#erp software compay

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What’s Up with xTuple—and Open Source ERP?

While Virginia might have seen its share of controversy over the recent laws on women’s reproductive rights, the region’s business and entrepreneurial climate is undisputed owing to vibrant enterprise applications vendors. One such vendor is Deltek—long reported by TEC as the enterprise resource planning (ERP) leader in the government contracting sector, while another is abas-USA, an innovative manufacturing ERP vendor that leverages a multiplicity of popular open source and proprietary technologies.

This article features the third vendor from the same neck of the woods, xTuple(formerly OpenMFG), which recently turned 10 years young. As a commercial open source company, xTuple works with a global community of tens of thousands of professional users. Customers can tailor the vendor’s solutions with multi-platform support for Apple Mac, Microsoft Windows, Linux and mobile devices, and take advantage of flexible and transparent licensing and pricing options. xTuple targets mid-market enterprises and smaller organizations with solutions that are an alternative to the typical older, larger and significantly more expensive and complicated traditional ERP solutions (on proprietary technologies).

    xTuple: Current State of Affairs Needless to say, the ERP software vendor xTuple, whose technology stack comprises open source technologies (e.g., PostgreSQL database, Qt desktop client, and much more recently the open source SproutCore HTML5 framework for data-intensive desktop and mobile clients), has seen much expansion in its business and customer base since its inception. The company reported a 35 percent growth in 2011 and currently has more than 300 paying customers (each with 20 users, on average) and nearly a million downloads of its freePostBooks accounting software edition to date.

xTuple’s direct customers are concentrated in North America and Latin America with local partners in other regions worldwide. The vendor’s ecosystem now includes more than 50 partners and translations in 25 languages. In addition, xTuple currently has 27 employees and expects to grow to around 40 by the end of 2012. Most of its employees are in the headquarters in Norfolk, Virginia, where xTuple owns and has been renovating a 10,000 sq-ft 1940s-era bank building. The vendor also has employees working remotely throughout the U.S.

In 2011 xTuple delivered three major product releases (3.6, 3.7 and 3.8 in its modest version numbering system) and many minor ones. The xTuple offering is available in the aforementioned PostBooks (free download) and commercially licensed Standard and Manufacturing Editions. The vendor also introduced the following two new commercial editions:

1.     Project Edition—project accounting plus Standard Edition

2.     Enterprise Edition—Manufacturing, Project, Web portal, Fixed Assets, xTuple Connect (formerly Batch Manager) data integration, plus the new Advanced Commissions module  

                                           See the company’s Web site for functional comparison and pricing of these ERP offerings. Last but not least, xTuple continues its push into the distribution market.

  Never a Dull Moment with Ned Lilly, xTuple CEO What follows below is a candid discussion with Ned Lilly, xTuple’s chief executive officer (CEO), president and co-founder. Lilly is no stranger to TEC; here is an engaging article with Lilly from 2008. He is very well versed in current market trends and is not loath to engaging in friendly, competitive banter (Lilly also publishes the popular The ERP Graveyard Blog, tracking the once-rampant ERP vendor consolidation. See xTuple’s bios of its top management as well as thisarticle on Ned Lilly and the idea behind starting xTuple.

  Our questions and Lilly’s answers are as follows: TEC: Has your market and competitive landscape changed as of late and how? What trends have you noticed in the market? NL: We're spending less and less time explaining the concept of open source and leading more with functionality and value with next-generation business management software. Then, when they ask us how it is that a 27-person company has a product that is competitive with companies 100 times its size, we explain how the open source development process makes for better software—faster.

Oddly enough, we don't run into other open source players that much, especially afterCompiere’s acquisition by Consona Corporation. We typically compete with one of the Microsoft Dynamics ERP products, SAP Business One (although less of that lately), and sometimes NetSuite (although more often it's people moving off NetSuite). We face off against Epicor and Infor from time to time, usually for request for proposal (RFP)-based processes.

TEC: What is your ideal customer profile now in light of the latest product enhancements (or is it more of the same)? What percentage of your customers is in the cloud or on demand? NL: There are still basically two buckets of customers: 1) “greenfield” opportunities (smaller companies growing out ofQuickBooks, etc.) and 2) replacements for older, “Graveyard-y" ERP systems. The ideal customer for us is still someone with an inventory-centric business such as in manufacturing and distribution. Although, with our recently added project accounting andtime & expense (T&E) capabilities, we're getting into more professional services type deals too.

As for the software-as-a-service (SaaS) install base, we've got a small but growing number of customers (approximately 15) using our integrated Amazon EC2 offering. Many of our partners also provide hosting and other managed services. In those cases, that's just a question of where the server lives; the licensing is the same. So it might be 10 percent of the total commercial customers in some kind of on-demand offering. We'll be expanding our cloud offerings in the 4.0 release with both a free offering and a series of commercial offerings.

TEC: What is the current state of affairs of xTuple releases, new enhancements, etc.? NL: In addition to what you said in your intro, we just released 3.8.1, and the next major release will be a jump to 4.0 in May 2012. The really cool thing about 4.0 is that the new Mobile Web client will interoperate seamlessly with the desktop client. Both will talk to the same PostgreSQL database back end and, by the end of the 4.x series, the entire application will have been ported to the Mobile Web platform. We're not aware of any ERP vendor that has come close to doing this.

In addition to 100+ minor enhancements, release 4.0 will see the full suite ofcorporate/customer relationship management (CRM), accounting, and T&E capabilities available in the new Mobile Web client. In addition to the full application being available as open source, we will also offer totally free hosting for anyone who wants to run it in the cloud (no limit on the user count). A commercial (for a fee) cloud edition will give unrestricted access to the data (backups, application programming interfaces [APIs], etc.) and helpdesk support—and the ability to run a mix of Mobile Web and Desktop clients.

The general idea is that each major version number in the 4.x series will see at least one new module ported to the Mobile Web client. For example, 4.1 will almost certainly be sales order management; 4.2 will likely be inventory management and all the related commercially-licensed manufacturing and distribution functionality. We will continue with the same functional distinctions between our commercial xTuple ERP comparison and encourage the development of new vertical add-on packages (including a commitment to help developers of existing packages port those packages to the new Mobile Web client).

  “Social” Ecosystem Product Development TEC: How are your major system integrator (SI), independent software vendor (ISV), reseller and other partnerships going? What is the state of affairs of your xChange app store, which was unveiled in 2009? NL: One shining example of add-on product development from a partner is the aforementioned Fixed Asset product suite—a partner in New Zealand, a former SAP consultant, wrote a package for one of his customers that does basic fixed asset tracking and made that available for free on our xChange app store. He then added two commercial supersets covering depreciation and the general ledger (G/L) interface and ongoing maintenance of the fixed assets. The packages were so good that we included them in our Enterprise Edition; see here for the latest info on the update.

As for the app store, people are building cool things, like the fixed asset example I just gave you. But truthfully, we haven't done a very good job of pulling in all of the scripts and packages that people are building (customers and partners alike). There are hundreds of minor enhancements that are out there that we, partners or customers have done—but it's resource intensive to package them up and put them on the xChange. And there's the implied maintenance burden, too.

It's the kind of thing that if we had a big slug of investor money, and we were trying hard to look bigger than we were, maybe we'd throw a couple of people at it, and corral all that stuff, and get some kind of program behind it. I alluded to this in my previous answer when I said we were making substantial commitment to building a methodology for converting existing add-on packages to the new Mobile Web platform—we wouldn't do that if there weren't a substantial amount of material that isn't immediately obvious on the Web site.

But in general, we'd rather have a smaller number of high-quality offerings on our store, than a larger amount of untested, unsupported flotsam and jetsam like you sometimes see in other such places.

TEC: How is the freebee accounting PostBooks product doing, and is there any conversion to xTuple ERP? NL: Extraordinarily well—coming up on 1 million downloads, and more than 50,000 active users registered on our Web site. Every week we hear from someone who has been running PostBooks for some period of time (often months or even years) and is ready to talk about a commercial edition upgrade, coming to a training class, sponsoring a new feature or two, etc. These users also buy stuff on the xChange store.

TEC: What non-typical ERP extras do you provide? For example, your aforementioned fellow Virginian peer, abas-USA, in addition to providing a self-contained database (free of charge) and APIs to major computer aided design (CAD) systems (e.g.,SolidWorks by Dassault Systèmes), also includes an impressive document management system with optical character recognition (OCR)-based search through multimedia documents. Other capabilities that do not usually come bundled within an ERP system are computer telephony integration (CTI) and embedded business intelligence (BI) via Jaspersoft reports. In addition, there is the e-learning tool, which is built-in to the software and tracks users’ progress as they interactively train on abas ERP modules. You get the drift, and is there anything similar by xTuple, given your open source nature (an “R&D socialism” of sorts)? NL: One really nice one is the Pentaho BI package, created by another of our partners. We've had partners develop a number of interfaces to different shopping cart front ends, product lifecycle management (PLM), and CAD tools, various wireless warehouse solutions, and iPhone apps. In the latter category, one of our partners is working on a point-of-sales (POS) solution that uses the same hardware snap-on that the guys in the Apple Stores use to swipe your credit card, etc., from their iPhones.

TEC: I can see that you do not talk much about your "social" capabilities, despite that topic being “mandatory” of sorts these days. Is it because there is nothing generally available, there is not much demand for that by your customers, or for any other reason? NL: Sorry, I didn't mean to obnoxiously ignore it. I guess we view it as a bit of a made-up trend among some vendors looking to get a little Facebook rub-off. We've had this kind of kind of functionality for some time, but just haven't jumped on the naming bandwagon:

·         A logged and time-stamped internal messaging (IM) system that can connect to instant messages, e-mail, fax, text, etc. The same system publishes notifications of system events a user subscribes to (a kind of a poor man's workflow), e.g., new order received, quantity below zero, customer issue reported, etc.

·         A verbose running conversation stream organized by a CRM account (customer, vendor, etc.)—all intra-company comments, short IM/text-style messages, e-mails, customer notes, etc., are accessible from one place.

·         Our Web portal product exposes CRM communication to a two-way customer dynamic—it's a front end into as much of the CRM as you want to make available to trading partners (again—customer, vendors, partners, etc.). That can mean incidents (tickets), to-dos (by group or individual), projects/tasks, opportunities, etc. We've used it to manage communications with our value-added reseller (VAR) partners for years.

What else do you mean by "social"? If it's connectors to Facebook, LinkedIn, Twitter, etc., I'd say that's a great opportunity for third-party add-ons, but not really what I'd consider core ERP functionality.

  Going Forward . . . TEC: Is there anything that you are at liberty to say on the company's future moves, i.e., new functional scope, verticals, regions, partners, etc.? NL: We've obviously got a lot going on—35 percent growth last year, increased profitability, hiring like crazy (even hired our first-ever marketing director). The Mobile Web client is going to be the big news for the year, of course—and people aren't going to immediately realize how revolutionary it is. With a small core staff, leveraging the power of some unbelievable open source tools and communities, we've managed to do a total rewrite of the client—while still maintaining 100 percent interoperability.

The Mobile Web client will run in any modern browser, on any operating system (OS), and it will also be available as a compiled app that will work with the various app stores. It will be a single, 100 percent JavaScript code base, and it is actually “faster“ than the C++ graphical user interface (GUI) client. I don't have to tell you how terrible the performance of most Web apps has been historically—but we really believe this SproutCore HTML5 framework, in whose community we have invested heavily, is a game changer. The Node.js server, which manages an incredibly efficient data source in a very lightweight middle-tier, is also phenomenal.

And meanwhile, we continue to leverage the advanced features of the PostgreSQL database—the transactional processing power and some cool object-relational tricks make this database much more than a dumb data store, unlike database management systems (DBMSs) used by most ERP systems. Here’s a sneak peek at the talk we'll be giving at the Open Source Business Conference (OSBC) show in May to roll out the Mobile Web client, and a deeper dive for PostgreSQL developers a few days earlier. 

TEC: Which modules, regions and verticals have been most active as of late? What do you foresee in 12 to 18 months—more of the same or not? NL: We continue to add new VAR/SI partners worldwide at a healthy clip. The bulk of our business remains in North America, but we have very active, successful partners in Mexico, the Middle East, Europe, and Southeast Asia.

One vertical that we're going to focus on particularly this year is wholesale industrial distributors—starting with a cannonball into the electrical distribution pool. This is a market that has been disproportionately affected by the “ERP graveyard” consolidation—the overwhelming majority of electrical distributors seem to be running a handful of products acquired by Epicor/Activant or Infor. We've been working with a leading trade group in that market to build out an add-on package of features specific to this group, and we rolled it out at the IMARK GROUP showcase on March 27–30. I wouldn't be surprised if there were a broader Distribution Edition of xTuple by the end of the year.

TEC: What is your end game: eventually going public, being acquired for some hefty amount, or something else? NL: The opportunity we see for xTuple is the democratization of ERP. So to that end, we're going to step up our efforts at a real ubiquity strategy—we want as many people as possible using the free version, and we don't care if we ever see a dime from them. We've seen the power of the "network effect" clearly over the past few years—the more people that are using the system, the better and more valuable the system is for everyone.

Open source really knocks the walls down and creates a whole new dynamic (pardon the obvious pun) that the incumbent proprietary vendors can't really answer in the long run. It's open source that is much more of a customer-favoring phenomenon than SaaS and cloud, which is at least partially driven by a new generation of vendor lock-in objectives. We'll embrace the cloud more fully, of course, with our 4.0 product—but we'll do it, once again, in a way that will disrupt the incumbent competitors.

So, to answer your question, we're looking to continue to grow the company, and in the long run, to significantly change the rules of enterprise software. We want what people currently call ERP and CRM to be as easy and accessible as consumer software—for companies of all sizes, from startup to Global 1000. We believe we have the technology, the domain expertise, and the global community reach to make that happen.

I get calls all the time from financial types, but that's not my interest now. We see an opportunity to build and grow a company that almost no one else in the market today can make. We're creating something of enormous value, and when you're doing that, the end-game questions tend to answer themselves over time. We truly want to grow your world.

For more information about ERP systems, or to start comparing ERP solutions side by side, visit TEC’s ERP Evaluation Center.

[tec123456-blog]

Don’t Forget to Factor In Mobile ERP When Selecting a New ERP System

With the proliferation of smartphones, tablet computers, and other mobile computing devices—and the associated increase in applications designed for them—the obvious question is when users of enterprise solutions including enterprise resource planning (ERP) will be able to access company-wide solutions from their mobile devices in meaningful ways.

In mid-2011, as IFS prepared for the release of IFS Touch Apps, its mobile ERP initiative, IFS North America conducted a study among executives at middle-market-to-large manufacturers to better understand their interest in and the nature of demand for mobile device access to enterprise applications. The study encompassed more than 200 executives, all of whom reported involvement in enterprise software selection at manufacturing companies with greater than $100 million (USD) in revenue. The results are indicative of the current state of mobile ERP in middle-market industrial companies.

The study delved into a number of topics related to mobile ERP, including the degree to which respondents could currently access enterprise technology from a mobile device, the types of mobile applications and interfaces they were most interested in and the degree to which mobile ERP will change the way we work.

Among the key findings:

Manufacturing professionals view the mobile interface as an important consideration in enterprise software selection.

Few respondents currently rate access to enterprise software from their mobile device highly, and many have no access today.

As expected, the mobile interface is more important to respondents who regularly work during personal time or away from an office location than to those who work primarily during business hours in an office setting.

A sizable majority of respondents said that the mobile interface is either as important as other considerations or the most important consideration in ERP selection.

Mobile ERP: The Current Situation

A number of the findings that address the current state of affairs for mobile ERP should come as no surprise to those close to the industry. Historically, mobile devices used for business purposes primarily supported e-mail and other forms of messaging, with the BlackBerry enjoying significant market share among business users. Increasingly, smartphones are becoming more important to ERP vendors as market share is absorbed by the iPhone and Android platforms (see figure 1). More than half of respondents said that the BlackBerry was the mobile device currently used, including younger professionals who likely have an iPhone or other mobile device for personal use but rely on a BlackBerry for business (see figure 2), but enough indicated that they expected to replace their Blackberry with an iPhone to give iPhone the projected lead in a year or two.

This would indicate that the iPhone and Android platforms must receive top priority among enterprise software vendors like IFS. It also means that companies involved in software selections ought to reconcile their planned mobile device purchases with the mobile interfaces of their ERP vendors.

Figure 1. The iPhone is poised to take the lead from BlackBerry as the mobile device from which enterprise software is accessed. (Courtesy of IFS North America)

Figure 2. Even among younger professionals, BlackBerry currently dominates the mobile market for business use. (Courtesy of IFS North America) Regardless of the mobile platform people are using, very few have more than minimal access to their enterprise software environment from a mobile phone (see figure 3). The chief reason for this is that mobile interfaces are only now making inroads as a supported client device for enterprise computing, in part because enterprise software vendors have only recently begun offering them in earnest and in part because these interfaces often require the most current version of an enterprise suite, and many users may be using software that is one or more version out of date.

Importance of Mobile Access to ERP in Future Selections

While current ability to access enterprise software from mobile devices like smartphones is limited, this ability will be a top priority in software selections in the coming years, and a focus area of development for software vendors.

The vast majority of respondents—68%—indicated that during software selection, the mobile interface for an enterprise application was as important as other features. A surprising 13% said it was the most important consideration in a selection process.

Meanwhile, when asked what mobile functionality was important to them, a small handful of tasks were rated more highly than others. One thing that these tasks have in common is that they all deliver real-time data, facilitate time-sensitive processes, and allow the user to actively participate in business processes using the mobile device. Top-rated functions include

approvals and authorizations,

notifications and alerts,

contact management,

business intelligence, and

the ability to take photos and attach them to records.

Figure 3. The horizontal axis indicates the average rating for each software type on a scale from 1 to 5, with 1 = “Poor, little to no support for mobile devices” and 5 = “Excellent, can do anything I need to do from a mobile device.” Among users who can access their ERP system through a mobile device, very few rate this access as excellent. Meanwhile, significant portions of users reported no mobile access to a variety of types of enterprise software solutions.

The ability to complete these time-sensitive functions are particularly important to the 80% of respondents who say they need access “on the move”—that is, in locations where they cannot connect with or effectively use a laptop. For these people, the ability to be productive on mass transit, in airports, during quick breaks between meetings, and in other challenging settings may be significant (see Figure 4).

Figure 4. The vast majority of respondents require access to ERP while “on the move” or in situations where a laptop is impractical. (Courtesy of IFS North America) While mobile ERP may allow for some productive work in these situations (e.g., waiting to board an airplane, or waiting for lunch in a deli or in a cab between appointments), it also has the potential to expand the hours of work into time normally spent on personal tasks. Respondents were asked to what extent they would be more prone to working on personal time once they could access their enterprise systems using their mobile device. More than 60% indicated they would in fact work more on personal time—but among those, the majority said that mobile access would make work less invasive than if they needed to be on a laptop (see Figure 5).

Figure 5. The availability of ERP functionality on a device that can be carried in a pocket may in fact lead to more work on personal time if these survey results are any indication. (Courtesy of IFS North America)

Conclusion

Mobile access is going to be of increasing importance in the market for enterprise software of all types. Study data suggest that the optimal mobile strategy will address  a handful of key functional priorities, as the vast majority of different options for mobile ERP functionality proved to be of very little interest in this study. Furthermore, an interface that is usable with a variety of versions of an enterprise software product or suite will make faster inroads because the most recent version will not be required in order to gain mobile access.

As more users gain access to their Enterprise Resource Planning softwareenvironment through their mobile devices, the way we work, where we work, and when we work may change. Some tasks and roles within a company will still work on a more traditional device. While the compact screens of smartphones and tablets are improving, work performed on large quantities of data will still require a full-size screens or even augmented, expanded screens, as fewer people make decisions on larger and larger quantities of data. But for executive-level functions, this study suggests that the mobile has tremendous potential.

[tec123456-blog]

Demystifying "Vendor Shootout for ERP" Events

Over the last few years I have repeatedly seen the Vendor ShootoutTM for ERP event banner ad appearing on the Technology Evaluation Centers (TEC) Web site and being promoted in TEC’s newsletters. In addition, I would come across mentions of the event in other industry magazines, press releases (PRs), social media feeds, Web site banners, and so on.

Needless to say, I was curious about an event (not to say dismayed by my lack of insight) that even carried the Moderated by TEC tagline on its official logo. Every now and then, various software vendors’ staff and other industry contacts would ask me about the event (probably expecting some in-depth knowledge), and I would somewhat embarrassingly have to pass them on to my selection services colleagues at TEC’s Montreal headquarters, since they are the ones who have been directly involved with the event.

But in mid-August 2011, the 11th Vendor Shootout event took place in my neck of woods (Boston, Massachusetts [US]), and I was able to experience it first-hand as a neutral (and yet very active) observer.

Plex Systems, IQMS, and abas-USA presented directly, while Infor ERP SyteLine, Epicor ERP, Microsoft Dynamics AX, SAP Business ByDesign, and Oracle JD Edwards were represented respectively by Merritech LLC, Cre8tive Technology, ePartners, Navigator Business Solutions, and Terillium. For my report on how several of these vendors/products performed, see my blog post The 11th Vendor Shootout for ERP: Observations – Part 1.

What follows now is my report on the event and how I felt about attending it.

  Co-opetition to the Fullest Extent

Let me start by allaying some misconceptions. First, TEC is not the organizer, and we are not financially compensated by the event organizer. To be fair, we hope to benefit there from our exposure as an unbiased software evaluator, knowledge broker, and moderator of the event. Frankly, we will gladly provide professional services to any attending company that needs help with regard to selecting the most appropriate software package (and some do). After all, TEC needs to pay its bills every month as well.

Who is the organizer then, you must be rightly asking? Well, it is North Carolina (US)-based brij (pronounced “bridge”), a leading value-added reseller (VAR) of former JD Edwards enterprise resource planning (ERP) solutions, now branded as Oracle JD Edwards. From a business model perspective, the company does keep the event and its software sales efforts separate, which can be validated by the fact that hardly anyone knows about who really is behind the Vendor Shootout event (ironically, even many Boston event attendees thought that TEC was the organizer).

As explained in my selection service colleague Paul Kininmonth’s blog post from 2008, brij (which was working with TEC in 2007), wanted to create an event where qualified manufacturing enterprises could come and witness multiple ERP packages in action (including its own).

The concept of a live event had a brij sales executive thinking this at the time:

I am SO confident that my product stands up against the competition that I would be willing to line it up alongside those competitors and in front of some project-minded individuals to demonstrate what it can do in a controlled environment. Our competitors will do the same thing, and the attending audience will be allowed, without bias, to make up their own minds as to what products look good to them in terms of functionality, usability, and efficiency.

Call it ballsy or foolhardy, but time and again there has been collaboration amid various fierce competitors who come together on an invitation-only basis (and trust me, these folks do not necessarily like each other, but these feelings are put aside at least for a day or two) in one event full of “show me” demos and presentations to quite clued-in audiences. It simply makes you wonder why these zealots in the US Congress cannot think along similar lines for the benefit of everyone (or the majority, at least), but I digress…

In order to make the event meaningful and credible to the end-user community, brij realized that it would need to create a single script for all of the participating vendors to follow (see this high-level demonstration script). In addition, the firm wanted to bring in a third-party impartial moderator so that there was no evident bias and so that all vendors could and would be viewed as equal in billing and opportunity.

TEC agreed to be involved and assist in the marketing effort, providing that we had the opportunity to present our selection services methodology, and also providing that we had access to all of the attendees. This event just had its 11th edition in Boston, and TEC has been billed as the moderator for each of them.

  Non-violent “Shootout”

The title “shootout” might not be the best choice of words in light of the recent outbursts of violence worldwide, and with many folks feeling trigger-ready in these days of anger and insecurity (in fact, in the hotel elevator and corridors, I had to repeatedly explain to other bemused conference attendees what the event was really about). And yet, nothing could be further from the truth: time and again, brij has reached out to its competitors, thus creating a VAR community of sorts, with the sole goal of attracting hot leads and opportunities (and may the best solution win). Moreover, the event title notwithstanding, there is no elimination or “last man standing” scenario involved.

Make no mistake: this was not a Woodstock-like love-fest either, but rather a down-to-earth event with no hard sell by anyone. The Boston event attendees were about 40 employees (IT managers and business users) from about 20 manufacturing and distribution companies, all of which were in the process of evaluating ERP software and all of whom had some preconceptions as to what they wanted to see. These folks were not clueless first-time-ever ERP users liable to swooning over vendors’ dog-and-pony shows and falling for distasteful competitor-bashing.

Quite to the contrary—these folks had only limited patience for each vendor’s introductory corporate slides, and they were eager to dive deeper into the prescribed demo script. Many of the attendees were looking to replace their outdated/outgrown legacy ERP systems (Intuit QuickBooks, Exact JobBOSS, Infor Point.Man, PRMS, and Baan IVc were some names that I heard, but there might likely be many more), and they had very concrete questions for the participating vendors about how their solutions would overcome the shortcomings of these legacy systems.

  Reasonable "Pay for Play" Takes Place

Frankly, the event provides some limited opportunities for some "play for play" action, but nothing too tacky or off-putting. For one, the organizer and moderator had the chance to kick off both days' programs with their presentations during the breakfast. But again, there was no hard sell there, and the topics of these presentations were quite vendor/product non-specific. After all, some concepts of software selections and implementations are as universal as the fact that the sun sets in the west.

Along these lines, my colleagues Paul Kininmonth and Michael Thaw talked about TEC’s best practices for a structured software selection project in order to minimize the potential challenges (see screen capture below) and build the foundation for implementation success. There was nothing vendor-specific and controversial there (other than a “subtle” plug for our selection services). After all, who on earth would disagree with the concepts of objectivity, transparency, consensus, risk mitigation, cost reduction, audit trail, and so forth?

      Paul and Michael outlined the following checklist for a successful enterprise system selection:

Gain executive buy-in, and determine project variables

Structure a project plan to optimize time and resources

Conduct exhaustive vendor landscape research

Perform comprehensive collaborative requirement gathering

Ensure consensus building via clear and consistent communications

Validate, assess, and score scripted demonstrations and references

Perform quantitative and impartial vendor capability analysis

Leverage your efforts to design an implementation blueprint

What caught my attention in the presentation is the point that events such as the Vendor Shootout might be a perfect due-diligence opportunity to validate some of the so-called “extended criteria” for a software selection (see screen capture below). Namely, the event is a great place to put vendors and their solutions through their paces via the aforementioned structured demo script (in addition, attendees can also get some high-level market data on vendors validated here as well).

    For more information, see TEC’s previous blog post on these subjective criteria of software selections. In addition, see TEC’s now timeless classic 2001 article series on a concrete evaluation of four ERP vendors’ demonstrations.

While software selection was the breakfast kickoff topic on day one, software implementation was the breakfast topic on day two. After all, participating VARs understand the concerns and culture of the attending companies. Through their implementation and support services, these firms are much more than the products they represent. To that end, Terillium, in collaboration with brij, presented the following “Top 10 ERP Implementation Myths” (in decreasing order):

One size fits all.

Your current system defines your needs.

You will have a no-modification policy.

All functionality is created equal.

This is an IT project.

You can’t afford to spare your best people.

Everyone should be involved.

You can implement in a bubble.

You will document and train later.

You can ignore business reality.

Many of these misconceptions are quite straightforward, but some might sound as though they run counter to conventional wisdom at first glance. But the presenter fleshed out each bullet point with additional rationale, which made perfect sense. I won’t go into that now, for the sake of brevity, but I would encourage everyone who’s interested to either contact the firm directly or, even better, attend a Shootout event in the future.

In addition, there were sponsorship opportunities for each meal, and coffee/tea networking breaks and cocktail reception. Consequently, abas-USA, SAP, Plex Systems, and Infor had their respective few minutes of fame allotted to bragging about their capabilities during those breaks. Fair enough!

  Who Pays for the Event, and Why?

The show is financed and sponsored by participating vendors/VARs and attendees, as well as via some additional media sponsorships. The marketing draw is a joint effort between brij (who takes care of the venue and catering), the vendors or their VARs (yes, they do occasionally invite companies who are on their radar as hot prospects), and TEC. For its part, brij markets the event using a combination of tactics, including e-mail marketing, telemarketing, the TEC newsletter, LinkedIn, press releases, Twitter, the event Web site, TEC’s Web site, vendor/VAR Web sites, etc. Over half of the attendees have reportedly heard about the event via the company’s e-mail blasts.

It is important to note that all “unknown” registrants are screened and qualified by the event coordinator before accepting the registration. In other words, vendors pay for access to prequalified companies who are actively looking for ERP software. This is a big prerequisite for end-user registration. More often than not, consultants will disguise themselves as end-users to gain access to the end user group, but they are very well screened and “weeded out” by savvy event staff members.

At first, I was surprised to realize that the vast majority of attendees were not Boston locals, as I came across companies from Florida, Kentucky, and even Wales (UK). I indeed wondered why they found it worthwhile to spend money on the registration fees, hotel, and travel to see vendor demonstrations. The sentiment was along the lines of the quote by a previous Vendor Shootout attendee, as displayed on the Vendor Shootout Web site:

A project of this magnitude (software selection) is a very long drawn out process. The solution you choose will have a tremendous impact on your business. To review multiple software demonstrations at one time with side by side comparisons saves time narrowing your selections, moving your project forward in a shorter period of time.

Indeed, after thinking over and remembering my involvement in selections over a decade ago, companies’ staff would otherwise have to travel to several locations to be repeatedly shown products by each vendor separately. Alternatively, they could fly vendor teams into their premises, but it all takes much more time and money than seeing all of them at once. In the case of the Boston event, there were five two-and-a-half-hour demo slots over two days, and eight available ERP solutions. Two colleagues from the same company could see all the products by dividing the sessions between them.

I was wondering about how these attendees would react to the event and the ability to watch the same scenario play out up to five times in two days (given that I was brain-fried by the end of the first day, after three demos). Well, after a collective 12 hours or so of information gathering, presentations, keynote speakers, and seminars, the response was overwhelmingly positive and the consensus seemed to be that the scripted presentations create a format that allows for a true “apples to apples” comparison of products and functionality.

I concur with IQMS’ recollection of the event in its subsequent blog post. Indeed, during the breaks, several attendees volunteered to me that they were curious about what other systems had to offer, since they were on the fence with respect to whether to pay for an upgrade with their existing system, or take that money to another ERP Software System and start anew. Many also were curious about the latest technological advancements - specifically smartphone and tablet mobility apps. Overall, there was a pretty well-rounded collection of reasons for attending the event.

  There Is Always Room for Improvement

In the end, everyone—from attendees, to vendors/VARs, and dare I say it, even TEC and the tacit organizer brij—walked away with some value, whether it be a better understanding of the buying “public,” the state of the ERP market in today’s manufacturing world, or the functionality available to the buyer. The event allows the ERP implementation project-minded attendees to make their own conclusions in a low-pressure and bias-free environment about what works for them, given their own understanding and experience of the industry in which they work.

The math is simple: eight best ERP Software solutions were fighting there for 20 prospective customers. Even if each vendor/VAR acquires a single new customer (to say nothing of a few), the benefit of the event already exceeds the costs and effort involved by a large margin. One of my first reactions and tweets from the event was that it was too bad that SYSPRO, Sage ERP X3/MAS 500, ProfitKey, NetSuite (especially in light of its SAP Business ByDesign and Plex Online on-demand counterparts), IFS, Consona ERP, etc., were not participating as well.

Afterwards, I learned that some of these vendors had been present at previous events, and the reasons for their irregular attendance vary. Some have different budget calendars, while other still feel uncomfortable about attending an event that is organized by archrivals.

Since November 29, 2007, at Georgetown University, Washington, D.C., when the doors opened to the first Vendor Shootout for ERP, featuring six industry-leading products, the event has evolved in a number of ways. For one, the number of vendors participating has increased to eight of late, spreading the event into two days, as opposed to a one-day show initially. The script itself has been elevated from a point-by-point detailed individual feature script to a higher-level business area script.

The Vendor Shootout has always been an ERP-based event and specifically for core manufacturing and distribution focused enterprises. In February 2011, an experimental third day was added with a business intelligence (BI) focus. However, this attempt didn't really work, as the main focus of the attendee group was still on ERP. Thus, no standalone point solution events have been planned. Nonetheless, the event organizers are considering creating a focus on some industries for future events (e.g., retail, government, etc.) while leveraging the typical ERP scope.

Basically, the event still sets out to do the same thing it always did, which is to provide a forum for actively searching software buyers to see and meet a number of vendors/VARs who can deliver desired capabilities. Additionally, it provides the opportunity for this group to network with others (including competitors) who are in the same boat at the end of the day. The co-ordination and the event’s format have changed to optimize these intents.

The attendees (both end-users and vendor/VAR staff) with whom I spoke with agreed that this was a useful forum for them. The only drawback was that by the second day, they were having trouble discerning systems from each other. This information overflow is an expected outcome, since they see a brush-fire agenda from at least five different software suppliers, with lots of screens and sales pitches, over a two-day period.

Do some vendors go off topic and/or fail to complete the script’s syllabus? Possibly. But because vendor representatives cannot attend the competitor sessions, it is up to the attendees to keep the vendors honest. At some sessions I attended, some sections (e.g., accounting or human resources [HR]) were breezed through, and others (e.g., order capture, planning, manufacturing, etc.) had much deeper dives due to the audience’s interest and insistence.

In summary, any company that is serious about acquiring a new enterprise system, and any vendor/VAR that has nothing to hide (or be skittish about) in a multivendor competitive setup should benefit from attending Vendor Shootout events. Your comments and suggestions on how to make this event even more attractive and worthwhile are more than welcome.

[tec123456-blog]

Cloud ERP for Manufacturing: 6 Considerations

While cloud computing is still hot, the conversations I’ve been having with people who are in the process of selecting an enterprise resource planning (ERP) system for their manufacturing business express a lot of skepticism, uncertainty, and concern about the applicability of cloud software to their business.

There is no shortage of software-as-a-service (SaaS)–based manufacturing ERP software offerings nowadays, for almost any vertical manufacturing market segment, but while cloud and hosted solutions are routine for many types of business software across various industries, TEC data shows that they are not in wide use among manufacturing businesses.

To analyze the data, I combined TEC Advisor project numbers of ERP for discrete manufacturing, ERP for process manufacturing, ERP for engineer-to-order manufacturing, ERP for the apparel industry, ERP for mill-based and material converting environments, mining industry ERP, and ERP for mixed-mode manufacturing. For the sake of simplicity, I grouped together SaaS and hosted solutions—a set of applications that are not deployed on the manufacturer’s premises and can be accessed via the Internet. Note also that interest in SaaS-based ERP software for manufacturing (and other industries) varies by country and geographical area and can be seriously affected by political climate and general development capabilities, as well as lines of communication and local business and Internet rules and practices, but such level of detail is beyond the scope of this analysis.

The graph below demonstrates which server platforms TEC Advisor users from manufacturing companies indicated as preferred for their future ERP systems.

Server platform preferences of manufacturing businesses *Totals may exceed 100% as multiple server platforms may have been selected.

Cloud and hosted solutions demonstrate stable growth—in the manufacturing sector the level of interest more than doubled since 2007, from 9.4% to 19.4% of all respondents in 2011. In fact, all other platforms showed a decline in interest.

However, the preference for SaaS and hosted solutions together is a fraction—only one-fifth of all respondents in 2011—of that for traditional in-house server platforms. This shouldn’t be too surprising given that the market for cloud-based or SaaS ERP systems for manufacturing is still relatively immature and is in a stage of active development.

Despite the rush for the cloud with other types of business software, such as customer relationship management (CRM), human resources management (HRM), and project and process management (PPM), there are valid reasons for manufacturing companies to avoid off-premise ERP systems. Some of these issues are to do with the nature of SaaS-based software products, and others are specific to the manufacturing industry.

There are six major issues over which manufacturers hesitate to move to the cloud:

Multiple modification requirements. Since manufacturing is generally a complex process, which includes a wide range of operations and a high volume of transactions, many of which are unique, there is a high level of possibility that modifications or customizations of standard out-of-the-box ERP software will be required. But software modification requirements interfere with the main idea of multitenant SaaS ERP—delivering exactly the same application to all the clients. Certainly, some SaaS software products can accommodate low-level changes, such as screen customization or those related to features not requiring source code change. But this model cannot accommodate serious changes in business logic and processes.

Handling exceptions in common business processes and making modifications to ERP systems has always been frustrating and expensive, so if a cloud product reflects all of a manufacturer’s specifics within its standard functionality, it should be given serious consideration.

Data ownership and overall increased dependency on a third party. Any usage of an ERP system implies a level of dependency on a business that is out of your direct control. However, in the case of cloud computing this dependency will be absolutized. The issue goes beyond temporary service outages, or the theoretical possibility that a service provider may file for bankruptcy. Fundamental differences may exist between the service user and the service provider—strategy, approach to routine operations, provision of information, reaction speed, etc. In addition, manufacturing companies will have logistical concerns regarding data availability in cases of contract expiration or termination for any reason.

Obviously, not all businesses feel comfortable putting their private data and related infrastructure into the hands of others, especially into remote services that you can’t control. But on the flip side, modern businesses already depend on a huge number of service providers, such as banks, consultants, and suppliers, who outsource various business functions, thereby sharing their private data to a greater or lesser degree.

Strict compliance requirements. Many manufacturing businesses operate in market niches that are held to severe compliance regulations with multiple-level government standards, or various requirements from nongovernmental certification authorities. ERP software systems are often designed with functionality to help ensure compliance.

Cloud ERP vendors aren’t always able to support the requirements for specific regulations because of the nature of the deployment method or its technical limitations. For instance, some compliance activities may require dedicated servers, but cloud solutions generally rely on shared server power. Certain compliance legislation may even require information storage and processing to be internal.

Security concerns. Despite the tremendous efforts of cloud providers to minimize security concerns, this remains one of the strongest impediments to the adoption of cloud-based ERP systems. Cloud application vendors argue that the security level of SaaS is even higher than for on-premise systems—the cloud service providers’ staff is highly trained and more experienced with preparing for and dealing with security and access issues, and dedicated data centers are built and managed with more focus and control.

It would be wise, however, to remember that the weakest element of security has never been the data center but rather the software end user—and this element remains the same, whether the user is accessing an on-premise or off-premise system. Some cloud ERP Software Vendors may address end user security risk within their service level agreement but the price of such a service should be factored into the system’s total cost of ownership.

Leasing versus purchasing. Although leasing may seem to be more affordable in the short term than purchasing, this method may not be suitable for some manufacturing companies. The final decision to purchase or to lease greatly depends on several factors, including accounting, geography, taxation, and established corporate policies. Note also that the SaaS delivery model is not always less expensive than owning—from a long-term perspective, buying your software outright will likely be more cost-effective.  

Integration with other corporate applications. Operational issues at the junction of two or more software products are frequent, and an ERP Software System has to integrate with the other cloud and on-premise systems that a company uses—a manufacturing company may run dozens or even hundreds of various systems simultaneously. Technically speaking, all potential integration issues can be resolved, but what it will look like from an organizational or administrative point of view is an open question. Geographic remoteness may bring an additional level of complexity to an already complicated issue. In addition, the total cost of such integration work may make this deployment model less attractive.

In fact, the cloud solutions landscape is further complicated by the different types and classes of offered applications, including private cloud, platform as a service, infrastructure as a service, software hosting, and so on—the variety of possible combinations of delivery methods for a single manufacturing business is huge. To navigate the software evaluation and selection process, companies need to clearly identify and understand their business priorities and strategy.

Most of the above-mentioned concerns are surmountable; with the exception of specific compliance issues and cost considerations, there’s no longer any reason for manufacturers to stay away from the cloud.