Cornerstone re-imagines Talent Management -- and itself

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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It’s all about - Re-imagine …

Re-imagine functionality

Cornerstone wants to re-imagine the functionality behind its key three automation areas – performance, learning and recruitment. Cornerstone has targeted specific new functionalities In each of the three automation areas, to bring them further, and closer to the new workforce’s needs. Not surprisingly there has been special attention on recruitment. 
 

The other direction of the re-imagination project is around the user experience. Cornerstone rightfully realized about a year ago, that their product’s user experience was falling behind and has embarked into a brand new user interface with a much more 21^st century tune, you may even say consumer grade user interface.

The overall acceptance of the new user interface was very positive by the attendees and I think Cornerstone has done a very good job creating a lightweight, easy to use interface experience with good cross platform consistency.

My main concern on the new user interface paradigm is the scroll intensity and related downsides. The old user experience paradigm of the eyes are faster than the mouse comes to mind – when users need to scroll to get to information – it takes time and in the worst case – they may not even find the information, as they do not start scrolling. But overall the new Cornerstone user interface is a significant increase in usability and can rightfully claim to be consumer grade.

Public Sector, SMB and force

Cornerstone has expanded beyond being a pure horizontal vendor – with a focus on public sector and is adding (north American) functionality to make it a strong provider of talent management for this vertical. And while public sector organizations certainly can take help managing talent, it was a surprising choice of a vertical to me.

Equally Cornerstone has started to offer products for the small and medium size businesses (SMB) – mainly centered around the performance functionality of last year’s acquisition of New Zealand’s Sonar6. Sonar6 was a leader in the gamification trend for enterprise applications and it is good to see some of that DNA not only being preserved for the SMB offering (<500 employees is the cutoff) but that some of the Sonar6 acclaimed performance management functionality like the helicopter view have made it to the mainstream product.

And back in February Cornerstone released it’s Salesforce based product. Interesting enough the company operated a subsidiary in stealth mode for some time, let it build a product on force.com and sell it to over 70 customers, including Salesforce themselves. It’s a gamble not only on the salesforce ecosystem and partner sales activities, but also on the force.com platform as an alternative to the more Microsoft centric mainstream products.

Cornerstone Uniquenesses

The company has a few unique characteristics that are worth mentioning here. At the preceding analyst day it became clear, that the executive team has been working together for a long time, know each other well and is very consistent facing the questions of the analyst community. It’s remarkable that these executives were able to grow along with the company for the last years of very rapid growth, a living proof of hiring talent for growth.

Moreover Cornerstone is one of the very few enterprise vendors out there with a single platform, with all offerings being built on top of this platform. This not only ensures consistency for end users, but also a higher productivity for development resources. At the same time a single platform company needs to have an attentive eye on the time appropriateness of the platform, but Cornerstone seems to have a good eye on this. The user interface modernization being a good indicoator. Likewise the force.com based product seems to have been an alternative platform validation project, with the nice side effect to yield a separate product for the Salesforce ecosystem.

Then there is the location of the company, being headquartered in Santa Monica. And while there are more recent successes from Silicon Beach it remains an unusual location for an enterprise software company. But Cornerstone has reached a good critical size and attracts enough talent for their product development teams to allivieate this a concern. It could even be an advantage, as Cornerstone engineers come with a relocation extra price tag, should a competitor try to poach.

And finally a lot of respect has to go to Adam Miller – who is the driving force on product vision and direction. Few software companies today rely on their CEO to do this – and even fewer CEOs come to mind to have that capability. Even more remarkable is that Adam's background is not in the high tech industry – but in legal and investment banking. Talk about a wide talent profile.

Positive customers

The road ahead

Like Workday, one of the few other single platform HCM vendor in the market today, Cornerstone has a year of execution tasks and challenges ahead of them. Once you have a great product you need to get it to customers and with little localization needs for talent management required – in comparison to core HR and payroll – the worldwide expansion is a key task for Cornerstone. Hiring, training and getting sales people to the first sell in many geographies outside North America will be critical. And then the ramp up of the following value chain with partners, consulting capability and delivery infrastructure to ensure customer viability and satisfaction. The latter has the most obvious need for investment – as the company does not have a data center in the APAC region yet – something that due to international networks latency is pretty much a necessity.

And while Cornerstone is hitting the right notes in terms of re-imagining their core products it needs to keep investing into them. Across performance, learning and recruitment the latter is probably the lightest in terms of functionality.  And while the weakening of Taleo in the marketplace due to the Oracle acquisition has helped some early customer successes, this situation won’t stay quiet as it is now for too many quarters to come. 

Not only will the Oracle / Taleo combo get its act together, but we will see also the Workday recruitment module in less than 12 months from now in the marketplace. This will transform the currently close partnership between Cornerstone and Workday into a coopetition at best.

So it’s time for Cornerstone to invest in distribution, delivery and products. The news of the planned 220M US$ debt offering is a good sign that Cornerstone is serious about the expansion needs and takes advantage of favorable conditions in the capital markets.

Advice for partners

Find a role in the upcoming expansion that Cornerstone needs partners to fill. Find a win / win area that you can invest and execute in and that allows you to setup for above average revenue growth in the next 12-18 months.

Advice for customers

You are in good hands with Cornerstone for learning and performance. The external enterprise functionality is a very good addition and value add.

• If you look for recruitment, make sure it’s a good fit.

• If you are in public sector understand the road map and make sure you get re-assurances for its timely delivery if your critical processes hinge on it.

• If you are an SMB make sure the gamification nature of the product suits your employee base – and if it does – you have one of the most exciting talent management products at your disposal.

• If you are on the force.com platform and want to run an integrated talent and sales / service system – Cornerstone is one of the more viable and capable vendors.

• If you are based in APAC make sure you have sufficient re-assurance for onsite application performance.

MyPOV

A good event for Cornerstone with significant product innovation – not only on the business functionality but also the critical platform side. Cornerstone has positioned itself well and earned a very good market position that it now needs to execute to expand and solidify in the next 12-18 months all across the world. Exciting times for the company’s customers, its partners, investors and employees. And when well executed, it will not only re-imagine the products – but also the company. 

Meet the Connected Enterprise Speakers: Chris Meyer, Monitor Talent

This is the second installment in a series of blog posts in which we will introduce you to this year's Connected Enterprise (#CCE2013) speakers. This year's list of speakers is comprised of a group of revolutionaries that will challenge you to reevaluate your approach to standing business models.  

Say hello to Chris Meyer, innovator, author, and founder of Monitor Talent.

Chris has dedicated his career to anticipating and shaping the future of business. And he's been pretty busy. Chris is the author of four books including Standing on the Sun, and Blur: The Speed of Change in the Connected Economy and Future Wealth, a BusinessWeek Best Seller. 

Reexamining capitalism

One of Chris' major areas of analysis is the changing dynamics of capitalism. The capitalism of today looks very different from the Adam Smith-style capitalism of 1776. As emerging economies gain power and mature, will they adopt the practices of the old guard? Or will they make their own way, and create the next prevailing version of capitalism? What new opportunities will that create for firms around the world?

Join us at Connected Enterprise and hear from Chris how:

• The obsession with return on equity gives way to more broad-based measurements of success.
• Adam Smith's invisible hand of the market is redeemed by the "invisible handshake" of collaborative networks.
• Businesses take ownership of the impacts they now call "externalities."

Register for Connected Enterprise before June 30, and save up to $1000. 

Register here: http://connectedenterprise.ontrackevents.com/home.cfm

How hard is it to install Office365? Or: The harsh reality of customer support

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the&nbsp;cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.&nbsp; Coverage Areas: Future of Work Tech Optimization &amp; Innovation&nbsp; Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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The other day I went through a rather mundane challenge... I was running Office365 on one machine - but didn't like that machine, returned it and got another one, a new one. Well all I needed to do was re-install Office365, that I need to edit and see revisions of research reports.

Well - the process started by noon on Thursday, and I was finally done on Friday by close to 10 AM  - close to 24 hours. I don't want to dig into the details - but at some point I started tweeting about my progress and created this Storify if you want to visit some of the highlights you can find them here.

But what we can learn from this is, that the reality of customer support, even at a deep pocketed company like Microsoft, is ... pretty sad. Maybe I had a bad day, was just unlucky, had agents at the end of their shift etc... but I don't believe that - given the nature of the observations I was able to make.

Solid Products - less support

All issues seemed to be around downloading and installing the Office365 install files. I realize they are huge, but not larger than other downloads I do (development environments, legally purchased movies etc). This whole problem could have been avoided with a more solid, fault free download.

And typical, like many high tech companies - Microsoft tries to not eliminate the problem at the root - but implements workarounds... I was surprised Office comes with repair tools - a quick repair tool and a internet repair tool (which takes longer, not sure why the internet name would make it look like it take longer, but ok). And indeed these tools work, on the original machine one of the repairs helped me to install Office365. But how about instead making sure that the install files are not having issues in the first place? The leaner approach that certainly is.

Worse - Microsoft bends its own rules. At least the ones from the past when a Windows program needed to un-install again. I have seen plenty of bad and unclean uninstalls - but I never in my 20 or so years of using Windows (ok, dated myself Windows 2.1 was the first Windows I ever used) - had a program that would not un-install itself... but now I had Office from Microsoft themselves - and knew I was in trouble:

And finally I cannot prove it - there maybe an issues with authentication with Microsoft. Somewhere between Microsoft ID and Office email address there was a snafu. Can't pin point what it was, it surely wasn't solved by deleting browser properties - we tried this three times - but something in the back-end did not work (as I could not log in).

Confused about Microsoft ID - don't worry Microsoft is, too

In all three conversations I had with Microsoft 1st level support - they had me try to login with my Microsoft ID and alternatively with my new Office365 email ID. Well turns out - as confirmed by the last support agent who finally fixed my problem - it has always been and is only the Office365 ID you should use to login into Office365. Seems intuitive - but 3 support agents had me try another path. How and why it finally worked - I was not privy to the root cause.

Support best practices are... hard

Interesting enough - every of the 10 agents I talked to asked for a callback number in case we would get disconnected. Very good practice - only you need to call back when the line drops. In my case 3 times. So why ask for the number when you do not call back - or your agents do not have the capability to call back?

And of course you should have a knowledge base and trained support agents. I mentioned the confusion on the Microsoft vs Office365 ID. But we also went down dead ends like switching browsers, deleting cookies etc. At no point I had the impression the agents were working on a cohesive script.

Moreover you want to make sure your agents know where to transfer calls. All first level support agents knew I had a problem with Office365 - but I got routed twice to the wrong 2nd level support. No idea why. But frustrating for the customer and this costs Microsoft real money.

It was good to see, that I was a member of four personal, warm transfers, but I had to start from scratch every time. It does not look that the agents are working on one common system - as I had to re-answer same and similar questions again and again.

But on the downside there is always some signal and signal strength loss with every transfer in the VoIP ether - so two times the 3rd level agent could not hear me anymore... so obviously the signal boosting does not work well enough.

Lastly - global remote support is not an easy task. But you should be aware of the time zone where you client is in. One 2nd support agent told me that the next level of support is gone - because it was after 10 PM PST, but well it was 9:17 PM PST.

Needless to say every agent I talked to was friendly, patient, polished and professional.

Make your support agents life easier

Only the 9th agent logged a case and I got a service request number. But all other agents beyond 1st level always asked me for a service request number... so make it a practice to log a case and generate a number right away.

And anyone who came up with these order number format nncnccnn-nnnc-nnnn-nccn-nncnccnnncnn needs to call India and pass 10 order numbers across the line every day... it took me 2-3 minutes to get that monster across the phone line... so make it easier for the support situation.

Social practices are ... harder

I wasn't private about the problem anymore - used the Twitter hashtag #OfficeSaga and tweeted every step along the way. Some follow Twitter users re-tweeted. I addressed tweets to @Mircrosoft and @Office. But the social pickup came when it was all done... and typical social networks - a Twitter user replied - even before me (inside joke guess at #HANA speed):

Since then - nothing, nada, zilch... so when you engage in social relationship management - then you need to monitor earlier, be faster and round the interaction up.

Biggest Concern

The agent that managed to help me at the end of the day is working in a team, that is only available 9-5 PST. That is hardly enough coverage for software support in a country like the US. Yes - I had an option to continue to emergency and productions issue support - but that did not seem adequate for an Office install issue - I have been on the other end too many times to do this... but Office buyers and users deserve a better time coverage in my view. Unless Microsoft shows me, that I am the only one calling in in after hours... but empirically I doubt that - since I got the custom due to unexpected call volumes... message right at 8 AM. So plenty of backlog.

Advice

If you are in charge of support somewhere and reading this - hope your team does better. If not and you are aware of the weak points - then address them asap. If you think you are stellar - then pick up the phone and try a few warm transfers and see when the nth agent can't hear you anymore.
...

MyPOV

Maybe it was just bad luck. But it showed some systemic issues in customer support, that I would have thought a well funded, high tech company like Microsoft would solve better. Concerns me about the general support experience out there. Good luck next time you have to call 1-800...

Constellation Demystifies Social Business with the First of Eight Actionable Reports

SAN FRANCISCO, CA – Constellation Research, Inc. the research and advisory firm focused on disruptive technologies, announced today the publication of "Demystifying Social Business: Optimizing the Lead to Deal Process (Sales)” by Constellation Principal Analyst and CEO, R “Ray” Wang. This research report provides pragmatic advice about how organizations should get started on their social business initiatives.

This report reveals:

• How social business adoption has moved from experimentation to evangelization
• Why use cases provide the entry point for successful social business adoption
• Seven key use cases for sales in the lead-to-deal business processes
• How to find your organization’s disruptive technology adoption style or ‘persona’
• Four recommendations for the successful deployment of social business solutions

Constellation Research pioneered the complete set of front office and back office use cases for social business in 2010.  This report provides insight into a key –mega-area - lead to deal use cases.  Social business initiatives have gained acceptance as a key driver in business innovation.  Since 2010, organizations have experimented and successfully deployed social business initiatives across a variety of business processes.  In Constellation’s recent 2013 survey of 237 social business adopters, more than a majority (57.8 percent) of the market leaders and fast follower respondents had moved from experimenting with social business initiatives to scaling them to match demand. This trend signifies the successful growth of social business across a number of use cases.

With over 50 use cases identified in the survey, organizations now have defined entry points to begin social business initiatives.  Consequently, many businesses can learn from the experience of market leaders and fast followers.  

“After talking to 100’s of early adopters in social business, we felt it was time to put together the best practices to share with our clients.  What’s amazing is the correlation between social business success and alignment with business processes.  The result is this first of eight reports and the related workshops we’ll be offering in Constellation Academy” said  report author R “Ray” Wang.

This report fits into Constellation’s business-focused research themes: Next-Generation Customer Experience and Consumerization of IT &The New C-Suite.

THE REPORT
More information about "Demystifying Social Business: Optimizing the Lead to Deal Process (Sales)" can be found here: http://www.constellationr.com/research/demystifying-social-business-optimizing-lead-deal-process-sales

Download the report snapshot

ABOUT R "Ray" Wang
R "Ray" Wang is the Principal Analyst and CEO at Constellation Research, Inc.  He's also the author of the popular enterprise software blog "A Software Insider’s Point of View". Ray's a prominent keynote speaker and research analyst working with clients on innovation, business model design, engagement strategies, customer experience, matrix commerce, and big data.  He advises Global 2000 companies on business strategy and technology selection.

COORDINATES
Profile www.constellationr.com/users/rwang0
Twitter: @rwang0

Press Contacts:
Contact the Media and Influencers relations team at [email protected] for interviews with analysts.

Sales Contacts:
Contact our sales team at [email protected].

Why SAP acquired hybris Software

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the&nbsp;cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.&nbsp; Coverage Areas: Future of Work Tech Optimization &amp; Innovation&nbsp; Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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hybris Software

The company is a veteran of the e-commerce age, being founded back in 1997, which for e-commerce timelines is like centuries ago. But hybris has been able to grow by adding functionality way beyond the original e-commerce scope and expanding the enterprise.

Over time hybris has grown way beyond the original scope of e-commerce - out of the necessity to support the customer base. Customers were working on more channels, well that requires some MDM capability - which suits also to integrate with various ERP back ends.  Customers wanted mobile commerce - well that required hybris to support mobile shopping carts. Multiple channels and systems - here comes order orchestration... and so on.

hybris has shown long breath and staying power on the topic, no doubt. But it's recent success of close to 90% YoY growth was also aided by reduced competitive pressure from IBM's Sterling Commerce acquisition and even closer to home, Oracle's acquisition of ART technology. That left hybris as the only dedicated e-commerce vendor standing from the 2011 Gartner e-commerce leader's quadrant. A void into which hybris executed very well, so congrats to their management team on that.

SAP Whitespace

As stated before - SAP - like their competitors - are under enormous revenue pressure to produce the results expected by the markets. With a significant over-licensing situation - it's getting tougher to find new areas of business automation to sell to customers. And one area that was under-penetrated by SAP since the dot com boom and post the markets pseudo boom phase - has been e-commerce.

One ironic example of this has been the poster child customer on the call, Grainger, which sells office equipment in the US. Around 1999 already Grainger was the customer to demo for SAP as they had a great vision of selling micro-targeted and priced products and where a showcase for SAP on the back end (back then under the MRO hype mantle). And while they still use the SAP back end, their e-commerce automation had moved to... hybris.

So SAP has no good, complete electronic interaction and commerce platform for customers, especially consumers. And competitors like Oracle and salesforce are providing the front ends to the customer interactions where SAP provides the back ends  This should make scary late 90ies scenarios pop up in Walldorf, when SAP was in the same position, only it was Siebel that was getting big in the front office.

From all recent SAP acquisitions - hybris has the most white space from a SAP install base perspective. More SAP customers had Business Objects, Ariba and SuccessFactors than having hybris. The 80 or so common customers are a drop in the ocean for the 240k+ SAP customer pool. So most likely - this is the largest potential for SAP to address post an acquisition - ever.

Where will hybris go?

As standard by now - hybris will remain a separate entity - which on paper is always good to preserve culture and dynamics - but eventually unravels at SAP. Unusual for a 2B+ (speculated) acquisition, the hybris CEO does not become part of the board (as did John Schwartz, Lars Dalgaard and Bob Calderoni). Or maybe the co-CEOs thought it's not again time for a top level re-org (my take on the last re-org here).

This may even accelerate the integration of hybris further, as SAP will have to push looking for cross-sell opportunities into their install base. The big questions is - what appetite does the average SAP account manager have to sell e-commerce solutions - something the veterans got burned on - and more junior members of the salesforce may not see the sweet spot in. But then HANA based products are not directly around the corner either - so I would expect some account managers to do crash courses on how to sell e-commerce.

Integration matters

SAP knows by now, that when they acquire another vendor, SAP customers expect an integrated solution. This has been a steep learning curve recently, as Business Object as a BI vendor provided integration tools. Same for Ariba. This alleviate the need for newly created integration options.

But on the SuccessFactors acquisition it became clear, that the thin type integration SuccessFactor offered, was ok with customers when they bought from a separate company, but this would not work once SAP and SuccessFactors were a combined entity.

The challenge for SAP' is, that it does not have a viable integration platform. HANA Cloud Platform is too young and faces many other challenges. NetWeaver PI is coming around these quarters - but the main question is - where to integrate to - the Business Suite classic or any brand new HANA based products. 

On the press call there was even the hint that hybris maybe re-platformed on HANA. But putting hybris on HANA maybe straightforward for hybris - but will create even more integration needs for SAP - as the data to run a multi channel e-commerce system like hybris - will have to come out of the Business Suite. Which technically could run on HANA -- but even in that case data needs to be accessible for hybris, and not only will data flow to hybris, it ill also need to be written back. 

And I doubt the SAP salesforce will want to limit the cross-sell potential to customers only, that have based their Business Suite on HANA. Which creates additional integration work in regards of getting the relevant ERP content exchanged between hybris and Business Suite in classic deployment.

Last but not least - hybris announced their integration to SAP - only a short 3 weeks ago at Sapphire - and while it runs at Grainger, Levi's, Phonak etc - it seems to be a pretty new offering. 

The good news for SAP is - integration needs are so vast - that they may raise the bar for competitors to sell into the SAP install base, but only once SAP integrates well enough.

The (biggest) missing pieces

SAP still has a few missing piece for the overall B2B2C strategy - and that's the orchestration of customer relationships and business across channels. This job falls to market segmentation and relationship automation via campaign management. Both functionalitiey exist in the Marketing module of SAP CRM - but they are not up to 21st centrury best practices. 

Equally SAP lacks functionality for another key component in the consumer space, sentiment analysis. The former Business Object Inxight is doing text well - but cannot process the signals a consumer leaves as an electronic interaction trail. And the partnerhship with NetBase - well iyt is a partnership. Not enough to counter and compete salesforce's Radian and Oracle's Vitrue and Collective Intellect capabilities. 

So expect SAP to take out the checkbook soon again.

Implication for SAP customers

SAP customers that are thinking about their e-commerce presence and automation should pause their efforts and see what SAP will come up with in a reasonable timeframe. hybris capabilities are advanced enough to justify a reasonable timeout.

Implication for hybris only customers

You need to get assurance from SAP that you will be supported down the road. I just spoke to a customer of SAP today - who simply got forgotten because of being on a not go forward platform. Extract the concesssions in the next weeks when there is still attention from SAP top management on this matters.
 

Implication for SAP partners

This is good news for partners since most likely there will be a lot of time and labor to be spend - at least for a transition period - which will help SI revenues. If Bill McDermott is right, that CEOs want this - then except lucrative budgets. 

Increase your staff expertise on e-commerce in general and hybris in particular. Polish HANA skills and assess  likeliness of integration going towards HANA. Likewise for NetWeaver PI - it's new - get trained and get experience under your belt.
 

Implication for SAP

This is a very good acquisition for SAP, securing revenue potential for years to come and only creating insignificant product overlap questions, unlike the SuccessFactors buy. How many customers are still on the venerable SAP Store these days? I guess they will be happy to move to the hybris offering. But SAP will need to do a better job on communicating and executing the integration plans than recently with SuccessFactors.
 

Implication for competitors

Depending on how well SAP will address integration - there is a differently timed remaining window of opportunity. Most likely hybris will slow down with creating new leading functionality - even though no one from SAP and hybris would admit to this - so this creates an opportunity to claim functional leadership with hard to sell away differentiation points.
 

MyPOV

This acquisition makes much more sense for SAP than e.g. the SuccessFactors acquisition. Though both will alleviate / have alleviated competitive pressures, the hybris acquisition sees pretty much no functional overlap with existing SAP offerings - so much less explaining to do externally and internally. And  moving hybris to e.g. HANA is a simpler scope than  moving SuccessFactors. I bet if SAP wanted, hybris could run on HANA before SuccessFactors.
But SAP needs to address the integration roadmap quickly and execute on it. 

Once more like all things product at SAP these days - it's all about execution.

Constellation's Quarterly Enterprise Mobility Survey

At Constellation we're passionate about how business models can be transformed by disruptive technology. However, we're not satisfied with just sitting around theorizing--we want to know how people like you are actually using the technology. This holistic approach to research production ensures we produce the highest quality research and advisory.  

So... will you help us?

Take this short 15 minute survey. Tell us how you're using mobility in your organization, and we'll send you a snapshot of the survey results. 

Share the link to this survey http://www.surveymonkey.com/s/V23PZJL

Plex Software and Its Mandate for Growth

President, Computer Economics and Strativa, Inc.
Computer Economics and Strativa, Inc.

Frank Scavo is skilled at formulating and communicating IT strategy, developing the business case for new systems, and facilitating the selection of enterprise systems, such as ERP, CRM, and supply chain management. He is also an expert in benchmarking IT spending and staffing levels for end-user IT organizations. Frank was one of the first tech bloggers, beginning in 2002 with his launch of the Enterprise System Spectator providing independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them. Frank has been quoted as an IT expert in numerous business and industry publications such as the New York Times, Wall Street Journal, Computerworld, CIO Magazine, ZDnet, eWeek, Datamation,…...

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As the first cloud-only manufacturing ERP system, Plex Systems has an wide footprint of functionality, going beyond what is offered by newer cloud vendors.

Nevertheless, after more than a decade of development, Plex has fewer than 1000 customers and its presence is limited mostly to smaller manufacturing companies in a few sub-sectors.

As evidence, there were about 700 attendees at last year's PowerPlex conference. This year's PowerPlex, which I attended this week in Columbus, Ohio, saw about 750 Plex users in attendance.  Granted, overall, these are highly satisfied and enthusiastic customers. There just needs to be more of them.

On the one hand, Plex claims a compound annual growth rate of nearly 30% over the past three years--an impressive number. But as the first fully multi-tenant manufacturing cloud vendor, Plex could have, and should have, been growing at a faster pace. Now, there are several other cloud vendors taking aim at Plex's market, such as NetSuite, Acumatica, Rootstock, and Kenandy. 

Plex must grow more aggressively, for two reasons. First, the company was acquired last year by two private equity firms. Private equity is not known for patience. Second, as CEO Jason Blessing pointed out in his keynote, growth protects the investments of existing Plex customers. Software companies that do not grow do not have the resources for continued innovation. Eventually, they only provide enough support to keep current customers--at best. They become, in effect, "zombie vendors," to use Blessing's term.

So, what does Plex need to do to grow at a more substantial pace in the coming years? I see six mandates. Some of these are fully embraced by Plex, while others, in my view, could use more emphasis. 

Get Noticed

If some cloud vendors need to tone down their marketing hype, Plex needs to kick it up a notch. Plex was not only the first truly multi-tenant cloud manufacturing systems, it was also one of the first cloud providers period. Yet still the majority of manufacturing systems buyers have not heard of Plex. Reflecting Plex's home turf in Michigan, discussions with Plex insiders about this often includes the phrase, "midwestern values"--in other words, not blowing one's own horn. However admirable this humility may be on a personal basis, it is not useful from a business perspective.

Hopefully, this is about to change with the hiring of Heidi Melin as Chief Marketing Officer. Melin worked with CEO Blessing at Taleo, and more recently she was CMO at Eloqua, which was acquired by Oracle. In my one-on-one interview, Blessing was high on Melin's arrival, and indicated that she would be especially focused on digital marketing to reach the many thousands of companies in Plex's target market. 

Put More Feet on the Street

Blessing also indicated that he intends to beef up Plex's sales efforts, which to date have been concentrated largely in the Great Lakes region. This has left many sales opportunities poorly supported in other US geographies, such as the southern states (home to many automotive suppliers) Southern California (home to many aerospace suppliers), and other parts of the country that are home to many food and beverage companies. Increased sales presence in international markets is also needed.

This is a step long overdue. When my firm Strativa short lists Plex in ERP selection deals, Plex is often flying in presales resources from across the country, which does not sit well with most prospects. Opening regional sales offices, like Plex has now done in Southern California, will help put more feet on the prospects' streets.

Move Up-Market

Historically, Plex's system architecture is oriented toward single-plant operations. There is some logic to this approach. As Jim Shepherd, VP of Strategy, points out, most of the information needed by a user is local to the plant he or she is working in. However, even small manufacturers often have needs that include multiple plants, cross-plant dependencies, and central shared services. Plex does have some multi-billion dollar customers, but these are primarily companies with collections of plants that are relatively independent of one another.

In response, Plex is building out its cross-site and multi-site capabilities while keeping its primary orientation around the single plant. In my view, this will be a key requirement in Plex moving up-market and serving larger organizations.

Build Out the International Footprint

The bulk of Plex's sales are to US companies, but if Plex is to grow more aggressively it will need to better support the international operations of these companies. It will also need to sell directly to companies outside of the US.

In his keynote, Shepherd pointed to the new ability for Plex to print reports on A4-size paper, commonly used in parts of the world outside North America. The fact that Plex is just now getting around to formatting reports on A4-sized paper shows just how US-centric Plex has been. To be fair, Plex does support multiple currencies and has support some international tax requirements, such as in Brazil, India and China, although some of this is done through partners. Nevertheless, Plex has much it could do to improve its appeal to multinational businesses. In this day and age, even small companies--like those Plex targets today--have international operations. Building out its international footprint is another prerequisite for Plex to achieve more rapid growth.

Venture Outside of Traditional Subsectors

Plex sees its current customer base primarly as three manufacturing subsectors today: motor vehicle suppliers, aerospace and defense, and food and beverage. Blessing indicates that by Plex's calculations, these three sub-sectors account for about 25-30% of the manufacturing ERP market. Surprisingly, however, Plex currently has no plans to expand outside of these sub-sectors. Blessing believes that simply by increasing Plex's sales execution in its current markets it can continue its compound annual growth rate of nearly 30% for the next several years.

Count me skeptical. First, as indicated above, Plex no longer has exclusive claim to the cloud manufacturing ERP market. Plex is going to have to fight a lot harder than it has in the past for new customers. Second, why is 30% growth the benchmark? I understand that there are risks in more aggressive growth. But aiming higher might be needed in order to meet the 30% goal.

In my view, Plex is not far off from being able to address the needs of manufacturers that are adjacent to its existing markets. These would include industrial electronics, medical devices, and industrial equipment. Plex already has some customers in these sub-sectors, so it's not like the company is starting from scratch. Hopefully Plex will formally target these industries, sooner rather than later.

Target the Customers You Want Not Just Those You Have

Over the past 10+ years , Plex has let customer requests drive its product roadmap. In fact, much of Plex's development has been funded directly by customers or groups of customers who desired certain new features. This worked well to minimize Plex's up-front costs of new development and also led to high levels of customer satisfaction. However, it had one major drawback: if you only have customer-driven development, everything you build will by definition only be of interest to the type of customers you have today. In addition, a single customer or group of customers are not able to fund major new development that are more strategic in nature.

Here Plex is on the right track. Recognizing this need, Plex is now allocating product development funds for strategic initiatives, including a revamp of its user interface, cross-browser access, business intelligence and reporting capabilities (Inteliplex), as well as other major initiatives. In conversations with customers at PowerPlex they expressed these as welcome developments, although they have, apparently, diverted Plex resources from some of the customer-requested enhancements they also wanted.

The Way Forward

There's plenty that I admire about Plex: its zero-upgrades approach, its broad functionality, and the fact that it proves manufacturing companies have been ready for cloud computing for many years, contrary to the claims of on-premise ERP providers. Most of all, Plex allows me to roam around its user conference and speak informally with customers. Nearly without exception, everything I hear is positive. Not a single customer has told me they made the wrong choice with Plex, although with any ERP implementation there are always bumps in the road. 

But none of this guarantees that Plex will thrive in the future. Like proverbial sharks, software vendors must continue to move forward, lest they die. The management team at Plex has some new blood, including the CEO, and a new perspective. They understand the opportunities ahead, but will they fully rise to the challenges? We'll be watching.

Related Posts

The Simplicity and Agility of Zero-Upgrades in Cloud ERP 
Plex Online: Pure SaaS for Manufacturing

Why IBM acquired SoftLayer

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the&nbsp;cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.&nbsp; Coverage Areas: Future of Work Tech Optimization &amp; Innovation&nbsp; Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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On the morning of June 4th 2013 we learned that IBM announced its intent to acquire SoftLayer – a strategic acquisition for IBM in their quest to reach 7B of cloud revenue in 2015. Financial terms were not disclosed – but the street says the deal is valued around 2B US$.

IBM is serious about cloud

IBM has been much more active with respect to cloud since the spring of 2011 with the debut of “IBM SmartCloud” and activity has further increased in the last 6-12 months. With the endorsement of OpenStackas a standard IBM opted for the standard route of the new IBM, which is to use standards. But the pool of OpenStack vendors has become pretty crowded in the last months – basically leading to the question, how to differentiate between all those vendors endorsing OpenStack.At the same time IBM backed up their cloud ambition with the commitment to the 7B US$ goal – with the target year of 2015 coming sooner in sales cycles than one would think. A traditional route through hardware differentiation was not in the books and also not fast enough – so IBM more recently took the route of an acquisition.

Why SoftLayer makes sense for IBM

Amongst the potential acquisition targets IBM could choose from, SoftLayer makes a very good fit. Given IBM’s legacy on the hardware side, private cloud and cloud business solutions (analytics, Smarter Cities, etc) and conservative clientele – it needed a cloud player that would both be strong on the private and public cloud. That SoftLayer was building their own machines may sound counter intuitive at first – but if you take in account the recent rumors that IBM may sell their commodity server business – it starts making sense again. And while IBM has very talented hardware architects, the 8 years of experience SoftLayer has gathered building cloud hardware and vital support technology (IMS) is an asset that Constellation Research is glad IBM will leverage – one way or the other.

Moreover IBM needed the capability to let customers operate hybrid clouds – may it be to wait to write down existing on premise hardware, may it be for security and compliance reason as some part of their enterprise applications needed to remain on premise. SoftLayer is an excellent choice for this capability.

Finally SoftLayer has invested into a very robust and performing data center and network infrastructure – proven in point by SoftLayer signing up 60 gaming companies the last two quarters. Gaming is a very demanding space a vendor would only be successful in, when understanding the infrastructure requirements and being able to address them successfully and SoftLayer now has the track record to prove it.  

IBM and OpenStack – business as usual

SoftLayer has been very active in the OpenStack Swift community, especially for Swift. SoftLayer does not change IBM's strategy with Openstack at all. In the contrary we would expect IBM to make more contributions to OpenStack in the short term future. On the flip side IBM needs to differentiate in the OpenStack field – so it will be interesting to see how that will be played by IBM in the next quarters.

SoftLayer and IBM SmartCloud Solutions

IBM’s SmartCloud solutions now have an even more viable platform to be deployed on –across the different flavors of the cloud – on premise, in the cloud and hybrid. This combination has the potential to bring IBM really back to the place where IBM once was over half a century ago – the essential standard choice as a hardware and services vendor for whole categories of customers.

For IBM Cloud customers

This is an exciting announcement and while it maybe a distraction in the short term, it solidifies and validates IBM’s commitment to the cloud. The flexible deployment options that SoftLayer has proven in the marketplace, are a big benefit to customers, so wait and see, how this will develop in the next few months.

For SoftLayer customers

Carefully evaluate, if you are in a customer segment where IBM wants to be in business. E.g. as a gaming company make sure you get the commitments from IBM to keep maintaining and investing in SoftLayer. IBM has stated that it plans to invest significantly in SoftLayer’s technology and grow that business and model.

For Competitors

This acquisition notches up IBM's capability and makes IBM an even more serious contender. This will definitively be felt by all the hardware vendors dabbling in cloud - e.g. HP and Dell. But it may also give some food for thought to thecloud purists at AWS and Google - as they do not offer anything private and hybrid. It definitively gives IBM a leg up against AWS in the battle for where the enterprise puts their cloud application. 

For IBM

MyPOV

A very good move by IBM, other vendors recently claimed to be fully on the cloud – well IBM made clear they are in the game for real and mean to make this a multi-billion business.  The next months will be interesting to see how IBM will integrate SoftLayer and tune their new go to market for the new IBM cloud products and offerings.

We will know the cloud has completely arrived at IBM, when the company will announce a cloud division – that will encompass not only the services but everything needed for a successful cloud solution – including the hardware and software. Constellation Research does not expect this to be too far out.

Is Your Customer Service Efficient or Effective? Wanna Find Out?

A premise of moving from company-centricity to customer-centricity is to become more effective at delivering customer service.

As a result of the many years that we admonished customer service organizations to become better and more efficient at what they do, to save more money in their operations, and to reduce the costs of servicing customers we  ended up at the opposite end of where we needed to be.

As it turns out, becoming hyper-efficient is contrary to listening to the customer.

As we grow into the “age of the customer” we see more and more than we need to not only listen to them but also to act according to their needs and expectations.  We are on our way to do that, slowly, but we are lacking a guide on how to get there.

I have written a simple, one question guide to becoming more effective that I’d like to share.  As you (hopefully) recall, I use a “sponsored research model”; the research for the move from efficiency to effective (which was done by talking to several customers and reflecting on their collective experiences) can be found at Coveo’s blog as part of the ongoing series on how Knowledge Management is changing.

Please, hop over there and read the link-bait-named “The One Thing That You Must Do To Ensure Your Customer Service Solution Is Effective” and let me know in the comments what you think if you can. I promise you the content is better than the title…

Thanks for reading.

WebRTC Integration with Enterprise and Public Communications Infrastructure

Alumni: Constellation Research
Constellation Research

Dr. Brent Kelly is a Vice President and Principal Analyst at Constellation Research and President of KelCor, Inc. He focuses on the unique intersection of unified communications, social business, cloud services, video and mobility.&nbsp; Dr. Kelly provides strategy and counsel to key clients including Chief Information Officers, Chief Technology Officers, investment analysts, venture capitalists, technology policy executives, sell-side firms and technology buyers. Prior to joining Constellation, Dr. Kelly served for 10 years as a partner at Wainhouse Research where he was the primary author of most of the firm’s unified communications reports and forecasts. Dr. Kelly is a regular presenter at Enterprise Connect (formerly VoiceCon), the communications industry trade show where his well…...

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Some WebRTC-enabled sites will likely need to connect with enterprise communications systems and to the PSTN. Here we discuss architectures for how this can be done.

This is the second in a series of articles from Brent Kelly offering a primer on WebRTC; Part One can be found here.

Because the barriers to entry are small, we are likely to see numerous websites that are "WebRTC-enabled". As a consequence, there will be thousands, and perhaps millions of websites, that become WebRTC islands in which communications is only between those users with browsers connected to the same Web server. However, some WebRTC-enabled sites will likely want to connect WebRTC clients to enterprise communications systems and to the public switched telephone network (PSTN). In this post we discuss architectures for how this can be done.

The Need for Border Controllers
Organizations that deploy WebRTC and wish to integrate with existing communications systems should expect to deploy border controllers. A border controller is a device that sits between the WebRTC world and a) another WebRTC domain, b) SIP communications infrastructure, or c) the PSTN. Border controllers may provide a number of capabilities including:

1. Signaling gateway--The WebRTC draft standard does specify that signaling must occur when establishing a communication session; however, it does not specify what kind of signaling or the parameters in the signaling protocol used. Each web developer can use what they want for signaling connections and call parameters.

If a WebRTC application does not use SIP signaling, then there must be some type of translation between how the WebRTC application establishes and controls a communications session and how the SIP or PSTN world does communications. Even if the WebRTC application uses SIP, there are so many different "SIP-compliant" implementations that a signaling gateway may still be required.

2. Media gateway--WebRTC may not use the same voice and video codecs as are found in an enterprise or public communications system. If this is the case, then media transcoding will be required to enable communications between these disparate systems.

3. Flash gateway--It may be necessary to support Flash for some time until it is fully displaced by WebRTC. A Flash gateway will assure that browsers that are not yet WebRTC-enabled can still be used in an "always works" service offering .

4. Security and compliance--WebRTC uses cryptography to provide security, by encrypting both the control data and the media. A border controller may be required to decrypt WebRTC control and media flows before they can be integrated with another WebRTC domain or the SIP/PSTN world.

5. NAT and firewall traversal--Most browsers reside behind both firewalls and network address translation (NAT) devices. These devices tend to block real-time voice and video.

WebRTC uses a protocol called ICE (Interactive Connectivity Establishment) for traversing NATs and firewalls. ICE in turn relies on STUN (Session Traversal Utilities for NAT) and TURN (Traversal Using Relay NAT) protocols and servers. A WebRTC deployment will probably need to establish STUN and TURN servers to provide higher likelihood that voice and video packets will traverse the network boundary. As an alternative, for securely allowing WebRTC voice and video traffic to traverse NATs and firewalls, an organization can place a WebRTC-compliant session border controller in the DMZ (Demilitarized Zone); in this model, the SBC handles the ICE/STUN/TURN dialogs for NAT traversal.

Session border controllers can be purchased that handle only one, some, or all of these border traversal issues. Several session border control companies make WebRTC-compliant border elements, including Acme Packet, Genband, Sansay, Mavenir and others. At least one PBX vendor has plans to integrate WebRTC into the PBX fabric so that no SBC is required.

Integration with SIP-Based Infrastructure
Interoperability with SIP infrastructure will usually require some type of a session border controller to decrypt the WebRTC control and media flows, and it may also be necessary for transcoding between WebRTC codecs and the codecs found in enterprise phones and video units.

When a gateway is involved, the WebRTC voice and video peer connections are between the browser and the border controller (see Figure 1).

Figure 1. Integrating WebRTC with the Enterprise Communications System

Integration with the PSTN
There are several different ways in which WebRTC can connect to the PSTN. In the figure below, the PBX could be connected to the PSTN, which is the most likely scenario in the enterprise. Alternatively, the WebRTC-to-SIP gateway could connect directly to a carrier, which in turn has a gateway to the PSTN. The WebRTC-to-SIP gateway function could reside in a session border controller (SBC), or it could be a separate enterprise network element (see Figure 2).

Figure 2. Integrating WebRTC with the PSTN

Conclusion
While some WebRTC-enabled sites will function well as a communications island, others will wish to federate with other WebRTC domains and with the SIP, PSTN, and mobile worlds. This is clearly possible as illustrated in the figures above.

When designing WebRTC into a Web site, it will be important to decide how WebRTC clients will integrate with these other domains. Using a signaling protocol like SIP or Jingle when implementing WebRTC will make it easier to interoperate between WebRTC domains and enterprise and public communications domains.

This article is an excerpt from Dr. Kelly's recently published report titled, "Ten Things CIOs Should Know About WebRTC."