Posts Tagged ‘SME’

Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider

Competition Intensifies For The Small And Medium Organization’s Software Budget

Software vendors such as Oracle and SAP can no longer rely on their large enterprise customers for double digit year-over-year growth.  In fact, their customers have not only reached a saturation point in being able to consume new solutions, but have also faced demands to cut their large maintenance bills.  With nowhere to go, enterprise apps vendors now turn to the small and medium sized market to drive their growth plans.  Consequently, billion to multi-billion dollar SMB stalwarts such as Infor, Microsoft, Sage, and Lawson are not standing still.  In fact, they seek opportunities to take market share from the industry leaders while fending off challenges from sub $500M SMB vendors such as Agresso, CDC Software, Deltek, Epicor, Exact, IFS, NetSuite, QAD, and Syspro.

Small And Medium-Sized Organizations Seek Enterprise Class Solutions Without The Resource Overhead

Globalization, regulatory compliance, and economic demands results in similar market pressures for all sizes of business.  Size no longer plays a relevant role in business requirements.  In fact, a recent survey of over 100 small and medium sized organizations, shows similar needs as large enterprises.  However, small and medium-sized organizations can not afford the resource overhead required to maintain large and complex software systems.  The 10 areas that drive vendor selection decisions include (see Figure 1):

Figure 1. Small and medium sized organizations seek enterprise class solutions without the resource overhead

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The Bottom Line – Ten Lessons Learned Emerge From Recent Vendor Selection Trends

  • Invest in last mile industry focused solutions.Customers expect their vendor to speak their language.  Solutions that lack vertical fluency and limited industry customer referencability will be relegated to the ERP graveyard.
    Lessons learned: Demonstrate thought leadership in each vertical and lead industry discussions.  Focus on a handful of verticals.
  • Focus on rapid implementation and realization. Gone are the days of 12 to 18 month deployments.  Customers seek deployments times with less than 3 months.
    Lessons learned: Consider SaaS and OnDemand options.  Templates and productized roll-outs improve time to market but can’t compete with  SaaS solutions and onDemand offerings in demonstrating value to customers.
  • Expand the number of trusted partners and vendors. As SMB’s expand across the globe, they expect vendors to invest in trusted partners for both delivery and product footprint.  Customers expect partners to assist with localization in new geographies, extend vertical solutions, and integration.
    Lessons learned: Build partner ecosystems to geometrically expand reach while meeting customer needs.  No vendor can deliver on all customer needs.
  • Deploy easy to use reporting tools and BI. Value out of the box requires BI and reporting tools to be proactive and pervasive.  Users should have access to relevant and timely information along business processes.
    Lessons learned: Design reporting tools with the end in mind.   Start with the value of information and embed throughout the business process.
  • Reduce administrative complexity and ownership costs. SMB’s seek enterprise class capabilities sans the resource overhead of traditional large ERP products.  Business users need to be able to make changes and extend the system.  Ownership costs such as maintenance should deliver value or be reduced.
    Lessons learned: Design self-service administration capabilities from the get-go, not an afterthought.  Software maintenance needs to deliver value or be offered in tiers based on perceived value.
  • Apply Web 2.0 style usability. Solutions should not require extensive training.  New generations of work expect the simplicity and ease of use from consumer based web applications.
    Lessons learned: Invest in user experience and user interaction.  Design process flow based on role-based personas.
  • Improve stakeholder access. Employees, partners, and customers must gain access to key business information.   Value should not be locked away from users when disconnected.  Mobile remains a future growth area.
    Lessons learned: Allow information to be accessed by everyone, everywhere, and at anytime.  New stakeholders will need access so apps should be designed with bullet-proof role based security.
  • Embed Microsoft Office Integration. Ability to use productivity tools should be a given.  Customers seek the ability to seamlessly integrate.
    Lessons learned. Success requires the design Office integration to be both a user interface and gateway into applications.  Clunky interfaces into Microsoft fail in adoption.
  • Deliver worry free updates. Customers should be able to update and upgrade software without significant time spent testing integrations and taking down the system.
    Lessons learned. Design application management into the system design.  Consider the business impact of down time.
  • Provide financing options.  Customers now expect vendors to provide financing to facilitate license purchases.  In many cases, clients seek financing to preserve cash position and add additional services such as training and implementation.
    Lessons learned. Use financing as deal enabler to drive not only license growth, but also larger deal sizes.  Financing is a weapon.

Your POV

Prospects and customers – do these requirements ring true?  Vendors -where are you with your SMB strategy? Let us know how we can assist.  Please post or send on your comments to rwang0 (at) gmail (dot) com or r (at) altimetergroup (dot) com and we’ll keep your anonymity.

Copyright © 2009 R Wang. All rights reserved.

News Analysis: Microsoft Dynamics AX Acquires IP For Four Industry Solutions

Microsoft Dynamics Demonstrates Continued Industry Solution Investment

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Today’s announcement focuses on the Microsoft Dynamics AX product line.  Key facts include:

  • IP acquisition only. Microsoft acquires the intellectual property (IP) for three four industry solutions.  These solutions build on the Microsoft Dynamics AX platform.  Microsoft has not acquired the companies or personnel.   Fullscope, Inc.; Computer Generated Solutions, Inc.; LS Retail, and To-Increase (Columbus IT) remain fully independent and partners within the Microsoft Dynamics ecosystem.

    POV
    :  Unlike other mergers and acquisitions, Microsoft embeds proven and market tested solutions into the core code base.  IP acquisitions provide immediate value without the typical hassles of post-merger integration.  Placing the IP into the main Microsoft Dynamics AX code line ensures consistency.
  • Commitment to upper mid-market requirements. Mid-market sized businesses require deeper levels of vertical and industry functionality.  Today’s announcement demonstrates a commitment to expanding manufacturing, service industries, and retail capabilities.

    POV: Last mile solutions make or break upper-mid-market organizations.  Creating a broader set of common industry capabilities that sit on top of core Microsoft Dynamics AX accelerates both Microsoft and its partners ability to extend vertical capabilities.  Theses solutions come from partners with proven records in delivering to customers.

Acquisition Focuses On Industry IP From Proven Partners

Partner IP selected for acquisition represents the most successful and recognized solutions within the Microsoft Dynamics ecosystem.  Customers can immediately access professional services and process manufacturing capabilities.  Retail solutions will be shortly announced.  Key details for the three industries include:

  • Process manufacturing from Fullscope, Inc. The process manufacturing solution encompasses the entire process manufacturing life cycle and addresses engineer to build.  Key verticals supported include chemicals, food & beverage, life sciences & pharmaceuticals, pulp & paper, and primary metals.  Fullscope garners many Microsoft awards including Partner of the Year for 2007 to 2009.
  • Professional services from Computer Generated Solutions, Inc. The professional services solution provides project based solution (PBS) capabilities that track time and expense, improve project profitability, and optimize resource utilization.  Key verticals supported include advertising & marketing, architecture & engineering, government contracting, legal services, and management & IT consulting services.  CGS was recognized as a 2007 Microsoft Dynamics Inner Circle member.

  • Retail solutions from LS Retail EHF and To-Increase (Columbus IT)*. The LS Retail  solutions focus on delivering end to end retail and POS integration to Microsoft Dynamics AX.  Key features include 6-level item hierarchies, auto item creation, pricing management, purchasing, distribution, loyalty programs, concession management, and hand held support.  The solution is optimized for fashion retailers though other verticals have successfully deployed this product.

    To-Increase A/S, the software development arm of Columbus IT, provides Retail Chain Management solutions.  Key features include both front office (CRM) and back office integration.  The solution includes features such as centralized campaign management, pricing management, inter-company trade, integrated return management, credit risk management, multi-currency, and online Axapta POS integration.  Columbus IT has seen succes in key industries such as Furniture, Gas Stations, Groceries, Healthcare & Cosmetic, and Sports and Fashion.*

The Bottom LineMicrosoft Dynamics AX Users And Partners Can Expect More IP Acquisitions

Building off the experiences from Industry Builders Initiative (IBI) and Certified for Microsoft Dynamics (CfMD), the latest strategy by the Microsoft Dynamics team to accelerate industry vertical innovation for customers and partners provides a pragmatic approach.  Customers expect Microsoft to take the lead in orchestrating common industry capabilities while also providing a stable platform for core Microsoft Dynamics AX capabilities.  Acquiring the IP of proven solutions in the market plays to Microsoft’s strengths by leveraging the ecosystem for innovation while embedding key common business processes.  The result – a more predictable roadmap and a single architecture for customers and partners to expand on.  Pending the success of these IP acquisitions, one can expect more to come as this becomes the model to most efficiently deliver on industry vertical innovation.

Your POV

As an SMB, do you feel Microsoft has the right level of depth in its industry offerings?  Are you in the midst of an SMB ERP vendor selection and are confused by all the choices?  As a partner, do you feel this approach is fair to your investments?  Look forward to your comments or hearing from you.  Post your comments or send a direct email to r at altimetergroup dot com or r at softwareinsider dot org.

* (added 9:23 am GMT-8:00)

Copyright © 2009 R Wang. All rights reserved.

Monday’s Musings: Industry Vertical Pivot Points Still Matter Most

Pivot points represent a market segmentation approach used by many companies to determine market demand, define new products, assign sales territories, service customers, and put boundaries around customer sets.  Since September 2009, over 500 enterprise software decision makers were asked which one pivot point would they prefer their software vendor focus on.  The four key pivot points include market segment, geography, industry, and role.  To elaborate:

  • Market segment – standard definitions of size whether it be by revenue (e.g. $0-249M, $250-499M, $500-999M, $1,000-4,999M, $5,000-9,999M, $10,000-19,999M, >$20,000M)  or by employee count (e.g. 0-49, 50-99, 100-249, 250-499, 500-999, 1000-2499, 2500-4999, 5000-9999, 10,000-19,999, 20,000-49,999, >50,000).
  • Geography – physical and cultural location of where primarily business is conducted (e.g. North America, South America, Latin America, Western Europe, Eastern Europe, CIS, Middle East, North Africa, Africa, India, Greater China, APAC, Oceania, ANZA, etc.)
  • Industry – industry expertise or vertically related business functions often generated by SIC code or broad categories (e.g. Discrete Manufacturing, Process Manufacturing, Retail/Wholesale Distribution, Services, Public Sector, Healthcare/Life Sciences)
  • Role – classification by job functions and titles (e.g. CEO, COO, CFO, CMO, VP of HR, VP of Security, Architect, Chief Legal Officer, etc.)

Respondents were forced to choose the one pivot point they felt would be most relevant to their needs.  The results are as follows:

Pivot Point Preferences

(Survey of 527 enterprise and sme/smb software decision makers from phone, tweets, email, and in-person interactions from September 2008 to June 2009

The bottom line – end users should demand vertical expertise

The message resonates loud and clear – users seek more vertical expertise from vendors.  Making minor extensions to support an industry may not be enough in today’s market.  As industry requirements increase and require software solutions to provide support, end users must demand greater levels of innovation and investment into vertical specific requirements.  Given how much money has been spent on maintenance and support, end users should take an active role in building the right level of dialogue with vendors:

  • Request to join customer advisory boards. Often customer advisory board members have insight into the product direction and future functionality decisions.  Some vendors such as SAP, Oracle, Lawson, and Microsoft hold regular advisory board meetings with end users, senior management, product teams, and analysts to define, prioritize, and test requirements.  These meetings often result in a status report on priortiziation and progress in delivering the requested functionality.
  • Influence existing user groups. User groups may already provide industry specific forums where the vendor and the end users have existing channels of dialogue.  Determine how quickly it has taken a vendor to deliver on promised functionality.  If it’s been more than 12 months and its a common request among 80% of the users, then it’s time to rally the end users for some change/
  • Rally around industry trade groups. Take the time to see what standards have been set by industry trade groups.  As vendors modernize their software architectures to support web services and SOA, trade groups could provide a key opportunity and forum to define common business process, architecture, and meta data standards.

The bottom line – vendors should keep focusing on verticals and micro-verticals

By a 3 to 1 margin, software decision makers resonate most with verticals.  This continues a trend where customers seek deeper functionality by verticals and micro-verticals in their solutions.  Vendors should take the following 5 actions to improve vertical relevance:

  • Focus on a select number of verticals based on vendor size. Most software vendors under $500M have the bandwidth to focus on 3 to 5 verticals while those between $500M and $1B can handle 7 to 9 verticals.  Agree on what you will not be focused on and treat other sales as opportunistic.
  • Build a road map of capabilities that should be part of the vertical solution. Identify the complete functionality of business processes that should be supported.  Include both internally built and externally provided solutions.
  • Identify solution centric ecosystem ownership. Given the myriad of combinations and customer requirements to deliver the last-mile solutions, not one single software vendor can deliver all aspects of a solution.  Determine what part of the value chain will be delivered, externally sourced, or provided by a partner.  Keep in mind some customers may choose to extend on your platform as well.
  • Enable easy access and extension of the core platform. Design the solution with partnership and extension in mind.  Ecosystems provide the fastest way to build adoption of your software. As users and partners add IP and innovation to the core product, vendors gain natural barriers of entry and exit in a specific vertical and micro-vertical.  Customers may also seek to band together to build solutions or have a partner extend and industry solution for them.
  • Tie the pivot points together. One final point – don’t make the mistake of just focusing on a vertical or one pivot point.  Take the time to cross segment by the other pivot points.  Vendors often find that these verticals may not fit as neatly across the board and that’s okay.  Some solutions such as risk and compliance may have inherent appeal across a role such as a CFO and span verticals.  Keep in mind pivot points provide a guide but use common sense when building natural segments.

Related research of interest

May 7th, 2007 “Solutions-Centric Ecosystems Disrupt The Enterprise Software World Order”

August 22, 2007 “Avoiding Failure In Technology Partnerships”

September 3, 2008 “How To Select A Software Partner Solution Offering

Your POV.

Got a similar view on pivot points?  Disagree on this assessment? As an end user which pivot point matters most to you and has your vendor delivered?  As a vendor, have you started to focus more on industry verticals? Identify yourself as a vendor, end user, media professional, etc.  To learn more about how to build your solution centric ecosystem, design a partner program, or extend your industry vertical strategy, feel free to reach out.  Post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.