Press Release: Constellation Research Appoints new Director of Lead Generation and Sales

Monday's Musing: Avoiding Social Media Fatigue Through Engagement

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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Social Media Moves From Ubiquitous Usage To Relevant Rationalization

Have we hit a social media plateau?  In recent client conversations on usage of social media, the trendsetters appear to be “socialed out”.   Most early adopters seem to be overwhelmed with their personal (Facebook, Google+), corporate (Yammer, Jive, Chatter, SharePoint), and professional (LinkedIn) social networks.  In fact, respondents feel that adding any additional network for anything social is quite overwhelming.  While early adopters are moving from ubiquitous usage to relevant rationalization, the majority remains in ubiquitous usage (see Figure 1).  Recent data on number of users at the Big 4 of social media show that we are in the middle of ubiquitous usage:

• Facebook (901M users as of Feb 2012)
• Twitter (500M users as of March 2012)
• LinkedIn (161M users as of March 2012)
• Google+ (100M users as of Feb 2012)

Early Adopters Facing Social Media Fatigue

As early adopters start rationalizing their networks, some are even pulling out.  From loss of interest in Google+, Empire Avenue, to even FaceBook, people have started to selectively choose networks to combat overload and social media fatigue.  The common theme – relevant rationalization by self-interest.   These trends parallel those for mail, phone, email, web and other disruptive technologies.  Going forward, users will move towards desensitization when the advertisers and companies abuse the channel by spamming users with an unwanted deluge of irrelevant offers.

The Bottom Line: Engage Users To Combat Fatal Fatigue In The Disruptive Tech Adoption Life Cycle

Every new medium or technology goes through this life cycle. To combat Phase 4, Fatal Fatigue and cross over to Revival and Rejuvenation, organizations must engage their users during relevant rationalization in order to keep customers through Fatal Fatigue and Revival and Rejuvenation.  Here’s the five phases of the disruptive technology life cycle:

• Phase 1: Eager early adopters. Users eagerly experimented in the newness of the medium.   Early adopters attempt to apply the medium to everything.
• Phase 2: Ubiquitous usage. Rapid adoption put the medium in the hands of the masses.  Adoption exceeds 50 million users.
• Phase 3: Relevant rationalization. Brands and enterprises apply the medium to the right business use cases and processes.
• Phase 4: Fatal fatigue. Inundated with marketing, bombarded with irrelevant content, and tired of the newness of the medium, customers begin tuning out.
• Phase 5: Revival and Rejuvenation. Maturation of the medium ushers an improved era of engagement apply the Six C’s of Engagement.

Success will require organizations to engage their customers and employees.  Find out more in the Harvard Business Review blog post here.

Figure 1. Disruptive technologies follow an adoption life cycle that must overcome fatigue to succeed

Your POV.

Ready to avoid Fatal Fatigue? Have a story on how you’ve achieved engagement? Add your comments to the blog or send us a comment at R (at) SoftwareInsider (dot) org or R (at) ConstellationRG (dot) com

Please let us know if you need help with your Social CRM/ Social Business efforts.  Here’s how we can assist:

• Assessing social business/social CRM readiness
• Developing your social business/ social CRM  strategy
• Vendor selection
• Implementation partner selection
• Connecting with other pioneers
• Sharing best practices
• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Related Research:

• Friday’s Features: Using Attensity Analyze 6.0 To Compare Customer Sentiment For @united @southwestair @virginamerica
• Event Report: Lithium Network Conference 2012 #LiNC
• Best Practices: From First To Worst – Continental In A Post United World, Lessons In Next Gen Customer Experience
• Monday’s Musings: Seven Basic Privacy Rights Users Should Demand For Social Business
• News Analysis: Lithium Technologies Adds $53M in Financing
• Monday’s Musings: Balancing The Six S’s In Consumerization Of IT
• Monday’s Musings: A Working Vendor Landscape For Social Business
• Product Review: Google+, Consumerization of IT, and Crossing The Chasm For Enterprise Social Business
• Monday’s Musings: Using MDM To Build A Complete Customer View In A Social Era
• Monday’s Musings: Mastering When and How High End Brands Should Use Daily Deal Sites Such As Groupon
• News Analysis: Salesforce.com Acquires Radian6 For $316M
• Monday’s Musings: Q1 2011 State of Social CRM and CRM From An EMEA Point Of View
• Best Practices: Applying Social Business Challenges To Social Business Maturity Models
• Research Summary: Software Insider’s Top 25 Posts For 2010
• Best Practices: Five Simple Rules For Social Business
• Research Report: Constellation’s Research Outlook For 2011
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Research Report: Next Gen B2B and B2C E-Commerce Priorities Reflect Macro Level Trends
• News Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants And IPO?
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM
• News Analysis: Biz360 Acquisition Signals Attensity Group’s Move Into Social CRM
• Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination
• Research Report: The 18 Use Cases of Social CRM – The New Rules of Relationship Management
• News Analysis: Siperian Acquisition Vaults Informatica Into An MDM Leadership Position
• News Analysis: Jive and Radian6 Partner – Great For Business, But Could Fragment IT Systems
• Event Report: Salesforce.com Pushes Social CRM Technology — But Don’t Expect Companies To Be Successful With Tools Alone
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Personal Log: Altimeter Group – Helping Organizations Bridge The Technology Obsolescence Gap
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Copyright © 2001 – 2012 R Wang and Insider Associates, LLC All rights reserved.
Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Customer Experience!

NetSuite Manufacturing: Right Direction, Long Road Ahead

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

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

From Partner Solutions to a Core Offering

Until recently, NetSuite’s approach to serving manufacturers was to provide what it called “light manufacturing,” coupled with customer-specific customizations, supplemented by partner solutions such as Rootstock when heavier manufacturing functionality was required. But this approach could only take NetSuite only so far.

• Support for manufacturers is essential in light of NetSuite’s product strategy. As explained by Zach Nelson in a small group briefing, the customer order is central entity in NetSuite, and NetSuite wants to “own” anything that is input into, or output from, the customer order. In the manufacturing sector, this would include production work orders. It makes no sense, therefore, for NetSuite to hand off these business processes to partners.
• At the same time, the manufacturing sector represents a large potential market for NetSuite. There are more manufacturing companies—especially small manufacturers—in the US than in any other sector. Inadequately serving such a large potential market made no sense as NetSuite looked to accelerate its growth.
• However, some basic features for manufacturers have been missing. For example, standard costing were not addressed in the core product, and few prospects would be willing to customize their implementations for such a fundamental need.

As a result of this realization, NetSuite in 2011 began work in earnest to build out its manufacturing functionality. In a briefing during NetSuite's conference I met the key players hired for this mission. They include:

• Roman Bukary, Head of Manufacturing and Distribution Industries. Roman previously worked for SAP, Baan, and other software companies. Earlier in his career, he was a manufacturing engineer.
• Ranga Bodla, Director, Industry Marketing. Ranga held product management positions at SAP and Pilot Software.
• Thad Johnson, Sr. Product Manager for Wholesale Distribution and Manufacturing Verticals. Earlier in his career, Thad was a product manager at QAD and also held several materials management positions in industry.
• Frank Vettese, Practice Manager. Frank has manufacturing software experience with IFS and Effective Management Systems.
• Gavin Davidson, Vertical Market Expert, Manufacturing. Gavin’s experience includes implementation work with manufacturing systems from Baan, Epicor, Microsoft Dynamics, and Visual.

I’m pointing out the experience of these individuals to show that NetSuite’s push into manufacturing is more than a marketing campaign. It has put together a serious team of individuals to lead the product development effort for this vertical.

An Expanding Footprint

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

Let’s take a look at some of the manufacturing functionality that NetSuite has recently added or will be adding. From these few points we can get a sense for where NetSuite is in its current and near-term ability to better support manufacturing customers.

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

I believe that NetSuite means business in pursuing the manufacturing sector. However, as can be seen, many of these capabilities (e.g. routings, cycle counting, labor reporting) are very basic manufacturing requirements, things that have been present in systems such as ManMan, AMAPS, BPCS, and others back into the 1980s. Furthermore, some of the planned capabilities will lack key things that a manufacturing prospect would expect. For example, the team characterized NetSuite’s material planning system as a “lean manufacturing system,” which to me is a polite way of saying, “minimal.”

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

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

The Time and Place for Customization

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

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

Rapid Progress Possible

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

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

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

Related Posts

NetSuite a Viable Alternative for SAP Customers
Key success factor for SaaS suites: functional parity
Kenandy: A New Cloud ERP Provider Emerges from Stealth Mode
The Simplicity and Agility of Zero-Upgrades in Cloud ERP

Friday's Features: Using Attensity Analyze 6.0 To Compare Customer Sentiment For @united @southwestair @virginamerica

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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A Travelers’ Tale of Two Airlines (@united vs @southwestair)

A hurried shower, followed by a hastily packed bag.  Then, the race to the taxi stand (Figure 1).  Should be easy to get a cab at 5:45 am in Las Vegas, right? Only the late night crew roll into a casino this late or early in the morning on a Tuesday.  Who’d be flying out so early?  So much for that theory.  A line forms 50 deep outside. Eveyone is half asleep, and headed to McCarran – Las Vegas airport from Caesar’s Palace at 5:30 am.  I figure Southwest 2286 takes off at 6:25 am, should be plenty of time.  I keep consoling myself.  At 5:50, I get into my cab. I instruct the driver not to take the freeway and to go local.

Figure 1. Just Another Day At The Las Vegas Taxi Stand

I get to the self-service kiosk to check in. I get the dreaded .  I’m told my bag will be checked late and it could risk being sent on a later flight.  At 6:00, I’ve missed all normal cut-off windows.  Most airlines cut you off at 30 minutes prior and I am really late.  I’m ready to accept my fate.  I’m ready to be told to get on the next flight.  Strangely enough, the gate agent notices that I’m late and does everything to hurry me on-board.  She tells me that there is a chance my bag won’t make it but they’ll do their best.  She kindly reminds me check-in is 30 minutes prior and suggests I take another security entrance to improve my odds of passing through TSA in time.  She also lets me know that she’s told the gate agent I may be late.  I finally get through TSA and get to the gate with 2 minutes to spare.  The aircraft door isn’t closed. In fact, it’s open and waiting for me to board. I hop on, pass out, and arrive in San Jose.  In some modern day miracle, the bag also has arrived with me.  I thank the travel gods.

Flash back one week earlier, the same morning sequence occurs in Las Vegas.  This time with rental car in tow, I head to the rental car return center at 4:00am for a 5:30 am flight.  A staffing issue occurs with the “consolidated rental center transportation” and no buses arrive until 4:30 am.  I think to myself, I still have time.  I rush to catch United Airlines 479 to San Francisco.  The bus arrives at 4:45 am.  I rush to the kiosk and arrive for check-in at 4:47 am.  The kiosk tells me to see an agent. I wait another 3 minutes in the uber premium line (a.k.a. Global Services).   The agent looks at my ticket and tells me in a stern and disapproving voice, I have to wait for the next flight which is at 11:49 am.

I flash my Global Services card in a last ditch attempt for empathy.  The agent tells me that policy is policy.  United can’t check me in as I miss the cut-off.  She tells me that I should know better and come to the airport earlier.  The Las Vegas airport is so big, the bag would never get to the plane on time.  They won’t let me take off without my bag.   There’s no point in arguing at this point. I have a speech at 11:00 am to get to.  I rush over to the Southwest counter to find the next flight.  The agent asks me what’s wrong. I tell her I need to get on the 6:30 am.  She says, no problem.  I give her all the details and she issues me a ticket in 5 minutes.  I make it to the keynote but I’m very bitter about United and how they have treated me.  I was a happy Continental flyer before the merger, you can read all about it here.

Social Data Quantifies Qualitative Experiences – United Ranks Last Among The Three Carriers

By now, most folks have seen what happened when “United Breaks Guitars“, the tale of an awful customer experience for Dave Carroll who had his guitar broken.  When the airline failed to take responsibility, he took to the web.   With over 11.9M views as of this blog post, this social media epic fail epitomizes what happens when companies ignore their customers and shirk responsibility for resolving legitimate complaints.  But what happens when an airline completely chooses to ignore social media as a channel? Do customers go away? Do they just jump to another channel?  Are these social analytics tools reflective of the general customer base?

Using Attensity Analyze 6.0, a comparison was made among the three airlines.  We selected two best in class low cost carriers (i.e. Southwest Airlines and Virgin America) and United Airlines to answer this question (Figure 1).  Analyze 6.0 took 12,863 public comments from Facebook, Twitter, blogs, forums (user forums, discussion forums, LinkedIn Answers, etc) YouTube videos, mainstream news and more to gather this data (see Figure 2).

Figure 1. Twitter Accounts For The Three Airlines

Figure 2.  Attensity’s Analyze 6.0 In Action With Feedback Analysis On Three Select Airlines

In the social media feedback analysis, the Attensity Analyze report measured 3 major performance indicators:

1. Share of voice. At about 40%, the bulk of the mentions come from Virgin America, with United at about 35%, and Southwest a bit over 20% in category share.  Virgin’s share of voice is disproportionately higher than United’s who has a larger network more routes, more destinations, more planes (see Figure 3).  Southwest Airlines has almost 11 times the followers of United.  Both Southwest Airlines and Virgin America have put out 3 times more tweets than United.

   Figure 3. Despite Size, Virgin Has Huge Share of Voice
   

2. Sentiment by airline. The low cost carriers appear to have cracked the customer service challenge in social media better than United and other legacy airlines.  Virgin America’s positive sentiment hovers above 75% positive while Southwest Airlines held at slightly over 70% positive (see Figure 4).  United’s sentiment shows an inverse with around 26% positive sentiment and 74% negative sentiment.  The public tweets posted per follower (between .007 and .027) for United is comparable to Southwest Airlines.  Ironically, Virgin America has a lower public tweets posted per follower count, but has higher positive sentiment than United.

   Figure 4. Virgin and Southwest Have Overwhelmingly High Positive Sentiment While United’s Negative Sentiment Sets It Apart
   

3. Detailed sentiment (positive or negative).  The solution automatically creates categories that users can modify or leave as-is for further analysis (see Figure 5).  A text preview allows users to quickly scan the comments related to the twitter stress.  In United’s case, poor sentiment translates into three major areas for massive improvement: customer treatment, flight schedules, and hate airline rounded up the Top 3 negative sentiments.

   Figure 5. United’s Detailed Negative Sentiment
   

The Bottom Line: Companies Such As United Airlines Can’t Hide In A Transparent World

In this shift from transactions to engagement, social business and customer experience shifts the priorities of major organizations.  Organizations must staff, train, and enhance how their front office employees work with prospects and customers in multiple channels.  Social media makes everything transparent and any competitor can monitor your company’s social presence.  Hoping that folks will ignore you if you ignore social media is a sure way to drive negative sentiment for your customer base.  While United Airlines may feel insulated by its corporate contracts, expect many individuals to tell their procurement organizations to switch carriers this year as the negative sentiment for United grows.  In fact, companies such as United Airlines better wake up to the reality of social media or face an eroding customer base.

Recommendations:  Always Start With Listening Before Engagement

All social business projects should start with an analytics strategy.  The following advice comes from client best practices in our client research panels:

• Scan your base for correlations to the analog world. Make sure results in social tie have relevance to not only a segment, but also the rest of the customer and prospect base.  A industrial ball bearing manufacturer for heavy machinery probably will not find strong correlations and adoption to their FaceBook page.
• Identify new markets by listening in on your competitors’ customers. Understand thyself first but understand thy competitors and find out what product categories, vertical markets, geographies, and sentiments are hot.
• Add dimensionality. Take analytics to the next level and aggregate inputs and signals from all source types.  Tie back data to existing customer systems.
• Move from insight to action. Determine the next steps once armed with insights.  Improve the quality and timeliness of decisions.
• Refine. Remix. Repeat. Identify points of failure. Improve on these areas. Test out new areas with new hypotheses.

Your POV.

Considering social analytics? Are you ready to take the plunge? Tell us how we can assist?  Add your comments to the blog or send us a comment at R (at) SoftwareInsider (dot) org or R (at) ConstellationRG (dot) com

Please let us know if you need help with your Social CRM/ Social Business efforts.  Here’s how we can assist:

• Assessing social business/social CRM readiness
• Developing your social business/ social CRM  strategy
• Vendor selection
• Implementation partner selection
• Connecting with other pioneers
• Sharing best practices
• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Related Research:

• Event Report: Lithium Network Conference 2012 #LiNC
• Best Practices: From First To Worst – Continental In A Post United World, Lessons In Next Gen Customer Experience
• Monday’s Musings: Seven Basic Privacy Rights Users Should Demand For Social Business
• News Analysis: Lithium Technologies Adds $53M in Financing
• Monday’s Musings: Balancing The Six S’s In Consumerization Of IT
• Monday’s Musings: A Working Vendor Landscape For Social Business
• Product Review: Google+, Consumerization of IT, and Crossing The Chasm For Enterprise Social Business
• Monday’s Musings: Using MDM To Build A Complete Customer View In A Social Era
• Monday’s Musings: Mastering When and How High End Brands Should Use Daily Deal Sites Such As Groupon
• News Analysis: Salesforce.com Acquires Radian6 For $316M
• Monday’s Musings: Q1 2011 State of Social CRM and CRM From An EMEA Point Of View
• Best Practices: Applying Social Business Challenges To Social Business Maturity Models
• Research Summary: Software Insider’s Top 25 Posts For 2010
• Best Practices: Five Simple Rules For Social Business
• Research Report: Constellation’s Research Outlook For 2011
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Research Report: Next Gen B2B and B2C E-Commerce Priorities Reflect Macro Level Trends
• News Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants And IPO?
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM
• News Analysis: Biz360 Acquisition Signals Attensity Group’s Move Into Social CRM
• Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination
• Research Report: The 18 Use Cases of Social CRM – The New Rules of Relationship Management
• News Analysis: Siperian Acquisition Vaults Informatica Into An MDM Leadership Position
• News Analysis: Jive and Radian6 Partner – Great For Business, But Could Fragment IT Systems
• Event Report: Salesforce.com Pushes Social CRM Technology — But Don’t Expect Companies To Be Successful With Tools Alone
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Personal Log: Altimeter Group – Helping Organizations Bridge The Technology Obsolescence Gap
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Copyright © 2001 – 2012 R Wang and Insider Associates, LLC All rights reserved.
Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Customer Experience!

Cisco's Customer Collaboration Analyst Event Highlights

Constellation Orbits
Constellation Research, Inc.

Elizabeth is a well-recognized industry-leading analyst. She was previously Vice President and Principal Analyst at Constellation Research.  Prior to Constellation, Elizabeth spent eleven years at Forrester Research as vice president and principal analyst.  She has managed large consulting projects for business and government organizations and provides technical insight and guidance to business and government organizations on their communication issues. Prior to her role as an industry analyst with Communication Initiatives and Forrester Research, Elizabeth held senior management positions with IBM, ROLM and Siemens ICN where she was a senior manager for strategic planning and alliances. Expertise Elizabeth’s expertise includes in-depth knowledge of unified communications,…...

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Two themes emerged from  Cisco’s Collaboration Analyst event were the delivery  and execution of strategic initiatives announced previously and the strong push to grow market share at Avaya’s and Genesys’ expense.  The highly packed agenda did a good job of presenting Cisco’s current market plans and major areas of focus.  By selling the “Cisco” story, the company hopes to drive higher adoptions for its customer collaboration contact center line of products, while also validating the improvements and enhancements made in its contact center product line during the last five years.

Cisco has done a remarkable job of expanding its market share and divides its customers into three segments:

• High touch customer segment.  These are the large enterprise customers that want full featured and highly customized solutions.  This is the area that has been dominated by Avaya for many years, followed by Genesys.  Cisco’s product for this segment is the Contact Center Enterprise edition.
• Mass Market segment.  These are mid-sized and large customers that require the scalability and features of the contact center enterprise but have less need for a highly customized solution.  Cisco’s product for its mass market customers is the Contact Center Enterprise Packaged edition.  By packaging several of its applications, Cisco can reduce its list price by 20% and offer a simpler solution for its services partners to install.
• Attached market.  These are the customers who buy Cisco’s Unified Communication Manager and have smaller contact centers.  Cisco sells its Contact Center Express package to this segment.  An advantage of its Express is the large number of certified resellers, making it easier for more partners to sell and install.

Cisco’s next release (9.0)  coming out next month offers several enhancements but does not reveal any surprises  The four pillars that make up the Cisco customer collaboration experience include the following:

• Mobile connectivity.  Cisco embraces the adoption of mobile devices by its customers and wants to provide secure access to information and people.  They have a new mobile application for administrators or supervisors that allow them to make changes in agent assignments directly from their mobile device.   With strong support for mobile devices and tablets, Cisco’s offers solutions to support customers anywhere.  However, Cisco does not have a productized offering for mobile application support that would connect customers directly from the mobile app into the contact centers. 
• Social Customer care.  This offering provides social media agent support across all market sizes and includes queuing of social media contacts as email notifications.
• Visual Support.  This enables customer collaboration on video from kiosks, smart phones, and desktops to support rich media interactions.  Cisco views video as a growing market with strong opportunity but admits video is still relatively small for contact center interactions today.
• Virtual support.   Cisco offers server and desktop virtualization with Finesse Agent and Supervisor desktops, which reduces costs for hardware and system management.  Virtualization is also important for extending contact center connectivity to the expanding population of home agents.

Cisco’s announcements show progress in shrinking its product gaps in areas, such as reporting and analytics, email and Web integration and precision routing.  These are all positive moves that will improve its competitiveness in the market.  While advances on its core product are extremely important, I did not see a lot of innovation with customer examples but expect its extensive developer community will continue to create inventive improvements for its product line.  For Cisco competitors, I think there is something to be learned by Cisco’s intense focus to build up market share in the contact center.  Competitors cannot ignore the smaller end of the market and only focus on the higher end, as Cisco continues to gain strength across all its market segments.

The Simplicity and Agility of Zero-Upgrades in Cloud ERP

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

The Goal: Zero Upgrades

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

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

Implications of Zero Upgrades

Actually, I've known about the Plex approach for some time. But the implications of this strategy became more apparent as I sat through the keynote and some of the individual workshops.

1. You Like It? You’ve Already Got It. A good part of the opening keynote included the announcement and live demo of a new embedded report writer, called IntelliPlex. Now I wouldn’t say that the demo blew me away. It's good. It has an easy drag-and-drop method to allow users to create their own reports, generate charts and graphs, calculate new columns based on formulas, produce pivot tables and cross-tabs—all good stuff. Is it as powerful as the embedded BI capabilities that other vendors have demonstrated recently? In some cases, no.
   
   But here’s the catch. Every Plex customer watching that demo knew that they could immediately log on to their Plex system and have access to that report writer. They don’t need to order it, pay separately for it, install it, or be on a certain version of Plex to use it. Perhaps that’s the reason I didn’t see a single person walk out early from that keynote.
    
2. Functionality is Front and Center. I attend a lot of vendor conferences. Many of the sessions are taken up with subjects such as “Planning for Version X,” “What’s New in Release 7.2.345b,” “Prerequisites for Migrating Product X to Version Y of Database Z.” The Plex conference has none of these tactical, infrastructure-type subjects. All attention is on what the software does, not what you need to do to get it to do those things.
   
   For example, I sat in on part of a presentation on work center production scheduling—not a subject that I would consider a major draw. In much larger vendor conferences, I might see 20 or 30 people in this sort of presentation. But, as shown in the photo nearby, there were about 150 (out of 800 total) conference attendees in this session. Because Plex users do not have upgrades to deal with and plan for, they can devote all of their time to learning how to use the functionality that they already have access to. There appeared to me to be a much greater percentage of line-of-business users than I see in many vendor events.
    
3. User-driven Enhancements. Plex’s approach frees it from having to spend time managing multiple versions of its product, creating sandboxes, and phasing in customers from one version to the next. This gives its developers more time to work on product enhancements, which are largely driven by customer-funded requests. Although one customer may fund a change, all customers have the option to “flip the switch” and use it if they so choose, without having to schedule a version upgrade. All new functionality is delivered with the switch set “off,” so that individual customers can choose what and when to implement it.

Ultimately, the zero upgrades strategy enables business agility for customers. This point was stressed to me in an interview I did with Plex customer Ben Stewart of Inteva. His company has a growth-by-acquisition strategy and needs to be able to bring new plants and new locations on-board quickly. Plex’s zero upgrade approach and rapid response to his change requests (e.g. enable a new EDI partner) supports this strategy of agility to accommodate rapid change. Other customers report Plex implementations of new plants in timeframes of weeks, not months.

Are There Downsides?

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

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

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

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

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

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

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

Related Posts

Plex Online: Pure SaaS for Manufacturing
Computer Economics: Cloud Players Storm the Gates of ERP
Key success factor for SaaS suites: functional parity

News Analysis: Informatica Launches MDM 9.5

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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New Product Addresses The Social, Mobile, Cloud, and Big Data World

The convergence of social, mobile, cloud, big data (analytics), and video/unified comms changes the playing field from transactional applications to engagement applications.  The result – a sea change of new data types from structured and unstructured sources.  With greater volumes of data, demand for information shifts from real time to right time inside and outside the enterprise.  Context by process, by roles, by location, and by any other segmentation requires a robust MDM solution to improve the return on #bigdata.  Unfortunately, many master data management solutions have not been designed to handle this new world of business led requirements.

Enter Informatica’s MDM 9.5 product launched May 15th, 2012 at Informatica World (#IW2012).  Some key features in 9.5 highlight the move to social, mobile, cloud, and industries:

• Versioning – effective dates deliver timelines. The new product delivers effective dating to define and manage past, current, and future versions of a record.  Delivered at the base object level, relationships are automatically version-enabled.
  
  Point of View (POV): Future analysis of social and mobile data will require the ability to segment and correlate by time.  The solution can model hierarchies and entities by past, present and future. More importantly, versioning provides rich compliance information that will serve as a backbone for information governance of a wide variety of data types and sources..

• Social MDM – Facebook apps connect to customer profiles. The new Facebook and MDM connectivity provides a social graph of the customer and friends of the customer. Users gain bi-directional connectivity.
  
  Point of View (POV): Connection to Facebook not only brings rich profile information, but also delivers key multichannel connections.  This linkage exposes and identifies common interests and relationships which build richer customer profiles.  Customers should work hard to drive data out of Facebook and not into Facebook, reducing the trading of privacy for convenience.

• Mobile MDM – iPad app changes the user experience. Informatica 9.5 MDM delivers mobile location based services with master data for location specific customer information.  Solution accounts for social features including website access and Twitter.
  
  Point of View (POV): Mobile has emerged as the predominant user interface of choice.  Users expect to gain any time, anywhere access to key data.  More importantly, MDM 9.5  prepares users for a world of social, mobile, and geo location convergence.

• MDM Solutions For Industries. Informatica’s delivered updates to industry solutions in Counterparty (Financials), Pharma, and Reference Data Management.  MDM 9.5 adds a new SFDC MDM gateway and Insurance 1.0 solution.
  
  Point of View (POV): The move to industries makes sense for customers looking to jump start their implementations.  Expect retail, CPG manufacturing, consumer electronic goods, oil & gas, healthcare, and public sector to show up next on the road map.  Industry specific deployment models provide significant advantages for partners to build on top of Informatica MDM 9.5

The Bottom Line: Informatica’s Building MDM For The Next Generation Of Engagement

The road from transaction to engagement requires strong master data management to bring order and business value to the chaos of #bigdata. Constellation predicts that 87% of organizations will enter best of breed “cloud hell” by the end of 2013, the challenge of data integration must meet strong information governance. Master data management remains a critical skill set required for enterprises to deliver on business agility and provide the needed infrastructure for adopting disruptive technologies and new business models.

Your POV.

Have you deployed social, mobile, or cloud?  Are you ready to take your master data management to the next level?  Got a question?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Please let us know if you need help with your Social CRM/ Social Business efforts.  Here’s how we can assist:

• Assessing social business/social CRM and master data management readiness
• Developing your social business/ social CRM  and MDM strategy
• Vendor selection
• Implementation partner selection
• Connecting with other pioneers
• Sharing best practices
• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Related Research

• Monday’s Musings: Using MDM To Build A Complete Customer View In A Social Era
• Monday’s Musings: Mastering When and How High End Brands Should Use Daily Deal Sites Such As Groupon
• News Analysis: Salesforce.com Acquires Radian6 For $316M
• Monday’s Musings: Q1 2011 State of Social CRM and CRM From An EMEA Point Of View
• Best Practices: Applying Social Business Challenges To Social Business Maturity Models
• Research Summary: Software Insider’s Top 25 Posts For 2010
• Best Practices: Five Simple Rules For Social Business
• Research Report: Constellation’s Research Outlook For 2011
• Research Report: How The Five Pillars Of Consumer Tech Influence Enterprise Innovation
• Research Report: Next Gen B2B and B2C E-Commerce Priorities Reflect Macro Level Trends
• News Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants And IPO?
• Tuesday’s Tip: Applying The Five Stages Of Adoption Towards SCRM Projects
• News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM
• News Analysis: Biz360 Acquisition Signals Attensity Group’s Move Into Social CRM
• Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination
• Research Report: The 18 Use Cases of Social CRM – The New Rules of Relationship Management
• News Analysis: Siperian Acquisition Vaults Informatica Into An MDM Leadership Position
• News Analysis: Jive and Radian6 Partner – Great For Business, But Could Fragment IT Systems
• Event Report: Salesforce.com Pushes Social CRM Technology — But Don’t Expect Companies To Be Successful With Tools Alone
• Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone
• Personal Log: Altimeter Group – Helping Organizations Bridge The Technology Obsolescence Gap
• Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Copyright © 2001 – 2012 R Wang and Insider Associates, LLC All rights reserved.
Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Customer Experience!

Event Report: Questions Every #SAPPHIRENOW Attendee Should Be Asking SAP

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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SAP’s In The Midst Of Massive Transformation

Just four years ago, nervous attendees dealt with a tumultuous global market entering financial crisis.  SAP’s management team decided to raise maintenance fees to shore up its margins amidst a drought of innovation.  Customers revolted en masse.  Policies changed due to user group and global influencer pressure.  Less than 18 months later, a defiant CEO resigned and a new management team resolved to improve relationships with key customers and address the lack of product innovation.

Fast forward to 2012, SAP’s acquired its way into innovation with BI/analytics (Business Objects), mobile (Sybase), cloud and HR (SuccessFactors), and a tiny bit of Social (SuccessFactors Cube Tree) (See Figure 1.).  SAP HANA serves as the foundation for the future product line.  SAP’s experimenting with consumer apps such as Recalls+.  Innovation in R&D shifts from the star building fortresses of Walldorf to agile tech hubs in TelAviv, Palo Alto, Vancouver, Bangalore, and Shanghai.  From the outside view, SAP’s placed long term bets in innovation on its road to 1B users.  The growth in market cap from €30.9B in 2008 to €57.8B (as of 5/11/2012) reflects this perception by the financial community.  Has SAP succeeded where other software vendors have failed during massive periods of transition?

Figure 1. SAP Covers Three Out Of Five Innovation Pillars In The Consumerization of IT

Customers Have Reason To Remain Cautious Of SAP’s Ability To Execute

From a customers point of view, the verdict remains mixed.  Loyal customers have seen a series of failures from SAP over the past decade as it attempts to make the shift and claim innovation.  Most industry observers would agree that SAP’s made significant investments in innovation.  However, the results of organic innovation have mostly failed from products to services.   A review of the past decade shows four proof points:

1. Delays in the next, next, next, no make that the next version of R/3. For those waiting for the latest version of ERP, the core product will probably show up late to mid decade.  Maintenance plans call for end of support in 2020 which means SAP plans a product between now and 2018 at the latest.  Customers seeking deeper industry functionality now turn to system integrators who build the user exits and customizations required to continue business.  Meanwhile, the market for third party SAP products has never been stronger.  A string of SaaS vendors have emerged to address the “edge applications” in incentive comp, talent management, pricing, travel and expense, collaboration, and marketing automation that SAP previously ignored.  Some of these “edge vendors” such as Salesforce.com have emerged as billion dollar companies creating new markets.  Yet, after several product chiefs and a decade of trying, SAP applications still lack common data models (e.g. there are at least 8 in use), common interfaces, and common process models.   The much hailed enhancement packages delivering “timeless” software require slightly less work than previous upgrades but still require a lot of planning, testing, time, and money.
2. Clearly a confusing cloudy cloud strategy awaiting partly sunny skies. Business by design still has not achieved the tens of thousands of customers by 2010 when it was announced.  At best, SAP has a bit over 1000 live customers.  Customers who use the ByD product have mostly expressed positive comments and have seen the benefits of the OnDemand based approach.  The distribution of the product to the masses and incentivization of sales execution remains challenging to a country club, shake-hands, relationship sales culture.  Meanwhile, a series of well designed, and compelling products from the SAP OnDemand for Large Enterprise initiatives remain under marketed, and in some cases late to market.  Timing could not have been worse as the SuccessFactors acquisition has clouded the cloud strategy.  Customers seek cost effective, heterogeneous, integration options from their on-premises core to the cloud options.  SAP still has to deliver on an integration framework customers find cost effective and can trust.
3. Never so easy, NetWeaver remains hard to use, rigid at best. Various attempts at an SAP middleware have finally made headway. The solutions now include an ABAP version and a Java version.  Previous versions remained hard to use, complicated to maintain, and confusing for the developer ecosystem and the system integrators.  Recent UI improvements help IT leaders convince business customers that they can ease back into SAP.  Everything does look better in an iPad, including SAP.  Sybase’s mobile platform replaces a failed and feeble attempt at NetWeaver mobile.  Many customers begrudgingly use NetWeaver and something else.   That something else – well, it’s typically 1/2 or 1/4 the cost.
4. Great new maintenance offerings, low user acceptance due to sales not service offering. SAP’s made considerable effort to improve its maintenance offerings with new programs and offers to lower the cost of ownership.  Each offer considers the lifecycle of ownership and shows great care and craft in creation.  While most customers show initial interest, the sales process attempts to tie maintenance offers into new professional service revenue instead of reducing the overall spend with SAP.  Because customers mostly see ERP now as a legacy infrastructure, CIO’s intend to drive cost out not invest more in.  Hence, many customers consider  a move to third party maintenance options and SAP optimization solutions.

The track record remains mixed.  Customers remain cautions.

What Clients Want From ERP Seems Confusing At First

Recent surveys among ERP clients indicate a bipolar prioritization of cost reduction and innovation (See Figure 2).  While this may not make sense at first, clients have driven cost savings with the purpose of funding innovation.  At the same time, survey respondents in IT seek cost savings while survey respondents on the business side demand and expect innovation.  Consequently, the top 5 areas indicated by survey respondents highlight this emerging trend:

1. Improve mobile access (93.2%)
2. Reduce cost of ownership and complexity (88.8%)
3. Deliver self-service BI (83.7%)
4. Renew focus on innovation and disruptive tech (75.7%)
5. Address integration with existing investments (72.1%)

Figure 2. ERP Customers Now Seek Innovation

In Constellation’s latest survey on the 4 personas of the next generation CIO (to be published May 2012), 105 innovative CIOs indicate a shift away from cloud  (56.4%-2012) and virtualization (29.6% – 2012) to mobile (60.2%-2012) and big data and analytics (48.7%-2012) (see Figure 2).  Despite being the top projects in 2011, the drop in priority of virtualization (51.9%-2011) and cloud (69.6%-2011) doesn’t reflect the lack of interest.  In fact, these projects have matured and innovative CIOs have now prioritized the next wave of innovation.

Figure 3. What Innovative CIO’s Expect Their Vendor To Deliver On Disruptive Technologies In 2013

Some key findings:

• Mobile enablement shoots to the top (60.2%). Mobile is the primary interface.  Anywhere, anytime computing is here to stay and these CIOs are working on the infrastructure required to support BYOD and CoIT.  App stores and mobile device management play a key role.
• Cloud deployment drops but is the predominant preference (56.4%). Cloud is assumed as the deployment option of choice.  CIOs now looking at providing the platforms to support apps stores, and applications development in the cloud to spur innovation.
• Big data and analytics rounds out the top 3 (48.7%). Big data is hot.  Today innovative CIOs take the Lytro approach.  As with a light field camera where you take the picture first and then focus, big data strategies start with capture the data and find the correlations later.
• Unified communications and collaboration increases in priority (41.1%). Improvements in cost performance ratios now put UC at the reach for any sized company.  These tools have gone from luxury to essential with home work forces and disparate teams.
• Social software enablement grows slowly among CIOs (33.4%).  CIOs focus less on external social software while CMO counterparts drive the purchase and adoption.  On the internal side, the data shows collaboration tied back to unified communications.

As the adoption of these disruptive technologies take shape, early adopters will find the leverage and force multipliers in the convergence of these technologies.

Questions SAPPHIRE Attendees Seek Answers To

These latest findings reflect the buying sentiment of key IT decision makers.  More and more, the business side of the house is asking questions and driving decision making.  SAPPHIRE attendees will ask the same questions amidst the macro trends.  Constellation’s Board of Advisor, Dennis Howlett recent post on “What should we expect at SAPPHIRE” provides a great start to questions that customers hope to have answers to.  Here’s a few more from Constellation’s client research communities and questions from blog readers:

Apps

• How do I plan for a future upgrade when the road map on apps remains murky?
• What’s the best way to prioritize industry specific functionality and gain a commitment from SAP executives?
• What steps in reducing maintenance costs will SAP deliver in the next 12 to 18 months without requiring my company to buy more services?
• This is the year of HR and HCM for SAP, can you compete with the HCM innovators?
• What’s the HCM road map?
• When will you deliver a social CRM product?
• Will you buy a marketing automation product to augment the marketing product?
• Why is SAP legal holding up contracts and the buying process?

Mobile

• Why does it cost more to use SAP’s mobility solutions than it does with third party solutions like Skytek?
• How come as an SAP customer I pay twice and in some cases three times for mobile licenses to access the same system information?
• What’s the future of the SAP mobile ecosystem? Which areas will SAP not compete in so partners can thrive?

Social

• How will SAP integrate with Jive, Yammer, and Lithium?
• What’s the Sharepoint to SAP social strategy?
• What’s in CubeTree that I can use today in my SAP environment?
• Should I go to a best of breed software company for internal and external social business or will SAP make an acquisition to beef up CubeTree?

Cloud

• SAP has at least five cloud platforms.  What’s the final cloud road map?
• Can I expect a PaaS layer from SAP that supports open standards?
• Who should I turn to for heterogeneous cloud integration?
• When will SAP deliver a truly multi-tenant SaaS platform?
• How do I ensure I keep to SOA principles in this new messy world of best of breed cloud apps?

Analytics

• When will SAP rationalize its BI products to have a common meta data model and architecture such as IBM and Oracle?
• Why do I pay three times for the same type of product functionality in BW, Business Objects, and now HANA?
• When will SAP provide a business user level visualization tool for enterprise use that’s cost effective compared to QlikTech and Tableau?

Database

• When can I get rid of my existing database and go straight to SAP HANA for my apps?
• Will HANA be required in future releases?
• When do I lose choice in database?
• When will HANA be put in the Cloud?

What questions will you ask while you are at SAPPHIRE?

The Bottom Line: Ask Your Questions And Stay Tuned For Updates At SAPPHIRENOW

To date, SAP’s innovation efforts earn a B- for good acquisition strategy.  However, execution challenges on organic innovation and overall business value of acquired solutions keep it from moving above a B-.  Expect SAP customers, influencers, and prospects to seek answers to not only how SAP has innovated, but also how well have they executed on their plan and road map.  Customers don’t care that SAP has 1B users, share holders do. Customers need to see how these acquisitions deliver overall business value and quick wins for the business.  If SAP drops the ball on what customers want, share holder value will evaporate like alcohol in the desert.  SAP’s done a better job than in the past, but customers need solutions faster than ever from traditionally legacy applications vendors.

Your POV.

Ready for SAPPHIRE?  What questions will you be asking SAP executives? What do you hope to leave with?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Please let us know if you need help with your next gen apps strategy efforts.  Here’s how we can help:

• Mapping out the roadmap in the Future of Work
• Providing contract negotiations and software licensing support for SaaS, Cloud, and On-Premises software.
• Evaluating SaaS/Cloud options
• Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
• Designing end to end processes and systems
• Comparing SaaS/Cloud integration strategies
• Assisting with legacy ERP migration
• Engaging in an SCRM, HR tech and strategy
• Planning upgrades and migration
• Performing vendor selection

Resources

SAP Conference Call Replay With Bill McDermott and Lars Dalgaard

Monday’s Musings: Balancing The Six S’s In Consumerization Of IT

Monday’s Musings: A Working Vendor Landscape For Social Business

Research Report: The Upcoming Battle For The Largest Share Of The Technology Budget Part 1

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Copyright © 2001 – 2012 R Wang and Insider Associates, LLC All rights reserved.
Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Customer Experience!

Making Sense of the New Epicor

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

Three Elements of Strategy

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

Epicor executives were upbeat in presenting these and other elements of the new Epicor. But how differentiated is Epicor's strategy, and what does it mean for Epicor customers? Here's my take.

The Azure Strategy is a Winner

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

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

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

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

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

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

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

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

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

The Culture Message Has a Subtext

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

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

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

A more solid product than we've seen before.

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

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

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

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

Related Posts

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Infor’s Two-Pronged Cloud Strategy

Press Release: Constellation Research Appoints New Chief Operating Officer

Constellation Research, an award-winning research analyst and advisory firm helping clients navigate emerging and disruptive technologies, announced today that it has appointed Dennis Kanemitsu to the newly created position of Chief Operating Officer.

As a veteran in technology-related businesses, Kanemitsu brings more than 25 years of domestic and international experience managing technology, software, and service organizations in the disciplines of sales, marketing, business development, services offering development, strategy, and operations.  Previously, he served as Managing Director, Global Markets, at Forrester Research, where he led Asia Pacific, Latin America, and parts of Europe, Middle East & Africa.  Kanemitsu has also held executive positions at IBM, Peregrine Systems, Extricity, and Informix.  He holds a BA in Psychology the University of California at Riverside and a Master of Social Work and MBA from the University of Washington.

 

Constellation Research CEO, R. Ray Wang, commented:  "To service our clients better and to manage Constellation's growth, we now require a seasoned expert in the industry to take our operations to the next level.  We're lucky to have Dennis' expertise in the research industry, his ability to put strategy and planning into action, and his insightful approach to operations.  The entire team is thrilled to have Dennis on board."

 

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