Tuesday, February 25, 2014
Drilling Deep into Healthcare ERP
Most enterprise software providers today claim to target certain industry sectors. But when you scratch below the surface you find that their so-called industry focus is not much more than a market strategy. There is little if any support for the core operations of those industries. At best, such providers give a tip-of-the-hat to certain industries in their horizontal applications, such as accounting or
The problem is not so much in the manufacturing industries, where ERP started. Indeed, there are ERP providers with strong operational support for, say, or engineer-to-order manufacturers with native PDM integration, or, for metal processing centers, with nesting logic.
The problem is when you get outside manufacturing. For example, some vendors claim to support the financial services sector, but you can't find a core banking or insurance claims module in their portfolios. Ask about those, and the vendor will give you a list of partner solutions. In other words, there is not a serious effort to support those industry-specific operational requirements.
Infor as an Example
One example of a provider that is putting some weight behind its industry strategy is Infor, the third largest provider of enterprise software, after SAP
and Oracle. Since Charles Phillips took the helm as CEO in 2010, Infor has been building out its capabilities to match its tagline, which reads in part, "Specialized by Industry." Its website lists 12 industries, from aerospace and defense to public sector. But when you drill deeper
, you find not just "food and beverage," but "bakery, grain, and cereals," and "confectionery." I've worked with manufacturing systems for over 30 years, and even I'm not sure how the requirements for those sub-industries would be different. But I'll take Infor's word for it.
So far, so good. But Infor has taken the concept of industry specialization beyond manufacturing and is applying it to the non-goods-producing sectors as well, such as in healthcare. The firm has already acquired and built out solutions for hospitals, extended care providers, and health insurers, along with data integration functionality between healthcare providers and from medical devices. These solutions go a long way to address the day-to-day operational activities of healthcare providers, not just their administrative support needs.
Today, Infor took another step to build out its operational support for healthcare providers, announcing its intent
to acquire GRASP Systems International
. It's an interesting move. Infor already supports healthcare workforce management (e.g. nursing staff scheduling) through systems it picked up with its Lawson and Workbrain acquisitions. But its acquisition of GRASP will take that a step further.
GRASP goes beyond simple scheduling of, say, nursing staff based on the number of patients. Rather it provides "automated patient
acuity," which means it takes into account "the unique set of interventions required for each patient." In other words, a patient in critical condition will need more attention than one in less critical condition. Even two patients with the same condition may require different levels of attention, depending on other factors. The ability to more precisely allocate healthcare staff not only improves productivity, thus saving money. It also improves outcomes by allocating staff according to actual needs of patients.
Infor's acquisition of GRASP goes beyond just picking up its software products. GRASP also has a significant professional services group, which means Infor is acquiring some good healthcare industry talent as well.
A Blueprint for Growth
ERP is by every definition a mature market. The need for horizontal solutions such as basic accounting and HRMS are more than adequately provided by a set of well established competitors. Of course, there is an opportunity for new cloud upstarts to displace these incumbent providers, as I've pointed out recently
But in addition to cloud deployment, another way for enterprise software providers to grow is to better serve specific industry sectors, drilling down beyond administrative support into deep operational processes. There are hundreds of small providers, such as GRASP, that have taken this approach. Infor is one larger provider that is attempting this at scale, in a number of industry sectors.
It is a blueprint that others will do well to emulate.
Infor and Salesforce.com: More Than a Barney Relationship
Infor's Two-Pronged Cloud Strategy
New details on Infor's Lawson acquisition
Making money in software with a niche-industry strategy
Labels: ERP, healthcare, Infor, Lawson
Wednesday, February 19, 2014
The Cloud ERP Land Rush
|Oklahoma Land Rush|
For those unfamiliar with US history, in 1889 the US government opened unoccupied lands in Oklahoma to settlement. Settlers could claim up to 160 acres, live on and improve the land, and then legally obtain title to it. Such an opportunity led to a land rush,
in which thousands of settlers raced into Oklahoma to make their claims.
Today, cloud ERP is like Oklahoma in 1889, mostly unoccupied land, and there is a race as cloud vendors rush in. NetSuite and Plex were two early settlers. Today NetSuite has more acreage (number of customers), while Plex has fewer acres but more development of those acres (functionality)--at least in manufacturing. Cloud-only providers such as Rootstock, Kenandy, AscentERP, Acumatica, Intacct, and SAP (ByDesign) are also in the race. Traditional providers such as Microsoft Dynamics, Infor, Epicor, Oracle, UNIT4, and QAD have also entered the land rush, although they are moving more slowly, as they need to pull wagons full of their traditional on-premises software along with them.
In the larger suite of enterprise applications, such as CRM and HCM, the land rush is further along. Salesforce for CRM and Workday for HCM have already staked out large claims and are rapidly developing them. But Microsoft with Dynamics CRM, SAP with SuccessFactors, and Oracle with its Fusion HCM are also adding to their acreage. Core ERP functionality, on the other hand, is earlier in the land rush. There is still a lot of open territory with a lot of unclaimed land.
FinancialForce Staking Its Claim
One provider that is clearly in the land rush is FinancialForce, which today announced new branding to signal its claim in cloud ERP.
The company is now referring to its suite of enterprise applications as FinancialForce ERP
. The new branding is necessary
because FinancialForce long ago ceased to be a provider only of
financial management systems.
FinancialForce previously added professional
services automation to its portfolio and late last year acquired Less
Software, which provides inventory management and order. Vana
Workforce is another acquisition from last year, which adds human
capital management (HCM) functionality. FinancialForce also added its
own functionality in areas outside of financials, such as advanced
quoting and revenue recognition. With this broader footprint,
FinancialForce now qualifies as a cloud ERP provider.
Building on the
Salesforce.com platform, FinancialForce has direct integration to the
Salesforce cloud applications as well as to all of the other providers
in Salesforce's AppExchange marketplace. The recent evolution of this
platform to Salesforce1 gives FinancialForce additional capabilities for
building out its mobile deployment options.
How many acres will FinancialForce claim? The signs are hopeful. The company is
reporting strong results: 80% growth in its revenue run rate, and 62%
growth in headcount year-over-year, bringing it to over 260 employees
globally. FinancialForce now has customers in 27 countries with users
in 45 nations worldwide. By all accounts, the company is on a strong
Plenty of Land for Everyone
The economic and strategic benefits of cloud computing accrue to end-user organization that completely or at least largely eliminate their on-premises IT infrastructure. Our research at Computer Economics
shows that cloud user companies save more than 15% in terms of their total IT spending, and the money that they do spend goes more toward innovation and less towards on-going support. But it is difficult to move away from on-premises infrastructure if an organization's core ERP system is still on-premises. Therefore, the move to cloud ERP is essential if organizations are to fully realize the benefits of cloud computing. You can move your CRM and HCM systems to the cloud--but if you are still running on-premises ERP, you still have one large foot stuck in the old paradigm.
In my view, there does not need to be one clear winner in cloud ERP. Just as there were dozens of on-premises ERP vendors in the 1990s, especially when sliced by industry sector, there is plenty of room for many more cloud ERP providers. There is plenty of land for everyone.
Computer Economics: Cloud Users Spend Less, Spend Smarter on IT
Four Cloud ERP Providers on the Salesforce Platform
NetSuite Manufacturing Moves on Down the Highway
Kenandy: A New Cloud ERP Provider Emerges from Stealth Mode
The Simplicity and Agility of Zero-Upgrades in Cloud ERP (Plex)
Plex Online: Pure SaaS for Manufacturing
Computer Economics: Cloud Players Storm the Gates of ERP
Key success factor for SaaS suites: functional parity
Labels: Acumatica, AscentERP, cloud, Epicor, ERP, FinancialForce, Infor, Intacct, Kenandy, Microsoft, Oracle, Plex, QAD, Rootstock, Salesforce.com, SAP, SuccessFactors, UNIT4, Workday
Monday, February 17, 2014
Oracle's Partial Victory Against Rimini Street and Customer Implications
The US District court in Las Vegas issued a ruling in the Oracle vs. Rimini Street lawsuit last week. Oracle issued a press release
on it this morning, pointing out the parts of the ruling in Oracle's favor, but did not provide a complete view. I've since received an actual copy of the Court's ruling and have had a chance to digest it.
I've contacted Rimini Street, and they indicate that a statement will be coming later today. I'll update this post when I receive that.
Summarizing the Court's Findings
The Court's rulings are complex, as is fitting in this case (full text here
). Let me summarize them as I see them:
- The Court's ruling is largely focused on Rimini Street's alleged copyright infringement of Oracle's PeopleSoft software in serving four customers:
"Oracle’s claim for copyright infringement, as it relates to the present motion, arises from Rimini’s copying of Oracle’s copyright protected PeopleSoft, J.D. Edwards, and Siebel-branded Enterprise Software programs on Rimini’s company systems in order to provide software support services to four separate customers: the City of Flint, Michigan (“City of Flint”); the school district of Pittsburgh, Pennsylvania (“Pittsburgh Public Schools”); Giant Cement Holding, Inc. (“Giant Cement”); and Novell, Inc. (“Novell”)."
- Whether Rimini Street has the right to copy Oracle's software depends on the terms of the license agreements to these four companies.
In this action, it is undisputed that Rimini does not have its own software license from Oracle for any of the identified Enterprise Software programs copied on its systems. Instead, Rimini contends that Oracle’s software licensing agreements with the four customers at issue in this motion expressly authorize it to copy, keep, and maintain copies of the copyrighted software on its company systems and under its control in order to provide contracted software support services to those customers. .... As each customer’s software licensing agreement is different, the court must evaluate Rimini’s express license affirmative defenses separately for each customer at issue in this motion.
- Concerning the City of Flint, the Court rules in Oracle's favor, that the City's license agreement with Oracle does not permit Rimini Street to maintain copies of Oracle's PeopleSoft software.
Based on the court’s rulings above, none of Rimini’s asserted license provisions (Sections 1.2(b), 1.2(c), or 14.2) expressly authorize Rimini’s copying of Oracle’s copyrighted PeopleSoft-branded software as a matter of law. Therefore, the court finds that Oracle is entitled to summary judgment on Rimini’s express license affirmative defense as it relates to the City of Flint, and the court shall grant Oracle’s motion accordingly.
- Concerning Pittsburgh Public Schools, the Court rules in Oracle's favor, in regards to Rimini Street's copying of Oracle's PeopleSoft software.
Here, the court finds that the Pittsburgh Public Schools’ license contains language similar to the City of Flint’s license....
Based on the rulings above, the court finds that none of Rimini’s asserted license provisions (Sections 1.1, 1.2, or 10.2) expressly authorize Rimini’s copying of Oracle’s copyrighted PeopleSoft-branded software as a matter of law. Therefore, the court finds that Oracle is entitled to summary judgment on Rimini’s express license affirmative defense as it relates to the Pittsburgh Public Schools, and the court shall grant Oracle’s motion accordingly.
- Concerning Giant Cement, the Court denied Oracle's request for summary judgment against Rimini Street, refusing to find that Rimini Street had used copies of Giant Cement's in ways conflicting with Oracle's license agreement for J.D. Edwards.
Based on this record, the court finds that there are disputed issues of material
fact as to whether Rimini’s use of the development environment associated with Giant Cement was for archival purposes or whether Rimini accessed the software’s source code. Accordingly, the court shall deny Oracle’s motion for summary judgment on Rimini’s express license affirmative defense as it relates to Giant Cement.
- Concerning Novell, the Court denied Oracle's request for summary judgment, ruling that Novell's license agreement allows Rimini Street to maintain copies of Siebel software on its own servers.
First, the court finds that the plain language of Section 2.1(iv) authorizes Novell to make archival, emergency backup, or disaster-recovery testing copies. Further, the court finds that the plain language of Section 2.1(viii) permits Novell to allow Rimini, or another third-party, to install the software for archival, emergency back-up, or disaster recovery purposes.
Therefore the court finds that Novell’s license allows for archival and/or back-up copies of the software on a third-party system. Accordingly, the court shall deny Oracle’s motion for summary judgment on Rimini’s express license affirmative defense as it relates to Novell.
- The Court also ruled on Rimini Street's claim that Oracle's shipping of software to Rimini Street locations granted an "implied license" to Rimini Street. Here, the Court did not agree with Rimini Street's claim and granted Oracle's motion for summary judgment against Rimini Street.
In its affirmative defense, Rimini argues that for years Oracle shipped back-up copies of its customer’s software installation media to Rimini’s facilities with full knowledge that the installation media were not only being shipped to Rimini’s facilities, but that Rimini was using the installation media to create copies of the software on its own systems to provide support services to Oracle’s customers....
The court has reviewed the documents and pleadings on file in this matter and finds that the evidence before the court does not support Rimini’s affirmative defenses of implied license and consent of use....
First, other evidence before the court establishes that these back-up copies, although ultimately shipped to Rimini, were shipped after Oracle’s customers submitted requests to Oracle describing Rimini’s address as the customers’ “secondary offsite backup location.”...
Second, Rimini admits that the purpose behind the obfuscated shipping requests was to allow Rimini to create development environments to service Rimini’s customers without Oracle’s knowledge....
Additionally, there is no evidence that Oracle knew of Rimini’s use of the shipped installation media to create copies of the software on Rimini’s systems. Rimini admits that the shipping requests were designed so that Oracle would not know that Rimini was using these backup copies of the licensed software.
In a nutshell, although Oracle's press release does not mention the Court's refusal to grant summary judgment regarding Giant Cement and Novell, the Court's ruling is, in fact, largely in Oracle's favor. The Court granted summary judgment in the case of the City of Flint and Pittsburgh Public Schools, and in regards to Rimini's claims of "consent of use" and "implied license." At most, Rimini Street can only claim that there is no decision yet concerning Giant Cement and Novell.
[Update] Ruling Specifically Deals with Rimini-Hosted Environments
Rimini Street sent a letter to its customers today, outlining its position on the Court's ruling. In it, it points out that the legality of third-party maintenance is not at issue. Rather, the Court's ruling last week is specifically about how Rimini Street delivers those services--whether through hosting Oracle software on Rimini Street computers, or providing them directly to customers who maintain their own development environments:
This case is NOT about the legality of independent enterprise software support. Oracle agrees that it is legal for third parties to offer independent enterprise software support to Oracle licensees, and Oracle licensees have a legal right to purchase Rimini Street support services instead of Oracle annual support services. Competitive motivations aside, this case is primarily about the specific processes Rimini Street used to support a portion of its clients.
Rimini Street also points out that the terms and conditions of Oracle licenses have varied through the years and that the Court's ruling therefore does not apply to all of Rimini Street's customers that use Oracle software. In addition, Rimini Street stopped offering Rimini-hosted environments in 2012. Therefore, going forward, Rimini Street believes that its operations will comply with the Court's recent ruling.
What Does It Mean for Enterprise Software Customers?
For those hoping that this case would set a legal precedent for third-party maintenance services, the Court's ruling is not a positive development. The Court has essentially ruled that in two of the four customers in dispute, Oracle's license agreements did not give Rimini Street the rights to do what it did. Concerning the other two, the Court did not rule that Rimini Street had the rights, only that it declined to rule at this time, reserving a decision for a later point in the process.
It is too soon to tell whether Oracle will prevail at trial. But at this point, one thing is clear for customers: do not enter into a license agreement with a software vendor without ensuring that your rights to third party maintenance are explicit. As the Court's ruling last week shows, it all comes down to what rights you have in your license agreement. Sign the vendor's license agreement as-is and it's likely that your rights to third-party maintenance will be limited to having the third-party provider only able to work on your own installation of the software. [But see Update #3, below.]
Our research at Computer Economics shows widespread dissatisfaction with both the cost and the quality of service for the Tier I ERP vendors' maintenance programs. If there are not viable and healthy third-party maintenance providers in enterprise software, it will just hasten the demise of the traditional software license model.
In other words, Oracle may win the battle, but long term, lose the war.
Update: 12:30 p.m. PDT:
Changed concluding section to point out that limitation is on where the software is installed.
Update: 1:00 p.m. PDT:
Added section on Rimini Street's customer letter.
Update: 2:30 p.m. PDT.
In a briefing with Rimini Street, CEO Seth Ravin insists that this particular court ruling
does not impact Rimini Street's ability to deliver maintenance services, as it is
already moving all PeopleSoft customers to client self-hosting.
Update: 2:50 p.m. PDT. Dennis Howlett
has a good breakdown of the court ruling, with additional perspective from Rimini Street.
Rimini Street to Oracle: don't expect us to roll over
SAP and third-party maintenance: good for me but not for thee
Legal basis for third-party ERP support industry
Oracle slams Rimini Street with lawsuit over third-party maintenance
Labels: 3PM, Oracle, rimini street
Thursday, February 13, 2014
What Is Innovation? An Expansive View
On the business conference circuit today, innovation has become a buzzword. It's too bad, because organizations today need to innovate as much, if not more, than ever before. So, instead of abandoning the word, let's try to recover it.
When thinking about innovation, business leaders often set the bar too high for themselves. They hear about new technologies coming out of Silicon Valley and other tech hubs around the world and they equate that with innovation. Surely, new technologies are innovations. But I would argue that view is too narrow, and what executives need is a more expansive view of innovation. Furthermore, too much focus on technology can actually lead to a lack of real innovation.
Innovation Is Something New--For You
According to Merriam-Webster
, the word innovation has two meanings. First, it is "a new idea, device, or method." This generally fits the common understanding of innovation. But the second definition is, "the act or process of introducing
new ideas, devices, or methods." The first definition is the new thing itself, while the second definition is the introduction of that new thing.
Smartphones were an innovation. But the introduction of smartphones into, say, your expense reporting process, is also an innovation. In business, innovation does not just mean that you invent something new. Innovation means that you introduce a new invention into your organization.
I would take it a step further. Innovation does not just mean you do something that no one has ever done before. Innovation means you do something that you
have never done before. Others may have introduced smartphones into their expense reporting process. That was innovation for them. But when you introduce them into your expense reporting process, that is innovation for you.
A few years ago, I was working as a strategy consultant to a large high tech manufacturer that wanted to "transform the customer experience." The goal was to come up with a three to five year plan of strategic initiatives, in which new technology would play a starring role. Over a period of weeks, the project team came up with a long list of ideas, such as building a customer-facing knowledge base, new mobile apps for field service engineers, and big data analytics.
But some team members were concerned that none of our ideas were "far out" enough, that top management would think we had failed to be "innovative." At one point, a team member joked about coming up with a “hologram” of a service agent, which the customer in the field could conjur up, like a spirit.
Of course, in brainstorming, no idea is too far out. But that doesn’t mean that innovation is only in far out ideas. As it turns out, the project team had many good ideas, including leveraging the company’s smart products in the field as a platform for customer service. Were other companies already doing this? Yes. But this company had not fully exploited these opportunities. Rather than worry that their ideas were not “innovative” enough, this company would be better served by actually implementing the ideas they already had. In other words, it was not a matter of inventing a new technology but of introducing a new technology to their business.
Business Process Innovation
Second, innovation is not a synonym for technology. The innovations that many organizations need today are not new technologies, but the application of available technologies to their business processes. The goal should be to simplify a process--or even better, eliminate the process.
For example, again, in customer service, what if customers could serve themselves? Or, what if customers could serve each other? The technology for customer self-service and for customer communities is now widely available from commercial software vendors. Innovation is no longer a matter of writing customer self-service applications or community platforms. The innovation today is to introduce those technologies into a specific organization.
Of course, at some point, introduction of a technology becomes so commonplace that it can no longer be considered an innovation, even if it is new for you. If you are just now getting around to using a personal computer, instead of index cards, to track your inventory, it would be hard to say you are innovating.
Nevertheless, many organizations do not focus enough on business process innovation. Even when they introduce new technologies they do not spend sufficient time ensuring that they change their business processes. The customer self-service system is installed, but service engineers do not spend time to populate the knowledge base behind it. The community platform is installed, but no one invests the time to nurture a community. The computerized inventory system is in place, but when the materials manager wants to check on-hand inventory he walks out the the warehouse, because he doesn't trust the system. In many cases, the technology does not lead to innovation because there is no business process change.
Business Model Innovation
Innovation becomes even more powerful when it means introduction of something new in the organization’s products or services. This goes beyond business process innovation to innovation in how the organization makes money. Or, in the case of a public sector organization, how it delivers its services and fulfills its charter.
Business model innovation certainly can involve introduction of a new technology. For example, Uber
's business model is heavily dependent on mobile apps to match drivers with riders who are physically near by one another. Here the mobile apps do not make money directly but enable the business model.
Caterpillar is another example. Sensors built into Cat's equipment have opened up a whole new way for the company to make money by offering job site services, such as controlling compaction of soil and asphalt. Caterpillar is no longer just selling heavy equipment and maintenance contracts. The innovation is not just in the sensor technology but in the business model that it enables.
Innovation should not be a buzzword. Business leaders should take an expansive view of what innovation means for their organizations and think beyond technology to business process and business model innovation.
How to Become a Chief Innovation Officer
In Defense of Incremental Innovation
Labels: big data, customer service, innovation
Thursday, February 06, 2014
Enterprise Software: Suites Don't Always Win
The major enterprise software providers promote their pre-built integration as a selling point in capturing new business from existing clients. They argue that, rather than attempting to integrate different systems from different providers, organizations should buy everything from a single provider and get the integration for free.
Why the Integration Story is Getting Old
But do suites always win? In my software vendor evaluation work
, I've noticed that the integration story is not resonating with buyers as it once did. I think there are several reasons for this.
- Vendor suites may not be as well integrated as vendors claim. This is especially true when the vendor's suite comprises pieces that they acquired. Both Oracle and SAP have made many acquisitions over the past decade. Is the integration of these piece parts really seamless? In some cases, yes. But in many cases, no.
- Integration an IT-priority, not a business priority. Many software selection projects these days are being led by business users. This has always been desirable, but it is especially true when you get outside of core ERP to systems such as CRM, supply chain management (SCM), and human capital management (HCM). IT leaders generally put a high priority on integration because it makes their job easier (notwithstanding point #1). Therefore, when IT leads the vendor selection effort, integration rises near the top of the selection criteria. When business units lead the selection, they tend to rank process alignment, ease of use, and maximizing adoption higher than they do integration with back-end systems. Whether rightly or wrongly, business leaders often say to IT: we want System X--make it work.
- Integration has gotten a lot easier. The integrated suite story was more convincing 20 or even 10 years ago, when the choices for integration were either brittle point-to-point flat file interfaces or complex middleware or integration hubs that required substantial investment before the first integration could be built. Today, application programming interfaces (APIs) and web services make integration a lot easier than it used to be in the past. SaaS providers, in particular, have gotten very good at integrating with other systems, whether cloud or on-premises, as this is a common requirement among their customers. So, the problem has gotten smaller.
- Not all integration points are equally critical. In a recent CRM selection, the incumbent ERP vendor made the claim that there were something like 300 integration points between the vendor's ERP and CRM systems. Did the buyer really want to program all these touch points between ERP and some third-party CRM provider? It's a good sales pitch. But when we investigated further, we found that there were really only a handful of integration points that really mattered to this customer. For example, if pricing only changes once a year, is it really necessary to have the CRM pricing tables automatically updated from the ERP pricing tables? Investigate your real needs for integration and often you will find they are much less than your incumbent vendor will claim.
In addition, think about the benefits of not having all of your enterprise system "eggs" in one basket. True, there are benefits to having fewer vendors in your applications portfolio. At the same time, it is possible to have too few--to grant too much power to a single vendor. Behind closed doors, suite vendors talk about how much "share of wallet" they have among their customers. But is it in your best interest to have so much of your IT spending wrapped up with a single provider?
Situations Where Integration Is a High Priority
To be sure, there are situations where integration should be a high priority. I would not like to see an organization pick an accounts payable module from one vendor and a purchasing module from another. These functions are too tightly coupled. Furthermore, purchasing and accounts payable are generally not systems of strategic advantage. Customers are better off buying them from a single ERP vendor, implement them, and move on to more strategic opportunities.
Likewise, in supply chain management, I don't like to see sales and operations planning, advanced planning, and event management selected from different vendors. These functions form a closed loop with a single data model. Material planners need to be able to perform these functions simultaneously in parallel. Building interfaces to cascade information from one system to another is simply too cumbersome.
Criteria for Evaluating Integration Needs
I don't expect that the large integrated suite vendors will change their message. For them, suites always win. But for buyers, I recommend a broader perspective.
- Is the system you are looking for one that must be integrated with other systems in your portfolio?
- If so, can you verify that your incumbent vendor has really integrated those two systems?
- How many integration points are really needed, and how many are nice-to-haves that could be satisfied with a simple work around?
- For those that need automated integration, how difficult would it be for another vendor to provide that integration?
- Do third party vendors have references that have done that same integration with other customers?
- Do the benefits of a third-party vendor in terms of adoption, ease-of-use, and competitive advantage outweigh the benefits of pre-built integration?
Finally, is the system you are looking for one where innovation, competitive advantage, ease of use, and high adoption are top priorities? If so, the best choice may not be from your incumbent provider. The fact that the large Tier I suite vendors have been acquiring smaller best-of-breed providers is evidence that leading edge innovation is happening outside of the integrated suites.
Customers should think through the answers to these questions and make the right decisions for their businesses. If they do so, many times, suites won't win.
Vendor application integration tools are no silver bullet
Implement EAI, or just roll your own?
Photo Credit: www.seewellcn.com
Labels: integration, Oracle, SAP
Tuesday, January 28, 2014
Plex's Growth Strategy: Glass Half Full
Those interested in cloud ERP know that Plex was the first provider to offer a cloud-only manufacturing system. Yet Plex has had nowhere near the growth of other cloud enterprise system providers, such as NetSuite. SAP receives a lot of criticism for only having sold 1,000 or so customers its Business ByDesign system--but ByD has only been in general distribution for three or four years. Yet Plex, which launched its cloud offering over 10 years ago, has fewer than 500 customers.What's wrong with this picture?
Last year, encouraged by Plex's new private equity owners, CEO Jason Blessing and his management team formulated a growth strategy, which they presented at the Plex user conference. Afterwards, I outlined
what I thought Plex needed to do to execute on it.
Following up now half a year later, Jason circled back to give me another briefing, and it was a good opportunity also to see what progress Plex was making. Here is my take:
- Management changes are part of the growth plan. Plex this week announced the appointment of Don Clarke as its new CFO. He appears to be a great candidate for the job. He comes most recently from Eloqua, a leading marketing cloud vendor, where he oversaw Eloqua's growth to nearly $100M in annual revenue, its initial public offering, and its eventual sale to Oracle last year, which put Clarke out of a job.
I joked with Jason that Oracle's acquisition strategy has been serving Plex well in terms of recruiting, as several of Plex's top management team have come from companies that Oracle acquired: Heidi Melin, Plex's CMO, also came from Eloqua, Karl Ederle, VP of Product Management spent time at Taleo, which Oracle acquired in April 2012, and Jason himself came from Taleo.
If Plex's growth strategy is successful, there is likely to be an IPO in Plex's future. Clarke's experience in taking Eloqua public will serve Plex well.
- Plex added 59 new customers in 2013, bringing its customer count to "nearly 400." As mentioned earlier, in my view, the total customer count is well below where it should for a decade-old cloud provider. Jason compares it favorably with the 500 or so customer count for Workday, overlooking the fact that Workday launched in late 2006 and that its typical customer is several times larger than Plex's.
Still, Plex's growth in 2013 represents a 15% increase in its customer base and signals that its growth strategy is beginning to take hold.
The new customer count includes some accounts that are larger than Plex has sold to in the past, such as Caterpillar, which is running Plex in a two-tier model for some smaller plants. In my previous post, I outlined some of the functionality improvements that Plex would need to make to better serve these large customers, and there are signs that these enhancements are underway.
- Plex doubled its sales force last year. This, no doubt, is behind the uptick in new customer sales. The new sales headcount is serving primarily to expand the geographic coverage outside of Plex's traditional Great Lakes concentration to the South and also to the West Coast. (As part of the expansion, Plex opened a Southern California sales office, which happens to be a short walk from my office near the John Wayne Airport.) There are also increased sales to organizations outside North America, another hopeful sign.
- Plex's industry focus remains in three industry sectors: motor vehicles, food and beverage, and aerospace and defense. In my view, this is probably the greatest constraint to Plex's growth strategy. Short-term, having more feet on the street and expanding geographically are low-hanging fruit. But at some point, there will be diminishing returns. Manufacturing contains dozens of sub-sectors, many of which are adjacent to Plex's existing markets. It is not a big jump to build out support and sell into these sub-sectors. We discussed a couple of these, and hopefully, Plex's product management team will have the bandwidth to address them.
- Plex's platform remains a weak spot. Most cloud systems today provide a platform for customer enhancements and development of complementary functionality. For example, Salesforce.com offers Salesforce1, a mature platform-as-a-service (PaaS) capability that has spawned an entire ecosystem of partners. NetSuite, likewise, has its SuiteCloud platform. Although Plex has the beginnings of such a platform, it is still limited to use by Plex's own development team and a few carefully-vetted partners. Jason knows this is a need, and hopefully we will see more progress in this area.
There is a lot to admire about Plex. Of the few cloud-only ERP providers that are addressing the manufacturing sector, Plex has the most complete footprint of functionality, rivaling mature on-premise manufacturing systems. In addition, customer satisfaction is readily apparent when I speak to installed customers, both new and old. Hopefully, Plex will build on these strengths and see growth accelerate.
There is a Plex 2013 year-end recap
available on the Plex website.
And right on cue, Dennis Howlett has done an on-camera interview
with Jason Blessing about Plex's 2014 strategy. He also comments on Plex's approach to SaaS pricing.
Plex Software and Its Mandate for Growth
The Simplicity and Agility of Zero-Upgrades in Cloud ERP
Plex Online: Pure SaaS for Manufacturing
Labels: ByD, cloud, Eloqua, NetSuite, Oracle, PaaS, Plex, SaaS, Salesforce.com, SAP, Taleo, Workday
Friday, January 24, 2014
Workday Making Life Easier for Enterprise Users
Even if you don't follow developments in HR technology, you should pay attention to what Workday is doing, for two reasons. First, Workday is no longer just an HR systems provider, having expanded its footprint into financial systems, operational support for service delivery, and business intelligence. Second, as a SaaS-only provider, Workday has been, in my opinion, a leader in best practices in deploying cloud enterprise systems.
In December, the company released Workday 21. In addition to the 246 new
features included in this version, it also features a major update to
its user interface, which Workday starting rolling out earlier
Enterprise User Experience Overdue for Refresh
The look and feel of enterprise software has not changed much since the days of client server, when graphical user interfaces took over from the old green screen mainframe-like experience. Workers use desktop computers to access a main menu, which displays a series of icons or links that point to various subsystems. Data entry screens cram as much information as possible so that users do not have to click through to multiple panels to complete a transaction. Because of the density of information, enterprise software came with extensive user manuals, online help, and training classes.
When vendors abandoned the client-server architecture for browser-based thin clients, they did not generally change this paradigm. They just changed the back-end. They did not significantly alter the fundamental user experience.
Now vendors face a serious problem when users demand mobile access. These user interfaces do not translate at all to a smart phone or tablet display. Mobile access, if provided at all, is a completely different user interface than that on the desktop. In fact, some vendors sell mobile access as an additional product, separate from the vendor's traditional desktop access.
Raising the Bar
Workday has always paid a lot of attention to its user interface. In fact, Workday has gone through something like five major updates in its UI: from HTML/AJAX to Adobe Flex, then adding native IOS and Android, and now to HTML5.
But apart from the technology change, Workday's new interface illustrates several best practices, some of which it derived from consumer Internet services, such as Google and Facebook.These are my take-ways:
- One interface for all platforms. The familiar "Workday Wheel" is now gone. Why? Because it did not translate well to smartphone or tablet access. The new homepage is a grid of icons that resize and scale according to the size of the screen.
- Easy movement between platforms. Most of us get interrupted in the middle of our work. The new UI allows users to start a process, such as a performance review, on one platform (e.g. a desktop) and then continue or complete it on another platform (e.g. a smartphone).
- Less is more. Workday has removed less-than-essential information from panels, such as the employee profile, organizing and relegating it into tabs or linked lists, so that panels focus the user's attention on what is most important. I especially like the drop-down navigation on the left side of the header bar, which looks quite a bit like Facebook's left side navigation.
- Inbox-driven workflow. No more jumping jumping back and forth to the Workday Wheel to complete tasks. A new unified in-box gives users a view of all notifications, with a preview pane and ability to take action right in the inbox.
- Intuitive use. Viewing the user interface in action, it becomes obvious that most users will not need a lot of training on "what key do I press?" As in the past, they will need training on Workday's functionality and how it applies to their jobs. But the new interface should greatly speed the time to productivity for most users.
These are just some of the points about the new UI. In addition, there
are many functionality enhancements, which I'm not covering here.
To see quick overview of the new UI, check out this video
by Workday's VP of User Experience, Joe Korngiebe (you can skip past Joe's opening remarks and start at the one minute mark, if you like).
To be fair, other enterprise vendors, such as Infor, Oracle, and SAP, are making great strides in the user interfaces as well. Workday's most recent release provides another example of how life is getting easier for enterprise software users.
Over at Diginomica, Dennis Howlett has his own take
on Workday's new UI.
Best Practices for SaaS Upgrades as Seen in Workday's Approach
Workday Pushing High-end SaaS for the Enterprise
Labels: cloud, HTML5, Infor, mobile, Oracle, SaaS, SAP, UI, UX, Workday
Thursday, January 23, 2014
Evaluating UNIT4's Growth Strategy
Changes are afoot at UNIT4
, a European-based ERP provider. UNIT4 is looking to move to the next level, and it held a
virtual press conference earlier today to outline its growth strategy going forward.
This post outlines some of the key points along with my viewpoint of its likely success.
UNIT4 is best known for its Agresso ERP system, its Coda Financials system, and its majority ownership of cloud ERP provider, FinancialForce
(with minority investment by Salesforce.com).
UNIT4 has been a well-regarded ERP provider for years, focused largely on the services sector. Like many traditional vendors, UNIT4 has been transitioning to cloud delivery and, fair to say, has been more successful than many of its peers. At a time when many traditional ERP providers have less than 10% of their revenue from the cloud, UNIT4 claims to have more than half of its 450M euro annual revenue derived from subscription services.
New Leadership for the New Strategy
UNIT4 has a new CEO, Jose Duarte, who came on board seven months ago. He served as co-CEO alongside Chris Ouwinga until January 1, when the board appointed him as sole CEO. Duarte came to UNIT4 from a 20-year career at SAP, which including roles as President of the EMEA & India region and President of the Latin America region.
If UNIT4 had announced its new growth strategy without making any management changes, I might doubt its seriousness. The top management change, therefore, is a good sign.
Core Message is Familiar
UNIT4 has long had a message of enabling its customers to "embrace change," and it touts its offering as being highly flexible and adaptable to changing business conditions. In its new growth strategy, that messaging does not appear to be different.
Duarte does point out that the pace
of change is increasing--not only from economic and regulatory pressure, but also from the pressure of new technologies, such as the so-called "SMAC" technologies (social, mobile, analytics, and cloud). Yet IT leaders spend 80% of their budgets on "keeping the lights on," leaving only 20% for innovation. UNIT4 intends to help its customers transition from transaction-centric to people-centric systems.
In my view, this message is good but it is not particularly distinctive. Most other enterprise software providers have adopted this story--not just newer providers, such as Salesforce.com and Workday but incumbent providers, such as SAP, Oracle, Infor, and Microsoft. Whether they actually accomplish that is another question--but the message is the same.
Vertical Solutions May Be Differentiating
When it comes to UNIT4's industry focus, however, I do see something that may be distinctive. Unlike many enterprise software providers that attempt to cover a broad range of markets, UNIT4 is distinctly focused on services businesses (including public sector), as shown in the schematic nearby.
Notable, there are no manufacturing sectors in UNIT4's target verticals. ERP has its roots in the manufacturing industry, and that ground is fairly well covered by other providers. By focusing on less crowded verticals, UNIT4's growth strategy has a better chance of success. Some of the sectors--such as financial services, investment companies, travel management, housing authorities, real estate, and insurance companies--have many fewer competitors targeting them. On the other hand, some of the sectors, such as professional services, are targets for some of the newer cloud-only providers, including UNIT4's own FinancialForce investment.
Overall, I am bullish on UNIT4's market focus.
Willingness to Buy or Partner instead of Build
There is another piece that represents a change in UNIT4's product strategy, and that involves partners. To fill out its offerings for some industry sectors, there are some pieces that UNIT4 may not build directly. This is especially true when addressing sector-specific processes. Duarte didn't mention claims processing in the insurance industry, but I would suspect that might be a good example. In such cases, UNIT4 will be more willing in the future than it has in the past to partner for or even acquire complementary solutions.
Private Ownership May Facilitate the Strategy
In November, UNIT4 announced that it had been approached by private equity firm Advent International in a cash offer to buy all issued and outstanding shares of the company--effectively, to take UNIT4 private. Duarte more or less implied that this transaction, which UNIT4 had not solicited but nevertheless was recommending to its shareholders, was not directly related to its growth strategy, although the growth strategy was one of the things that made UNIT4 attractive to Advent.
Whether related or unrelated, I find a potential departure from public ownership a positive step for UNIT4. Software vendors transitioning from on-premises license sales to cloud subscription revenue often face pressure on financial results as money that would have been collected up-front is now spread out over the subscription period. Taking away the need to report quarterly results gives UNIT4 breathing room to make the transition to cloud.
Private ownership may also give UNIT4 more flexibility in making those niche acquisitions for complementary products that are essential for its target industry sectors, as they would be able to be completed more quickly than would be the case where public shareholders would need to be involved.
UNIT4 has already made substantial progress in its migration to the cloud, but that is only one of the transitions needed. Hopefully, under private ownership, UNIT4 will be able to fulfill all the elements of its new growth strategy.
Over at Diginomica, Phil Wainewright summarized his half day briefing with UNIT4 in a curiously titled post: Unit4 updates Agresso to SMAC the BLINCs
Four ERP Providers on the Salesforce Platform
Labels: Agresso, cloud, FinancialForce, Infor, Microsoft, Oracle, SAP, UNIT4
Monday, January 20, 2014
Four Cloud ERP Providers on the Salesforce Platform
As cloud ERP solutions mature, they are becoming viable alternatives to traditional on-premises and hosted ERP systems. Dreamforce 2013, the annual conference of Salesforce.com users in San Francisco last November, offered a good opportunity to review the progress of four such cloud ERP systems—all built on the Salesforce.com platform.
Salesforce1: The Next Generation Salesforce Platform
During the conference, Salesforce unveiled the latest iteration of its platform, now dubbed Salesforce1
, as shown in Figure 1. The platform has a lot going for it.
- It provides a complete applications development environment (a platform-as-a-service, or PaaS) running on Salesforce.com’s cloud infrastructure. Developers building on Salesforce1 can interoperate with any of Salesforce.com’s applications, such as its Sales Cloud, Service Cloud, Marketing Cloud, as well as other third party applications built on the platform.
- It includes social business capabilities. Developers can incorporate Salesforce.com’s social business application, Chatter, as part of their systems.
- The platform puts mobile deployment at the center, allowing apps to be written once and be deployed simultaneously on a variety of user platforms, including desktop browsers, tablet computers, and smart phones. In support of the so-called "Internet of Things," Salesforce1 can even be deployed on connected devices.
- Finally, the platform provides a way for developers to market and sell their applications, by means of Salesforce.com’s AppExchange marketplace.
For a detailed view of Salesforce1, see this review
by Doug Henschen over at Information Week.
With Salesforce.com now the market leader in CRM, it is no wonder that its platform has become more and more attractive to developers. Building on this platform, third-party developers become, in essence, an ecosystem around Salesforce.com, with strong network effects. The more popular the platform becomes, the more it attracts developers. In return, the more developers build on the platform, the more attractive it becomes to other developers. It is a virtuous cycle.
In our consulting work at Strativa
over the past three to five years, I’ve seen several cases where organizations first implemented Salesforce.com’s CRM system, then based on that success started looking to see whether they could replace their existing on-premises ERP system with a cloud-based solution. And, when they search the AppExchange, they find four cloud ERP providers: FinancialForce, Kenandy, Rootstock, and AscentERP.
I’ve been following these four providers for several years, and this post serves as an overview and update, based on briefings and interviews I conducted with these four vendors during the Dreamforce user conference.
As the name implies, FinancialForce
started in 2009 as an accounting and billing system. It was formed as a joint venture between UNIT4 and Salesforce.com. The company expanded into professional services automation in 2010 with the acquisition of a PSA system from Appirio, built on the Salesforce platform, and by building out its own services resource planning (SRP) functionality. More recently, Financialforce developed offerings for revenue recognition and credit control on the new Salesforce1 platform for revenue recognition, pushing these functions out to sales and services users in the field.
The company lists 50 customer case-studies
on its website, an impressive number for a vendor that is only four or five years old.
At Dreamforce 2013, FinancialForce took two more steps to expand its ERP footprint. First, it announced acquisition of another AppExchange partner, Less Software, which provides configure-price-quote (CPQ), order fulfillment, service contracts, inventory management, and supplier management modules. Founded just two years ago, Less Software was already partnering and doing joint deals with FinancialForce, so the acquisition does not appear to acquire much if any integration work. FinancialForce refers to Less Software as having supply chain management (SCM) capabilities, but I would view that as somewhat of an exaggeration. There are some light warehouse management capabilities, but no transportation management or supply chain planning functionality that I can see. Less Software has had particular success in selling to value-added resellers, such as Cisco resellers, as well as to industrial distribution organizations and one manufacturer of children’s furniture.
The second step, announced during the conference, was the acquisition of Vana Workforce, a human capital management (HCM) software provider—which is also built on the Salesforce platform. Vana's HCM functionality includes core HR, talent management, recruitment compensation, time management, and absence management. Payroll is not provided, but the system can connect with a number of popular payroll systems. As with Less Software, Vana Workforce was already partnering with FinancialForce, so the integration effort, again, would appear to be minimal.
Organizations in the professional and technical services sector should take a look at FinancialForce, as well as anyone needing a financial management solution. With its acquisition of Less Software and Vana Workforce, FinancialForce now qualifies for the short list for distribution and light manufacturing companies. There were hints during my briefings that FinancialForce may continue with an acquisition strategy, so it is likely that additional industry sectors may become potential targets for this solution provider.
I covered the launch of Kenandy back in 2011, when I interviewed
its CEO Sandra Kurtzig. Sandy was the original founder and CEO of ASK Group, the developer of the well-known ManMan ERP system. Her coming out of retirement to launch a new ERP system made a big splash at Dreamforce 2011, where she appeared on stage with Salesforce CEO Mark Benioff and Ray Lane, former Oracle President and now Kenandy board member representing investor firm, Kleiner Perkins. Salesforce.com is also an investor in Kenandy.
Since that launch, Kenandy has been rapidly adding functionality. It has its own financial systems, including general ledger, invoicing, accounts receivables, and accounts payables. Multi-company and multi-currency support were added earlier this year, with up to three reporting currencies. According to Kenandy executives I interviewed, the system also supports multiple plants with multiple locations in a single tenant. There is a full MRP explosion. Lot tracking and serial tracking allow Kenandy to sell into foods and other industries that require track and trace. Item revision levels are tracked with multiple revisions allowed in inventory.
Only three years in existence, the installed customer base is small but growing, with some impressive wins. During Dreamforce, Kenandy touted its recent win with Del Monte Foods, which implemented Kenandy for its acquisition of Natural Balance, a pet food manufacturer. I spent some time one-on-one with the Del Monte project leader, who provided quite a bit of insight into the dynamics of the implementation. Del Monte was able to implement Kenandy’s full suite—financials, customer order management, and distribution—in just three months. This included integrations with third-party systems for EDI, warehouse management, and transportation scheduling.
He also shared with me that he wrote a trade promotion management (TPM) system on the Salesforce platform, integrated with Kenandy, in just six weeks—and he did it by himself. He had previously built a similar system integrated with Del Monte’s legacy system, but that effort took seven months with a team of seven developers. Even discounting the fact that his previous experience might have made development of the second system easier, by my calculations this is about a 50 to 1 improvement in productivity, illustrating the power of the Salesforce platform.
Del Monte is not finished with Kenandy. The firm reportedly plans to eventually move all of Del Monte’s ERP processing from something like 60 internal systems to Kenandy.
More information Del Monte’s experience can be found in a case study on Kenandy’s website
is another manufacturing ERP provider with an interesting history. The management team, headed by CEO Pat Gerehy and COO Chuck Olinger, has decades of experience building manufacturing ERP, most recently at Relevant. Following the sale of Relevant to Consona (now Aptean), the team embarked on a new venture to build a manufacturing cloud ERP system from scratch. They developed their first iteration of Rootstock on the NetSuite platform in 2008, interoperating with NetSuite for financials and customer order processing. In 2010, however, they disengaged from their NetSuite partnership and rewrote Rootstock on the Salesforce platform. (That the Roostock developers could build a complete system so quickly on the NetSuite platform and then again on the Salesforce platform speaks to the power of these modern cloud platforms for rapid software development.)
As a result of the replatforming on Salesforce, Rootstock developed its own customer order management product and now partners with FinancialForce for its accounting systems. It also has good functionality for purchasing, production engineering, lot and serial tracking, MRP, MPS, and capacity planning, shop floor control, manufacturing costing, and PLM/PDM integration. The system can support multiple companies, multiple divisions, and multiple sites, all within a single tenant on the Salesforce platform.
On its website, Rootstock highlights an impressive list of 25 customers. These include Astrum Solar, a residential solar provider with operations in a dozen states in the US. EBARA International, a manufacturer of pumps and turbine expanders in the energy industry, with 77 subsidiaries and 11 affiliated companies worldwide.
Over the past year, Rootstock has been gaining traction. After the Dreamforce conference, it announced four more wins in the month of November: Microtherm, a business unit of ProMat International; Proveris, which provides testing protocols for drug developers; Source Outdoor, an outdoor furniture manufacturer; and Wilshire Coin, a coin dealer.
Buyers looking for strong manufacturing functionality, including hybrid modes of manufacturing, should consider Rootstock. Project-based manufacturing is also a sweet spot.
approaches manufacturing ERP from the execution side of the business. Its co-founders, Michael Trent and Shaun McInerney, have a long history in warehouse management and data collection, and it shows in the capabilities of the product. Built from the start on the Salesforce platform, AscentERP supports production modes of build-to-order, assemble-to-order, and configure-to-order along with repetitive manufacturing capabilities. It can take opportunities from Salesforce.com and convert them into sales quotes and into sales orders in the production system. The system supports the complete manufacturing process from master planning, purchasing, production, and shipping. Reverse logistics is also supported through an RMA process.
Like Rootstock, AscentERP supports the accounting function through partnership with FinancialForce. In addition, the system also integrates with Intacct, another SaaS financials system. For smaller companies, Ascent created an integration with Quickbooks.
During Dreamforce, AscentERP announced advanced manufacturing functionality, including workflow and alerts, multi-plant and multi-location support, production scheduling and tablet computer data collection using the new Salesforce1 platform.
Reference accounts include Chambers Gasket in Chicago and All Traffic Solutions, a manufacturer of electronic roadside signs. Both of these customers use FinancialForce for financials. Other reference accounts include The Chia Company in Australia, the world’s largest grower of Chia seed and products, so familiar during holiday season, and SolarAid, an international charity that provides access to solar lighting.
Buyers may want to short list AscentERP if they are looking for a nuts-and-bolts production system with good support for warehouse management and data collection. Smaller companies may find the Quickbooks integration an interesting option, allowing them to implement ERP without having to give up Quickbooks.
One sales strategy I wish more enterprise SaaS providers would follow: AscentERP offers a free 30 day free trial
on its website.
Cast a Wide Net
All ERP systems have their strengths and weaknesses, and these four are no exception. For example, all of these systems are relatively new. Although they are rapidly building out their functional footprints, there are still gaps in their functionality. Buyers that insist on having every box checked on their RFPs may not like this, but those buyers who are willing to do some system enhancements on the Salesforce platform may find that the advantages of speed and flexibility outweigh any short-term gaps. It all depends on whether buyers are viewing pure cloud deployment as a strategic advantage.
The four vendors outlined in this post are not the only cloud ERP providers in the market. Buyers should also consider other providers, not built on the Salesforce platform. These include established cloud players such as NetSuite and Plex, as well as newer entrants, such as Acumatica. Finally, some of the traditional providers of on-premises ERP systems, such as SAP, Oracle, Microsoft, Infor, and Epicor, offer hybrid cloud deployment options that may be alternative to these cloud-only providers.
Choosing the right ERP system—whether cloud, hosted, or on-premises—can be challenging. Those looking for more in-depth analysis and independent advice in navigating the process should consider our software selection services at Strativa.
Kenandy: A New Cloud ERP Provider Emerges from Stealth Mode
Labels: Acumatica, AscentERP, cloud, EnSW, Epicor, ERP, FinancialForce, Infor, Kenandy, Microsoft, NetSuite, Oracle, Plex, Rootstock, SaaS, salesforce, SAP, SFDC
Thursday, December 05, 2013
Supply Chain Management in the Era of Social Business
Applications of social networking are easy to see in the business-to-consumer space, in functions, such as sales, marketing, and customer service. But is there also a role for social tools in heavy back-office B2B processes? At first glance, the applications may not be apparent. But when the word “collaboration” is substituted for “social,” we can see that B2B organizations made use of these technologies long before the word “social” came into vogue. Think Lotus Notes, for example.
Nevertheless, the opportunities for social business are growing, and nowhere do I see a greater need than in supply chain management, specifically planning systems.
Most supply chain planning (SCP) systems today are not social. Rather, they are oriented around the job of an individual planner, who works with user interface that strongly resembles an Excel spreadsheet. Rows show demand and supply, with columns indicating time periods, left to right, marching into the future. Highlighting is used to indicate periods where there are shortages of resources, whether material, capacity, or other elements of production. Exception messages alert the planner to take action. Except for better graphics, the user experience is not much different from that of MRP systems that I worked with and taught in the 1970s and 80s.
What’s Wrong with Spreadsheets?
The spreadsheet paradigm has survived for decades because it does have its strengths. First, it is familiar to anyone trained in principles of supply chain management. Second, it allows a lot of information to be conveyed on a single page.
The issue comes in the “take action” part of the planner’s job, especially when an action affects other participants in the supply chain, such as customers, suppliers, or sub-contractors. For example, a planner may be trying to resolve an issue with a late order. Taking action in this case might mean paying premium freight to expedite a supplier order, rescheduling production, shorting another customer, scheduling overtime, or any number of exceptional actions. The problem is that such decisions can rarely be made by a single individual. They require collaboration and approval by various other players inside and outside the organization. At this point, the planner turns from the SCP system and picks up the telephone, sends an email, or convenes a meeting.
Traditional SCP systems are good for identifying the problem, and they are good for recording the decision. But they are not good as a platform for collaboration to discuss the problem and to make a decision. Supply chain collaboration is not simply a matter of “getting approval.” These are content-rich collaborations, often requiring analysis of what-if scenarios and tradeoffs between competing metrics and objectives.
In other words, today’s SCP systems are systems of transactions, not “systems of engagement” (to use the term coined by Geoffrey Moore).
What Does Social SCP Look Like?
I got a little insight into what the next generation of SCP systems might look like, when I attended the Kinaxis
user conference last month in Scottsdale, AZ.
By way of background, Kinaxis provides a supply chain planning system, dubbed Rapid Response. The company was founded in the early 1990s and has been through several name changes, most recently from Webplan to Kinaxis in 2005. Kinaxis was developing in-memory software long before in-memory became an industry buzzword. The firm also moved to a cloud delivery model in the late 1990s, around the same time that Salesforce.com and NetSuite were starting out. Kinaxis has been successful selling into large companies with complex supply chains and competes directly against SAP, Oracle, as well as other best-of-breed specialists that vie for this market.
During the half day of analyst briefings, Kinaxis executives put up some screen shots of a new user interface that the company is considering. Although they did not use the word “social” to describe their objectives, I immediately saw the embedded social aspects of the new user interface.
- Automatic team selection. In a large organization, it is not always readily apparent who needs to be involved in a certain supply chain decision. Knowing who should be involved on the customer and supplier side can be even more difficult. The prototype role-based dashboard automatically tells the planner or other user who needs to be involved—inside and outside the organization—in deciding each proposed action.
- Business intelligence in context. For each supply chain decision needed, the demo UI allows each participant to see the impact of the proposed action on the business and on other people. So, there’s no need to leave the application to look up relevant information. In this way, the system promotes cross-functional alignment and consensus.
- System of engagement. The new UI does more than just record the transaction. It captures team voting, comments, and assumptions, which are traditionally done outside the formal system.
- Cross-device access. No more waiting until you get back to your desk. The new UI automatically reformats itself across desktop, tablet, and smart phone displays, allowing access anywhere, any time. Going beyond the Apple/Google operating systems that many vendors support, Kinaxis also supports Blackberry and Microsoft mobile platforms.
- Light gamification. When the team arrives at a decision for a given case, the alternative scenarios fall off the display, like sticky notes falling from a whiteboard, and the word “Closed” is stamped on the case—a little visual reward for resolving the case. Though I didn’t see it in the demonstration, I can envision a leader board for each functional group, showing number of cases resolved and other metrics that the organization deems important.
Embedded Collaboration vs. a General Purpose Tool
To be fair, Kinaxis is not the first to seek application of social business principles to the supply chain. However, most attempts thus far have involved general purpose tools, such as Microsoft’s Sharepoint or Yammer, or Salesforce.com’s Chatter to capture collaboration among trading partners. There has also been talk about the use of social media sites such as Twitter to monitor or rapidly communicate events that may affect availability of material, for example. But these just scratch the surface of what is possible.
But, using a general purpose social tool requires the planner to use one system for planning and another for collaboration, with little or no connection between them. So, when supply chain professionals are in the planning system, they can’t collaborate, and when they are in the collaboration system, they can’t plan.
In contrast, the social business capability being considered by Kinaxis is not some general purpose activity feed layered on top of the application. Rather, it is embedded in the application itself. The automated team selection solves a real problem in large complex supply chains. The discussion thread is natively embedded as part of the application and is focused on specific decisions to be made. There are no side discussions about pet cats or who’s bringing what to the company picnic. If those things are important, let them be relegated to Chatter or Yammer and keep the SCP discussion focused on taking supply chain actions.
The prototype coming out of the lab at Kinaxis gives a clear view of what is possible in in putting social business constructs into supply chain planning. It helps that Kinaxis has built a complete SCP solution from top to bottom as a single system, as opposed to building it up from acquired components. With a single in-memory system, Kinaxis can more readily provide all the information at the same time to all participants. There is no cascading of plans sequentially from one level to another: all levels are planned concurrently.
Does this mean that SCP vendors need to give up the spreadsheet paradigm? Not at all. My advice would be for vendors to continue to use the spreadsheet user interface. As I noted, it does have its benefits. But the “social SCP” paradigm needs to be introduced alongside the spreadsheet. In this way, long-time SCP users can continue to work with the interface they have grown up with, and at the same time, be introduced to a different paradigm. User interface changes can be quite unnerving for long-time system users. A parallel approach will make the transition easier.
You can watch the full video of the prototype user interface by clicking the graphic below (free registration required).
Supply Chain Management Delivers Positive ROI Despite
Breakthrough in Material Planning: Demand Driven MRP
Labels: gamification, Kinaxis, scm, social, social business, supply chain management
Tuesday, October 22, 2013
Open Source Not a Panacea for Cloud Infrastructure Decisions
When it comes to cloud computing, do open systems win out over proprietary standards? My view is, perhaps in theory, but cloud computing--specifically public cloud infrastructure--has bigger problems right now than whether it's built on open source. Furthermore, open source cloud infrastructure providers have obstacles to overcome.
I'm participating in an online video debate
on October 29, hosted by IBM's Smarter Computing program, on "the pros and cons of open computing when it comes to cloud, big data, and software defined environments." This post outlines part of my viewpoint on this subject.
What's Not to Like about Open Source?
One of the problem in debating "open source" is that it is difficult to argue against the word "open" as a concept. For example, we all like to think of ourselves as open-minded, not close-minded. We admire top executives who have an open-door policy--have you ever heard of a manager with a "closed door policy?" In home-buying, sellers like to point out the open floor plan. Who ever advertised a house as having a "closed" floor plan?
So also, in computing, open just sounds better. Moreover, when it comes to cloud infrastructure, open source projects such as OpenStack and CloudStack have admirable goals, such as the ease of porting computing workloads from one cloud provider to another, promoting competition, and escaping the dreaded vendor lock-in.
The Larger Issue: Adoption
But, to me, it is premature to debate about whether open source cloud infrastructure is better. The larger issue today is the small percentage of corporate IT organizations that embrace public cloud infrastructure at all
. In our Technology Trends survey
at Computer Economics last year, we found that less than 10% of IT organizations worldwide have any use or plans to use public cloud infrastructure. Moreover, of these, only half claim use it, or intend to use it, for production systems.
If they are not using public cloud for production systems, then what are they using it for? Our survey found interest in public cloud for software development and testing, disaster recovery capabilities (such as backup and recovery), or for archiving older data.
In addition, I question some of those production uses of IaaS. Discussions with associates who advise data center managers confirm my suspicions. One associate, who works a lot in the entertainment industry, pointed out that one popular use of cloud infrastructure is in rendering animated film. In this case, animators require enormous amounts of computing power and storage to render even a few minutes of animation. As it turns out, cloud infrastructure is perfect for such a use, as it frees the IT organization from having to maintain those high levels of computing resources, which are only used sporadically. Furthermore, the risk is low. If the cloud provider goes down in the middle of a rendering job, the animator can simply resubmit the job. Nothing is lost.
But when it comes to production systems, such as accounting systems or royalty processing, these same entertainment industry decision-makers shun cloud infrastructure. It is not that they want to keep such systems on-premises, as witnessed by the fact that they have been outsourcing their data centers to managed services providers for years. As my associate remarked, "CIOs don't want to be in the data center business any more." But, rightly or wrongly, they are cautious about entrusting production systems to a cloud infrastructure.
Open Source Not a Panacea
Although the goals of OpenStack and other open source cloud projects are admirable, they may be a solution in search of a problem.
- Specifically, migrating workloads between competing cloud providers may not be as big a deal as open source proponents claim. Customer demands are already forcing competing cloud providers to recognize and support each other's APIs. For example, some members of the OpenStack community are urging support for Amazon's APIs. If OpenStack fully goes this route, application systems written for Amazon's cloud will be able to be deployed on an OpenStack cloud without a lot of migration effort. Even VMware--the vendor with the largest stake in so-called private clouds--supports Amazon APIs and is also a contributor to OpenStack. Therefore, as far as I can tell, portability is not a major issue.
- Second, so far, it does not seem as if proprietary cloud providers are using their proprietary standards in order to extract higher fees from customers. Quite to the contrary, cloud infrastructure is a very competitive market. Whatever concerns IT decision makers have about public cloud infrastructure, one thing they cannot complain about is its cost. Leading cloud providers are not raising prices--rather, they are cutting prices, in some cases many times a year. IT decision makers are not holding on to their on-premises systems because they are concerned about the cost of public cloud--they are focused on risk. This was also a key finding in our Technology Trends survey.
If a cloud provider wants to overcome enterprise IT buyer concerns, it should focus on reliability, security, privacy, and offer a well-staffed support group. Many of the OpenStack providers are doing exactly that. It may well be that OpenStack providers, such as IBM, H-P, Dell, Rackspace and others, will be successful because of their value-added services, not because they embraced an open source infrastructure.
Incumbent Infrastructure Providers Have an Edge
Furthermore, proponents of open source cloud infrastructure may be underestimating the advantage that on-premises infrastructure providers have in moving their customers to the public cloud. Although, as discussed above, IT leaders have concerns about moving production workloads to the public cloud, one thing that does appeal to some of them is the ability to move seamlessly from on-premises system instances to cloud instances.
This is the so-called hybrid cloud infrastructure. CIOs may adopt a hybrid cloud strategy in order to move non-critical workloads out of the data center, freeing up system resources (e.g. the animation rendering application discussed above), or to "burst" to the cloud during period of high demand for system resources (e.g. during a major advertising campaign that strains an in-house e-commerce system).
Now, which provider has the advantage in helping IT organizations set up hybrid cloud capabilities? The provider that is already serving the on-premises data center (Microsoft, VMware, or Oracle, for example) or the one that would like the data center to replatform its on-premises systems to match the infrastructure of the provider's cloud infrastructure (e.g. OpenStack, CloudStack)?
The answer is obvious, which is why Microsoft, VMware, and Oracle are all providing public cloud services that require very little change to the customer's on-premises infrastructure. Unless an IT organization is building a data center from scratch, it is unlikely to want to standardize its internal infrastructure on a completely new technology--open source or otherwise.
Advocating for Cloud and Open Source
Nothing I've written here should be taken as an argument against cloud computing or open source. I've been blogging on these subjects since 2002 and consider myself as an advocate of both. In my view, one day nearly all systems will be delivered via cloud computing, and open source software has proven itself to be a viable business model for a variety of software categories, especially for lower levels in the technology stack. But in the case of public cloud infrastructure, I don't see open source cloud projects as dominating the market any time soon.
The video of my IBM debate
is now online. You can watch it by clicking the image below.
The Inexorable Dominance of Cloud Computing
Cutting Through the Fog of Cloud Computing Definitions
Photo Credit: Flickr, followtheseinstructions
Labels: amazon, Azure, cloud, cloudstack, IaaS, open source, openstack, rackspace
Monday, September 23, 2013
Best Practices for SaaS Upgrades as Seen in Workday's Approach
If you're involved with enterprise software, you need to pay attention to what Workday is doing--even if you're not interested in HR or financial systems. Because Workday is one of the best examples of how enterprise applications can and should be delivered in the cloud.
This was one point I took away from Workday's annual user conference in San Francisco and from a day-long series of briefings for industry
analysts earlier this month.
The differences between Workday's practices and the approach of traditional enterprise software vendors are striking. There are several points of contrast, but in this post I'd like to focus on how Workday delivers software upgrades and some new twists in how it does this.
Traditional Approach to Software Upgrades
In the traditional enterprise software model, vendors develop new versions and provide them to their customers that are under maintenance agreements. The customer takes delivery of the new version, installs it on a test copy of the system, migrates data from the existing production version, retrofits any customizations or interfaces with other systems, revises its user procedures, performs system testing, and migrates all of its users to the new version. In the process, if there is any time left in the schedule, the customer also may investigate how it would like to use any new functionality offered in the new version.
The bottom line is that in the traditional model, software upgrades are both a technical exercise as well as a business exercise. The technical challenges of data migration, retrofitting of customizations, and reworking system interfaces can be significant and can encourage customers to stay on older versions of a vendor's system for many years. When such a customer finally wants to get current on the latest version, the upgrade process can
rival the time and expense of the original implementation. The technical aspect can be so much work that companies often retain outside service
providers to manage or assist in the effort. The business aspects--accommodating changes to business processes or embracing new functionality--are often jettisoned for the sake of simply getting the new version installed from a technical perspective. As a result, customers often do not realize the benefits of the new functionality that the vendor offers.
The Workday Approach
Workday's approach to upgrades, from the beginning, is simple: it takes responsibility for all technical aspects of the software upgrade, allowing the customer to focus solely on the business aspects. There are at least three reasons that Workday can do this:
- Workday's object model allows most customizations to be brought forward to new versions of the system with little or no retrofitting.
- Likewise, Workday's Integration Cloud, based on technology it obtained through its acquisition of Cape Clear, allow most custom integrations to continue to work with new versions of its system.
- Since Workday operates the system on behalf of the customer, Workday takes all responsibility for migrating the customer's data to the new version.
The impact of this last point should not be underestimated. Last year, Workday's CTO, Stan Swete, wrote
about how important it is for the SaaS provider to take full responsibility for migrating customer data to new versions:
[The] Software-as-a-Service (SaaS) model improves service delivery quality by letting the provider own the end-to-end process of development, conversion, and deployment. In the on-premise software world the vendor controls development (and associated QA), but there is a hand off for conversion and deployment. At Workday, the update process is not done until every customer is on the new version. The same team that project manages our development also project manages conversion and deployment.
When it comes to version upgrades, not all SaaS providers are
created equal. Some are little more than single tenant hosting providers. Others are multi-tenant SaaS providers, but they deploy new versions as separate instances of the
system and allow customers to stay on older versions for long periods
of time. This makes version upgrades considerably more difficult if and
when customers do decide to upgrade. Workday, as discussed, is at the
other end of the spectrum, keeping all customers current on the latest
version. Salesforce.com, NetSuite, and Plex
, are similar to Workday in
this regard, though they may differ in the details of how they do it.
Further Improvements in Workday's Approach
This year, Workday has further refined its approach to version upgrades in three ways:
- Single production instance for all versions. Previously, Workday would deploy a new version of Workday as a system instance that was separate from the previous version, and Workday would migrate customers in waves from the old version to the new version over a three week period. Workday's new approach is for the current version and the new version to exist simultaneously on the same system instance. Workday will now move customers to the new version by means of a set of "switches" that dictate which features of the system the customer will see. This new approach is possible because of Workday's object orientation discussed earlier.
- Continuous development and deployment of new functionality. Instead of holding all functionality enhancements for its periodic version upgrade, Workday is now introducing smaller changes on a weekly basis. This is especially important for small but high-priority changes or for tax and regulatory updates. Contrast this to the traditional vendors, who required many months or years between the time customers request changes and the time they actually see them in updated versions.
- Continuous conversion of customer data. As Workday develops new features that require changes to its data model, the single production instance now allows Workday to convert customer data in the background in advance of actually migrating customers to the new version. This reduces the amount of downtime required during the when the customer is moved to the new version.
- Preview instance. Now that there is a single production instance and continuous conversion of customer data, Workday is now able to offer customers a preview instance of the new version, giving customers a longer time-frame in which to evaluate and plan for the new version. Under the traditional model, customers only get a hands-on look at the new version when they take delivery of the upgrade, install it, and convert their data to it in a prototype environment. Workday's approach gives customers much more time and encourages them to make use of the new functionality.
Swete summarized these changes in a blog post
during the user conference:
Probably the best example of embracing continuous change is happening on
the service delivery side of our business. Workday has moved to
continuous deployment of new features to a single code line. This move,
along with the continuous background conversion of data for new
features, enables us to complete updates for our production customers
with less scheduled downtime. Application of changes to a single code
line reduces the expense of maintaining multiple code lines around each
update we do. Moving to continuous deployment also gives us the
flexibility to continue to respond to our customers’ requirements when
it comes to the number of updates we do each year.
As Swete indicates, the single production instance, continual development approach, and continuous conversion of customer data allow Workday to scale back from three new major versions a year to just two. The conference audience applauded when co-CEO Aneel Bhusri made this announcement, perhaps indicating that many companies have difficulty absorbing three major upgrades a year. At first blush, the reduction in the number of new versions a year would imply that Workday is slowing down the number of new features per year. But in an sidebar conversations with Workday executives the next day, it became clear that these most recent improvements actually mean that Workday will be introducing more
new features each year. The difference is that the smaller changes will be trickled-in on a weekly basis, while major new features will be held for the twice-yearly updates. As indicated earlier, this approach also allows Workday to accommodate regulatory or tax-law changes on short notice, which have become more common in recent years.
Workday's core strategy of reducing or even eliminating the technical burden of version upgrades is a best practice for SaaS providers, allowing customers to focus exclusively on business improvement and maximizing the value of their system investment. More SaaS providers should follow this example.
Over at Diginomica, Phil Wainwright has two good posts covering some of these same points:
Note: Workday covered my travel expenses for attending its user conference.
The Simplicity and Agility of Zero-Upgrades in Cloud ERP
Labels: cloud, hrms, SaaS, Workday
(c) 2002-2014, Frank Scavo.
Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.
About the Enterprise System Spectator.
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