Thursday, December 13, 2012

Four Needs Pushing Microsoft Dynamics into Large Enterprises

Early in November, I attended a series of analyst briefings offered by Microsoft Business Solutions (MBS), outside of Seattle. The briefings and interviews with MBS executives  provided an opportunity to catch up on where Microsoft is going with its Dynamics line of business applications. Coming away from the event, I was impressed with several overall trends that are encouraging Microsoft to move up-market, into territory that for many years has been dominated largely by SAP and Oracle.

I recently developed these thoughts more fully in a new research report at Computer Economics, Microsoft Dynamics Stepping onto Enterprise Turf. This post provides a brief introduction.

Evolving Market Solutions

In the early 2000’s, Microsoft jumped into the business applications market by making acquisitions that brought Great Plains, Solomon, Navision and Axapta into its product portfolio. These products, aimed at small and midsized businesses, established the perception that Microsoft was aiming its business applications primarily at smaller companies. When it came to enterprise applications for global organizations, Microsoft was viewed as out of its league. Those were markets for players such as SAP, Oracle and other vendors with multinational capabilities.

But the market landscape is changing. Over the past year, the Microsoft Business Solutions (MBS) division has been demonstrating that it is capable of delivering two of its business applications—Microsoft Dynamics AX (the descendent of Axapta) and Microsoft Dynamics CRM—to large and multinational organizations. Moreover, Dynamics product enhancements now rolling out will accelerate this trend.

Four Needs Encouraging the Up-Market Move

There are at least four customer needs that create an opportunity for Microsoft to move up into larger enterprises, as shown in the figure nearby.
  • Multinational localizations, formerly a requirement only for large companies, are being are increasingly demanded even by small businesses.
  • The desire of organizations large and small to manage their people, facilities, and equipment as one global resource pool.
  • The continuing pursuit of improved productivity and tighter control, through worldwide business process consistency. 
  • The need of global organizations to have operating systems that are appropriate to serve the needs of both their large and small operating units.
The MBS division continues, of course, to offer software that is aimed at small and midsized businesses (SMBs), those with single-site operations or with limited international presence. Microsoft reseller and systems integrator partners often introduce Dynamics NAV (formerly Navision), Dynamics GP (formerly Great Plains), and Dynamics SL (formerly Solomon) in these situations, sometimes in combination with Microsoft Dynamics CRM for customer relationship management.

Nevertheless, larger enterprises can now take Microsoft Dynamics under consideration when selecting a vendor for its enterprise business applications. In the large company market, it is Dynamics AX along with Dynamics CRM that form the solution offering. Although MBS is seeing success with large organizations in several industries, the retail sector appears to be particularly receptive to Microsoft's move up-market.

Although the Tier I ERP providers--SAP and Oracle--are well entrenched in the world's largest corporations, if Microsoft is able to compete effectively at this level, it will give enterprise buyers additional choice and options that they have not had in the past.

My full report discusses in detail the four customer needs that are driving Microsoft Dynamics up-market and three ways in which Dynamics now has become capable of serving these large organizations. Challenges facing Microsoft in gaining market share among larger companies are also discussed. The report concludes with examples of customers that illustrate the move of Dynamics into the enterprise market and recommendations for large enterprise buyers who are considering Microsoft Dynamics.

Related Posts

Microsoft Dynamics ERP on Azure: What Are the Benefits
What’s new with Microsoft Dynamics AX 2012

Wednesday, October 17, 2012

Tablet Computers to Begin Displacing Laptops

Tablet computers, such as Apple's iPad, are making inroads into corporate settings, but only a small percentage of corporate employees today are using them. This will likely change, however, as tablets and tablet-like devices evolve in their capabilities and form-factors.

Market Definitions Blurring

The market for tablet and tablet-like devices is developing quickly, but there is still quite a bit of confusion. For example, in Intel's most recent quarterly conference call, CEO Paul Otellini wondered out loud about the definitions of the various types of new tablet-like computers coming on to the market.  He said,
When you start seeing an ultra book with a detachable touch screen, is it a tablet? And [if] it's based on [Intel's next generation processor] Haswell, is it a tablet, an ultra book or a convertible? I don’t know. We’ll have to invent some names for these things as we go along but what I can tell you is the level of innovation there is unbounded.
Later in the call, he answered a question the potential for tablets to cannibalize sales of personal computers and laptops.
Pressed by one analyst on how much of the slowdown in consumer PCs was related to timing of Windows 8, versus how much was related to cannibalization by tablets and phones, Otellini said that “I think it’s a bit of each.” Otellini said that once Windows 8 ships, and consumers begin to try it out, “and we have all of the touch-based ultrabooks out there, we’ll know a lot more so we’ll try to quantify that a bit more for you in 90 days.”

In other words, the line between laptop computers and tablets is blurring. Moreover, tablets themselves are evolving in their form factors and capabilities, enabling them to begin to encroach on sales of laptops.

Corporate Penetration of Tablets Low But Growing

When considering the issue of cannibalization, Intel and other suppliers are considering both consumer sales and business sales. But the evidence so far shows adoption of tablet computers is much stronger on the consumer side than the business side.

As shown in the figure nearby, our research at Computer Economics indicates that about one-third of business organizations are supporting tablet computers to some extent among their user populations. However, the percentage of corporate employees actually using tablets is quite low. At the median, less than 5% of business users carry company-supported tablet computers today. These statistics vary, of course, by industry and size of organization.

Although tablet penetration into the corporate workforce is quite low, there are signs that the usage rate will increase sharply in the coming years, based on the percentage of organizations considering these devices or planning additional investments. 

Tablet Capabilities to Mature Rapidly

To this point, corporate PC makers have not had much to worry about in terms of tablets taking market share away from personal computers. Today, most tablet computers, specifically the market-leading iPad, do not have the capabilities of laptop computers. For example, cutting and pasting text on an iPad is cumbersome.

iPads today, therefore, supplement laptops and desktop computers rather than replace them. As the market leader, Apple can afford to deliberately limit the functionality of the iPad so as to not cannibalize sales of its own MacBook laptop computers. However, as other tablet manufacturers catch up and even surpass the functionality of the iPad, Apple is likely to expand the capability of its tablet computer line.

The maturation of tablet computer capabilities will come sooner rather than later. Microsoft's introduction of Windows 8, a touch-enabled operating system that will run on PCs, laptops, tablets, smartphone and other handheld devices, is a full-featured platform. It will be able to run Microsoft Office, the core desktop application suite for most business organizations, as well as single-purpose mobile applications that are so popular on today's tablets. Tablet manufacturers will leverage these capabilities to introduce devices that are much more capable of replacing laptops than the iPad is capable of today. This will force Apple to follow suit if it wants to continue to make inroads in corporate settings. Makers of Android-based tablets will no doubt do the same, as has been rumored.

Tablets Will Begin to Displace Laptops in Corporate IT

Corporate IT organizations are not the ones taking the lead today to push tablets, or tablet-like devices, into the workforce. In most cases, it is individual business units that are forcing the IT organization to support these devices. The pressure generally is coming from sales organizations, field service, or top executives directly, who want these devices to perform simple tasks while traveling, such as checking email, scheduling appointments, entering expenses, and performing workflow approvals.

Tablets are just the latest example of the "consumerization of IT." In this regard, adoption of tablet computers in business will likely take a similar path to the adoption of personal computers over 30 years ago. When personal computers first made their appearance in business organizations, IT organizations were quite happy with having employees use IBM 3270 green screen terminals. It was business leaders that bought those first PCs and then turned to the IT organization to support them. Ultimately, IT organizations took over the procurement and management of desktop computers and addressed issues of connectivity with the corporate networks.

Likewise, today, it is business leaders who are buying tablet computers and pushing their IT organizations to support them. As these devices mature, they will become a standard part of the IT portfolio of most business organizations. At that point, we will see tablets and tablet-like devices take a serious bite out of laptop and desktop sales.

That day may come faster than IT leaders imagine.

Related Posts

Laptops Displacing Desktops: Impact on Support Costs (Computer Economics)
ERP in the Lead, But Mobile Apps Gaining Ground (Computer Economics)

Sunday, October 14, 2012

How to Optimize Your ERP System

Earlier this month, I gave a keynote presentation on the subject of ERP optimization, at the Manufacturing ERP Experience conference in Cleveland. This post provides a quick introduction to the subject of ERP optimization and a video of my complete keynote.

Not Enough Just to Select and Implement the Right System

When it comes to ERP, most business leaders realize that it is critical to select the right system and implement it successfully. Likewise, when it comes to advice about ERP, most analysts and consultants focus on their attention on best practices for ERP vendor selection and implementation

But very few analysts pay attention to what happens after the implementation. An organization will spend many more months using an ERP system than it will selecting and implementing it. A company might take three to six months to select a new ERP system and another year or two to implement it: but it will be using that system to support its business operations for seven years, 10 years, or hopefully even longer.

How ERP Systems Become Sub-Optimized and What to Do About It

There are many opportunities for ERP system to no longer fully serve the needs of the business--even ERP systems that have been correctly selected and implemented. Business requirements may change, due to organic growth, mergers and acquisitions, introduction of new products and services, changes in business models, new demands from customers, or any number of other factors. As a result, organizations frequently become dissatisfied with their ERP systems.

Business leaders, therefore, need to periodically optimize their ERP systems, both on the benefits side and the cost side. This ERP optimization effort encompasses four main tasks:
  1. Analyze Root Problems. Trace each ERP problem according to a four-way framework, that is, problems related to (1) the software itself, (2) how the software was installed, (3) the business not using the system, and (4) the business not using the system effectively.
  2. Identify Corrective Actions. By understanding the root causes, the corrective action often becomes clear, and it often does not mean an expensive and disruptive exercise in selecting and implementing a new system. Rather, the existing system can be optimized.
  3. Identify Potential Cost Savings. After three years, the majority of ERP total cost of ownership is not in the up-front implementation costs: it is in ongoing support. Therefore, it is essential to optimize the ongoing support costs for ERP, considering a number of practical recommendations.
  4. Execute the ERP Optimization Roadmap. Finally, the recommended actions need to be prioritized, planned, and carried out with just as much discipline as the original implementation demanded. If done correctly, optimizing ERP can effectively extend the life of a current system to better serve the business for years to come.
You can watch my full presentation on optimizing ERP by clicking on the image at the top of this post. 

If you'd like a full copy of the presentation slides, just email me. My email address is in the right hand column.

Related Posts

Factors that Affect ERP Implementation Cost 
Twenty Years of ERP Lessons Learned
Optimizing ERP Support Staffing in Smaller Organization

Sunday, September 23, 2012

SAP's Emerging Cloud Platform Strategy

I participated last week in two days of SAP briefings with a group of about 15 bloggers. Part of the time was devoted to explaining SAP's evolving cloud strategy, which I will attempt to summarize in this post. 

Keep in mind that what I'm sharing here is not SAP's own messaging around its cloud strategy. Rather, it is my interpretation of where SAP is going and what it needs to do to be successful.

SAP Has a Proliferation of Cloud Assets

Over the past few years, SAP has been at work rolling out a number of cloud services. The most well-known is Business ByDesign (ByD), a full-suite ERP system, written from the ground up for software-as-a-service (SaaS). This was an enormous development effort, and it went through two development iterations until 2011, when it was ready to scale in production. SAP now has over 1,000 customers running ByD.  

Following initial delivery of ByD, SAP also began rolling out its line-of-business applications. These were built on the ByD cloud platform to meet the needs of specific business functions, such as sales force automation (Sales OnDemand) and expense reporting (Travel OnDemand). There are others, also.

Then in 2011, SAP acquired SuccessFactors, a well-respected cloud-only HRMS vendor. This greatly increased SAP's stature as a SaaS provider, but it also added another set of cloud assets and executive leadership to the mix. Further adding to the complexity: SAP is in process of acquiring Ariba, the venerable provider of supplier networking services.

From Cloud Applications to a Cloud Platform

In my view, the current situation has led to a number of problems. First, SAP's cloud portfolio is largely a collection of unrelated systems, and several different cloud platforms. There has been no common architecture, and no integrated product roadmap.

Second, the rest of SAP's product porfolio is not standing still. Specifically, SAP has been making large investments in its in-memory database technology (HANA), and it has acquired and developed an impressive array of mobility applications and mobility platforms. All of these products have cloud-delivery aspects. 

Third, SAP lacks a single extensible cloud development environment. (ByD does have a PaaS capability, for partners only, but it is limited to ByD.) Customers and partners don't just want cloud apps, they want the ability to extend those apps and build new applications that can interoperate with them. In other words, they want PaaS (platform-as-a-service) in addition to SaaS.

SAP's emerging cloud strategy addresses all of these issues: it embraces all of SAP's existing applications as well as its database and mobility platforms, and it gives customers and partners a development environment to build upon and extend these services.

Here are key aspects of SAP's cloud strategy, as I see them:
  1. Everything as a Service. Behind the scenes, SAP has been rearchitecting its SaaS offerings to be delivered as web services. For example, it has broken up ByD functionality into 32 "honeycombs," so that no two of them share a common database. Rather they communicate via messaging. SAP has taken the same approach with its line-of-business applications.  In fact, all of SAP cloud applications will be deployed as web services, including its mobility and database offerings. I have to believe this also includes SuccessFactors. SAP will now be able to sell individual modules (e.g. Finance), or a complete suite, or combinations in between.
  2. Platform-as-a-Service. SAP has built a PaaS capability, now referred to as the SAP Netweaver Cloud (earlier code-names included JPass, Neo, and Project River.) It is intended as a multi-language/multi-framework platform. It is primarily a Java-platform, but its open nature also allows development in a variety of other languages, such as Spring and Ruby. Furthermore, it allows developers to access all of the SAP cloud applications, database services, and mobility services that are now accessible via web services (see point #1).  It even allows applications to access SAP on-premises systems such as SAP ECC, CRM, and HCM. Conceivably, therefore, the Netweaver Cloud could be used for customizations/extensions of SAP on-premises systems that have been traditionally done with ABAP coding.
  3. Ecosystem. The SAP Netweaver Cloud can be used internally by customers or their system integrators, and it also can be also used by third-party developers to build new applications for sale on the SAP Store. This facilitates the growth of SAP's developer ecosystem.
The Netweaver Cloud runs in SAP's own data centers (including those gained through the acquisition of SuccessFactors). There are a number of other features, such as identity services and document services, which I won't go into in this post.

The Pluses and the Minuses

There are several things I like about SAP's emerging cloud strategy.
  1. Integration. SAP's is finally integrating all of its cloud assets into a single platform. If successful, nearly anything SAP delivers should be available and accessible through Netweaver Cloud.
  2. Openness. Netweaver Cloud does not use a proprietary language, like's APEX. Use of public development languages, such as Java and Ruby, facilitates adoption by developers and also works against lock-in to a single platform. Likewise, the PaaS makes use of open source projects from Apache and Eclipse, which should further facilitate adoption by developers. 
  3. Availability. Netweaver Cloud has already been released to customers, and it is scheduled for general availability at the end of this month. A free 90 day trial is already being offered. This puts SAP out ahead of Oracle, whose Oracle Public Cloud is still in controlled availability (though hopefully there will be announcements at Oracle's Open World conference next month).  
On the other hand, there are some aspects that give me concern.
  1. Will Customers Understand It? The cloud-only providers have one great advantage: simplicity. Everything builds is on its platform. Likewise, enterprise cloud leaders such as NetSuite and Workday grew up with single platforms. Their platforms are relatively easy to explain and easy to understand. SAP, on the other hand, has a variety of on-premises and cloud systems. Furthermore, it has built or acquired a variety of database products and mobility applications and platforms. The SAP cloud platform must now deal with all of these products. It's not easy to explain, as witnessed by the difficulty SAP's own team had in communicating it with our group of tech bloggers. If the bloggers struggle with understanding it, what hope does SAP have to make the message clear to customers or prospects?
  2. Will Developers Adopt It? Developers are a key to success in cloud systems, just as they are in mobility applications. already has a large and enthusiastic ecosystem of developers for its platform. Microsoft has an enormous ecosystem of development partners, for whom Microsoft's cloud platform (Azure) is more-or-less an incremental step in using existing Microsoft development tools. Will SAP's current population of partners readily embrace Netweaver Cloud, or will they be content to continue development in the SAP tools they have been using for years? 
  3. Is SAP Too Late?'s PaaS was first introduced in 2006 (I wrote about it at the time, here). NetSuite has had CloudSuite for years. Microsoft has already rolled out and continues to refine its Azure PaaS. SAP is only now rolling out Netweaver Cloud. Though SAP denies this, I do believe that its cloud development efforts in recent years have taken a back seat to its database and mobility development efforts. So now, SAP is playing catch-up. SAP has a lot of work to do to be perceived as a cloud leader.
Regarding that last point, on the other hand, my research at Computer Economics shows that PaaS is a technology that is still in the early adopter phase. Most organizations are still buying individual SaaS applications and have not yet made a strategic commitment to cloud computing as a platform. They have hybrid systems: some on-premises, and some in the cloud. Of course, there are exceptions: these are the early adopters that embrace cloud computing not only for SaaS applications but for PaaS as a development strategy. Nevertheless, the majority have not yet seen the vision. Therefore, if SAP can quickly make its cloud strategy clear and deliver working product, it may still have a shot at being a major player.

Here are some reports from other bloggers who were at this event:
Disclosure: SAP paid for part of my travel expenses to this event. 

Related Posts

SAP in Transition on Mobile, Cloud, and In-Memory Computing
SAP innovating with cloud, mobile and in-memory computing to allow customization of its hosted service 

Monday, July 30, 2012

2012 Technology Trends: Call for Survey Respondents

Over at Computer Economics, we've now launched our 2012 Technology Trends survey, and we're looking for qualified IT executives to take a 15-minute survey about their technology investment plans.

What's in it for you? If you complete the survey, we'll send you a complete copy of the final report (a $995 value).

In this year's survey we're asking about your organization's adoption and experience with 13 technologies:
  • ERP
  • Customer Relationship Management (CRM)
  • Supply Chain Management
  • Human Resources Management Systems (HRMS)
  • Data Warehouse/BI
  • Social Business/Collaboration Systems
  • Legacy System Renewal
  • Software as a Service (SaaS)
  • Public Cloud Infrastructure (IaaS)
  • Platform as a Service (PaaS)
  • Unified Communications
  • Desktop Virtualization
  • Tablet Computers. 
Want to know more? See a summary of the final report from last year.

Monday, June 11, 2012

Oracle's List of 100-Plus Cloud Applications

Oracle has now responded to analyst requests for a list of the 100+ cloud applications that Larry Ellison claimed in his Oracle Cloud presentation last week. I've just checked, and his exact words were "Over 100 enterprise-grade applications running in the cloud."

But the email cover for the list sent this morning refers to them as "100+ application services." As I speculated last week, Oracle is defining "application services" at very fine-grained level, almost down to individual programs.

For example, within "Oracle Fusion Customer Relationship Management - Marketing" is "Fusion Marketing Segmentation - up to 500,000 records" really a separate and distinct application from "Fusion Marketing Segmentation - up to 1,000,000 records?"

Update 1: Upon further review, I'm wondering why Oracle CRM On-Demand, a multi-tenant SaaS application, is missing from Oracle's list.

Update 2: I'm also wondering, using Oracle's definition of "applications," how many does SAP have?  In his presentation, Ellison said, "SAP only has SuccessFactors." Leaving aside my point that Ellison did not credit Business By Design or SAP's line of business applications as cloud apps, how does "SuccessFactors" count as one application, but Oracle's Taleo counts as 24 (see list below)?

Here is the complete list of what Oracle claims as its 100+ cloud applications:

Oracle RightNow

Oracle RightNow Dynamic Agent Desktop Cloud Service: Seats
Oracle RightNow Standard Dynamic Agent Desktop Cloud Service
Oracle RightNow Enterprise Dynamic Agent Desktop Cloud Service
Oracle RightNow Enterprise Contact Center Dynamic Agent Desktop Cloud Service
Oracle RightNow Standalone Chat Dynamic Agent Desktop Cloud Service
Oracle RightNow Dynamic Agent Knowledgebase Cloud Service
Oracle RightNow Chat Cloud Service
Oracle RightNow Cobrowse Cloud Service
Oracle RightNow Cobrowse Remote Support Cloud Service
Oracle RightNow Contextual Workspaces Cloud Service
Oracle RightNow Guided Assistance Cloud Service
Oracle RightNow Agent Scripting Cloud Service
Oracle RightNow Desktop Workflow Cloud Service
Oracle RightNow Product Registration Cloud Service
Oracle RightNow Social Monitor Cloud Service

Oracle Taleo

Taleo Enterprise Cloud Service Platform
Taleo Platform Cloud Service
Taleo Analytics Cloud Service
Taleo Recruiting Cloud Service
Taleo Recruiting High Volume Cloud Service
Taleo Onboarding Cloud Service
Taleo Performance Management Cloud Service
Taleo Goal Management Cloud Service
Taleo Succession Planning Cloud Service
Taleo Development Planning Cloud Service
Taleo Learn Cloud Service
Taleo Learn External User Cloud Service

Taleo Enterprise Recruiting Assessment Content
Taleo Hourly Assessment Content Cloud Service
Taleo Store Manager Assessment Content Cloud Service
TBE Recruiting Standard Active User Cloud Service
TBE Recruiting Premium Active User Cloud Service
TBE Recruiting Manager Cloud Service

Taleo Business Edition - Per Employee
TBE Recruiting Premium Cloud Service
TBE Smart Sourcing Base Cloud Service
TBE Smart Sourcing Per Posting Cloud Service
TBE Onboarding Cloud Service
TBE Compensation Cloud Service
TBE Performance Management Cloud Service

Taleo Business Edition - Learn
TBE Learn Cloud Service
TBE Learn External Trainees Cloud Service

Oracle ATG

Oracle ATG Live Help
Live Help Interactions On Demand
Live Help Chat On Demand
Live Help Email On Demand
Live Help Cobrowse Chat On Demand
Live Help Cobrowse Phone On Demand
Recommendations Single-Channel On Demand
Recommendations Multichannel On Demand
Recommendations Additional Catalog On Demand
Recommendations Large Catalog On Demand

Oracle Fusion Applications

Oracle Fusion CRM Base Cloud Service
Fusion CRM Base Standard Offering Cloud Service
Fusion CRM Base Enterprise Offering Cloud Service
Fusion CRM Base Premium Offering Cloud Service
Fusion Transactional Business Intelligence for Customer Relationship Management Cloud Service
Fusion Enterprise Contracts Management Base Cloud Service
Fusion Incentive Compensation Cloud Service
Fusion Opportunity Landscape Cloud Service
Fusion Quota Management Cloud Service
Fusion Sales Campaigns Cloud Service
Fusion Sales Predictor Cloud Service

Oracle Fusion Marketing Cloud Service
Fusion Marketing, Enterprise Edition Cloud Service
Fusion Marketing, Additional Volume Cloud Service
Fusion Marketing, Additional Email - 500,000 Messages

Oracle Fusion Partner Relationship Management Cloud Service
Fusion Partner Relationship Management for Channel Managers Cloud Service
Fusion Partner Relationship Management for Partners Cloud Service
Fusion Territory Management for Channel Managers Cloud Service

Oracle Fusion Customer Data Management Cloud Service
Fusion Customer Data Steward Cloud Service
Fusion Customer Management Foundation for Organizations Cloud Service
Fusion Customer Management Foundation for Persons Cloud Service
Fusion Data Quality Address Cleansing Cloud Service
Fusion Data Quality Matching Cloud Service
Oracle Fusion Human Capital Management Cloud Service
Fusion Human Capital Management Base Cloud Service
Fusion Transactional Business Intelligence for Human Capital Management Cloud Service

Oracle Fusion Human Capital Management Cloud Service Options
Fusion Global Payroll Cloud Service
Fusion Goal Management Cloud Service
Fusion Payroll Interface Cloud Service
Fusion Performance Management Cloud Service
Fusion Talent Review Cloud Service
Fusion Workforce Compensation Cloud Service
Fusion Workforce Lifecycle Manager Cloud Service
Fusion Workforce Predictions Cloud Service

Oracle Fusion Talent Management Cloud Service
Fusion Talent Management Base Cloud Service
Fusion Transactional Business Intelligence for Talent Management Cloud Service

Oracle Fusion Talent Management Cloud Service Options
Fusion Goal Management Cloud Service
Fusion Performance Management Cloud Service
Fusion Talent Review Cloud Service
Fusion Workforce Compensation Cloud Service

Oracle Fusion Financials Cloud Service
Fusion Financials Cloud Service
Fusion Expenses Cloud Service
Fusion Advanced Collections Cloud Service
Fusion Automated Invoice Processing Cloud Service
Fusion Financial Reports Center Cloud Service
Fusion Transactional Business Intelligence for Financials Cloud Service

Oracle Fusion Procurement Cloud Service
Fusion Purchasing Cloud Service
   Option: Fusion Supplier Portal Cloud Service
   Option: Fusion Sourcing Cloud Service
Fusion Procurement Contracts Cloud Service
Fusion Self Service Procurement Cloud Service
Fusion Enterprise Contracts Base Cloud Service
Fusion Transactional Business Intelligence for Procurement Cloud Service

Oracle Fusion Project Financial Management Cloud Service
Fusion Project Financial Management Base Cloud Service
Fusion Project Control Cloud Service
Fusion Project Billing Cloud Service
Fusion Project Contracts Cloud Service
Fusion Enterprise Contracts Base Cloud Service
Fusion Project Performance Reporting Cloud Service
Fusion Transactional Business Intelligence for Project Financial Management Cloud Service

Oracle Fusion Project Execution Management Cloud Service
Fusion Project Management Base Cloud Service
Fusion Collaborative Project Management Cloud Service
Fusion Transactional Business Intelligence for Project Execution Management Cloud Service
Fusion Project Resource Management Cloud Service

Oracle Fusion Risk and Control Management Cloud Service
Fusion Risk and Control Management Base Cloud Service
Option: Fusion Risk and Compliance Management Cloud Service
Option: Fusion Risk and Compliance Intelligence Cloud Service
Option: Finance Controls Cloud Service
Option: Procurement Controls Cloud Service
Option: Human Capital Controls Cloud Service
Option: Fusion Controls On-Premise Connector Cloud Service

Oracle Fusion Supply Chain Management Cloud Service
Fusion Inventory Management Cloud Service
Fusion Product Hub Cloud Service
Fusion Transactional Business Intelligence for Supply Chain Management Cloud Service

Oracle Hyperion Cloud Service
Hyperion Planning Plus Cloud Service

Oracle Fusion Cloud Service Additional Add-On
Fusion Applications Extensibility Framework Cloud Service

Oracle Fusion Financials
Fusion Accounting Hub
Fusion Advanced Collections
Fusion Automated Invoice Processing
Fusion Expenses
Fusion Financial Reports Center
Fusion Financials
Fusion Transactional Business Intelligence for Financials

Oracle Fusion Procurement
Fusion Procurement Contracts
Fusion Purchasing
Option: Fusion Sourcing
Option: Fusion Supplier Portal
Fusion Self Service Procurement
Fusion Transactional Business Intelligence for Procurement

Oracle Fusion Project Portfolio Management
Fusion Project Billing
Fusion Project Contracts
Fusion Project Control
Fusion Project Costing
Fusion Project Integration Gateway
Fusion Project Performance Reporting
Fusion Transactional Business Intelligence for Projects

Oracle Fusion Human Capital Management
Fusion Benefits
Fusion Global Human Resources
Fusion Global Payroll
Fusion Global Payroll Interface
Fusion Goal Management
Fusion Performance Management
Fusion Talent Review
Fusion Transactional Business Intelligence for Human Capital Management
Fusion Workforce Compensation
Fusion Workforce Directory Management
Fusion Workforce Lifecycle Manager
Fusion Workforce Predictions

Oracle Fusion Supply Chain Management
Fusion Distributed Order Orchestration
Fusion Distributed Order Orchestration User
Fusion Global Order Promising
Fusion Inventory Management
Fusion Product and Catalog Management
Fusion Product Hub
Fusion Product Hub Data Steward
Fusion Product Hub for Communications
Fusion Product Hub for Retail
Fusion Transactional Business Intelligence for Supply Chain Management

Oracle Fusion Customer Relationship Management - Sales
Fusion CRM Base
Fusion CRM Desktop
Fusion Enterprise Contracts Base
Fusion Incentive Compensation
Fusion Opportunity Landscape
Fusion Quota Management
Fusion Sales Campaigns
Fusion Sales Catalog
Fusion Sales Predictor
Fusion Smart Phone Edition
Fusion Territory Management
Fusion Transactional Business Intelligence for Customer Relationship Management

Oracle Fusion Customer Relationship Management - Marketing
Fusion Email Marketing Server
Fusion Marketing
Fusion Marketing Segmentation - up to 500,000 records
Fusion Marketing Segmentation - up to 1,000,000 records
Fusion Marketing Segmentation - up to 3,000,000 records
Fusion Marketing Segmentation - up to 5,000,000 records
Fusion Marketing Segmentation - up to 10,000,000 records
Fusion Marketing Segmentation - unlimited records

Oracle Fusion Partner Relationship Management
Fusion Incentive Compensation for Channel Managers
Fusion Partner Relationship Management for Channel Managers
Fusion Partner Relationship Management for Partners
Fusion Territory Management for Channel Managers

Oracle Fusion Customer Relationship Management - Customer Data Management
Fusion Customer Hub Data Steward
Fusion Customer Hub for Organizations
Fusion Customer Management Foundation for Organizations
Fusion Customer Hub for Persons
Fusion Customer Management Foundation for Persons
Fusion Data Quality Address Cleansing
Fusion Data Quality Matching

Oracle Fusion Application Tools
Fusion Applications Extensibility Framework

Oracle Fusion Governance, Risk and Compliance
Fusion Application Access Controls Governor
Option: Fusion Application Access Controls for Fusion Applications

Related Posts

Oracle's Behavior Undercuts Its Own Cloud Accomplishments

Thursday, June 07, 2012

Oracle's Behavior Undercuts Its Own Cloud Accomplishments

Oracle held a much anticipated "Oracle Executive Strategy" update event for its Oracle Cloud services yesterday. With Larry Ellison leading the presentation, there was much thunder and lightening--but not much rain. This is unfortunate, because Oracle has put together an impressive set of cloud services. Ellison's inability to resist slamming the competition led him to overstate what Oracle has actually delivered, and to minimize the success of Oracle's competitors.

This post serves as a summary of the key points I gleaned from the webcast and from an analyst question and answer session afterwards with Thomas Kurian, Oracle's EVP of Product Development, who is always a pleasure to listen to.

Is There Anything New?

On Twitter and in back channel Skype conversations with other analysts, many of us were questioning: what exactly is being announced today? Nearly everything presented had been previously been presented at Oracle Open World in 2011.

Reading carefully through the pre-event summary document and scanning through my notes, I can only come up with two things that are new:
  1. Oracle is announcing new Oracle Fusion cloud applications and services in addition to those  announced during Open World (which were CRM, HCM, Social Network, Java Service, and Cloud Service). Larry Ellison indicated that Oracle now has 100 cloud applications and services.
  2. Oracle demonstrated some of the social marketing functionality from its Vitrue acquisition, which Oracle announced in March. 
Other than that, it's difficult to find anything that Oracle had not announced or presented earlier. So the event was largely a re-presentation of Oracle's cloud services, some demonstration, and a healthy dose of competitor-bashing.

Essentially, the 90 minute event fell into a pattern of presentation that is becoming all too familiar in the past several Oracle Open World conferences. There are too many issues to list individually, but I'll point out what I see as some of the things I found most troubling in Oracle's presentation.

Oracle Exaggerates Its Cloud Apps Availability

Oracle claims 100 Oracle Fusion cloud services but provides no list of the applications. Seeing that Oracle announced five during Open World, it's difficult to understand how it is now claiming 100, unless it is talking about very small pieces of functionality. During the post-event analyst briefing, I believe Tom Kurian did promise to deliver a list--so we'll have to wait for that. Update: Oracle has provided the list.

Furthermore, not all of the capabilities that Oracle showed or referred to during the event are in general release. Tom Kurian did review what products were generally available, but I was not able to capture that information. Again, we'll have to wait for some public clarity from Oracle on what customers can buy today and what is still waiting for general availability.

Oracle's Developer Cloud Still in Controlled Availability

Specifically, Oracle Java Service and Database Service are not yet available via customer self-service, as shown in the screen shot below. With a public cloud infrastructure service, you should be able to walk up to the website, submit a credit card and gain instant access to a development environment, run it for a few hours or days, then shut it down. Amazon Web Services has offered this for years.

A quick test on the Oracle website shows that if you try to sign up for cloud services, you are led to a screen as shown below, where you can leave your contact information. The message on that page reads,
When you submit this form, your information will be placed into a queue for access to controlled availability services. We will be provisioning Java and Database services in batches over the next several months. Our Fusion Application services will be made available shortly after that. You will be notified by email when your instance is ready.
I questioned Tom Kurian on this point and he indicated that this is a temporary measure during the ramp-up period. He said that Oracle is currently signing up about 150 development customers a week for its Java and database services and that by the end of August, the sign up process should be available entirely on a self-service basis. But today-there is still friction at the point of sale.

Ellison is Rewriting History

At the beginning of his presentation, Ellison claimed that Oracle began to rebuild all of Oracle's applications for the cloud, calling it Project Fusion. But some of us have a long memory, and we've written blog posts on Oracle's Fusion program over the years.

At the beginning, Oracle did not pitch Fusion as a cloud program but as an integration strategy for its disparate applications. Fusion would be the successor to Oracle's E-Business Suite, PeopleSoft, J.D. Edwards, and Siebel systems. As Oracle made many acquisitions, it needed a strategy, using middleware, to integrate these applications with one another and a successor set of applications based on the best features of each of its acquisitions.

See my many posts at the end of this post, and try to find one where Oracle ever used the word "cloud" in talking about Fusion. Oracle has not been working on cloud applications for seven years. It has only been in the past year or two, as and Workday began eating Oracle's lunch that Oracle responded with its own cloud pronouncements.

I have heard off-the-record that the early leaders in the Fusion group made sure to architect the product to allow cloud deployment. But Ellison's early presentations indicated that Fusion would be a traditional sold-as-a-license product, deployed on-premises, not a cloud service. To now claim that Fusion was a 7-year cloud development effort is simply not true.

Ellison's Characterization of Competitors is Out-of-Bounds

For example, Ellison claims that SAP has done nothing in the cloud except for its acquisition of SuccessFactors, and that it will have nothing otherwise in the cloud until 2020. He conveniently overlooks SAP's five or seven year effort to develop Business ByDesign, a full-suite multi-tenant cloud ERP system, which SAP has has sold to over 1,000 customers.

Whether SAP has met its objectives for ByD is not the point: Oracle has by its own numbers claimed only 200 sales of Oracle Fusion. So, even by Oracle's own numbers, SAP has sold more cloud customers with its own developed products. (Ellison also conveniently ignores SAP's own cloud-based line-of-business applications.) SAP may have its own problems in transitioning its business to the cloud, but Ellison's mockery of SAP is simply unfair and inaccurate. 

Ellison's slamming of the competition continued with a mis-characterization of Workday's in-memory technology and a straw-man argument that other SaaS providers tell customers "not to worry about security." Can Ellison point to any cloud competitor that has told its customers "not to worry about security?"

Oracle Exaggerates Adoption of Fusion Apps

Oracle claims just 200 sales of Oracle Fusion Apps, and it refuses to break down that number into how many are CRM, HCM, and so on. Although Oracle will not release that information, I have reason to believe that most of those sales are for HCM and that there have been few new sales of Fusion CRM.

Tellingly, there were no customers on stage with Ellison or Hurd. Except for a couple of slides with logos of companies that Oracle claimed as wins over its competitors, there were no customer mentions, no customer testimonies.

Oracle Customers Choose Cloud Because of Fusion Complexity

Back-channel discussions indicate that nearly all Oracle Fusion application sales are for cloud deployment, not on-premises. It appears that this is the case not because Fusion can only run in the cloud  (like or Workday) but because Fusion technical requirements are so complex that virtually no organization wants to deploy Fusion Apps on-premises. It is easier to simply turn over the infrastructure and application management activities to Oracle.

On a Positive Note

The dissatisfaction felt by many of the event attendees is unfortunate. Oracle does have an impressive array of cloud services, although some are still in the process of roll-out.
  • Specifically, I like the fact that Oracle is offering a full and complete IaaS platform, similar to Amazon's (although Oracle's is limited to Oracle technologies).
  • I also like that everything in Oracle's cloud is based on public standards, such as SQL, Java, and HTML5. 
  • I like that customers can freely move applications (Oracle's apps, or custom apps) from Oracle's cloud to on-premise deployment, or to other public clouds such as Amazon's--without modification. I questioned Kurian on this point, and he confirmed that there is no intent to lock in customers to Oracle's cloud. This is, in fact, a differentiator against as a development platform, which because it is based on proprietary languages, does not offer portability. 
  • Finally, the user interface or Oracle Fusion Application is cutting edge. From what I saw in the Ellison's demonstration, along with other Fusion apps I've seen demonstrated, Oracle has set a high bar for ease-of-use, embedded BI, and integration.
Oracle has fallen into a pattern in its public events of overstating its successes, misrepresenting its competitors, and touting statements-of-direction as accomplishments. This is unfortunate because it causes observers to discount what is in fact some very impressive technology. I hope that, in the future, Oracle will take a more understated approach that will do justice to its people, products, and services. 

Related Posts

Oracle's roadmap for Fusion Apps (2009)
More on Oracle's Fusion strategy
Oracle's Fusion strategy: clear as mud
Fusion to build on Oracle's E-Business Suite
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Is Oracle's Fusion really half complete?
SAP slams Oracle's strategy as, Project Confusion

Friday, May 18, 2012

NetSuite Manufacturing: Right Direction, Long Road Ahead

As one of the first cloud ERP providers, NetSuite is looking to grow its customer base across multiple industries and up-market to larger customers. Those efforts include NetSuite’s renewed focus on the manufacturing sector, as unveiled at NetSuite’s annual user conference, which I attended this week.

Bottom Line: NetSuite is making the right decision and good progress to build out manufacturing functionality as part of its core system, but there is still much work to be done to achieve functional parity with other cloud and on-premises solutions in the marketplace. Nevertheless, the rapid development capabilities of NetSuite's platform offer hope that it will get there quickly.

From Partner Solutions to a Core Offering

Until recently, NetSuite’s approach to serving manufacturers was to provide what it called “light manufacturing,” coupled with customer-specific customizations, supplemented by partner solutions such as Rootstock when heavier manufacturing functionality was required. But this approach could only take NetSuite only so far.
  • Support for manufacturers is essential in light of NetSuite’s product strategy. As explained by Zach Nelson in a small group briefing, the customer order is central entity in NetSuite, and NetSuite wants to “own” anything that is input into, or output from, the customer order. In the manufacturing sector, this would include production work orders. It makes no sense, therefore, for NetSuite to hand off these business processes to partners.
  • At the same time, the manufacturing sector represents a large potential market for NetSuite. There are more manufacturing companies—especially small manufacturers—in the US than in any other sector. Inadequately serving such a large potential market made no sense as NetSuite looked to accelerate its growth.
  • However, some basic features for manufacturers have been missing. For example, standard costing were not addressed in the core product, and few prospects would be willing to customize their implementations for such a fundamental need.
As a result of this realization, NetSuite in 2011 began work in earnest to build out its manufacturing functionality. In a briefing during NetSuite's conference I met the key players hired for this mission. They include:
  • Roman Bukary, Head of Manufacturing and Distribution Industries. Roman previously worked for SAP, Baan, and other software companies. Earlier in his career, he was a manufacturing engineer.
  • Ranga Bodla, Director, Industry Marketing. Ranga held product management positions at SAP and Pilot Software.
  • Thad Johnson, Sr. Product Manager for Wholesale Distribution and Manufacturing Verticals. Earlier in his career, Thad was a product manager at QAD and also held several materials management positions in industry.
  • Frank Vettese, Practice Manager. Frank has manufacturing software experience with IFS and Effective Management Systems.
  • Gavin Davidson, Vertical Market Expert, Manufacturing. Gavin’s experience includes implementation work with manufacturing systems from Baan, Epicor, Microsoft Dynamics, and Visual.
I’m pointing out the experience of these individuals to show that NetSuite’s push into manufacturing is more than a marketing campaign. It has put together a serious team of individuals to lead the product development effort for this vertical.

An Expanding Footprint

In terms of manufacturing methods, NetSuite is primarily targeting discrete manufacturers although it intends to provide some support for process manufacturing down the road. An ideal prospect would be a discrete manufacturer that does a mix of in-house and contract production.

Let’s take a look at some of the manufacturing functionality that NetSuite has recently added or will be adding. From these few points we can get a sense for where NetSuite is in its current and near-term ability to better support manufacturing customers.
  • Standard costing. As mentioned above, the lack of this capability in the past was a showstopper for many manufacturing prospects. But NetSuite reports that it added this capability in 2011, along with standard cost rollups.
  • Bills of material. NetSuite has had BOM capabilities for some time, and it will soon support revision levels on BOMs along with effectivity dates. Users can also set a default scrap percentage on BOM components. Support for alternate BOMs is not in the roadmap.
  • Routings. NetSuite added production routings to the standard system in 2011. These, of course, are used to create production work orders. Alternate routings will not be provided. .
  • Cycle counting. Standard NetSuite code will now support cycle counting of inventory by ABC code.
  • Material Requirements Planning (MRP). NetSuite now does a BOM explosion, but it does not generate reschedule messages for purchase orders or production work orders. Neither does it support all types of lot-sizing methods.
  • Unit of measure conversions for purchasing, receiving, and inventory management have been part of the standard system for some time.
  • Multi-facility planning. It appears that NetSuite will allow customers to maintain separate material plans for multiple facilities while still providing a global view of inventory. If so, this would go beyond what is typically offered in most Tier III on-premises manufacturing systems.
  • Labor reporting. The team demonstrated a basic clock-in, clock out process using a tablet computer that can be used to report production completions and labor from the shop floor. This capability is currently in proof-of-concept.
  • Capacity Planning will be supported, based on the NetSuite’s “demand plan,” but it does not appear that it will highlight capacity constraints as it will not track available work center capacity.
  • Inventory Allocations and Available-to-Promise (ATP). This basic capability—to allocate available inventory and scheduled receipts against customer orders, and to provide visibility into projected inventory availability—is also scheduled as part of standard NetSuite functionality. (Kudos to NetSuite CTO Evan Goldberg for providing a layman’s explanation of ATP during his keynote.)
  • Lot and serial number traceability. The team claims capabilities in tracing lot numbers and serial numbers from receipt through production into finished goods. I did not have a chance to verify this functionality, but if present, it would be of interest for a number of manufacturing sub-sectors such as high tech electronics and medical devices.
I believe that NetSuite means business in pursuing the manufacturing sector. However, as can be seen, many of these capabilities (e.g. routings, cycle counting, labor reporting) are very basic manufacturing requirements, things that have been present in systems such as ManMan, AMAPS, BPCS, and others back into the 1980s. Furthermore, some of the planned capabilities will lack key things that a manufacturing prospect would expect. For example, the team characterized NetSuite’s material planning system as a “lean manufacturing system,” which to me is a polite way of saying, “minimal.”

Contrast this with NetSuite’s current capabilities and roadmap for eCommerce (SuiteCommerce) or support for back-office processes of software vendors, which go far beyond what most other ERP providers offer.

Now, it may be that the major opportunities for NetSuite will not be in the hard-core job shops or industrial manufacturing companies. Inasmuch as many manufacturing companies in the United States and elsewhere in the world are outsourcing much of their heavy production processes, it might be that the feature set in NetSuite’s roadmap will be enough to satisfy the majority of its target manufacturing market.

The Time and Place for Customization

One thing that I do not think will satisfy such prospects, however, is the use of customization to fill basic functionality gaps. NetSuite promotes its ability to augment its standard processing with customer-developed or partner-developed customizations, without modifying standard NetSuite code. During his keynote, Evan Goldberg gave an impressive demonstration of the latest version of NetSuite’s development platform, SuiteCloud. I continue to be impressed with the ease-of-use that providers such as NetSuite and are delivering with their Platform-as-a-Service offerings.

However, the ability to customize and extend the solution should not be taken as an excuse for not offering expected features/functions in the standard product. When prospects need full-blown work center capacity planning, for example, the last thing they want to hear is, “Oh, we can use SuiteCloud to build whatever you need.” For customer-unique requirements, SuiteCloud is a powerful attraction. For what should be standard functionality, no.

Rapid Progress Possible

I’m encouraged by NetSuite’s renewed interest in serving the needs of the manufacturing sector. However the feature set currently in the roadmap does not go as far as I would like to see in building comprehensive functionality for manufacturers. Nevertheless, I believe NetSuite will see success with its product strategy for two reasons. First, as mentioned earlier, it may be that a comprehensive footprint is really not needed to serve the majority of prospects. Second, NetSuite’s cloud platform—like other PaaS systems—offers a rapid development environment. NetSuite will certainly make more rapid progress in filling out its feature set than it would if it were a traditional on-premises vendor.

Compared to the services industries, the number of cloud ERP providers for manufacturers has been limited. But with NetSuite’s renewed focus, the list is now getting a little longer.

Disclosure: NetSuite paid for my travel expenses for its user conference in San Francisco

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Wednesday, May 16, 2012

The Simplicity and Agility of Zero-Upgrades in Cloud ERP

I am coming to the conclusion that a primary benefit of cloud ERP is the reduction or complete elimination of version upgrades. This observation was reinforced again this week in my one day attendance at the Plex Systems user conference in Indianapolis. Plex is a great example of what a cloud ERP vendor can accomplish by taking what I call a “zero upgrades” product strategy.

The Goal: Zero Upgrades

Originally founded in 1995, Plex went through a complete product overhaul in 2001, when it completely rewrote its ERP system as a cloud offering. At the time, NetSuite was the only other product that came close to cloud ERP and even then, NetSuite was largely a financials-only service.

Interestingly, in my interview this week with CEO Mark Symonds, becoming a “cloud ERP” provider was not their primary goal, but rather a means to an end. Passing through the client-server era, Plex grew tired of the difficulty in getting customers upgraded to new versions and rolling out patches and fixes to its installed base. The move to an online system (Plex Online)—the term “cloud computing” had not yet been coined—was the means by which Plex would to solve this problem. Customers would not have their own installations of the system. Rather they would access one central instance of Plex, which would be developed and maintained directly by Plex. Customers would never have to upgrade.

Implications of Zero Upgrades

Actually, I've known about the Plex approach for some time. But the implications of this strategy became more apparent as I sat through the keynote and some of the individual workshops.
  1. You Like It? You’ve Already Got It. A good part of the opening keynote included the announcement and live demo of a new embedded report writer, called IntelliPlex. Now I wouldn’t say that the demo blew me away. It's good. It has an easy drag-and-drop method to allow users to create their own reports, generate charts and graphs, calculate new columns based on formulas, produce pivot tables and cross-tabs—all good stuff. Is it as powerful as the embedded BI capabilities that other vendors have demonstrated recently? In some cases, no.

    But here’s the catch. Every Plex customer watching that demo knew that they could immediately log on to their Plex system and have access to that report writer. They don’t need to order it, pay separately for it, install it, or be on a certain version of Plex to use it. Perhaps that’s the reason I didn’t see a single person walk out early from that keynote.
  2. Functionality is Front and Center. I attend a lot of vendor conferences. Many of the sessions are taken up with subjects such as “Planning for Version X,” “What’s New in Release 7.2.345b,” “Prerequisites for Migrating Product X to Version Y of Database Z.” The Plex conference has none of these tactical, infrastructure-type subjects. All attention is on what the software does, not what you need to do to get it to do those things.

    For example, I sat in on part of a presentation on work center production scheduling—not a subject that I would consider a major draw. In much larger vendor conferences, I might see 20 or 30 people in this sort of presentation. But, as shown in the photo nearby, there were about 150 (out of 800 total) conference attendees in this session. Because Plex users do not have upgrades to deal with and plan for, they can devote all of their time to learning how to use the functionality that they already have access to. There appeared to me to be a much greater percentage of line-of-business users than I see in many vendor events.
  3. User-driven Enhancements. Plex’s approach frees it from having to spend time managing multiple versions of its product, creating sandboxes, and phasing in customers from one version to the next. This gives its developers more time to work on product enhancements, which are largely driven by customer-funded requests. Although one customer may fund a change, all customers have the option to “flip the switch” and use it if they so choose, without having to schedule a version upgrade. All new functionality is delivered with the switch set “off,” so that individual customers can choose what and when to implement it.
Ultimately, the zero upgrades strategy enables business agility for customers. This point was stressed to me in an interview I did with Plex customer Ben Stewart of Inteva. His company has a growth-by-acquisition strategy and needs to be able to bring new plants and new locations on-board quickly. Plex’s zero upgrade approach and rapid response to his change requests (e.g. enable a new EDI partner) supports this strategy of agility to accommodate rapid change. Other customers report Plex implementations of new plants in timeframes of weeks, not months.

Are There Downsides?

I have discussed the zero upgrades approach with other cloud ERP vendors, and many of them disagree. They maintain that ERP is different from CRM or other non-critical applications, that cloud customers want control over their environments, that they want to choose when to upgrade and to be able to regression-test their business processes against new versions. In some cases, I think this is simply a legacy of the on-premises world: we’ve always released new functionality as version upgrades. In other cases, I believe that this position is taken for the vendor’s convenience, especially when their cloud ERP systems are using the same code base as their on-premises systems. Because the on-premises customers have to have version upgrades, the cloud ERP customers of the same system must also have version upgrades. Otherwise, the two classes of customers do not have the same code base.

This does not mean I am against the hybrid model—allowing a customer to run the same system on-premises and in the cloud, or to go from one deployment model to another. I have written that there are some advantages to the hybrid model. But forcing customers to do version upgrades is not one of them.

There is one scenario, however, where version upgrades are desirable, and that is in a regulated environment, an area I have some experience in. For example, current US FDA regulations require pharmaceutical and medical device manufacturers to demonstrate that they have control over software configurations that are used to support regulated processes. This does not necessarily rule out use of cloud computing, but it does make it difficult to claim that the user has control over the system if the vendor is changing it on a daily basis. In such cases, it is easier to defend the use of a cloud ERP version that is frozen in its configuration, where the customer can choose when to upgrade and can run testing to confirm acceptance of the new version prior to upgrade. In non-regulated environments, however, I believe that the Plex practice of delivering new functionality “with the switch turned off” is better, as it promotes agility.

Some may argue that the Plex approach may lead to bugs being introduced into the production system on a daily basis. For example, Plex may implement a new feature in one part of the system and it may affect processing in another part of the system—even though a customer may not flip the switch for the new functionality. One long-standing Plex customer indicated that this does happen from time to time, but still he is strongly in favor of the zero-upgrades approach. I would add, I have seen many cases where traditional on-premises vendors ship code that notoriously bug-ridden, where they are shipping “patch releases” for months, even years, later. At least with the Plex approach, when bugs are discovered, they can be fixed in a few hours.

One final issue has to do with the practice of letting customers drive new enhancements. This approach may have worked well when Plex was small, but I question its wisdom as Plex scales. If uncontrolled, this can lead to many one-off enhancements being introduced into the core system, which only pertain to a single customer.

Fortunately, I heard two things during the conference that mitigate this problem. One is that Plex is establishing a formal product management function to review and clear all customer change requests and to evaluate which ones have merit for multiple customers. Second, Plex has introduced a web services platform capability called VisionPlex, which allows customers and partners to develop their own enhancements to interoperate with Plex, but outside of the core systems. This capability is just being rolled out in several pilot projects, but if successful it will go a long way toward keeping one-off enhancements out of the core system. It also has the benefit of enabling an ecosystem of Plex partners to build on Plex as a platform—something that has been lacking to date in Plex’s strategy.

Plex is not a large cloud ERP vendor, having only about 750 customers. It is narrowly focused on a few manufacturing industries, such as automotive, industrial products, plastics, electronics, and a few others. However, it is showing strong and steady growth—30% revenue growth in 2011 and expecting 20% growth in 2012. Furthermore, it is an existence proof for the principle that a zero-upgrades product strategy has major benefits for both customers and the vendor.

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Saturday, May 12, 2012

Making Sense of the New Epicor

Epicor held its annual Insights user conference this week in Las Vegas. This was the first gathering for customers of both Epicor and Activant since the two firms merged last year. As such, it was a good opportunity for the firm's executives to introduce what they are calling the "New Epicor" to 4000 conference attendees.

Three Elements of Strategy

Although Epicor made many announcements, in this blog post I prefer to focus on three elements of Epicor's strategy, along with my point of view. 
  1. Blending of Two Cultures. CEO Pervez Qureshi and other presenters made a point of emphasizing the new Epicor as a blending of the best of "heritage Epicor" and "heritage Activant." (In the enterprise IT world, the word heritage is preferred to legacy.) Qureshi characterized heritage Epicor as having been a global company, technology-oriented, entrepreneurial, and top-line focused. Heritage Activant, he said, was oriented more toward service, process excellence, and profitability. The new Epicor blends the best of these two cultures, he claimed.
  2. Protect, Extend, Converge. The second element is Epicor's strategy and vision to protect, extend, and converge the product portfolio. "Protect" means to continue investment in the current products in its portfolio. "Extend" means to introduce new applications and infrastructure capabilities that deliver additional value across current products. Finally, "converge" implies a gradual evolution of current products with new technologies.
  3. Azure as the Cloud Platform. The third element is Epicor's evolving cloud strategy. Prior to the conference, Epicor's cloud strategy was limited to a small business cloud version of its Epicor ERP product ("Epicor Express") along with some hosted solutions for functions such as HCM and retail merchandising. However, the strategic direction announced at Insights went much further. Wading through the dense language of the press release, I see the Azure announcement as having three sub-parts: (a) Epicor will allow its Epicor ERP product to be deployed on Microsoft's Azure cloud platform, planned for Q3, 2013, (b) Epicor will also use Azure to provide interoperability between on-premises Epicor systems and Epicor point solutions deployed on Azure. (c) A new version of Epicor's SOA middleware ("ICE") will also be deployed on Azure to provide a PaaS offering, facilitate mobility apps, and satisfy other integration needs between Epicor and third-party products.
Epicor executives were upbeat in presenting these and other elements of the new Epicor. But how differentiated is Epicor's strategy, and what does it mean for Epicor customers? Here's my take.

The Azure Strategy is a Winner

Taking these three elements in reverse sequence: although I do not see the Azure strategy as unique, I do see it as attractive. In fact, it is more attractive because it is not unique.  Epicor is at least the fourth major enterprise software vendor in the past three months that has announced plans to deploy ERP in the Azure cloud. The first, of course, is Microsoft Dynamics, which in March announced its plans to deploy Dynamics GP and Dynamics NAV on Azure by the end of 2012.Then, earlier this month, Sage announced similar plans. And now, Epicor.

I have no doubt that others will follow, making Microsoft Azure a first choice for delivery of cloud-based enterprise applications. I have long felt that, just as on-premises database management systems have been standardized on just a few popular products, so also cloud platforms should be standardized. By way of analogy, very few on-premises vendors today write their own DBMSs, with Oracle being the exception that makes the rule. Why then should SaaS providers build their own cloud infrastructure? did it. NetSuite did it. Workday did it. But how many more can or should roll their own IaaS and PaaS platforms? There is a tremendous amount of cost and effort involved in doing so, not to mention the economies of scale that can only be realized by having thousands of customers. Epicor, Sage, and others are making the right choice by building on an established public cloud infrastructure provider.

Why didn't this happen earlier? Essentially, because Azure (specifically, SQL Azure database capabilities) has not been robust enough to support ERP-class applications. But in speaking with Microsoft earlier this year, it appears that these limitations are now being overcome, which explains why Microsoft Dynamics, Sage, and Epicor are all moving to Azure at about the same time.

There is one more advantage to the Azure strategy. The current Epicor Express offering is limited to customers with under 20 users. I do not believe Epicor's current infrastructure architecture allows customers to scale beyond that point in a multi-tenant environment. Moving to Azure frees Epicor from that limitation, allowing it to sell cloud ERP to larger customers, though I suspect in practice it will still be most attractive to small and midsize businesses.

Finally, moving to Azure immediately allows Epicor to offer cloud ERP in a number of geographies where it does not have partner data centers. Epicor ERP has good international capabilities. Now customers in international locations will also be able to choose cloud deployment in their own geographies to meet regulatory or performance requirements.

Strategy of "Protect, Extend, Converge" Is a No-Brainer

The protect/extend/converge message has two things going for it: it's easy to remember and and it's customer-friendly. It also happens to be the only product strategy that makes any sense for a vendor such as Epicor. Epicor's growth strategy, like Infor's and Oracle's, has been to acquire or roll up a number of smaller vendors to build a large customer base with a diverse portfolio of products. The benefits of such a strategy is clear: growth. The downside of such a strategy is the diverse portfolio. But with a certain level of attention paid to customer support, the large number of existing customers will continue to pay maintenance revenues (the mother's milk of enterprise software) and will also be candidates for cross-selling other Epicor products.

It is interesting, therefore, to compare Epicor to Oracle and Infor and to see the similarities. All three have large customer bases. All three have diverse portfolios. All three have some sort of middleware offering to connect all the solutions: Oracle has Fusion middleware, Infor has ION, and Epicor has ICE. All three have customer programs to "protect" existing customer investments: Oracle has its "Applications Unlimited" program, Infor made its promise to "never sunset" a product, and Epicor has its strategy of "protect." Likewise, all have their strategies to "extend," such as Oracle with its continued point releases of J.D. Edwards, PeopleSoft, Siebel and others; and Infor, with its continued investments in its portfolio. Finally, all have some sort of convergence strategy, such as Oracle with its Fusion Applications, Infor with its development of ION, common user interface, and other common functions.

In other words, Epicor's strategy is the only rational way to deal with a large and diverse installed base built through acquisition. Qureshi's plan to continue aggressively with new acquisitions means that successfully protecting, extending, and converging its product portfolio will become even more important.

The Culture Message Has a Subtext

I found Qureshi's keynote regarding the blending of the Activant and Epicor cultures to be interesting, if not unusual for a customer conference. It would be the sort of thing one would expect to be presented internally, in an "all hands" meeting, for employee consumption. Delivering this message to customers, however, also sends an implicit message: heritage Epicor needed  improvement in product quality and customer service.

Perhaps this subtext is so well understood by the majority of Epicor customers that there was little risk in sending this message.  Still, if Activant's strength--in contrast with Epicor's--was (among other things) process excellence and customer service, what does that say about heritage Epicor?

It didn't end with the keynote. Later in the day, there was a session on the product roadmap for Epicor ERP. The presenters were proud of reports from early adopters of the most recent point release (ERP 9.05.700). But in touting the quality of the release, they were, in effect, reminding Epicor customers of their past experiences. One customer quote was damning with faint praise, referring to the new version as:
A more solid product than we've seen before.

If my wife makes me a nice dinner, the last thing I would tell her is, "This is a more delicious dinner than you've made me in the past."

But, if Epicor customers are all-too-familiar with product quality and service delivery problems in the past, perhaps Qureshi's approach is best: to tacitly acknowledge the problem. Key executives in the new Epicor come from Activant, starting with Pervez Quereshi (CEO), Kevin Roach (EVP and GM, ERP Americas), and Paul Salsigiver (EVP and GM, Retail), sending the message that Activant's focus on software quality and service delivery processes will prevail in the new Epicor.

My question, however, is this: are customers seeing an actual improvement in Epicor's product quality and customer service? Or, is it too early to tell?

I invite Epicor customers and partners to send me an email, or leave a comment on this post. As always, confidentiality is assured.

Related Posts

Microsoft Dynamics ERP on Azure: What Are the Benefits?
Infor’s Two-Pronged Cloud Strategy

Thursday, May 03, 2012

Infor’s Two-Pronged Cloud Strategy

While enterprise cloud computing pioneers such as NetSuite and get much of the attention, there is some interesting cloud-work going on among traditional enterprise software providers. One such provider is Infor.

I had the opportunity to get an update on Infor’s cloud computing program last week, at Infor’s annual user conference, Inforum. The bottom line: I see Infor’s cloud strategy as having two prongs, and it is beginning to bear fruit.

I gave a brief overview of my thoughts on Infor’s cloud strategy in my video interview with Dennis Howlett. In this blog post, I expand on those initial thoughts.

Infor Representative of Traditional Enterprise Software Providers

Infor is generally known as a vendor that has accumulated a huge portfolio of enterprise software, by acquiring a number of players over the past decade. As a result, it claims an installed base of over 70,000 customers, making it the third largest enterprise applications provider by revenue, following SAP and Oracle. As such, it epitomizes the dilemma that such enterprise software providers face:
  1. They are competing against cloud-only ERP providers, such as NetSuite, Plex, Intaact, FinancialForce, Rootstock, Kenandy, and others, who offer simple one-stop subscription-based cloud ERP. Infor is increasingly seeing these providers in net-new deals for core ERP systems, especially in the SMB market.
  2. They are also battling against a host of cloud-based point-solution providers, who are creeping into Infor’s installed base offering everything from CRM to expense management to talent management. Infor has a number of good on-premises point solutions, but customers are increasingly finding cloud-based point solutions more attractive in terms of ease-of-implementation, flexibility, and time to value.

    The largest of these cloud providers, of course, is, which a number of Infor customers have already chosen for CRM. Interestingly, Infor does not have its own best of breed CRM system—even on-premises. It does have its Epiphany CRM system, but that is more of a marketing automation solution, not a sales force automation system, which is what most prospects are looking for. 
 Infor, as typical for most established enterprise software providers, needed an answer to both of these competitive challenges. In response, Infor has a two-pronged strategy, as I see it.

First Prong: Infor Business Cloud

The first prong of Infor’s strategy is to offer customers its own cloud solutions, both for full ERP and for point solutions. This program, first launched as Infor24 in 2006, is now branded as the Infor Business Cloud. The products offered therein are not merely hosted offerings—some of them were originally built as cloud offerings, while others are originally on-premises offerings that have been re-architected, allowing them to be deployed as multi-tenant cloud services.

In other words, Infor is not merely hosting its on-premises offerings and relabeling them as “cloud” (so-called “cloud washing). In my interview with Jim Ploude, who is responsible for Infor’s cloud business, he made it clear: the cost for Infor to deliver multi-tenant cloud services is orders of magnitude lower than it is for single tenant hosted services. There are also great advantages in terms of economies of scale, administrative overhead, risk reduction, and flexibility.

For Infor customers that insist on traditional single-tenant hosted services, Infor or one of its partners can provide that. But those services are separate from Infor’s Business Cloud, which offers the full benefits of cloud computing, and are more cost-effective.
  • In terms of ERP, the Infor Business Cloud currently offers only its Syteline product as a cloud service. But other products—which Jim was reluctant to name—are also in the pipeline for re-architecture as cloud offerings. These will give new customers additional choices for cloud ERP.
  • In terms of point solutions, Infor has a broader selection of cloud services, including Infor’s Enterprise Asset Management (EAM) product (originally the Datastream acquisition), expense management, property management, workforce management, and hospitality management. Jim himself came onboard with Infor as part of the Datastream acquisition and already had extensive experience in deploying that product as a cloud service.
As I point out in the accompanying video, most of Infor’s large customer base cannot move their entire applications portfolio to the cloud. They have already invested in on-premises systems. But they are increasingly interested in cloud solutions that interoperate with their on-premises investments. Infor, therefore, must provide hybrid offerings. Hybrid cloud offerings are not a compromise—they are necessary to meet customers where they are. This first prong of Infor’s strategy, therefore, represents a pragmatic approach that can work for the majority of Infor’s customers.

Infor’s Business Cloud is more than a statement of direction—it already boasts 1,200 customers and somewhere in the neighborhood of 2.4 million named users consuming its services. Although Jim would not give specifics, I have reason to believe that the majority of these customers are for the point solutions, with cloud ERP (Syteline) representing a small, but growing, number. This is not surprising, as ERP is really the last bastion for enterprise cloud computing.

Cloud Services to Facilitate Version Upgrades

There is one more angle to Infor’s business cloud that Jim was not able to discuss at length, because Infor still has announcements pending in this area. This is in regard to the use of cloud infrastructure, such as Amazon Web Services, to facilitate customer upgrades to new versions of Infor products.

When customers are considering to upgrade an existing on-premises system, much of the preliminary planning work—such as exploring features of the new version, conference room piloting, and analyzing differences between the customer’s version (which may include source code modifications or extensions)—requires a second working instance of the application. Those activities are a natural use-case for cloud infrastructure. For vendors such as Infor, who have a large installed base of customers—a significant percentage of whom are trapped in older, highly modified versions—cloud infrastructure represents an opportunity to more quickly move those customers to new versions, where they can benefit from the new products that Infor is developing.

At Inforum, Infor was not ready to announce plans for leveraging cloud infrastructure to support customer upgrades. But there is a real need in this area, and I’m looking forward to hearing more about how Infor plans to move in this direction.

Second Prong: Partnering with

The second prong of Infor’s cloud strategy is its partnership with, branded “Inforce.” As Salesforce already has made inroads into Infor’s installed base, and as Infor does not have its own best-of-breed salesforce automation system, a partnership between the two players makes a lot more sense than Infor attempting to build or buy its own cloud CRM offering.

I discussed the first deliverable of this partnership, Inforce Everywhere, in my blog post, Infor and More Than a Barney Relationship, and I was happy to see one Infor executive “borrow” this phrase in an analyst briefing.

Inforce Everywhere is an application, built natively on the platform and using Infor’s lightweight ION middleware, that allows a users to see Infor ERP data in screens. Conversely, it gives Infor ERP users access to data. As a result, users can have a 360 degree view of customer information encompassing both CRM and ERP data.

For most ERP customers buying, system integrators build such integration on a one-off basis. What Inforce Everywhere does is to provide such integration as a standard product. During Inforum I had an opportunity interview Julia Klein, CEO of CH Briggs, one of the first early adopters of Inforce Everywhere, and she gave a powerful testimony of how important this integration is to her company. She said that if Infor didn’t build this integration, she would have to hire someone to do it for her company.

Success Hopeful but Not Guaranteed

Infor’s two-pronged cloud strategy is coherent, but as with any strategy there are obstacles. On the first prong, the Infor Business Cloud, I see difficulties moving a sales force accustomed to selling software licenses with large up-front payments to selling cloud subscription services. I did receive some indication that Infor is aware of this problem and is taking steps to mitigate the sales disincentive to sell cloud services.

The second prong, the relationship with, also has the same challenge related to the sales model, which it hopefully will address. In addition, the pricing I have seen so far for Inforce Everywhere appears a bit rich, especially when combined with Infor’s own ERP pricing and subscription fees. Of course, nothing stops Infor or from negotiating more aggressive discounts, but wasn’t cloud computing supposed to simplify the rug-merchant nature of enterprise software sales? My concern is that if the pricing is too rich, many good prospects may find it more attractive to just do a minimal amount of one-off integration between the two products, just like they’ve done in the past.

In spite of these challenges, I think Infor has a good chance of success. If so, it will be a good sign for other traditional vendors working on making the transition to the cloud.

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