Monday, April 21, 2014
What Fiori Means for SAP and Its Customers
Over the past several months, analysts and bloggers have been debating about whether SAP should offer its new user apps, Fiori, at no charge to customers under its maintenance program.
The debate can be difficult to follow for those not familiar with Fiori or SAP's technology stack. This post summarizes the debate, including factors not often recognized, along with my view on what SAP should do in its own best interest and what it all means for SAP customers.
What is Fiori?
SAP Fiori is a set of apps, newly written by SAP, that address the most broadly and frequently-used SAP functions, such as workflow approvals, information lookups, and self-service tasks. They provide simple and easy-to-use access seamlessly across desktops, tablets, and smartphones.
To get a quick idea what Fiori is all about, watch this short video with examples of SAP Fiori apps for managers
, or click on the image on the right.
Fiori is more than just a new user interface. It is a set of cross-device applications that allow users to start a process on their desktop, for example, and continue it on a tablet or smartphone. SAP is developing its Fiori apps based on its latest user interface framework, SAPUI5.
SAP lists three types of Fiori apps
- Transactional apps, which allow users to perform SAP transactions on mobile devices, as well as desktops. For example, there is a transactional app for creating a leave of absence request and another for approving a purchase order.
- Fact sheets, which display information about key business objects in SAP. For example, there is a fact sheet app for viewing a Central Purchase Contract, which allows a user to also drill down into related entities, such as vendor contacts, items under contract, and terms.
- Analytical apps, which allow users to display key performance measures and other aggregate information about the business.
A complete list of all the current Fiori apps
is available on SAP's website. At the time of this writing, SAP has released two waves of Fiori apps, of 25 apps each, with additional waves underway.
It is important to note that Fiori will never be a comprehensive UI replacement for SAP. In a back channel
conversation, I learned that most SAP ERP processes cannot be
done with Fiori, now or in the future. Those SAP processes are
simply too complex in their design and do not lend themselves to
deployment on a smart phone or tablet. Everyone knows, for example, that
you can do a lot more with the desktop version of Netflix than you can
on the Netflix iPhone or iPad app. Likewise, it is difficult to take a
complex SAP process and dumb it down to the point where you can deploy
it on a smartphone.
Complicating things, Fiori is not the only development effort involving SAP's user interface. SAP has also released a product dubbed Screen Personas,
which allows users to customize standard SAP screens to their
liking. For example, using Personas, a user could remove fields of no
interest or change the placement of fields on the screen.
SAP Customers Are Pushing Back on Pricing for Fiori
The best source of information on the debate about Fiori pricing is a diginomica post written by John Appleby
, an SAP expert who works for an SAP partner, Bluefin Solutions. Some of what follows borrows from Appleby's post and its long comment thread.
The list price for Fiori is currently a one-time fee of $150 per user and it gives that user access to all current and future Fiori apps. That might sound like a good deal, until you consider several factors. First, as Appleby points out, that $150 per user fee can add up quickly. If a user only needs access to one or two Fiori apps (e.g. approvals), the $150 fee gets expensive in companies with thousands of such users. In the comments, Jarret Pazahanick points to one company that has 80,000 employees and would have had to pay $12M simply to let all of its employees view their pay stubs using Fiori. Nevertheless, Appleby points out that there are scenarios where Fiori is easily cost-justified such as when enabling the salesforce with a number of Fiori apps: the $150 fee per user is a no-brainer in such cases.
But, more basically: what are customers paying maintenance for? SAP's current maintenance pricing is 22% of the customer's license fee, which means that, in fewer than five years, the customer has essentially purchased its entire SAP product portfolio a second time. Customers look at Fiori as an extension of the SAP products they have already licensed. Why should they have to pay more money to SAP in order to license Fiori?
As Chris Kanaracus
found when he interviewed those in leadership positions from three major SAP user groups worldwide, SAP customers are up-in-arms over SAP's policy of charging them for Fiori. It's reminiscent of the customer revolt
against SAP's forced march of customers to higher levels maintenance fees a few years ago. It is also reminiscent of SAP's struggles
with how to charge for its mobility platform and the SAP Netweaver Gateway, back in 2011.
Strangely, SAP's policy toward existing customers appears to be harder than it is toward new customers. Back channel conversations indicate that when SAP is selling net new deals, it nearly always demonstrates Fiori--because it shows really well. When it comes to putting together a proposal, then, SAP typically bundles Fiori as part of the total deal.
Yet, when an existing customer wants to buy Fiori, that customer needs to pony up $150 per user. The exception, of course, is when the customer has something else it wants to buy from SAP. Then SAP can wink and nod and bundle Fiori into the deal with the other SAP products the customer is buying. In other words, unless you are willing to buy something more from SAP, you have to pay for Fiori.
Other Vendors Provide New Functionality at No Charge
Some on Twitter have argued that SAP's policy is no different than that of other vendors. I disagree. Some other vendors have a much more liberal approach to delivering new functionality to existing customers under maintenance at no additional charge. For example, Workday recently rolled out a new user interface
, and previous revisions added extensive mobile support. Workday didn't charge its existing customers extra for this new functionality. Salesforce did something similar with its Salesforce1 platform, a major new release of its Force.com platform--at no additional charge.
Furthermore, it is not just the pure cloud vendors who provide new functionality at no additional charge. For example, Microsoft Dynamics recently announced major new CRM functionality at no additional charge
to existing enterprise users (the top tier of users). This was not a user interface upgrade but totally new functionality from acquired products: a complete marketing automation system, from its acquisition of Marketing Pilot, a social media listening system, from its acquisition of Netbreeze, and a new service desk system, from its acquisition of Parature.
Finally, releasing new functionality at no charge already has precedent within SAP. For example, in 2012, SAP released a new product known as HR Renewal, which encompasses learning, employee and manager self-service, personnel administration, organizational management, and more. All of this was provided at no additional charge to customers under maintenance. See this blog post from Jarret Pazahanick
for details (including the comments). I see no logic in how SAP can charge customers for Fiori, while releasing HR Renewal to existing customers at no charge.
But...Paying for Fiori is the Least of the Problem
The argument to this point is simple: customers are paying maintenance on existing SAP products, and Fiori is an enhancement to those products. Therefore, SAP should make it freely available to customers. This was and is my position. But, as it turns out, for most SAP customers who want Fiori, that $150 flat fee per user is the least of their problems. There are two other obstacles to Fiori:
- Fiori needs current releases of SAP products. Some years ago, SAP introduced the concept of enhancement packs, whereby customers could selectively apply upgrades to individual SAP products instead of installing a completely new release. This approach is good: it lets customers can more easily install only the updates they really need or want. But it also means that many customers will not be completely up-to-date on all enhancement packs. Therefore, when a customer wants to install a Fiori app, the customer may first need to upgrade to a more current version of the product and install certain enhancement packs. Depending on how back-leveled the customer is, the upgrade can be a major effort. The prerequisites for each Fiori app are listed on SAP's website.
- Fiori needs HANA. Sometimes lost in the debate is the fact that, to use Fiori, customers need to be running HANA underneath their SAP products. SAP explicitly says that HANA is a hard requirement for Fiori fact sheet apps and Fiori analytic apps. For transactional apps, SAP says, somewhat cryptically, "They run best on an SAP HANA database, but can also be ported to other databases with acceptable performance." A back channel conversation with someone in a position to know, however, says that without HANA, Fiori transactional app performance is slow on mobile devices and, as a result, may not deliver a positive user experience.
Neither of these are small issues. One source with direct Fiori experience reports that the biggest problem is the effort required to upgrade SAP products and the expertise required to install Fiori. What percentage of SAP customers have all the upgrades and enhancement packs in place for Fiori? It is impossible to determine, but it cannot be a large percentage.
Another source points out that slow adoption of HANA is a major impediment to Fiori. Out of 85,000 SAP Business Suite customers, only about 1,000 have bought Business Suite on HANA, and SAP doesn't say how many of them are live on HANA. Even if all of them are live on HANA, that is only about 1% of Business Suite customers. Charging for Fiori is "a small barrier" in comparison to the need to implement HANA.
SAP Could Make More Money By Giving Away Fiori
So, if the price tag for Fiori is the least of customers problems, why not turn it around and ask, what would it mean if SAP were to offer Fiori to existing customers at no charge?
- It would give a positive reason for SAP customers to upgrade to HANA. The real opportunity, in my opinion, is not some small amount of revenue SAP might receive from sales of Fiori to existing customers. It is in moving those customers to HANA.
SAP has staked its entire product strategy on HANA. Yet, as we have just shown, fewer than 1% of Business Suite customers have purchased HANA. If SAP wants to be successful, it must do everything it can to move customers to HANA. Yet, the business case for Business Suite on HANA to date has mostly been, in effect, "you can do things faster." Yes, there are a few dramatic examples, such as large companies being able to do a complete MRP regeneration in seconds instead of hours. But for most customers, "faster" is not enough to justify the time and expense of a HANA migration.
Fiori changes that. SAP can now say, if you go to HANA, you can change the user experience of SAP with these Fiori apps. Fiori, in effect, could be the trojan horse for HANA.
- It would sell more SAP user licenses. The only individuals who can use Fiori apps within a customer's organization are those who have a user license for the underlying SAP product. Fiori, therefore, may tip the scales in favor of getting more users licensed for SAP products.
As Appleby wrote:
I don’t have any facts to support this, but it makes sense from a strategy perspective. Fiori Launchpad hosts multiple Fiori apps for a given person. If I’m a sales rep, then I could have approvals, accounts, and a bunch of other things. Each of these apps requires some user license of some kind....
If users are using Fiori, they will want new capabilities too, and those new capabilities have a sell-on, but only if people are using Fiori. Get customers on it, and get the account team in to sell-on.
Compared to the strategic value and revenue opportunities for moving customers onto HANA and selling additional user licenses, charging existing customers for Fiori is chump change.
SAP Has It Exactly Backwards
In summary, charging for Fiori is a big mistake for two reasons. First, it annoys customers, who need to see more value in SAP's maintenance program. True, it is unlikely that any single customer is going to migrate away from SAP simply because SAP is charging for Fiori. But SAP's stated policy reinforces the perception that there is not much value in SAP's maintenance program. SAP's most recently quarterly results
show that SAP's core business--sales of its Business Suite--are shrinking. SAP, therefore, should be doing everything it can to keep the customers it already has.
Second, SAP in practice already gives away Fiori when it is part of a larger deal. As discussed earlier, nearly every Fiori deal to existing customers is by definition going to be a larger deal, either because the customer will need to license and implement HANA or because the customer will want to move additional users onto SAP in order for them to use Fiori.
In a subsequent email discussion, Appleby asks:
How can SAP positively motivate customers to move to SAP's innovation stack (HANA, Fiori, Hana Enterprise Cloud, etc.). This is where the good stuff will happen. Why isn't SAP bundling these three things together including the services to get customers there? Why doesn’t SAP take some of the risk up front to keep its relevance?
Taking it a step further, if Fiori is part of the key to moving customers onto SAP's latest technology stack, perhaps SAP should by paying
customers to take Fiori, rather than charging them for it. The payment could be in the form of a moderate credit toward new user licenses or HANA licenses. Or, as Appleby proposes, a discounted bundle of products and implementation services.
Such a program would generate much good will among SAP's installed base and would further SAP's larger product strategy.
SAP Customers Should Investigate Fiori Possibilities
What does this mean for SAP customers? First, get up to speed on the Fiori apps currently available and show them to your end users. Long time SAP users are often jaded in their expectations, which means the bar is set pretty low. They will most likely be pleasantly surprised by the possibilities of Fiori. Screen Personas are another way to impress long-time SAP users with new possibilities. If they become supportive of Fiori and Screen Personas, they may give you the business case to make an investment.
Second, spend some time to determine what additional investments you will need to implement Fiori. If you are like most SAP shops, you will need to upgrade some SAP products. You will also probably need to migrate at least some portions of your Business Suite to HANA. Or, at least you will want the option to do so if Fiori performance turns out to be unacceptable without HANA. You may also need some additional SAP user licenses.
Finally, talk to your SAP account representative about putting together a bundled deal for Fiori, Screen Personas, new user licenses, and the other technologies you will need, including HANA. Despite SAP's stated policy to charge for the new apps, it is likely that SAP will be quite willing to cut an attractive deal when there is a larger amount of money at stake.
Dennis Howlett had a post on diginomica
last week where he delves into some of these same points.
Risks and Opportunities with SAP's Platform Economics
SAP innovating with cloud, mobile and in-memory computing
Mad as Hell: backlash brewing against SAP maintenance fee hike
Labels: Fiori, HANA, mobile, SAP
Thursday, March 13, 2014
Microsoft Broadens Dynamics CRM, Moves Up-Market
With three strategic acquisitions, Microsoft Dynamics CRM can now be considered a complete offering for sales, marketing and customer service. In addition, Microsoft’s CRM offering is showing its ability to move up-market into large enterprises.
These were two points that I took away from the Microsoft Dynamics Convergence conference last week in Atlanta, GA.
By way of history, Microsoft introduced its Dynamics CRM product in 2003, its first Dynamics product written from scratch, though it did not experience significant market uptake until several years later. Until the past year or so, Dynamics CRM was largely a salesforce automation system, with a bit of case management on the service side. As such, it was not well positioned against the CRM offerings of SAP and Oracle, which offered complete solutions. Though Salesforce.com also started as a sales automation system, over the past few years it has also built out its capabilities for marketing and customer service.
I saw the deficiencies of Dynamics CRM up close in 2010, when my consulting firm, Strativa,
facilitated a CRM selection for a midsize high tech manufacturer. The company had actually implemented Dynamics CRM but decided to abandon it for lack of customer service functionality. In another CRM selection deal, in 2012, we didn’t even short list Dynamics CRM because of its lack of support for marketing and customer service.
Filling out the Footprint
But now, as the result of three strategic acquisitions, the picture is completely different:
- Marketing Pilot: Acquired in 2012, Marketing Pilot is the basis for the newly announced Microsoft Dynamics Marketing. Product capabilities include campaign management, content management, approval workflow, media planning, email marketing management, and integration with sales force automation. The product also supports multichannel marketing, with social media management (e.g. automated posting to Facebook and Twitter) and digital advertising (e.g. integration with Google Adwords). With the latest version of Dynamics CRM, the product is completely integrated, with a consistent user-interface.
- NetBreeze: This acquisition by Microsoft in 2013 allows organizations to monitor social media conversations of interest to the organization’s brands. It also provides “sentiment analysis” on social media conversations. In other words, are people speaking positively or negatively about the brand?
Microsoft executives claim that Netbreeze is the only provider that does such sentiment analysis in native languages (five, at present). This, they say, is in contrast to competing offerings, which have to translate tweets (for example) into English, and perform the sentiment analysis on the translation. Anyone who has attempted to use Google Translate or Bing's translation engine to communicate in a foreign language knows the dangers of relying on machine translation. Netbreeze now forms the heart of the newly announced Microsoft Social Listening.
- Parature: This most-recent acquisition, in 2014, brought a complete customer service solution into the Dynamics CRM product set, addressing a deficiency I wrote about last year. Parature, built exclusively in the cloud, supports customer self-service, knowledge management, issue management, and service workflow. The product is built with multi-channel in mind, with support for call center, web self-service, text chat, and social media channels.
Parature is the basis for Microsoft’s newly announced Unified Service Desk. In a subsequent interview with Microsoft’s Bill Patterson, who has now been named Senior Director over the Parature operation, he indicated that Parature really doesn’t need much help to build out more functionality or even to integrate it with Dynamics CRM. The focus, he said, will be more on execution, raising its profile in the market, scaling its business operations globally, and training partners to sell and support it. Interestingly, Microsoft currently has no plans to migrate Parature from Amazon Web Services to its own Azure cloud. The product will interoperate with the rest of Dynamics CRM, no matter if the customer is running on premises or with Microsoft or partner hosting.
These capabilities fill out Dynamics CRM into a complete offering, although there are still partner products needed in some cases, for example, for field service, which Microsoft views more as an ERP function than a CRM function. Partner solutions are also needed for configuration, pricing, and quoting (CPQ).
Competing on Value
Although Dynamics CRM can now position itself well in terms of capabilities, there is also an economic angle to its market strategy. Microsoft is simplifying licensing for Dynamics CRM and releasing much of the new capabilities at no additional charge. Specifically, for Microsoft-hosted deployments, which comprise the majority of new deals for Dynamics CRM:
- CRM Online Professional, priced at $65 per user per month for customers with 10 or more Professional users, will give users access to Social Listening at no additional charge. For on-premises customers (the minority of new sales), there will be a $20 per user per month charge.
- CRM Online Enterprise, priced at $200 per user per month, essentially delivers the whole enchilada: the core sales functionality, plus Dynamics Marketing, Social Listening, plus the new Unified Service Desk.
It will take one or two actual CRM deals to see how the new pricing and licensing works in practice, but as it stands it appears to be quite competitive. Buyers may find the pricing attractive against a similar bundle from Salesforce.com, where costs can rise quickly as Sales Cloud, Marketing Cloud, and Service Cloud are priced separately. Throw in a few AppExchange solutions and the total price can be quite steep. Of course, large customers can and do negotiate significant discounts. Still, Microsoft’s offer of a complete CRM solution at a reasonable price should work to limit the premium pricing ambitions of Salesforce as well as Oracle and SAP. And, that’s good for buyers.
A more complete run down on the CRM pricing and licensing can be found in a Microsoft blog post by Paco Contreras.
The expanded CRM footprint will certainly help Microsoft compete for CRM deals in larger enterprises. However, Dynamics CRM was already moving up-market even before these most recent announcements.
During Convergence, I had a chance to sit down with Patrick Berard, Senior VP Southern Europe at Rexel France
. Though not a household name in the US, Rexel is a $18 billion distributor of electrical supplies, operating in 30 countries worldwide. Starting three years ago with its operations in France, Rexel implemented Dynamics CRM to provide a 360 degree view of its customers. It may not sound exciting except that Rexel, having grown through many acquisitions in various markets, has dozens of ERP and other transactional systems that contain customer information, in multiple languages. Bringing this information together for the first time in a single view was no small feat.
Rexel’s approach was not to disturb these transactional systems but to pull information from them into Dynamics CRM and make it available for real time display on desktops and mobile devices and to use it for sales force automation. The company also leverages Microsoft Lync and Yammer to create communities of interest around this customer information.
As good a case study as this is, Rexel may not be finished implementing Microsoft Dynamics. With Microsoft building out its CRM footprint, Berard plans to look at Dynamics Marketing to see whether it would provide a way to better manage technical specifications and other content. Finally, some of the ERP systems in Rexel operating units are “sub-standard” and candidates for replacement. Microsoft Dynamics AX may be a good fit for these divisions, which may lead to an even broader commitment to Microsoft throughout Rexel.
For a system that was only born 10 years ago, Microsoft has made great progress in building out a complete CRM offering. It positions well against SAP CRM as a smaller-footprint alternative. Against Oracle, Dynamics CRM has a simpler story to tell. There’s no doubt that Oracle has deep CRM capabilities, but they come in a variety of acquired products, such as Siebel, Rightnow, and Eloqua, as well as Oracle-developed products, such as Oracle Fusion CRM.
Against all competitors, including the market leader, Salesforce.com, Microsoft is signaling that it is willing to challenge their premium pricing.
With Microsoft now offering a complete CRM solution and demonstrating that it can scale up-market, there are few situations now where Dynamics CRM does not deserve consideration.
Microsoft Dynamics Move Up-Market: What's Missing?
Four Needs Pushing Microsoft Dynamics into Large Enterprises
Computer Economics: Microsoft Dynamics Stepping onto Enterprise Turf
Update on Microsoft Dynamics Products and Plans
Labels: CRM, Microsoft, Salesforce.com
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
(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.
Send tips, rumors, gossip, and feedback to Frank Scavo at
I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.
Selecting a new enterprise system can be a difficult decision.
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For information on how we can help your organization make and carry out these decisions, write to me.
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