands for SYSPRO. Then came the SYSPRO Quantum Architecture, followed by a “wired” Einstein on Espresso, fueling the “always on, on-the-go” mobile (wireless) customer.

The latest inspiration is based on what made the brilliant physicist so special: his brain. Einstein’s brain has long been the subject of speculation and research. At one time, many believed his genius to be a result of his brain being larger than normal, stemming from the observation that he was born with an unusually large head.

However, you might say the child soon grew into his head, which ultimately, for all outward appearances seemed a normal shape and size.  Although clearly “special” in terms of its capabilities, actual measurements proved it to actually be a bit smaller than average. For the role Einstein would play in life, it was clearly built better, not bigger. This is one of the reasons SYSPRO loves to draw these analogies. While not the biggest vendor in the ERP market, SYSPRO fancies itself and its products as “better, not bigger” for the markets it serves.

Yet not being the biggest also means it must build trust in its product and its ability to deploy easily and reliably in the markets it hopes to serve.

Product Trust

SYSPRO is one of only a few remaining ERP vendors that offers a single product suite and therefore it enjoys the luxury of a singular, focused development effort. That focus happens to be on manufacturing and distribution. In addition, SYSPRO, as a privately held company can also afford the luxury of concentrating on satisfying the customer and reseller community, as opposed to the investment community (Wall Street).

This “Product Trust” is based on SYSPRO’s latest Release 7, which represents a time-phased delivery against requirements collected from over 750 small to mid-size manufacturing companies. The SYSPRO ERP product is almost exclusively sold through channel partners. This collection process combines the power of the SYSPRO channel with the relationship SYSPRO enjoys with its customers directly through periodic “SNAP Surveys.” SNAP, short for SYSPRO Needs Answers Please, is the mechanism SYSPRO used to bring features such as enhanced user interfaces, with active tiles and touch capabilities, custom configurability and mobile access to its latest release (Release 7).

The Product Trust is formed through collaboration between its trusted partners (users and resellers) and its own development staff. Not content to rest on its laurels, SYSPRO is constantly strengthening its capabilities both from a functional and technological perspective. Yet the combination of standards-based technology from Microsoft (standards like .NET framework, XML, HTML5) and multi-tier architectures keep it affordable and suitable for a small-scale environment.

But continuous change, even when linked to continuous improvement, can be a challenge for small to mid-size manufacturers. Even though technological advances allow software vendors to bring more innovation to the market, updates and upgrades can be costly and disruptive. While ERP can generate cost savings and other improvements, many manufacturers wind up squandering those savings on the care and feeding of the systems designed to save them money.

Which is exactly why SYSPRO is delivering the innovation of Release 7 in a new way. You might call it “drip feeding” innovation, allowing customers to accept enhancements in smaller, more digestible chunks. This is just one of the ways SYSPRO is helping manufacturers become stronger and more profitable. By making product features and technology easier to consume, manufacturers are able to divert budget from the typical maintenance-related IT spend, freeing up cash and working capital to innovate their businesses. Features, functions and technology that are easier to consume can be deployed faster and more efficiently.

Deployment Trust

While today many narrowly associate “deployment options” with Software as a Service (SaaS), in this case Deployment Trust is more about rapid implementation than it is about cloud versus on-premise deployments. Yes, SYSPRO can be deployed either in a traditional on-premise environment or in the cloud, although cloud implementations are more akin to hosted models than a multi-tenant SaaS solution.

The SYSPRO Deployment Trust has been formed to battle against the bad rap ERP has gotten in general based on potentially long and difficult implementations. Failed implementations are frequently blamed on the software itself and yet often the software attributed to a failed implementation is the same software powering one that is wildly successful. Success is often less about the software, and more about the disciplines and business processes the applications are intended to model.

SYSPRO has long had its own implementation methodology suitable to small to mid-size businesses (SMBs), but it is now investing in new industry-specific business process workflows, account structures, executive dashboards with pre-defined key performance indicators (KPIs), industry roles and reporting. It recognizes the typical SMB faces many of the same pressures as its larger counterparts, but can’t afford to start from scratch and re-invent wheels. So it builds best-practices into the data and process models.

SYSPRO has worked diligently to make sure these templates, structures and process flows are not static. Not only must they be adaptable and configurable to each individual business, but also reflective of the reality that business change is inevitable. Therefore the software must continue to be agile and flexible, able to evolve and change.

Micro-vertical Trust: The Food Industry

The investment in micro-verticals is a natural by-product of the Deployment Trust initiative, since much of the content provided is indeed industry-specific. The first micro-vertical selected for this Brain Trust is the food industry, which provides a unique opportunity for SYSPRO USA. It is an industry that is not only recession-proof, but also faces a very specific and pressing set of operational challenges. The food industry across the world faces rising commodity prices, but in the US, it also faces increased pressure from large retailers like Walmart, added complexities of trade promotions and deductions and intense scrutiny from the Food and Drug Administration (FDA).

But perhaps top of mind has been the growing concern over food safety. Over the past six years the US has seen some of the biggest food recalls in history, impacting both fresh produce like lettuce, spinach and peanuts, as well as meats (beef, ground turkey, chicken and other poultry) and all sorts of processed foods from cookie dough to frozen dinners and salad dressings.

A result of these growing concerns has been the passing of the Food Safety Modernization Act (FSMA) in 2011. The goal of the new law is to better safeguard the US food supply and therefore compliance is mandatory, even for small to mid-size companies in the food industry. The law will radically change how many do business. The FSMA gives new legislative power to the FDA, including the ability to mandate a recall and close plants where there is a “reasonable probability” of potential threat. But perhaps most game changing of all, managers can be held personally liable and face the threat of criminal prosecution. The FSMA will be to manufacturing executives what Sarbanes-Oxley was to the accountants. So achieving regulatory compliance and food safety has become an absolute necessity.

Like other manufacturing segments, the food industry must deal with growing supply chain complexities, the need to improve forecasting, reduce inventory and improve customer satisfaction. In addition, it needs to comply with food safety regulations, including complete forward and backward traceability, manage recipes and formulas, replacement ingredients, co-products and by-products. And yet, throughout, it must not lose sight of efficiency, accuracy and profitability, often with razor-thin margins.

Economic Trust

So can SYSPRO build economic trust by addressing the stringent requirements of the food industry and perhaps others? Can a software company help…

  • Protect intellectual property?
  • Modernize processes that lead to profitability?
  • Free up resources wasted now on IT support that adds little value?
  • Stimulate US manufacturing innovation?
  • Facilitate creation of the best kind of US jobs, those based on creating real opportunity for business growth?

This is indeed a tall order. And perhaps software alone can’t achieve these goals. But one thing is certain. Manufacturers cannot compete and contribute to strengthening the US economy today without adequate supporting technology.  ERP has been both a boon and sometimes a burden to bottom lines. Many manufacturers have seen cost savings gained through ERP implementation eaten away by the cost and disruption of upgrades, or even worse, have left money on the table by not taking full advantage of software innovation. Today’s US manufacturing/distribution community could benefit enormously from having a partner focused on reasonably priced ERP technology, innovation that is easy to consume and operational coaching. That is why SYSPRO is committed to turning its channel partners into these dedicated resources.

As a result, SYSPRO is revisiting its Einstein Strategy and turning its Simply SMARTER acronym into the basis for a new SMARTER channel program:

Strategy: While SYSPRO has always sold almost exclusively through the channel, there is a renewed focus on recruiting, not just “life style” partners, but those not only interested in growing a significant business, but also with the knowledge and business acumen to truly add value to manufacturing operations.

Methodology: new and revised implementation methodologies for rapid deployment. This approach also extends back through the selling process, with heightened collaboration and standardized sales methodology, including special bundles and pricing.

Accountability: with program deployment incentives and the measurement of customer lifetime value.

Resources: pre- and post-sale assistance with the addition of ecosystem experts, particularly in food and safety and even assistance in factory layout.

Technology: continuous feature, function and technology innovation that is easily consumed.

Education: in strategy, marketing, sales, implementation, support and application development.

Rewards: customized partner-tailored goals, KPI measurement and management.

Thus far, SYSPRO has been able to bring 37 new partners to close. By concentrating on coaching these partners to success, SYSPRO hopes the channel will be able to “pay it forward’ and in turn coach their customers to the same level of achievement, creating an environment of growth and profits.

Summary

Most ERP software companies would be happy just to sustain or grow their own revenues. While this is important to SYSPRO USA, its executives have a long history of participating in civic, government and economic development. Being focused exclusively on manufacturing and distribution segments, this community holds a special place in SYSPRO USA’s executives’ hearts and minds, as does the desire for a stronger US manufacturing economy. Focus on product innovation and ease of deployment are important elements, particularly in support of the food industry, which feeds the country and helps fuel its growth. By also contributing executive services and educational programs, along with program incentives, SYSPRO USA stands squarely behind and in support of economic growth and job creation. A worthy goal of a Brain Trust? Yes. Genius? Perhaps not. Simply smarter? Definitely.

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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.

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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.

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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!

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Acumatica is “All In” with Partners. Bringing Home Next Generation ERP

It’s partner summit season in the world of enterprise applications. These events, combined with a Mint Jutras research project on channel strategies (still underway), have led me to dozens of conversations with software vendors and their partners over the past few weeks. Acumatica held its Partner Summit last week, providing me even more opportunity to dive deep into the partner relationships that are fueling business for this cloud ERP vendor. My impressions can be summed up in two words: All in.

“All in” was a phrase repeated several times on stage by Stijn Hendrikse, Acumatica’s chief sales and marketing officer. Stijn used it in the context of growth, products, partners and the cloud.

All In on Growth

Being a relatively young company (founded in 2007), you might expect double-digit growth from Acumatica. After all, it is much easier to increase millions of dollars of sales by 10%, 20% or even 50%, than it is to apply those percentages to billions. But triple digit growth? Yes. According to CEO Yury Larichev,  “Acumatica is on track to meet its growth target for 2013, which means we’ve grown more than 300% again in revenue, just like we did in 2011 to 2012. We think we may hit 350% this year.”

But Yuri’s goal is to achieve $1 billion in annual revenue within 10 years. He’s going to need a lot of partners to achieve this, because Acumatica is also “all in” on partners.

All In on Partners

One hundred percent (100%) of Acumatica’s business is indirect.  In fact management went as far as to say on stage, “No way are we going to sell direct or sell out to someone with a different strategy.” One on one, Stijn said to me, “I’m excited to be excited again. I don’t have to balance priorities between direct sales and the channel. Instead we have a high appetite to reduce channel friction and shorten the sales cycle.”

As a result of an intense recruiting effort, the company added 50 partners to its channel this year, including more than 40 in the last four months. Even attendance at its partner summit more than doubled, from 135 attendees last year (its inaugural event) to 282 this year. Those attendees came from 12 countries and 98 partners. Its global network currently includes 221 partner organizations.

But Acumatica knows that in order to grow its channel, it needs to demonstrate its commitment. While of course one way is through its product roadmap and platform innovation, another is to insure the company is easy to do business with. And I believe it has made a sincere effort to do just that. Acumatica is extending its CRM to its partners and providing strong incentives for the partners to manage their own businesses with the Acumatica business solution. Acumatica University has been a recent addition for training and education. These are becoming table stakes for a world-class partner program. But Acumatica has taken a few steps further.

Its latest software release includes a new licensing engine that facilitates license key distribution for every product module and automates renewals, a feature that is obviously easier to deliver operating in the cloud. It has also introduced a new partner portal, which will include leads, opportunities, invoices, product keys, support cases, guidance on up-sell and cross-sell opportunities and a tool to manage accounts. Partners will be able to see license keys and renewals as they are issued.

All in on Product

Product roadmap and platform innovation is key, but this 100% commitment to the channel puts an interesting spin on Acumatica’s product and channel strategy. Acumatica believes that in order to grow a successful channel, it must leave room for the partners to add value.  It is not unusual to rely on partners to take a solution into new verticals, sub-verticals or micro-verticals. In fact other vendors also encourage this in order to expand their addressable markets without diluting their own efforts.

Acumatica has three different kinds of partners: Value Added Resellers (VARs), Independent Software Vendors (ISVs) and OEMs. How does it define the difference?

Think of a VAR as a typical reseller of the Acumatica software. The “value add” might simply be the implementation and consulting services provided along with the purchase of the software. Or it might include some customization, or add-on functionality developed by the VAR. In providing this value add, the VAR might also be providing specific knowledge or expertise of a certain software, industry or country requirements.

The value added by an ISV is more specific. An ISV adds value through extensions to the product. Some ISVs you might have heard of include: Avalara (for sales and use tax management), Adaptive Planning (for financial planning, budgeting and forecasting) and ADP for payroll. Others might expand the addressable market for Acumatica beyond its standard financial, distribution, project accounting and CRM. For example, JAAS Systems adds advanced manufacturing features to Acumatica’s solution. ISVs (like JAAS) might also be VARs and other VARs may also resell solutions from ISVs. Indeed any partner that sells to manufacturers today must also partner with JAAS for a complete solution.

OEMs are a little different. These companies will use Acumatica technology to build their own solutions, sold under their own brands. So Acumatica will be “under the covers” so to speak. The two most notable of these relationships are Visma, a provider of business software solutions to SMBs in Northern Europe and MYOB, an Australia and New Zealand-based company that enjoys market shares as high as 70% to 80% within its operating markets.  The deal with MYOB, just announced (August 19, 2013) enables MYOB to localize and distribute Acumatica’s ERP solution.  Visma offers Visma.net, a complete business solution including a white-labeled version of Acumatica’s ERP as a key component.

So does this philosophy of leaving room for partners to add value mean Acumatica isn’t “all in” on their own product? My answer is: I seriously doubt it. If “leaving room” had become a convenient excuse for the Acumatica development team to deliver less innovation, I might think otherwise. So far this does not seem to be the case at all. In fact just the opposite seems to be true. The upcoming 4.1 release was intended to be a minor release, but has become a major one and plans are already underway for version 5.0.

And these new innovations seem to be closely aligned with the characteristics of what Mint Jutras calls “next generation ERP” including improved user experience, more innovation and better integration. And of course the ability to operate effectively in the cloud is also becoming table stakes for competing in the enterprise applications market today.

If “leaving room” means Acumatica relies on partners for specific functionality for a particular market niche, that’s a good approach. Inserting too much niche functionality into the base product serves only to clutter it up with added complexity. Better to have that supplied by a partner thoroughly familiar with the niche requirements and made available only to those that require it.

The question is: how opportunistic or purposeful are these efforts? One Acumatica partner developed a solution to manage auto loans at a car dealership. Something tells me Acumatica didn’t have a burning desire to get into that niche, so that was an example of opportunistic expansion. But if it desires to expand into process manufacturing for example (JAAS targets discrete), Acumatica will have to launch a directed effort to recruit a very specific type of partner, or convince an ISV like JAAS to expand its solution and market. It is still too early in the game to fully understand how much of these efforts will be strategically planned and how much will result from a VAR and/or ISV seeing a need and jumping on an opportunity, and therefore it is hard to predict exactly where Acumatica is headed. But wherever that is will be under the umbrella of the cloud.

All In the Cloud

Acumatica is definitely all in when it comes to the cloud. A “cloud only” solution has its pros and cons. On the plus side, the Acumatica solution was born in a browser and therefore has always had a zero footprint on the client, making it accessible any time, from anywhere. No legacy issues here. It is built from the ground up with cloud technologies: SOAP, web services, HTML5, Azure, Amazon, etc.

The downside of being “all in the cloud” ordinarily means less choice. Typically a cloud-based solution is only available as software as a service (SaaS). Not so with Acumatica. Lots of choices here: multi-tenant SaaS, single tenant SaaS (more like a hosted model), or even traditional on-premise deployments. You can purchase a perpetual license or pay a subscription. It is designed to be a multi-tenant cloud solution, but that doesn’t prevent Acumatica from offering it in a variety of different environments and Acumatica is quite unique in this regard.

Some industry observers, including those that have their own specific definition of what constitutes “true SaaS,” might argue against this approach. While Mint Jutras is seeing a major shift in acceptance of SaaS solutions, our research also proves that there is still a lack of understanding and even misunderstanding of cloud, hosted and SaaS offerings. While pundits argue about multi versus single tenancy and architectural nuances, our Understanding SaaS survey (data collected from 300 respondents about one year ago) showed the vast majority of survey participants don’t know or care about these aspects. They are simply looking to unburden themselves from the care and feeding of enterprise apps like ERP. They are attracted by lower costs, easier upgrades, less hardware and IT staff and are less worried about a single prescription of how cloud solutions are delivered. They are looking for business partners they can trust and having more choices in how they address these needs can be very attractive.

Are Customers All In?

One final note: Acumatica wants its customers to be “all in” as well. John Howell, one of Acumatica’s founders, is also still actively involved in the company’s product and corporate strategy. In his keynote address he talked about different market drivers, including Metcalfe’s law. If you aren’t familiar with it, here is Wikipedia’s definition: “Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system.” John’s interpretation is: involve everyone. The value of ERP is equal to the square of the number of users. This makes terms like “ease of use,” “usability,” “the customer experience” all that much more relevant.  All of these factors were addressed on the main stage throughout Acumatica’s Partner Summit.

John may well be onto something here. A cloud solution can go a long way in making ERP more convenient and accessible. According to our Mint Jutras 2013 ERP Solution Study, on average, 65% of employees in companies with SaaS ERP actively use ERP, compared to 45% in those companies with more traditional on-premises implementations. This represents a 44.5% differential and does not include those casual users that are limited to access to specific self-service functions (e.g., paid time off requests, purchase requisition requests, etc.). Actively engaging more of these knowledge workers also keeps all on the same page, making decisions that are data-driven, rather than based on gut feel.

This also reaches into the higher echelons of decision-making in the organization. Executives where SaaS ERP is deployed are 24.4% more likely to have access to and regularly use ERP, with 84% having some direct access (limited or regular use).

The challenge for Acumatica’s partners will be to make this the reality with each of their own customers. Are they up to this challenge? Is Acumatica willing and able to help them reach more broadly and deeply into their addressable market? The desire is definitely there; the goals are aggressive. Acumatica, its partners and its customers all need to be “all in.”

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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.

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SYSPRO’s Next Generation ERP: 7-on-7

 

SYSPRO 7 Addresses 7 Manufacturing Market Demands

In a recent report, Mint Jutras described the next generation of Enterprise Resource Planning (ERP) in terms of better technology to deliver a new customer experience, custom configuration without programming, more innovation and better integration. You might think that ERP vendors must reinvent themselves or their products in order to offer up a next generation ERP. Companies reinvent themselves by acquiring other companies and technology, and/or scrapping the development of legacy applications in favor of writing new ones from scratch, new ones that take years to mature.  But if you think these are the only ways to deliver next generation ERP, then you don’t know much about SYSPRO. SYSPRO has been around since 1978, but unlike most of the rest of the ERP world, still offers a single ERP which it has evolved to meet all the requirements of next generation ERP, but has done so using an approach that is unique to SYSPRO.

In the aforementioned report ERP, The Next Generation: The Final Frontier? we had some fun comparing ERP to the successful entertainment franchise, Star Trek. Like Star Trek, SYSPRO ERP is a long-running classic. Star Trek, The Next Generation debuted 21 years after the original series first aired. SYSPRO’s next generation ERP took a little longer, 24 years after the company was founded.  It was introduced in 2001 in response to what SYSPRO calls the “Extended Enterprise.” And the parallels don’t stop there.

The original Star Trek crew had a five-year mission to explore new worlds, travelling on the USS Enterprise. Early ERP often was viewed as a five-year investment. The new and evolved starship Enterprise in The Next Generation had an open-ended “continuing mission” to explore “space: the final frontier… to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no one has gone before.” ERP investments today are also seen as a “continuing mission” and SYSPRO views itself on a mission to make its installed base customers for life, helping mid-market manufacturers and distributors to explore new worlds and seek out life after traditional ERP in what has certainly become a strange new world.

SYSPRO 7 is the most recent of many steps along SYSPRO’s continuous journey, more a constant reinvention than the sudden birth of a new generation. While many limit beta testing to a very small sample of customers, a community of 600 early adopters has now tested this release.

Let’s take a look at the SYSPRO “7-on-7” approach to meeting new market demands. The seven categories of advances cited by this community align quite closely to the next generation requirements in ERP, The Next Generation: The Final Frontier:

  1. New personalized customization and role-based optimization
  2. New advanced functionality (like rapid sales order entry)
  3. New device agnostic mobile capabilities
  4. New industry templates for vertical markets (food, medical devices, electronics, machinery/equipment)
  5. New data integration and toolsets that address the “big 3” issues of big data; volume, velocity and variety
  6. New extended scalability to increase transaction throughput and transaction values including (optional) expanded field sizes
  7. New and more powerful server side reporting solutions that speed processing and simplify the embedding of external data

Defining the SYSPRO Customer Experience

When most software vendors talk about the customer experience, you find them talking about the experience of using the software. Today that discussion starts with the user interface (IU) and then goes on to include web-based and mobile access. This “experience” is influenced heavily by the supposed “consumerization of IT.” Certainly with the introduction of so many consumer applications, largely offered on smart phones and tablets, we have all become more demanding of user interfaces. Nobody has to read a manual to figure out a consumer app and we all make the assumption that we shouldn’t have to read a manual to figure out ERP either.

So many solution providers of next generation ERP have redesigned how their customers engage with ERP, making it a “social” (or “Facebook-like”) experience, typically taking a “Gen-Y” perspective and often guessing at what their customers and prospects really want. But here’s the challenge: ERP is not a consumer app. ERP runs your business. And quite frankly, there aren’t too many mid-market manufacturers and distributors that are run by Millennials of Generation Y. So sometimes these approaches don’t resonate with those making the business decisions.

SYSPRO takes a completely different approach to “the customer experience.” Instead of focusing exclusively on how its customers engage with SYSPRO ERP, it looks first and foremost at how those customers engage with SYSPRO, the company.  Many companies talk about customer satisfaction and listening to the voice of the customer, but for SYSPRO, this is deeply embedded in its corporate culture. As a result, the customers have a profound influence over what SYSPRO then delivers by way of the user experience with the product. No guesswork is involved; no wondering how new engagement models designed for Gen-Y folks will be received by the Baby Boomer and Generation X executives at the helm.

This distinction is not lost on its customers. Vann Spices of Baltimore, MD has been a SYSPRO customer since 2009. Being in the food industry, the company had a long list of system requirements including lot sourcing and product traceability. Because it differentiates itself with custom mixes, it needs to be agile and have a firm grip on available ingredients, ordering, scheduling and billing. It has a variety of direct and indirect sales channels in premium markets like New York, Washington DC and San Francisco, plus website sales.

Mick Whitlock, Vann Spices’ president sums it up well: “It’s not just the lot traceability, reporting, UI and food safety certification controls that matter – as good as they are at SYSPRO.  What’s equally and potentially even more valuable to us, is that I always know the SYSPRO team has my back.  The company executives and its service partners consistently show that they have my best interests at heart and will do whatever is necessary to keep my business running efficiently, no matter what happens.

“You ask a small company what that is worth – and they will tell you:  everything.  It’s worth everything.  Because without a technology partner like that, software is just software.“

That said, the software is still important and if the software isn’t easy to use, employees will spend more time and effort working around the system than with it, and executives will avoid it completely. They will rely on subordinates for data for decision making because they don’t have time to figure ERP out. Yet as executives carry more and more mobile devices, expecting to stay connected wherever they are, they become more impatient waiting for data.

New options for the user interface provided in SYSPRO 7 reflect this growing impatience. Custom-configured dashboards, including a choice of graphical representations of key performance indicators (KPIs) are presented in one or more tiles on the screen, much like those provided by other software vendors. But SYSPRO has gone one step further and made those tiles active (they refresh dynamically as data changes) and touch controlled (touch a bar or a wedge on a pie chart to drill down for more detail). They can be presented on any device, using any mobile platform and can be extensively personalized or customized.

These not-so-subtle differences are supported by the Microsoft standards on which the software is based and the use of HTML5 and XML, which might not mean much to your average business executive. But more importantly, these differences come from its intimate relationship with its customers, knowing how they think and what they want.

Customization versus Configuration

“Customizing” ERP can mean many different things and today configuration is often confused with customization. As noted in ERP, The Next Generation: The Final Frontier, customization used to mean mucking around in source code, resulting in hard-coded logic that was difficult to change. Source code modifications also made it difficult to keep up with updates and upgrades offered by your ERP vendor. If you couldn’t take advantage of innovation delivered, you were essentially letting some of your maintenance dollars go to waste. And as ERP (and your competitors) moved forward, you were stuck.

But SYSPRO has long stayed ahead of the pack when it comes to configuration rather than customization. SYSPRO introduced the concept of UI-centric power tailoring several years before this type of configuration capability became mainstream.  It knew its customers didn’t have big budgets for customization and didn’t want to leave them stranded on older versions as new innovation was delivered.

In spite of being a relatively small company, Vann Spices serves very large customers and hence has the same ERP requirements of a large manufacturer. Yet it doesn’t have the deep pockets of a large company. Mick Whitlock believes this is one reason why SYSPRO ERP can satisfy those needs. “The user interface is incredibly easy to use and tailor to our specific needs. It feels just like we built it specifically for our own company and our own purposes.”

More Innovation, Easier Integration

More innovation implies more features and functions. But an extended functional footprint isn’t what makes any ERP “next generation”. The underlying technology infrastructure does. While business executives often know little and care less about the underlying technology, they do care about the value it brings. And it is that technology that also aids in accelerating the development of new features and functions.

When SYSPRO first introduced its next generation ERP, it also introduced the concept of business objects, modern component architecture and a separate presentation layer. It is not important for the typical business user to understand this from a purely technical perspective. The crew of the Enterprise didn’t necessarily understand how chief engineer Scott’s transporter beam worked. But each and every crewmember knew what it did and what “Beam me up, Scottie” meant. Every businessperson using ERP needs to understand what technology can bring to the ERP party or the potential will remain vastly unrealized.

Presentation Layer

By separating the presentation layer from the source code, modifications can be made without impacting the rest of the system (think different languages, company-specific terminology, adding removing fields from a screen, etc.).

Business Objects

If you are not sure what a business object might be: In the context of ERP, a customer is a business object. But as a business object, a customer isn’t just a record in a master file. It also includes the maintenance functions, validation and controls.

Component Architecture

SYSPRO has coupled business objects with modern component architecture in order to be able to develop reusable building blocks on which additional SYSPRO modules or even custom applications can be built. If you need to add a customer relationship management (CRM) solution to SYSPRO ERP, you don’t need to create an entirely new (and different) customer master or programs to maintain it. You simply re-use the existing object. And you bolt the new CRM solution onto your existing ERP in such a way that it all looks, feels and behaves like a single integrated solution. Indeed SYSPRO offers CRM and it looks and behaves as an integral part of the broader solution.

But if you don’t need CRM (yet), ERP will not suffer from its not being there. You still have your customer master file and all the functions necessary to maintain it. Or perhaps you already have a different CRM. It is not unusual for small companies to invest in CRM even before a full-blown ERP solution. If you need to integrate with another third party application, as long as that other application can map to standard business objects, it too can be easily bolted on, data is synchronized and redundancy is reduced or eliminated. The same is true for any new custom-developed applications.

SYSPRO Release 7 includes new functionality, beyond the added features and flexibility of the new user interface. Release 7 builds on this flexibility by also including industry templates. Those in medical device industries might want to see the lot and/or serial number on every screen.  But unless you are in the food industry, you don’t want to see specific gravity or fat content. SYSPRO partners can pre-design the layout for an electronics manufacturer or a food processor. Or customers can fashion their own “customized” screens.

Achieving Warp Speed

To conquer the final frontier of ERP you need speed. The USS Enterprise had at its disposal amazing technology that allowed the starship to travel at warp speed, using a hypothetical faster-than-light propulsion system. While SYSPRO ERP can’t travel faster than the speed of light, the installation and upgrade processes have been re-engineered to move customers to this newest release faster, often in “one click”.

Once there, Release 7 has been enhanced for faster transaction throughput, supporting large transaction volumes and massive amounts of data from sensors, mobile devices and other external sources. Today these massive volumes must be structured but SYSPRO intends to include unstructured data (think Hadoop) in the future.

Summary

Star Trek was and is science fiction. To many, modern technology-enabled solutions might still seem the stuff of science fiction when in fact they are in production environments, producing results that are nothing short of amazing. What generation of ERP are you running today? Have you explored the world of very real possibilities recently? If not, are you missing out and losing ground in terms of competitive advantage?

Next generation ERP from SYSPRO is very real. If you are faced with the accelerating pace of business, growing volumes of data and higher customer expectations, but your current ERP solution has you stuck in the 20th century, maybe it is time to explore the final frontier. Consider joining the federation of SYSPRO customers for a new and improved ERP experience.

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Oracle, NetSuite, And Deloitte Partner To Deliver Integrated HCM And ERP Cloud Services

Last week NetSuite, in conjunction with Oracle and Deloitte, announced a partnership to deliver integrated human capital management (HCM) and enterprise resource planning (ERP) cloud services for the mid-market. Each of the three companies will throw something into the pot: NetSuite brings ERP, Oracle contributes HCM and of course both will be delivered via the cloud as software as a service (SaaS).  Deloitte plans to work with the two companies to develop a practice with “highly skilled practitioners specializing in tools and implementation services to help customers adopt the soon to be integrated SaaS technologies faster and more seamlessly.” The “soon to be” qualifier implies a future deliverable, so Oracle and NetSuite will also have to work together on this integration.

The partnership between Oracle and NetSuite is not new, but until now was pretty much limited to the technology stack. However, as far back as June 26, 2001, Oracle announced its “small business suite”, which was in fact NetSuite. But applications from NetSuite and Oracle never came together in any kind of substantive way. After all, in some ways NetSuite’s solution competes against Oracle’s Business Suite, as well as the ERP solutions acquired along with JD Edwards.

But NetSuite never really built out HCM functionality, choosing instead to partner. In fact, it already has several HCM partners, but they tend to have different solutions for different parts of the world. One of the biggest challenges for HCM solutions has always been the different regulations around the world, both in terms of payroll and other compliance requirements. Laws in the United States are very different from those in Europe, and even from one country in Europe to the next – and on and on around the world. Most HCM solutions start out as country-specific and never make it into the big leagues to compete on an international basis. But Oracle’s HCM solution can.

There are also quite a few different sub-segments within HCM ranging from the traditional human resource information system (HRIS) to talent management (including recruiting) to benefits and compensation, etc. It is more common to find individual point solutions for each segment than to find a full, comprehensive suite covering all of them. Hence the market is quite fragmented. Oracle is one of the few solutions that has the breadth of functionality and also serves a global market. It not only acquired expertise early in the game from its acquisition of Peoplesoft, but also more recently acquired Taleo for talent management.

The Taleo product, which is also SaaS only (like NetSuite) fits right in. But because this is a “cloud only” solution, global HR will have to come from Oracle Fusion, not the Oracle Business Suite. Fusion is still a work in progress.

The nature of the relationship between NetSuite and Oracle could best be categorized as a “referral” agreement. Oracle doesn’t sell NetSuite products and NetSuite doesn’t sell Oracle products. However Oracle has a dedicated HCM team, which will engage with the NetSuite sales team to jointly sell into NetSuite customers. This makes sense because a NetSuite ERP customer is more likely to buy Oracle HCM. That’s not to say an existing Taleo customer might not be interested in NetSuite, but I am sure the Oracle sales team would prefer to sell them an Oracle ERP. An Oracle HR customer running Oracle Business Suite or JD Edwards is less likely to buy NetSuite. Even if they were willing to consider this, the Oracle sales team isn’t going to bring the NetSuite team in for a possible replacement.

While referral arrangements are quite easy to create, there is one inherent weakness. They are also easy to walk away from. As mentioned above, right now Oracle Fusion is a work in progress. When it is a complete ERP, will Oracle still be as interested in partnering with NetSuite? Probably. NetSuite has an installed based of over 14,000 customers, so it is quite a large field of opportunity.

But what about the role of Deloitte? According to Jim Moffatt, CEO of Deloitte Consulting LLP, “Mid-sized companies are looking for solutions that allow them to be nimble and respond quickly to market opportunities. This newly integrated solution will help these organizations deliver better service at a lower cost, ultimately giving them an edge in the war for talent and a true competitive edge.”

I agree that mid-size companies are primed and ready for low-cost solutions. HCM functions have historically been under-served by enterprise applications and therefore there is a great deal of pent-up demand, particularly in the mid-market. I’m just not sure mid-size companies are ready to pay the price of a consulting firm like Deloitte. I suspect many mid-size companies will prefer the “do it yourself” approach, whether they are capable or not. Those that recognize their own weaknesses might turn to consultants, but the mind-set of a mid-size company expects a consultant to get in quickly and out just as quickly. Consultants such as Deloitte tend to like long engagements. We’ll have to wait and see how many times they get invited to the party and how long they stay.

All told though, this seems like a smart move for NetSuite. Its footprint expands without a huge development effort. Processes and functions managed by HCM solutions are quite easily integrated into ERP since they are not too deeply embedded in transactional activity. That is, unless time and attendance transactions are collected through workforce management in HCM. Even in this case, the integration is quite clean and simple. The HCM solutions market has been heating up, and this means the NetSuite team, in conjunction with its Oracle counterpart can provide a more complete and competitive solution.

Oracle also benefits from that wide open market of NetSuite customers, which get a more complete, integrated solution. As to Deloitte… we’ll see.

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