ERP Software at Your Service

ERP as a Service

admin — Mon, 10 May 2010 17:23:10 +0000

For the last several years we have seen the adoption of Software as a Service (SaaS) as a viable, and sometimes preferred, delivery and acquisition model for enterprise software. Examples like salesforce.com, Google Apps, Taleo, and Workday show how SaaS can be an advantageous model for some software categories while other categories such as ERP have seen a slower adoption rate.

ERP software delivered as a service is still a very small percentage of the overall market. Why is that? Regardless of the reasons one thing is clear: most customers are thinking about ERP as a service, but delaying the purchase decision.

There are pros and cons for acquiring your ERP on-premise or as a service. In the end the decision needs to be based on specific needs. Given how frequently business needs change, the need for a flexible model that allows customers to shift between SaaS and on-premise models becomes extremely relevant –Software at Your Service.

Here we examine the benefits and challenges of both SaaS and on-premise delivery models for ERP applications and demystify the alleged tension between them.

Manufacturer switches and finds relief in Cloud ERP

Acumatica Sponsored Post — Tue, 31 Aug 2010 17:24:23 +0000

North Carolina-based Quantum Group, a producer of tech-style customized fabrics for use in various commercial and industrial applications, knows all too well the challenges of managing a complex corporate structure. With seven companies in three different locations, Quantum needed to:

Control financials (general ledgers, receivables, purchase orders, and payables) across a distributed environment
Delegate work assignments and provide the necessary functionality and security settings for multiple users
Conduct custom reporting

This all came with the high price of installing and maintaining an ERP software system. And as Quantum’s operations expanded, the manufacturer recognized it had to rely on a solution that could be accessible from any location without the excessive expenses. The Company, for many years, had used a web-based ERP platform for its business processes, but it didn’t provide the kind of control Quantum needed over their costs, support, or user licensing.

With careful consideration, Quantum felt it was time to make the move to a new SaaS solution deployed in the cloud. That way, Quantum could automate its operation by quickly adding users without implementing client software or paying additional license fees. All users could access real-time data, advanced financial features and reports from anywhere they are located. Further, running on the cloud, the manufacturer could leverage disaster recovery capabilities and not have to worry about managing operating systems, hardware, and other datacenter complexities.

After an easy migration — the new system was deployed in just 30 days — Quantum quickly realized their cloud ERP platform gave them the critical power they didn’t have before:

Control over price
Control over deployment
Control over upgrades
Control over support

Read the full cloud ERP deployment story.

One CIO’s View of Cloud Computing and ERP Software

manchester — Tue, 31 Aug 2010 15:03:08 +0000

On August 30, Sramana Mitra posted an interview with Dennis Hodges, CIO of Inteva on her blog. The interview provides some interesting insights with regard to cloud computing and shows that ERP may start catching CRM in terms of cloud adoption. Read the full article and interview here.

Sramana Mitra’s summary

The interview uncovers several cloud computing trends. One of them is the case of early adopters pushing cloud vendors to address integration between on-premise and cloud services. Once there is significant adoption, this may not be a scalable proposition, and eventually we expect several new players and innovation by third parties and entrepreneurs to help the cloud providers and cloud adopters work out integration.

The acquisition of Cast Iron may have given IBM some edge in integration within its own cloud and on-premise offerings, but that leaves the playing field wide open for other players and innovative solutions. Another trend we spotted is the pricing model by ERP vendors whereby they share a percentage of sales as their fees. Last, cloud-based printing solutions and easing the real customer problem of not being able to access attachments via a BlackBerry are some of the blue-sky opportunities for entrepreneurs to explore.

ERP software in the cloud before CRM

Inteva started cloud adoption with ERP instead of CRM. Dennis says that once the ERP implementation is complete, business intelligence “might be next”. This example is interesting because it contradicts the standard industry adoption process where companies start their cloud experience with CRM and move their ERP to the cloud later. Standard industry adoption is supported by the fact that in 2008, Salesforce.com had 11% of the CRM market, while all web-based and SaaS vendors only accounted for 4% of the ERP market.

During the interview, Hodges describes HR software as an application that has been put “in the cloud”. Although to be fair, he says that this is really “outsourced” instead of cloud. ERP Cloud News comment: the fine line between outsourcing services and putting software and services in the cloud is a debatable topic. In a previous post we covered the differences between cloud, hosting, and SaaS.

Cloud ERP requires in-house business skills

Ms. Mitra skillfully leads Dennis Hodges to a discussion regarding the impact of cloud and SaaS on his internal resources:

If I look at the SAP model I do not have a stable of ABAPers, FICO experts, or anything like that. I have the finance business analysts, the purchasing business analysts, and they can work across more than one module.

The point is that cloud ERP still requires business expertise, but IT specific operational tasks become simple because they are outsourced. Not mentioned in the interview is the fact that the business experts need to be more computer savvy than the old days of dictated letters and day-long meetings.

Dashboards and reporting are important

At the close of the interview, dashboards and reporting features are seen as critical requirements for a business intelligence system. Dennis says that the ability to take a massive amount of data and make it simple or graphical so it can be read by a CEO or CFO is needed.

ERP Cloud News commentary

This interview is evidence that in 2010, the ERP market may begin catching up with CRM in terms of SaaS/cloud adoption. Critical information delivered by SaaS CRM (centralized views of sales, pipelines, and opportunities) also needs to be provided by business intelligence tools (centralized views of revenues, costs, cash, forecasts) to continue accelerating the adoption of cloud ERP. As adoption grows, organizations will need to change to favor business experts with a technical background over technical experts with a business background.

ByDesign Wrap Up

djohnson — Wed, 18 Aug 2010 14:11:48 +0000

The dust has almost settled, but the jury is still out on the launch of SAP’s Business ByDesign. ByDesign is SAP’s software as a service (SaaS) offering that has been in testing and development for the past 3-5 years. The topics of cloud computing and SaaS are still hot in the ERP market, but will adoption follow?

Much has been written on the topic, below we have linked to several insightful articles.

Reports on SAP ByDesign

Timing

July 28. Warwick Ashford reports in Computer Weekly “SAP too slow to cloud, say users” that 73% believe that SAP was too slow getting the product to market. The article does include quotes from SAP folks explaining reasons for the timing and provides evidence that maybe the hype was ahead of adoption. Key issues such as data protection, lack of control, lack of customization, compliance, and risks of outages are still causing some to wait.

August 3. Ann All reports in IT Business Edge “Was SAP Too Slow on SaaS? Maybe, Maybe Not” that SaaS is still accounts for a relatively small percentage of ERP deployments. The article also defends SAP’s timeline as normal for ‘traditional’ software-development standards. In the new SaaS world, maybe old timelines are no longer applicable? The article also addresses the issue of whether SaaS ERP should be a point application or become a sophisticated replacement for existing on-premise solutions.

Pricing and VAR Impact

August 2. Dennis Howlett recaps the pricing and offerings in ZDNet “SAP Business ByDesign 2.5 arrives: what now?” and discusses the critical issue of distribution and how value added resellers (VARs) will participate in SaaS offerings. This issue is further developed in his August 10 article “Is the cloud a VAR killer” where he takes a deeper dive at the fixed-price implementation issue.

User Counts, More News

August 2. Rick Whiting discusses customer rollout issues in CRN “SAP Furthers SaaS Push with New Business ByDesign Release.” The article also points out that version 2.5 is a feature pack which will kick off more widespread public availability. The initial version launched in 2007 only acquired 70 active customers.

August 3. The critics add their opinions in ZDNet “NetSuite slams SAP Business ByDesign.” In this blog post, Dennis Howlett moderates comments from both sides.

Let the Voting Begin

The market will determine the future of SaaS as well as the future of ByDesign. The polls are now open for enterprises, mid-market businesses, and small businesses. Results (a.k.a. adoption rates) are likely to vary by customer sizes and industries. Small marketing and consulting firms may come out for SaaS while large manufacturers may cling to on-premise. Keep in mind the ERP market has several “candidates” running for office. Some are strict SaaS, some have stayed with the client-server incumbent, SAP has two candidates, and other have candidates with both SaaS and on-premise capabilities.

NetSuite Q2 Results

djohnson — Fri, 13 Aug 2010 16:00:34 +0000

(Reuters) – NetSuite Inc (N.N), a maker of Web-based business software for small and mid-sized businesses, posted better-than-expected adjusted quarterly profit, helped by a jump in bookings at its North American segment.

Second-quarter net loss, however, widened to $7.2 million, or 11 cents a share, compared with $5 million, or 8 cents a share, a year ago.

Excluding items, the company earned 3 cents a share, besting analysts’ expectations of 1 cent a share, according to Thomson Reuters I/B/E/S.

Bookings through NetSuite’s North American channel grew 27 percent.

Revenue at NetSuite, which is majority-owned by Oracle Corp’s (ORCL.O) billionaire Chief Executive Larry Ellison, rose 17 percent to $47.1 million. Analysts were expecting revenue of $45.3 million.

Original article: click here

The importance of ERP deployment options

Acumatica Sponsored Post — Fri, 13 Aug 2010 15:47:37 +0000

According to IDC, Forrester Research, Gartner, SMB Group, and many other analyst firms, cloud applications are the wave of the future and will comprise over 30% of deployments by 2014. However, today over 95% of ERP deployments are still running on premise. So how do we move from a world with fewer than 5% of ERP deployments as SaaS to a world with over 30% of deployments as SaaS?

Reasons for upgrading ERP

The first step in understanding how this will occur it to review some reasons why companies purchase or upgrade their ERP software.

Newer companies without an advanced accounting solution need manage growth and automate their business processes. These companies do not normally have an existing infrastructure (and existing software baggage), so a solution which minimizes hardware, software, and IT complexity is a natural choice. Newer company needs are well served by a web-based solution that is offered as SaaS so they can benefit from the latest technology without a large capital expenditure.
Companies with ERP software systems that are no longer supported will be forced to upgrade. In some cases, these companies migrate to a supported version of their current vendor’s software. But, in the majority of cases, the legacy vendor only offers an upgrade to another client-server solution. Since the upgrade is nearly as expensive as installing new software, companies often use this time to investigate vendors that offer more modern technology. Unlike newer businesses, these companies have experience running client-server technology and be adverse to the notion of a cloud-based solution.
Specific activities such as acquisitions, mergers, new regulations, or rapidly changing business requirements often force businesses to investigate new automation solutions. As business requirements change, companies try to adapt and customize their existing systems to meet the new challenges that they face. This often leads to a web of loosely connected systems (instead of a single centralized web-based system) with expanding complexity. After the typical ERP upgrade cycle of 5-7 years, the company sets aside money to fix the problems that have accumulated.

Change is the biggest driver

Business is not stagnant. Most businesses face growth, budget cutting, mergers, acquisitions, management turnover, and other events on an annual basis. These changes almost always create changing requirements which lead to stress on current processes and systems.

The cloud provides agile computing environments so companies can manage change more efficiently. This is a major factor that will drive growth of SaaS adoption as predicted by several analysts.

Preparing for Change

SaaS solutions enable businesses to efficiently manage most types of business expansion. But a SaaS solution that does not offer the ability to move on premise or to a different data center or cloud provider can result in the same problems as your original client-server solution. As your requirements, regulatory environment, and corporate structure change, many SaaS solutions will face the same 5-7 year upgrade cycle because the are not easy to customize and do not offer deployment flexibility.

Example 1. Assume you distribute health care equipment. By purchasing a SaaS distribution solution, you can get started quickly and access real-time data and reporting from all warehouses and offices. As your business grows, you decide to begin selling direct to clients, which necessitates tighter controls over confidential data. If your same software code and data can be moved on premise, you can easily manage this change.

Example 2. Assume you are a CPA firm and utilize a SaaS accounting solution to do client write-up and allow customers to quickly access financial reports. Some customer want to utilize SaaS, others want to use an on-premise solution.

Example 3. Assume you are a company that needs to upgrade your software. Your CEO is excited by the prospect of SaaS, but the IT department and operations folks are not ready to make the jump yet. A web-based ERP solution that provides the ability to move from on-premise to SaaS is just what you need to keep folks happy in the short term while preparing for the future.

Conclusion

Companies should purchase a software solution that allows them to run either on-premise or as SaaS. This flexibility ensures that the solution will fit the business to ensure the lowest priced solution, even as the business’s size, complexity, IT expertise, financial position, or regulatory position changes.

IDC: One Third of All Software Delivered via Cloud in 2014

manchester — Thu, 12 Aug 2010 18:00:30 +0000

IDC reports in a recent press release that:

The Software as a Service (SaaS) market had worldwide revenues of $13.1 billion in 2009. IDC forecasts the market to reach $40.5 billion by 2014, representing a compound annual growth rate of 25.3%. By 2014, about 34% of all new business software purchases will be consumed via SaaS and SaaS delivery will constitute about 14.5% of worldwide software spending across all primary markets.

What about ERP software?

According to the IDC study, “applications will account for just over half of the market revenue.” The rest of the spending will occur on cloud platforms as businesses begin to purchase cloud services instead of hosted services.

ERP Cloud News Opinion:

Of the over $20B in application revenue, some will undoubtably be in ERP, while CRM, human resources, and other applications will continue to grow quickly as well. In addition, the size of the markets will be critical to cloud adoption. Small and medium sized businesses markets may develop quickly in the area of applications while larger businesses may develop more quickly in the area of infrastructure.

More on Consona’s acquisition of Compiere

guest blogger - Houston Neal — Fri, 30 Jul 2010 19:25:23 +0000

ERP Software Advice recently put together an analysis on Consona’s recent aqcuisition of Compiere. In their report, Why the Technology Matters – An Analysis of Consona’s Acquisition of Compiere, they suggest that while most software buyers don’t care about underlying technology, they still want software companies to:

Continue to add new features and fix bugs quickly
Evolve to the next generation of technology
Remain “strategically viable,” not just financially viable

Underlying software technology is a huge determinant of an vendor’s ability to deliver on these three requirements. This is the very reason Consona bought Compiere.

“It’s not about the open-source business model or Compiere’s customer base. Instead, it’s all about the technology,” says author Don Fornes.

So why is this relevant for software vendors and buyers? Because there is a big shift underway from client/server systems installed “on premise” to cloud-based or software-as-a-service systems that are hosted in a secure data center and accessed through a web browser. Moreover, the open source movement is producing underlying technology that is not only free, but increasingly really good stuff. Software vendors that don’t make the transition will wither on the vine.

Web-based, SaaS, and Cloud ERP benefits

djohnson — Thu, 22 Jul 2010 17:53:53 +0000

Background and Definitions

Cloud technologies are currently being hyped and advocated by all software vendors. Almost every ERP, virtualization, infrastructure, and application vendor says that their software takes advantage of the cloud. The cloud has become synonymous with successful, modern, well developed software. As companies promote the cloud, the differences between a SaaS offering, web-based software, and the cloud have been blurred. In this article we will try to clarify the benefits of each.

Definition of Cloud Computing: use of the Internet to access hardware, software, and other resources that are provided on-demand to perform work.

Web-based technologies have been in the press for many years so they are not as “in vogue” as cloud technologies. Key differences between web and cloud are (a) web-based technology relates to software while cloud-based technology has been applied to a wider range of computing resources such as hardware, storage, and software and (b) cloud technology can be employed without the use of web-based software.

Definition of Web-based software: use of a browser (thin client) to access a software application over the Internet to perform work.

The definition of SaaS is the widely debated, and in an earlier article we pointed out confusion between SaaS and hosting. Both cloud technology and web-based software make SaaS easy and effective to deliver – but it is possible to have SaaS without cloud technology.

Definition of SaaS: software that is delivered on-demand over a network (there is some debate if this is limited to the Internet), through a rental ownership model.

This article will cover some how web-based and cloud-based can benefit ERP users. In many cases the benefits of web-based software is more important than software that is deployed on the cloud.

Benefits

Cloud Benefits

The benefits of using an external cloud provider are similar to the benefits you get from buying power from your power company.

Instead of building a power plant in your office, you can get started right away by hooking into the power grid. If you grow rapidly or plug in more appliances, you can easily buy more capacity from the power company instead of having to upgrade your plant and equipment.
When you first buy power you only invest in building the connection and the appliances, you don’t have to spend massive amounts of capital to build a plant.
When something goes wrong, you call the power company get them to fix the problem. You don’t need to hire full time employees with expertise in power distribution and circuit design.
You benefit from economies of scale associated with providing the service. This is why you don’t see many businesses with generators running behind their building. Of course, there are exceptions where a large corporation in a remote location may benefit by generating their own power.

By replacing the words power company with cloud provider and appliance to software application you will see the benefits of deploying your ERP solution on a externally provided cloud.

To summarize: faster to build, lower hardware costs, rapid scaling, pay only for what you use.

Web Application Benefits

The benefits of using web-technologies are similar to the benefits you get from making purchases using a charge card such as Visa instead of setting up an account with each of your vendors.

Instead of multiple accounts and multiple pieces of plastic, a universally accepted charge card provides you with access to your account/line-of-credit no matter where you are, just like a web browser with your account credentials provides access to your software applications/data from anywhere.
Once you setup your charge card with your bank, you to not have to maintain any information with regard to each vendor, just like after you setup your computer, there is nothing more to maintain (with the exception of some occasional browser updates).
Your charge card provides instant access to a centrally managed account with your information and data no matter where you are.
Your charge card can be used from any city or location and provides access to your centrally located account information.

To summarize: no client software install, no client software maintenance, real-time data, access from anywhere, cross platform compatibility

SaaS Benefits

The benefits of using SaaS are similar to the benefits you get from renting a house instead of buying it.

It’s faster and easier to rent. There is no title search, home inspection, down payments, and complexities associated with purchasing a house.
You don’t need a large, up-front investment when you rent a home instead of purchasing one. Of course, renting isn’t for everybody and may end up being more expensive in the long run.
When something breaks a renter does not have to arrange to fix the problem or pay to fix it. Usually the renter calls the owner and has them perform the necessary maintenance work. As a renter, you do have responsibility for minor things such as cleaning, taking out the trash, etc.

A renter is similar to a user of SaaS software while a home owner is similar to a company that buys a software license. The reasons for home ownership are similar to software ownership. First, you can make changes/customizations to the software that are specific to your business. A renter can configure some things (change paint color, etc.), but an owner can take down a wall or add a bathroom. Second, the cost of owning software may be less in the long term if a business is willing to update the software and manage the operating environment. Finally, some businesses, just like some home owners, like the control that ownership provides against increasing rents and long term reliance on external vendors.

To summarize: rapid installation, lower up-front fees, fewer maintenance hassles.

Putting it all together: web, SaaS, and cloud

Web-based applications can be run as SaaS in the cloud to gain the benefits of all three models with one deployment. The table below illustrates several advantages of an ERP system deployed in this manner while specifying the technology that is the main contributor to the desired benefit.

Benefit	Importance to ERP*	Web-Based	SaaS	Cloud
Access from anywhere	High	X	-	-
Cross platform compatibility	Med	X	-	-
Easy, rapid installation	Low	X	X	-
Reduced maintenance	Med	X	X	**
Lower hardware costs	Low	-	X	X
Scale up and down	Med	-	-	X
Pay for what you use	Low	-	-	X

* Importance to ERP. This column describes the relative benefit to a mid-sized ERP company. The ability to access your data and applications from anywhere is quite important while the hardware savings associated with the cloud might be insignificant in an average ERP deployment. For example, if an ERP system costs $100,000 (software, configuration, customization) and the hardware it runs on costs $8,000, then saving 20% on the $8,000 will not be a critical component of the overall solution. Scaling up and down and paying for only what you use are also benefits of Cloud, but ERP deployments have fairly predictable usage patterns for most companies (although I can think of many exceptions where this would be critical). Some more discussion on these items is found in the post ERP for Distributors: SaaS versus Traditional.

** Many cloud programs are offered with SaaS components. For example, the Windows Azure program includes an operating system and OS updates. In this case the “cloud” includes the platform and would also include the benefits of SaaS (as it relates to the operating system). The combinations of solutions and fluid nature of the cloud definition make it nearly impossible to represent benefits in a simple matrix as we have tried to do here.

Is SaaS Required?

A final point worth noting is the fact that SaaS should be an optional component of your ERP software, not a required one. Some businesses may decide to forgo the SaaS benefits in order to gain a more flexible system and long term cost benefits associated with purchasing a cloud ERP system that is customized and integrated with on-premise applications.

Conclusion

Software applications that are web-based and deployed on the cloud maximize efficiencies and minimize costs associated with building and maintaining ERP applications. The relative importance of the benefits associated with a web-based solution for a complex application such as ERP is much higher than the financial benefits realized by deploying on the cloud. The introduction of SaaS provides both benefits and encumbrances, so we recommend selecting the vendor which offers both and allows you to switch deployments according to your business needs.

Definition of ERP

djohnson — Mon, 19 Jul 2010 13:48:10 +0000

At the Microsoft Worldwide Partner conference, I asked several folks to participate in an informal one-question survey. The question was “What is an ERP system?”

All of the Microsoft partners I spoke with were well versed in software and know their specific area of expertise. Many used acronyms such as LMS and RMS without thinking it was possible that I may not know what those things are. Likewise I assumed that everybody knew what ERP was, but in reality, even some technologists need a bit of guidance.

Many of the answers provided were quite good, and most people know that ERP stood for enterprise resource planning. A few notable exceptions include the person who thought that ERP and accounting were “pretty much the same” and the person who argued that ERP referred to “any business software system designed to simplify work.”

Formal Definition

Following the show, somebody who took the poll sent me the following definition:

“Enterprise resource planning (ERP) is an Integrated computer-based system used to manage internal and external resources including tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment.

An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide “services” and communicate on a local area network. The distributed design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex and expensive computer systems in areas which will not use their full capacity.”

The Cloud and ERP

The definition above used to be accurate, but the delivery aspects of ERP are changing. During the conference, Microsoft stressed cloud, cloud, and more cloud. The cloud makes it possible to deliver ERP in new ways, including the ability to deliver services outside the “local area network” described in the formal definition.

The cloud is changing and improving ERP. As many ERP companies are discovering, the cloud and web-based solutions allow you to build and deploy solutions in ways that meet customers’ needs so they no longer have to setup and rely on a complex local area network.