In the End, Infor Gets Lawson. What it means for customers of the new Infor

Exactly 6 weeks ago today (March 15^th) I posted an entry highlighting Infor’s bid to acquire Lawson. At the time and for several weeks afterwards, there was much speculation about the price, whether or not there would be additional bidders, as well as the probability of Lawson staying independent. Shortly after this announcement, Harry Debes (CEO of Lawson) addressed a large flock of Lawson customers at CUE 2011 (CUE stands for customer user event) and acknowledged all the speculation as the “elephant in the room.” He said the company was considering all possible options, including staying independent.

I don’t think a lot of people put money on independence as the future outcome, but there did seem to be a lot that counted on other bids popping up… maybe not a real bidding war, but at least a second bid that might drive the proposed price higher. Why do I think this? Quite simply, the stock price went up. At the close on the Friday just before the weekend when the initial offer for $11.25 per share was made, the stock price had been $11.55. Instead of going down as a result of the bid, it continued to go up. Someone was betting they could turn a profit on prices between $11.55 and over $12 a share. I don’t profess to be a trading whiz, but I do know $11.25 is less than $12. And $11.25 will be what they get when the deal is sealed. There won’t be an opportunity to watch the stock go back up because it will no longer be on the market. Infor, at least for now, is a privately owned company. Indeed the offer is really being executed by GGC Software Holdings, Inc., an affiliate of Golden Gate Capital, which is one of Infor’s investors.

So, now that the deal is really going down, what does this mean to the customers and employees of both companies?

There is always a certain level of uncertainty concerning the workforce of any acquired company. Those in Lawson’s development organization should take heart in knowing that Infor already announced its intention to hire 400 additional software developers. So my guess would be that good developers are safe. Poor performers in any department should probably be looking over their shoulders as an acquisition is the perfect opportunity to clean house. Let’s just hope Infor is able to distinguish the good employees from the underperformers. No offense intended, but that distinction is often much harder to make than it would appear to be. And in any acquisition, there will be some level of redundancy, particularly in the back office.

What about the impact on customers? My initial take is that the customers from both camps will benefit directly from this move. There will be more innovation and I hope this provides some impetus for some rationalization and cross fertilization of product lines because Infor’s reputation and brand has suffered as a result of having too many.

 In an open letter to Infor and Lawson customers, partners and employees, Charles Phillips, newly appointed CEO of Infor, highlighted several benefits to the deal, which also imply some plans. In fact he even starts out by saying, “Lawson customers can rest assured:  Product investment, innovation and customer success will be our key areas of focus” and references Infor’s previously announced plans for accelerated innovation, including those 400 developers he intends to add.

In this letter he highlights the following points:

4  Complete ERP suite: As the boundaries of ERP continue to be stretched, the top ERP contenders continue to expand their footprints.  Mr Phillips references Lawson’s enterprise financials and human resources products as standalone products, across multiple industries and the intent to integrate them with Infor’s manufacturing, supply chain, workforce, and asset management products. I “get” the reference to human resources as Lawson has developed this area further than Infor has, but Infor has financial management products that are available as stand-alone products as well, so the implication I see might be a rationalization of products, with Lawson’s S3 forming the basis over the SunSystems or Masterpiece product lines?  But just cross-selling independent extensions to ERP without truly integrating them doesn’t get you a “complete suite.”  So there is some real work to be done here.

4  Complementary products: Mr Phillips states, “The product lines are complementary, not overlapping.”  Complementary yes, but I diagree...they are also overlapping. Consider the financial product I mention above and Lawson M3 competes directly with several of the Infor ERP solutions for manufacturing. But I will say that Lawson has stuck to its knitting in terms of declared verticals. This means there is less overlap, but there is still a lot. However, the example Mr Phillips uses: ”… Lawson’s expertise in the healthcare industry will be enhanced by Infor’s Enterprise Asset Management which will be targeted for large hospitals and Time & Attendance product, complementing Lawson’s Nurse Scheduling application.  This is truly a scenario where 1+1=3.” But don’t forget Lawson also has an EAM solution.

4  Standards-based integration:  Infor’s underlying architectural strategy has undergone some changes over the past year, and appears to still be transforming itself somewhat, but the path seems to be towards openness and a commitment to stay out of the middleware market. This will pave the way for integrating the two new product lines with other Infor product lines.

4  Re-inventing the applications experience:  Both Infor Workspace and Lawson Mashup Designer have similar goals here. It will be interesting to see if and how these two separate products are rationalized.

The remaining points refer to expertise in key industries (of which neither company lacks in both complementary and overlapping industries), innovation and investment (as evidenced by prior announcements and growth plans for R&D) and scale. In terms of scale, Mr Phillips makes reference to 75,000 customers and concludes with, “Having more customers allows us to invest more, identify more requirements and develop a large partner ecosystem.” I agree with the premise, but Infor already claimed to have 70,000 customers, so I am a little puzzled by such a small (7%) increment.

I do believe Lawson customers in particular will benefit from the increased focus on innovation. While Lawson has indeed brought innovation to the table, even as revenues were down during the recession, its profitability stayed strong, which was commendable for a public company with an obligation to its shareholders. But it also limited its investment.

My conclusion… while I hate to see the number of distinct and competing ERP vendors shrink once again, I believe that if the combined companies are not afraid to make some bold steps to consolidate strategies, perhaps rationalizing product sets, the customers will be the clear winners.

The Case for ERP Consolidation

Today I was reading Bruce Richardson’s View From the Inside. Bruce was one of the longest tenured analysts with AMR Research (and its Chief Research Officer) before AMR was acquired by Gartner at the end of 2009/beginning of 2010. Bruce and I really moved in opposite directions. While I spent 30 years working for software companies before joining the analyst ranks, at the time of the AMR acquisition by Gartner, Bruce moved to Infor and is now on the software side. So we’ve both seen the view from both sides now.

The subject of Bruce’s “View” today was “A Tour of the Distribution ERP Market with Infor’s Andy Berry.” It talked about roadmaps and growth of sales to this market. But what specifically caught my eye was the announcement that Infor would be consolidating its multiple distribution products down to two and eventually to one offering. This is definitely a new approach for Infor. Throughout its history of over 35 acquisitions, Infor has avoided the consolidation or rationalization of products, sometimes in sharp contrast to companies it acquired.

The one merger in particular that comes to mind is Infor’s acquisition of SSA Global (August 2006), which itself had been a product of serial acquisitions and had defined a path of rationalization. Having just left SSA myself about 6 months prior to the acquisition, I was intimately familiar with its consolidation strategy. With somewhere around 10 different product lines at the time, SSA’s plan had been to consolidate down to two ERP solutions (LX and LN) and one financial management product, which ultimately would provide the basis of the financial modules in the two ERP solutions. But the company wasn’t too far down the path of execution when the merger happened, and the consolidation message, quite frankly, had not been very well received by its customer base. So abandoning that strategy seemed like a no-brainer at the time.

Add to this a couple other similar situations in the ERP market. Oracle had acquired Peoplesoft and JD Edwards, and also had its own business suite. But its announcement of its Fusion product as a single consolidated product line also met with resistance from its installed base. This was also about the time of Microsoft’s Project Green, which was meant to rationalize the four acquired ERP products (AX, NAV, GP, SL) down to one. Same reaction. Boos from the crowd.

So the case seemed to be pretty solid against rationalization unless you wanted to seriously tick off your customers. And maintenance revenue streams are way too important to an ERP solution provider to risk. So why was one ERP that also grew by acquisition – Epicor - successful in doing exactly the opposite?

On October 21, 2008, Epicor Software Corporation announced Epicor 9, the culmination of an eight year effort to converge its nine different product lines. And along the way, it didn’t seem to alienate its customer base. In fact over the years I have spoken with numerous Epicor customers that perceived a reimplementation as an opportunity, rather than a hardship. What was the difference?

Of course there are a myriad of differences, but I think the one that really mattered was that Epicor made the new destination different enough to really matter. Many installed base customers faced with a reimplementation perceive it as a “rip and replace” only to spend lots of time and effort to get back to exactly where they started.  Epicor took a staged approach to delivering on its goal of convergence and did not lose sight of its promise to protect investments along the way. But it also knew that it had to bite the bullet and do a complete re-write of its underlying base architecture. So first it built its Internet Component Environment (ICE) 2.0, a second-generation Service-Oriented Architecture (SOA) and Web 2.0 technologies. Then over the course of several years it converged from nine to four and then to one. Customers weren’t re-implementing on the promise of something new and different in the future. It was already there and they knew if they just tried to re-create their existing environment they would be cementing in place any restrictions they currently faced.

Oracle Fusion and Microsoft Green promised new architectures but they weren’t “there” yet. SSA had no new architecture to promise.

Infor always had the vision, but for several years got side-tracked through attempts to architect its own middleware. Infor has now decided to stick to what it does best – enterprise applications. By 2013 the two “destination” distribution products will share the same functional code base. Infor is already working on building identical user interfaces based on its new Infor Workspace and it is also working on integration with Infor ION, which it describes as “a new generation of business middleware that is lighter weight, less technically demanding to implement, and built on open standards.” I believe Infor ION will be a key factor if Infor is now successful in implementing a rationalization strategy here on the distribution side … and perhaps among its different ERP solutions for manufacturing? For its multiple financial management solutions? There are lots of opportunities for consolidation here and lots of work to be done. But then remember the 400 new developers Infor intends to hire?

And also don’t forget the two major acquisition announcements that emerged recently – that Infor intends to acquire Lawson and that APAX Partners intends to merge Epicor with Activant (ERP  for distribution). Fortunately Lawson Mashup Designer and Infor Workspace have a lot in common, at least conceptually. This could help. And time will tell if Epicor 9 becomes Epicor 10.

Twitter Spreads the Buzz as SAP's John Wookey departs

I’ve been watching the buzz that followed the announcement of John Wookey’s departure from SAP. Others have come and gone with hardly a mention but this departure is getting a bit more attention. Quite frankly I think it has more to do with Twitter than it does with SAP or John Wookey himself. That’s how I first learned of his resignation and I would guess most industry observers learned about it the same way. The immediacy of social media, Twitter especially, seems to spur everyone to either weigh in on the matter, or at least pass along the news. I was no exception, even though I am hardly as prolific in tweeting as many of my industry counterparts.

Ordinarily I don’t write much about organizational changes unless I believe they are somehow game changing. In fact I haven’t written a real analysis of a departure since Shai Agassi’s departure in March 2007. I did post a brief entry to my Aberdeen blog when Leo Apotheker left, but even that did not have the potential impact that Shai’s departure had. And John Wookey’s doesn’t even come close. But that is actually to John’s and SAP’s credit.

Yes John Wookey was a voice of the on-demand strategy at SAP, but let’s not forget that initially the “line of business” (which was really the large enterprise) on-demand strategy, which John was in charge of, had nothing to do with the current strategy which uses the Business ByDesign architecture as the overall on-demand platform. But today the revamped on-demand  strategy is firmly enough in place and execution has begun in earnest. I don’t believe John Wookey’s departure (or that of any SAP exec) has the potential of derailing the wheels that have been set in motion to carry through on that strategy.

Shai’s departure was much different. First of all, Shai had a far more influential position than John. Prior to his departure he oversaw the development of the SAP NetWeaver platform, SAP xApps packaged composite applications, mySAP SRM, SAP Business One, and the project that ultimately produced Business ByDesign (called the A1S mid-market initiative back then). And there was a massive reorganization when he left. I never really decided for sure whether his departure triggered the reorg or if the reorg triggered his departure.  In the end, it didn’t matter all that much.

At the time, as an Aberdeen analyst I wrote, “SAP appears to be far enough down the path of its enterprise SOA strategy to not be derailed by the departure of a single executive, even one as charismatic as Shai. The migration to its new platform and mySAP ERP [which became the basis for the Business Suite] has begun although SAP still has a long way to go to meet the publicly stated goal of 100,000 customers by 2010 [the Business Objects acquisition gave that initiative a big shot in the arm]. And SAP is in the early stages of delivering against the newly announced A1S mid-market strategy [which was made available on a limited basis as Business ByDesign in September of that year].”

Since Shai’s departure there have been a lot of ups and downs, as well as sideways motion on all these initiatives. But all of these goals have since been achieved, in one way or another. At this point I would just wish John well and will keep an eye out for where he lands. I am sure someone I follow on Twitter will tell me as soon as they know.

Lawson Mashup Designer – Getting M3 Customers Excited

What got customers excited earlier this week at CUE 2011 (Lawson’s annual Customer User Event)? The announcement that seemed to cause the biggest stir amongst the M3 customers was Lawson Mashup Designer. It is a new tool that helps Lawson customers build their own composite applications from multiple data sources, on-screen views and business intelligence reports – all without having to write software code. Only having one (quite full and busy) day at CUE this year, I didn’t have a chance to see all I wanted to see. So for now this will be some initial observations, with more to follow.

Lawson Mashup Designer is based on Lawson Smart Office (LSO), which was released back in March 2008. The original goal of LSO was along the same lines of thought as Mashup Designer is today. It was meant to be an intuitive, personalized user interface that allows users to directly access Lawson and Microsoft applications and update data pervasively and instantly across the applications. But while the emphasis of LSO initially was on those Microsoft productivity tools such as Microsoft Excel, Outlook, Word and PowerPoint, Mashup Designer builds upon LSO and extends beyond the realm of Microsoft and has customers fired up about the possibilities. In fact in talking with the COO and CFO of JR Watkins, a Lawson M3 customer, the pair commented that Mashups were “what lit our fire. We can definitely visualize how they could be used in our environment.”

Matthew Allbee, product management director for Lawson describes Lawson Mashup Designer as, “a new way for our customers to build better applications that they can use every day. By combining forms, process flows, data views, reports and business intelligence content into a single user-created application, we're now offering a new level of user customization. But most important, this does not require advanced programming skills. Instead, people who use Lawson every day can quickly start to create their own task- or process-specific applications."

But the keyword here might be “advanced” programming skills. While the intent is to be a tool for line of business versus IT, it is primarily for Lawson power users, system administrators and programmers, not your casual user or users that spend their entire time performing one specific function using M3.

LSO, being the foundation for Mashup Designer, is a prerequisite. Although the Mashup Designer is only available with M3, Lawson also plans to make it available for S3. In the meantime, for a limited time (until the end of August) LSO is available at no charge to any S3 customer with Lawson System Foundation (LSF). Those that take the deal do have to pay maintenance on LSO. For those S3 customers that have already purchased LSO – contact your customer service rep. Sounds like you could get some added incentives.

Details aside, what struck me first and foremost about Lawson Mashup Designer was the similarity in concept to Infor’s recently announced Infor Workspace. This is particularly relevant if in fact the proposed acquisition of Lawson by Infor goes through. You’ve got two companies thinking very much along the same lines in terms of a role based user experience that blurs the boundaries between disparate enterprise applications and web-based tools and applications. It would be great to see this kind of synergy accelerate the feature/function and technology innovation that the combined company could deliver to its customers.

My initial take on Epicor, Activant and Apax Partners

Yesterday Epicor announced it had agreed to be acquired by Apax Partners. While I am not personally familiar with Apax, its website tells me it is an independent global private equity advisory firm and holding company for the worldwide Apax partnership which is the lead investment adviser to the most recent Apax Funds. Apax Funds buy both majority and minority stakes in large companies that have strong, established market positions and the potential to expand. It has a strong heritage of technology investment.

At the same time, it was announced that Apax would also acquire Activant Solutions and merge the two companies. The combined entity will operate under the name of Epicor Software Corporation and become a privately held company. Of course it is too early to tell exactly how the merger will be executed, but Epicor itself has a history of acquisition and is the only ERP company that has grown through acquisition and successfully executed a product convergence/consolidation strategy. Epicor 9, released in December 2009, is built on Epicor Internet Component Environment (ICE) 2.0, a second-generation Service-Oriented Architecture (SOA) and Web 2.0 technologies and is generally recognized for its visionary architecture. But just as importantly, Epicor 9 merges capabilities of nine different products (hence the “9” in the name).  If Epicor remains true to past strategies, I would expect it to treat the Activant products similarly.

But then again….maybe not. Activant serves some very specific vertical industries including:

·         automotive aftermarket

·         farm-home

·         hardware and home centers

·         heavy duty truck and trailer

·         lawn, garden and nursery

·         lumber and building materials

·         painting and decorating

·         pharmacy retail

·         specialty retail

·         wholesale/distribution

While Epicor also serves retail and distribution sectors, Epicor also has products which complement ERP in support of a retail environment, and has never been that “niche” oriented.  It remains to be seen whether these industries are best served by separate product lines or whether Epicor will decide to continue the convergence and turn Epicor 9 into Epicor 10, or maybe even Epicor 11 or 12.

For now it is safe to assume the transaction will be good for Epicor and allow it to fuel more aggressive growth in the market. As for Activant, customers should take comfort in knowing that Epicor’s strategy has been very customer-centric with a motto of “Protect, Extend and Converge.” Whether convergence is in the future or not, I have a lot of confidence in the resultant management team preserving the part about protect and extend.

Infor Workspace: Work Without Leaving the Comfort of “Home”

On March 31, 2011 Infor announced Infor Workspace, calling it a new “consumer grade user interface designed to revolutionize the experience of doing business using enterprise applications.” Built on Microsoft SharePoint with significant investment, Infor Workspace delivers the next generation user experience by blending a common user interface across a mix of enterprise applications, web services  and business intelligence.  The role-based user experience is akin to setting up a home base of operations from which a business user can comfortably operate all day long, without ever leaving “home.” More than a portal, and more than just a common look and feel for Infor’s products, its power lies in further blurring the boundaries of applications and carrying context between applications of all types.

Boundaries are blurring

For the past several years the lines have been blurring between Enterprise Resource Planning (ERP) and other enterprise applications to the extent that it has become very difficult to determine where ERP ends and these other applications begin. This is particularly significant in any discussion of Infor, due to the company’s voracious appetite for acquisition. Over the years Infor has collected quite a variety of ERP solutions as well as complementary products that expand its footprint beyond the usual confines of traditional ERP. These acquisitions have put applications such as Supply Chain Management (SCM), Product Lifecycle Management (PLM), Customer Relationship Management (CRM), Enterprise Asset Management (EAM) and others into the Infor portfolio.

While this provided Infor with a more complete solution along with up-sell and cross-sell opportunities, there is never a silver bullet that turns different applications into a single cohesive solution that allows data and processes to flow smoothly between applications. That takes time and effort.  

Now these boundaries are blurring even further. Think about it. As a business professional you spend time in enterprise applications that run and support your business; you spend time using desktop tools, time on your own Intranet and you spend time out on the Internet. Lines between your business and personal life are also beginning to blur as the data and applications you use as a consumer also start to permeate your consciousness and re-set expectations, particularly those of younger folks fresh from college or business school.

More than a beauty contest

While Infor Workspace gives a common look and feel and a single sign on to potentially a vast array of disparate applications, it is more than just a portal. While how an application looks and feels is more important than ever, the real value of tools such as Infor Workspace are in providing visibility and ease of use and in fueling productivity. While top of the list of goals for ERP (and many other enterprise applications) is providing added visibility to the business, most companies today still lack a clear line of sight from quote to cash, and many individuals in those companies waste precious time searching for data on a regular basis. In this quest for information and knowledge, it is less important to know exactly where the information is coming from and more important to be able to easily carry information from one of these applications to another. This is what is meant by “context.”

Let’s take one example. One of your sales representatives might be using sales force automation tools available from your Customer Relationship Management (CRM) solution. This is where he has all his contacts, including an address. Now he is preparing to visit the prospect or customer and needs to plan his day around this visit, so he needs to know how long it will take to get there; he needs directions and he might also want to determine if he might be able to combine this call with a visit to another prospect or customer. No problem, he just opens a browser where he probably has Yahoo!Maps or Mapquest or Google Maps bookmarked. Then he grabs the address from CRM and copies and pastes it into the navigational application to get driving directions. This probably takes two or three steps because the address is contained in several different fields in the application that must all be strung together in the navigation application. And he better not forget to put that appointment in his calendar.

Fast forward now to Infor Workspace. Instead of multiple copy and paste steps, right from the customer record, he can click on a button to open up Google Maps and the destination location is automatically filled in from the CRM application.

In this case the sales rep doesn’t know or care if his directions are coming from an internal business application or an application he is accessing via the Internet. What’s important is that the customer and address was carried over automatically without having to find, copy and paste.

Or what about when that prospect is not within driving distance? He will need to determine the closest airport, then visit the company’s approved travel site and then search for other prospects and customers in close range. And he also needs to get approval (online?) from his manager for his travel.

It’s about context

This may seem like a trivial example to those who operate on the bleeding edge of technology, but there are plenty of business professionals out there, including some Infor customers, who have yet to apply these efficiency and productivity steps to their everyday work experience. If one individual can save a few key strokes every day, how much time and effort can a sales force of 100 individuals, or 1000, save in a day, a month or a year? Then think of other ways to save time and key strokes. What about currency or time zone conversion? How many other small tasks are you doing every day that quickly and quietly suck up minutes that, when added together, turn into hours. How many different applications do you typically have open at any one time of the day?

Exception management

In addition to the mapping, currency and time conversion tools that are available, Infor Workspace also provides automatic alert management tools that monitor the status of tasks in relation to promised completion or established service level agreements and alert users to exceptions. Event management tools that alert decision makers when conditions or activities occur or fail to occur have been around for more than a decade. Yet adoption rates and implementation of these types of tools are still very low. Building these tools into the application is certainly one way of encouraging more exception management.

But the real value of alerts is dependent on the level of intelligence available in the data. Infor has added certain charts and alerts as standard fare, but if the customer wants to build their own Business Intelligence they do need to buy those tools from Infor.

Another factor that impacts adoption of alerts and event management is the question of where and how these alerts are delivered. As the workforce becomes increasingly mobile, just delivering these on your standard desktop or laptop is not sufficient. An application running in a standard browser, which is a prerequisite for Infor Workspace, generally allows it to also run on an iPad. Today Infor Workspace is available on an iPad, but Infor admits it still needs to do some work on the touch and feel aspect of the interaction since some of the standard icons are quite small.

Underlying architecture

Infor has made use of its ION integration technology as well as Microsoft SharePoint and Microsoft Reporting Services. As noted above, applications will have to be browser-enabled in order to take advantage of Infor Workspace.

While most of Infor’s key go-forward products are browser-enabled, this will leave some of the legacy applications out of the picture. That is not necessarily a bad thing. While giving customers choice is good, encouraging them to stay on old, outdated technology is empowering them to remain underserved by technology and innovation. One of Infor’s goals is to get customers on the latest and greatest versions of their applications without having the customer incur a huge cost. For existing Infor customers Workspace is available through their annual maintenance agreement and Infor has tried to minimize the cost and impact of upgrading through means such as pre-built migration kits.

Recommendations and Key Takeaways

Infor Workspace provides a new paradigm and a new experience for Infor customers. It is more than a portal, it is a work space (hence the name), customizable by role and by individual, bringing together the power of internal and web-based applications. Existing Infor customers should explore the possibilities that unfold in implementing Infor Workspace along with applications they already own.

What about expanding beyond current products implemented? Because many of the solutions besides ERP have been acquired by Infor , current customers may not have perceived significant value in purchasing those complementary solutions from Infor. Now with a consistent look and feel, the benefits of a single sign on and “in context” business intelligence, they may want to think again.

For prospects of Infor currently considering a purchase, fully explore the application under consideration but also look carefully at how Infor Workspace can continue to expand the scope of the implementation, without adding extra cost.

NetSuite has arrived on the scene of ERP in Manufacturing

When I first “met” NetSuite about 5 years ago I have to admit I didn’t really consider it an ERP vendor. Of course that was back when I had a more narrow view of ERP and thought that if a vendor didn’t have MRP then it didn’t have ERP. I’ve since gotten over that and for several years now I have defined ERP as an integrated suite of modules that provide the transactional system of record for a business. Not every type of business needs MRP to form that basis. Of course most ERP solutions offer much more than that, so this is really my base line definition.

Back in 2006 I viewed CRM and eCommerce as NetSuite’s strengths even though it did provide a suite that extended beyond these modules.  But since then it has officially entered the realm of ERP in my book. Its Home page on its website (www.netsuite.com) labels it as “The #1 Cloud ERP / Financials Software Suite” and further describes its solution as “full-featured financials / accounting, CRM, inventory, and ecommerce software—all in a single system.” So in a way, it is still down-playing the ERP moniker in favour of “suite” and its historically strong suit: CRM and eCommerce, packaged with financials.

Also back in 2006, NetSuite did not target manufacturers. Without a true Bill of Material and MRP all it could address was some level of assembly or very light manufacturing. That has now changed, although not all as a result of organic development. Some of the manufacturing functionality NetSuite offers now comes from a partner, Rootstock. Rootstock Software is a certified NetSuite Solution Provider specializing in the manufacturing industry with heavy focus on the NetSuite Manufacturing Edition solution. While its website claims, “NetSuite Manufacturing Edition is the only cloud-based integrated business suite for manufacturing”, I think they are missing a few other players, with Plex Systems being at the top of that list. Plex has been offering a complete SaaS ERP solution for manufacturing for more than 10 years. Other more traditional ERP players (Epicor, Infor, QAD, SAP) also have cloud based offerings for manufacturers and even more have arrived on the scene with hosted cloud models.

But what I find very interesting is that some of NetSuite’s key customer successes were achieved without the use of Rootstock functionality.  I just listened in to a webcast sponsored by NetSuite and featuring 2 manufacturers using NetSuite and both purchases pre-date the partnership with Rootstock.

Schaeffer Oil prides itself on being “the oldest oil company you never heard of.” With 30,000 customers, it processes 90,000 orders a year using NetSuite and has achieved the following results:

·         Reduced its IT spend by $100,000 in the first 6 months

·         Reduced cycle time of order processing from 3 days to 1.5

·         Reduced backorders by 25%

·         Processed 25% more orders with 15% less staff

·         Improved communication and visibility

GLI Pool Products is a manufacturer and distributor of custom and specialty products for the swimming pool industry. It was founded in 2006 with the purchase of assets from a much larger Canadian company and in doing so inherited an ERP solution, but none of the influence over its continued development.  Ultimately they replaced that inherited solution with NetSuite. GLI has bucked the downward trend in construction related businesses and attribute much of their success to the use of NetSuite. They achieved lower material and operational costs while improving flexibility – a key consideration as they no longer wanted to live in “used-ta-land.” They could no longer be productive and profitable doing things the way they used to do things.

So while the addition of Rootstock functionality really just took effect in mid-2010, NetSuite has been quietly amassing quite a collection of manufacturers in its installed base for quite some time. This is particularly notable since NetSuite is not known for its “quiet” marketing tactics. With the addition of a couple of relatively new names to the NetSuite roster (Roman Bukary and Ranga Bodla) charged with promoting NetSuite in Manufacturing and Distribution, perhaps this will change.

Epicor University: Do we really need education and training?

Last week (March 15, 2011) Epicor announced the launch of a new university for its customers, partners and employees. Epicor University was created to address the challenge of delivering consistent high-quality training worldwide, and to expand the range of Epicor’s education deliverables. It also offers certification programs for Epicor’s partner channel. With the introduction of the university concept, all content, materials, and training is developed by a dedicated centralized team.

The primary objective is to provide customers with resources and tools to help them realize the greatest benefit from their enterprise software investment while allowing individuals to learn in the way they learn best. Epicor already offers a lot of resources, from embedded courses within their ERP system, to user guides, classroom courses and certifications, to an online help system that gets down to individual fields help and technical reference guides. According to Epicor, there are more than one hundred embedded courses associated with Epicor 9 and over 100 virtual or classroom courses available, 2,500 pages of content and graphics in Epicor technical guides, and 74,000 fields defined in Epicor 9 Field Help.

So why is a University needed? After all, user interfaces have become so much more intuitive and software has become easier to use. Navigation through an enterprise application is no longer cumbersome and confusing. And when was the last time you read the instructions for any kind of software anyway? If you can’t figure it out easily it just doesn’t get used.  

Exactly! That’s one of the reasons that education and training often gets ignored. Sure the user interface is intuitive. Sure it is easy to navigate through the various functions. But these are potentially complex business processes that are being modeled through an ERP. Are those business processes efficient? Are they standardized and repeatable? Do they produce a clean audit trail? Can they be easily audited? Do they put you in a position of competitive strength or hold you back from realizing your full potential? Most importantly, are you getting the most value out of your investment? Why do you think one company fails miserably while another succeeds beyond all expectations while they both use the same software?

Most every software company on the planet is working to enable self-service training and support. That makes sense. Like any other type of company today, most are attempting to grow while also reducing or constraining costs. The software business itself is very scalable. Create one piece of software and sell it dozens or hundreds or thousands or hundreds of thousands of times. But services don’t necessarily scale as easily. Sure, you can make it more scalable by creating user guides and online on demand training courses. But there is a certain element of education and consulting that happens one person, one hour or day at a time. And even the very best software can be underutilized, used incorrectly or used to model inefficient and incomplete processes.

So kudos to Epicor for bringing education and training back into the spotlight. Are you getting the maximum value possible from your ERP?

Activant announces new Business Rules Engine

Last Thursday I questioned whether IT spoke the language of business. In that short commentary, I used a couple of examples. One of them was “abstraction.” I mentioned that, “if you tell a business person you can set up rules that will govern processes once, and those rules will be enforced by all your business systems, then you have introduced the concept of abstraction without having ever said the word.”

Today I read that Activant has introduced a Business Rule Engine for Distributors.  This is exactly the type of feature I was talking about – one that takes the solution beyond the traditional transaction and reporting ERP of old. The Business Rule Engine provides Prophet 21 users with the ability to insert their own business logic into the Prophet 21 code base without altering the application code itself.

Some examples provided by Kevin Roach, executive vice president and general manager of Activant's Wholesale Distribution Division included:

·         Conversion rules that auto-populate some fields based on others -  like the town or city and state based on zip code? These are the types of “smart” features we have become accustomed to through our own personal online shopping experiences. Heck, I was a catalogue shopper long before the Internet and even back in those days I had customer service reps automatically filling in my town and state based on my zip code. But I didn’t see the same intelligence in business applications. This is a very simple example, but there are scores of ways to use this kind of functionality.   Like certain compliance requirements based on type of product.  Activant suggests an item entered with a product group of Pharmaceuticals could automatically set the Pedigree Tracking Checkbox to be checked. Or food and beverage for nutritional labeling, etc.  As new requirements are added, new rules reflect the changes with far less disruption than mucking around in code.

·         Validation Rules:  Another Activant example, Customer A can only buy items with Item Class 1 set to "No Restrictions." The system will provide an error message if an item without that Item Class is entered on an order for Customer A. These validations basically allow for the creation of warnings and error messages based on rules being met or not met.

·         Asynchronous Workflows. A third Activant example… a distributor could set up a workflow so that a purchase order placed in the amount of $5,000-$10,000 triggers an alert to an authorizing manager for signoff, while an order over $10,000 triggers an alert for the CFO's signoff. When the inserted trigger is activated in the Prophet 21 software, the rules included in that workflow will be executed in the sequence indicated.  Those are the rules today, but perhaps during a downturn in business, you need to (temporarily?) reduce those authorization levels or require the CFO to additionally review all purchases. Perhaps the rules tomorrow will add the type of purchase. Maybe a requisition generated for direct materials will be handled differently than indirect materials.

Why are these features and these examples (which appear to be so simple) so important? Because these business rules are subject to change. And if they are embedded within the logic of the application then changes to your business either require changes to your application (think source code and programming) or prevent your business from adapting.

If you are using older, outdated technology, and looking to upgrade or replace…perhaps this type of requirement is not top of mind. But all ERP users should be clamoring for this type of logic to be extracted (or abstracted) from the underlying code so that it puts the power of change in the hands of the business user.

Does IT speak the language of business?

I just spent a few minutes reading Tom Wailgum’s article entitled SAP and IT: Best Buddies, Worst Enemies. Definitely worth reading as it is so apropos. And apart from the fact that is was posted as ASUG news, the title could probably just as well have been ERP and IT. This isn’t just an SAP problem.

I spent most of my 30 years prior to becoming an analyst working for ERP companies (or their predecessors, because ERP isn’t as old as I am!) During that time … and continuing today… one of the biggest challenges was getting to the line of business LoB executives, past the CIO gatekeeper, during the selling process. Given who ultimately signs off on the deal (often the CFO or the CEO) you would have thought it would be easier. But it isn’t.

Often this is because sometimes the business world and IT appear not to speak the same language. Tom makes a very good point in saying, “…if [SAP] wants to sell to the business, it’s got to be able to talk to the business in a way that not just Computer Science grads can understand.” Again, I think you can substitute any other ERP vendor’s name. I have always made a point of talking about any enterprise business system in a business context, highlighting the successes versus the failures and measuring the success by the business benefits rather than cost, time to implement or other measures that tend to be the domain of the IT staff. In spite of having a master’s degree in computer science, I consider myself much more a businesswoman than a technologist. But even I fall into the IT jargon trap occasionally.

Often some of the most important business benefits result from the effective use of underlying technology infrastructure – like SOA (Service Oriented Architecture). But ask any business person if they care about SOA, and you will probably either get a glazed, disinterested look, or you will lose their attention completely. But if you talk about the benefits of SOA – easier integration, better connection to and communication with their business partners, then it will resonate.

Or take the concept of “abstraction.” The non-IT person might first think of Picasso’s art or Carl Jung’s psychology or philosophy, which I bet wasn’t the favorite college subject of your typical CFO. To a technologist, abstraction is an intuitive concept. It is very difficult to explain to someone esle (who might not have a clue) something that is immediately and intuitively understood. But if you tell a business person you can set up rules that will govern processes once, and those rules will be enforced by all your business systems, then you have introduced the concept of abstraction without having ever said the word. But it probably won’t really mean anything to them until they want to change the rules. If they find they only have to make a simple change once and it is propagated through all the business systems automatically, they now understand the value.

In order for any company to maximize the business value of ERP or any enterprise business system it must be embraced by the line of business executives responsible for delivering business performance. In order for that to happen, either the line of business needs to be more IT-savvy or the solution providers and the IT professionals need to learn the language of business.

When customers have a voice: 3 solution providers who listen well

You probably all have friends out there that send you jokes and other amusing (or not) trivia by email. Some will be selective. Some will not… sort of like two of my cousin who seems to send me everything that comes into her Inbox. The problem with these kind of distribution lists is that there is no way to unsubscribe without hurting someone’s feelings. So the delete button gets a lot of use on my keyboard.

But for the ones that are selective, sometimes there is some useful information. Like just this morning I learned that “a paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part. It is frequently used for humorous or dramatic effect, sometimes producing an anticlimax. For this reason, it is extremely popular among comedians and satirists.” So the first thing I did was forward it to my friend who is also a stand-up comedian. I know he is always looking for material.

But apart from the obvious value to my comic friend, I did find some of these paraprosdokians applicable to the art of developing software solutions. I say “art” purposely. While developing these solutions may be (computer) science, the process of deciding on a product roadmap is far less objective.

For example:

” To be sure of hitting the target, shoot first and call whatever you hit the target.”

This is what happens when the developers (I use the term loosely) make all the product decisions while never venturing out into the real world.

The corollary… “The voices in my head may not be real, but they have some good ideas!”

This is what happens when the developers make all the product decisions while never venturing out of their own space at all.

The result, when the first two are ignored… “You do not need a parachute to skydive. You only need a parachute to skydive twice.”

So the lesson to be learned and applied to the art of developing the roadmap of an enterprise business system is pretty simple:  Listen to your customers. There are 3 developers of enterprise business systems that come immediately to mind here (caveat - I don’t mean to say of course that there are no other solution providers with a particular focus on the customer):

Plex Systems:  You might have heard me say this before, but the reason Plex began offering a SaaS deployment model for ERP long before it was “hot” was because Plex’s founder was an advocate and a pioneer of rapid application development and he was looking for a way to deliver new enhancements at an equally rapid pace. Last year I attended Tom Mackey’s (Plex’s EVP of Sales) worldwide sales meeting. As I watched one of the Plex developers demo something the team was in the process of developing specifically for a large customer and as I learned how long it took the team to create the enhancement (all “customizations” developed by Plex are productized as opt-in features) it struck me that they had gotten this far in the time it might have taken other development teams to tell the sales team why they couldn’t or shouldn’t do it. As this realization dawned on me I heard their head of development say that his team didn’t develop any functionality speculatively. All features and functions were developed by request of a customer or a prospect.

Because Plex was developing features and functions so rapidly there was a time when they were having difficulty keeping up with the documentation. The customers brought this to the attention of management at the Plex user conference a couple years back, but they also brought a solution. Why not have the customers using these enhancements contribute to the documentation, wiki-style? Because these customers were so actively engaged with the company and the development process, this worked out quite well.

Now, there is one downside to this approach. You can’t enter a brand new market this way. But you can expand the boundaries of the markets that you already play in. And that is exactly what Plex has done. Early on, based on its proximity to Detroit, its business was largely in the automotive market. But as it began to expand beyond the state of Michigan, it found many of the features and functions required by other industries were either already built in or very close. For example the product already satisfied the requirements of compliance and traceability in automotive and these were easily adapted to packaged foods. And so on….

Sage Software: Over the past decade, much of Sage’s growth has been by acquisition. However, the second half of 2010 saw a resurgence in organic growth. This has been as a result of a combination of growth by acquiring new customers with an expanded range of offers and increasing share of customer spend through support and cross-selling. In 2010 Sage added 250,000 new customers, half of them here in North America. Now of course, not all of these were ERP customers, but enterprise business systems dominated. And there was also significant growth in spend from existing customers, largely through increased web offerings and a rapidly growing set of connected services – web-based and mobile services that connect to existing products.

Much of this approach resulted from an aggressive campaign to visit and listen to existing customers, which has been a primary focus of the management team. While a new focus, Sage has seen it paying dividends. For example, Sage has seen a growing interest from ERP customers in payment services. By satisfying this need, Sage also benefits since by adding these payment services, it can nearly double customer spend.

Syspro is the third enterprise business system provider that comes to mind when I think of close customer relationships. Syspro reports some of the highest customer retention rates in the industry and largely attributes them to personal one-to-one relationships with its customers, with a heavy emphasis on “personal.” Perhaps it is the South African heritage of the company, but execs like Joey Benedretti (president of Syspro North America) take any issue with a customer very personally. Just go out to their website and search on “awards” and you will see a plethora of nominations and wins. Probably the most telling of these awards in terms of customer focus is the Stevie Award. SYSPRO 6.1, the newest release of SYSPRO ERP software, was presented with a People's Choice Stevie Award for Favorite New End User Software Product at the 2010 American Business Awards last June. SYSPRO 6.1 included over 1,500 new customer-requested features and functions plus ease-of-use enhancements including dashboards, workflow services and process modeling and a new user interface that combines personalization and power-tailoring options.

All three of these solution providers develop a target with purpose and customer focus, listening to the voices of their customers which provide the perfect canopy to float development efforts.

SAP positioned for explosive growth in channels - that means SME

In 2010 SAP got very serious about channels, setting out to make profound transformational change. Not satisfied with incremental progress, SAP was looking to change the very DNA of its channel programs. A year ago, there were 5 different channel programs. Today there is one. Recruiting from the outside and shuffling the deck internally resulted in a 90% change in the management team. According to Kevin Gilroy, SVP Ecosystem and Channels, the current team is fired up “to make history.”

What’s happened in the past year? First of all… a lot of training. No longer is the channel just about the P&L, it is also about the balance sheet. There was a concentration on speeding the time to revenue and understanding the value of having an off-payroll sales force. But to keep those off-payroll channel sales partners interested and engaged, SAP needed to become more predictable. In August, SAP Business ByDesign, and SME in general went 100% channel. Since then only 2 or 3 exceptions have been made for direct sales.

Secondly, the new management team challenged existing processes. Here there was a definite advantage in having new eyes taking a fresh look at the old ways of doing business. They ripped out non-value added steps and sought to reduce disruption for the customer. They went so far as to remove the operational flavor of the team and replace it with a focus on the experience. The directive from management – if you aren’t improving the experience of the employee, partner or customer, either re-engineer the process or don’t do it. One example, the “experience” team took a 20 page leasing document and reduced it to 2 pages, reducing the turnaround from two weeks down to one day. The goal is one page, one minute turnaround. They have also simplified contracts so as to simplify the conversation and not to scare away customers.

The focus in 2011 is on meeting the needs of the SME. This means:

·         Delivering more choice and more packages tailored to the SME

·         Increased sales capability and capacity through channels and inside sales

·         Building a volume-based marketing engine. Marketing dollars will not be distributed evenly across the channel. SAP will pour more money in to fuel those with marketing engines.  

·         Continue to work on the” experience”. Optimize operations and processes around the needs of the SME users and partners.

But probably most important of all is to work on market perception. The ultimate objective of course is to turn the channel into a real volume business and this means selling more to smaller companies. SAP still is viewed as the 800lb gorilla in the market and many SMEs simply assume it is not for them – either it is too complicated or too expensive. Over the past year in talking with both Business ByDesign and Business One customers, it was not unusual for them to say to me, “I never thought I would be here. Who would have thought SAP had a solution for me that I could afford?” They don’t realize that 79% of SAP’s 109,000 customers are SME. That translates to 86,000 SMEs running SAP.

I think that Business ByDesign is going to play a very significant role in changing the market perception. ByDesign has the advantage of being a brand new product, engineered for the SME to reduce complexity. In fact SAP is finding it to be a real door opener that may lead either to a SaaS ERP (ByDesign) sale or an on-premise sale of All-in-One or Business One. Once that door is open, many are finding the price tag of the on-premise solutions is far more affordable than they assumed.

IFS promotes Lean methodologies in complex environments

I just finished reading an interesting white paper written by IFS (an ERP solution provider that specializes in addressing the needs of complex manufacturing). The title – Lean Enterprise in Complex ETO (Engineer to Order). Drawing from works by Lean experts such as James Womack and Jerry Kilpatrick, the paper does a great job of educating the reader on the principles and benefits of Lean methodologies.

The paper rightfully identifies Lean’s heritage in more high volume, repetitive manufacturing. After all it was pioneered by Toyota. But it also makes a case for Lean in a low volume, highly complex environment. Seems like some of these low volume manufacturers have been listening. According to data collected by The MPI Group for its 2010/2011 Manufacturers Data Report on manufacturing metrics and best practices, low-volume/high-mix manufacturers are actually more likely to have adopted Lean Manufacturing methodologies than an average of all plants surveyed (66.1% of low-volume/high-mix versus 60.8% of all plants) and are also more likely to use the Toyota Production System (TPS) (13.3% of low-volume/high-mix versus 10.5% of all plants). They are also more likely to use pull systems with kanban signals and one-piece flow techniques to manage inventory. As a result, they were able to shave an average of 26% off manufacturing cycle times (versus an average of 14% across all plants) over the past three years and more than half (53%) were also able to increase inventory turns, with 8.8% increasing them by more than 20%.

So if you happen to be one of those complex manufacturers dealing with the challenges of a engineer to order environment and have not embraced Lean methodologies thinking they only pertain to a more simple, repetitive environment… think again.

Sage X3 Launches in Russia and Austria. Sage who?

Actually Sage X3 launched in these two markets back in November 2010, but recent wins and partnerships underscore the global nature of the offering. If you travel around the major cities in Europe you will find Sage to be quite well-known. Not so much in North America. At Sage’s recent North American Analyst Day, all of the top execs that were present lamented this anonymity, most specifically Pascal Houillon, CEO Designate selected to replace Sue Swenson, current President and CEO of Sage North America when she retires later this year. In moving from France to California, he has been constantly reminded of this challenge of awareness both personally and professionally. His goal – make sure those that see him in the grocery store know who and what Sage does.

The stats from the most recent launch of Sage ERP X3 v6 in January 2010 signal X3 is indeed gaining traction. In the last twelve months Sage reports:

• 300 new customers have adopted Sage ERP X3
• the total number of X3 customers worldwide numbers in excess of 3,000
• Sage ERP X3 is now available in 53 countries

So why do so few people know who Sage (a $2.24 billion company) is? Why don’t they think of Sage when they think of the top ERP players? First of all, Sage is not just an ERP company. The company also sells accounting, CRM, Payment Solutions, Healthcare EHR and practice management and more. So that $2.24 billion is not all ERP sales. But it does have 3 different ERP solutions including MAS, X3 and Accpac with more than 165,000 users worldwide.

Part of this identity crisis results from Sage having grown largely through acquisition and having preserved many of the brands along the way. In fact, Sage ERP X3, until the last couple of years, was known as Adonix X3. Whenever I talk with a company that is acquiring another company, one of the first questions I ask is about preserving the brand. Changing names is hard, especially when there is a significant amount of brand equity in the name.

I went through those same decisions back in the mid-90’s when CA bought ASK. The CA management wanted to lose the MANMAN name. The problem was, everyone “knew” MANMAN even though hardly anyone “knew” ASK. So my advice to CA management was, you can change the name, but people will always call it MANMAN (today MANMAN is Infor ERP MANMAN). Sage had a similar situation with MAS and Accpac (acquired from CA, by the way) and therefore the prefixing of MAS and Accpac with Sage ERP is the logical solution to introduce the Sage brand while preserving the brand equity of these two solutions. But getting staff and customers to call them anything but Accpac and MAS is a constant struggle. Old habits die hard. But Sage had the opposite situation with X3. Adonix was more well-known than X3 and Sage allowed Adonix to operate as a subsidiary, preserving the Adonix name, for several years.

So I am afraid Mr. Houillon is going to have to continue to work very hard to get the same level of name recognition here in North America that he enjoyed in Europe. But in a market where name recognition is paramount to market awareness, it is certainly worth the effort.

Microsoft Dynamics CRM 2011 Arrives On-Premise Early

Yesterday Microsoft announced the availability of the on-premise version of Microsoft Dynamics CRM 2011. A month ago, on January 17^th the cloud-based online version made its debut. It was the first time Microsoft ever announced an on-demand version before making the on-premise version available. Now, as they release the on-premise version we spot another rarity in the software world… bringing a product to market early. Back in January Microsoft had said they would release the on-premise version on February 28th, but  lo and behold, it is already here.

In a way it is not surprising. The online and on-premise versions are really the same. While in the initial launch event Kirill Tatarinov (head of the Dynamics business) noted the symmetry between the two versions and touted this as something nobody had ever done before, I would respectfully disagree. In the past year we have seen several major enterprise applications vendors do the same, pointing to the value of giving customers choice and allowing them to move, uninhibited between the cloud and on-premise and back again. I suppose if you narrow the conditions down enough it might be unique, but instead I would point to it as a growing trend, particularly among those traditionally on-premise only software solution providers.

I am actually just now catching up on all this news. When I was recently with Aberdeen I was not the primary analyst covering CRM. But with a broad coverage area of Enterprise Applications, the center point being ERP, it was pretty hard to avoid. As ERP vendors continued to expand their solution footprints, the front office was one of the first targets. Very often I would see CRM modules being added to the core of ERP. Originally they were CRM Lite, but no more. These fully integrated or even embedded versions were becoming more feature-rich and fully functional. So it is not unusual for me to see CRM sold as a feature of ERP.

This made perfect sense to me because for almost 2 decades CRM vendors have been using the phrase, “a 360^o view of the customer.” But I failed to see how they could pull that off without ERP, or minimally an accounting system. After all, it is not a CRM system that invoices the customer or manages the receivables and seldom does it manage inventory where field service is an integral part of servicing the customer.

But not only is Microsoft Dynamics selling the compatibility and integration with ERP, you could almost say they are selling it as a feature of Outlook. I see this as a rather ingenious way of getting CRM infiltrated into the organization. It is human nature to resist change (and new software indeed represents  change) and the sales organization is no exception. In addition, how often have you seen a sales rep resist using the sales force automation “leg” of CRM for fear of big brother looking over his or her shoulder? End users of enterprise applications are less likely to ask for an additional software applications (to implement and learn) than they are to ask for more functionality in the solutions they already have.   And what application does a sales rep, particularly an inside rep, practically live in? Microsoft Outlook.

Of course, adding this functionality to Outlook does represent some change. But I have just recently migrated from Office 2003/Outlook 2007 to the 2010 versions of both. Talk about change! Of course it presented a bit of difficulty in finding the features I was accustomed to, but even after several weeks, it is a constant series of discovery of new features and functions. Based on the demo I saw of Microsoft Dynamics CRM 2011, the experience appears to be similar. Where I now click on Mail, Calendar, Contacts or Tasks, I would have an additional choice to go directly to CRM. But for the most part I don’t often have to leave the comfort of Outlook. I get new buttons on my tool bars with what Microsoft calls an Office-like ribbon. I get new personalization features. For example I can have any opportunity over a certain dollar value or forecast percentage highlighted with red, bolded font. With one click I can turn those opportunities into a chart, or I can have predefined charts. Or I could just stick to the raw data if I weren’t such a “visual” person.

Those are changes I could easily get used to!