When the major analyst groups discuss ERP the only vendor names they seem to use are SAP and Oracle. I think that shows their blind spot to the regional differences that manifests in ERP in the small-medium business (SMB) space.
I used to work for a company that re-sold Microsoft’s Dynamics NAV. With Microsoft’s reputation I thought that building a business in the SMB space with NAV would be fairly easy, after all, everyone knows Microsoft. It took me a while to learn that the growth of NAV was not as spectacular as I expected.
At first I thought that Microsoft South Africa was just not very experienced in the ERP world, and that was emphasised after hearing from Nav partners overseas that their business was growing fast.
Then I joined my current company which has a strong business in the SYSPRO ERP. There I found that SYSPRO’s 25-year track record in SA has given it a strength and market presence that makes it a formidable player in the SMB market.
The Dynamics product that does well in SA is GP (the old Great Plains) because it has had a presence here for well over 10 years, similar to that in the UK I understand. In the UK, I read that Sage is a major SMB player, but you would struggle to find a Sage customer in SA. A US comparison would be Lawson, which seems to have a strong presence in the mid-market there, but is a small player elsewhere.
So my hypothesis is that in different countries the ERP gorilla in the SMB market is different due to local history and conditions. What is needed next are numbers to either prove or disprove my hypothesis. I expect that the local analyst groups in each country are the ones with the information, rather than the international groups.
I am intrigued by the variety of comments about the recent release of SAP’s Business ByDesign (BBD, or A1S as it was previously known). It seems to be a potentially disruptive technology, but no one is quite sure by how much and how long it will take to see an impact.
On the doubting side is AMR’s Bruce Richardson (now requires subscription):
I’d love to get our CFO to switch to a new single-vendor, integrated SaaS architecture, but it’s too much of an uphill sell.
and discussing a problem in SAP’s marketing message:
SAP Business ByDemand is sandwiched between its two on-premises products: SAP BusinessOne for companies with less than 100 employees and SAP All-in-One for firms with more than 500 employees.
Another AMR analyst is reported making the following comment:
we have yet to see whether the market for SAAS-based ERP products is viable. Overcoming the skepticism of CIOs to have all their enterprise data hosted outside their firewall is no small undertaking. Demonstrating to partners that there is a profitable reality to participating in the evolving ecosystem to support this new application will not be easy.
Larry Ellison is also negative, reckoning SaaS and the SMB market isn’t a good place to make money
You spend a lot of money developing a whole new product for the low end. But you also need an all-new sales force because we don’t call on those customers. We don’t call on small businesses, and it’s very expensive to call on small businesses. It’s very expensive to do ERP implementations in small businesses. The cost of sales is high. The cost of implementation is high. There are virtually no synergies in sales, marketing, and product development and support.
“We just haven’t figured out a way to make a substantial profit in that market. We think it’s hard to make money.”
Somewhere on the fence is Nick Carr.
Even if SAP falls short of its ambitious goals for BBD, the onus is on its competitors to upgrade their vision and positions and products to meet and/or exceed SAP’s positioning. That competitive struggle alone will make the BBD launch more important than anything else that happened this week in the market, and, potentially, for a long time to come.
Phil Wainewright comments that SAP is prepared to take its time building the BBD business
SAP knows that in Business ByDesign it has something powerfully explosive on its hands and the last thing it wants it to have it blow up its face. It would rather risk burning the fuse so slow that it might even blow out altogether
For me, Dennis sums it up
Once again, SAP gives us all pause for thought about a story that will run and run.
I got this via Craig Cmehil’s blog, who got it via someone else …
1. Do you promote your blog?
No. I started blogging as a means of exploring my own creative writing capacity, and still do. Getting referenced occasionally by some of the big names in enterprise software blogging does help though, and I think that using trackbacks also helps.
2. How often do you check hits?
Not very often, because of #1.
3. Do you stick to one topic?
In general I try to, but if I feel something is worth blogging about I don’t restrict myself.
4. Who knows that you have a blog?
My employers, a director of our ERP vendor, some bloggers overseas.
5. How many blogs do you read?
I have 89 blogs in my Google Reader RSS reader, and try to read them all.
6. Are you a fast reader?
Yes, and Google Reader helps.
7. Do you customise your blog or do anything technical?
I have done some basic customisation of my blog, but I still feel like quite a novice when it comes to the technical stuff of WordPress blogsites.
8. Do you blog anonymously?
Yes, because when I started I wanted to be able to comment about things close to my business without being censored. I have revealed my first name, but I am still reluctant to divulge my full details. However, a couple of overseas bloggers have revealed my full name.
9. To what extent do you censor yourself?
I believe I have to be responsible in what I say, and I don’t like to be over-critical even when I feel highly emotional about something, so I reckon that means I do self-censor to an extent.
10. The best thing about blogging?
The bloggers I have encountered around the world as a result.
There seem to be so many stories at the moment about Apple’s iPhone. The latest news is about Apple trying to stop people from hacking the phone so it can be open to all networks. From the SA perspective, I can’t understand why a cellphone maker would want to restrict its phone to just one network provider.
We don’t have a good representation by Apple in SA – the company still hasn’t opened an iTunes service for South Africans even though the iPod is hugely popular here. If and when the iPhone comes here, or anywhere in Africa, Apple will have to establish a new service provider relationship as the ones it knows elsewhere don’t operate here.
I wonder if, like the Blackberry, the iPhone will be a damp squib in SA.
An article in Harvard Business School Working Knowledge brought back some old feelings about how marketing has become viewed in many organisations.
Fixing the Marketing-CEO Disconnect examines what has happened to the position of marketing in recent years and how it has dropped from a role of importance in the executive office. Locally I know that the marketing executive of a telco is no longer part of the executive team because marketing isn’t considered ‘strategic’ enough.
According to HBS:
“marketing exists far from the executive suite because the CEO perceives that there is not the same pressing need to master the marketing discipline as there is, for example, to master finance due to compliance issues”.
HBS points out that in many companies there is:
“a yawning gap between actual revenue growth and investors’ expectations … Marketing is the way in which firms can close this gap because it encompasses all the activities of an organization that listen to the customers’ voice and ultimately generates profitable relationships.”
Marketing has other responsibilities as well:
“responsibility for brand equity still resides in the marketing function, yet brand equity has never been more volatile and important”
The problem HBS identifies is that:
“the fundamental nature of marketing has shifted so rapidly that many companies have not kept pace … Over the past 10 years the mix of marketing skills needed by a company has radically changed”
From my experience, marketers at the corporate level in high-tech companies tended to have come from a marketing background. This may be appropriate if the company is in the consumer (B2C) end of the industry, but I don’t believe it helps at the business (B2B) end. Looking at the good marketers from companies like DEC and HP in the 1960s and 1970s, they tended to be from an engineering background. Those people could understand the technical issues of the products and then apply that knowledge to position those products to their target audience.
In my opinion, part of the problem that Microsoft Dynamics has against SAP (in SA anyway) is that Microsoft marketers come from the Microsoft ‘classic’, B2C side and think they can market to businesses in the same way.
The MarketingSherpa website has published ‘5 Steps to Better Marketing Operations‘ (restricted access). It discusses the rise of Marketing Operations (MO), a field which is trying to formalise and quantify marketing, and something that I was introduced to at JD Edwards in the early 2000s. MO arose as a response to the executive view that marketing was not measurable and therefore not manageable.
The steps are:
#1. Establish a formal MO function
This means that MO is not a one-person job, and should have its own budget. It also mentions not making “the mistake of expecting immediate ROI … research shows that investments in an MO function should be viewed as a long-term investment and requires a three- to seven-year payback.”
#2. Broaden the MO scope
In order to be effective, broaden the scope of MO to cover not only the marketing department’s activities, but also interactions with the entire company.
Best practice firms included the following nine areas in their MO efforts:
o Process improvement
o Marketing IT
o Budget and finance
o Marketing intelligence, including research and analysis
o Socialization and communications within the organization to get buy-in for MO activities
o Stakeholder alignment
o Sales alignment
In addition, best practice companies also included dashboards and scorecards in their MO functions.
#3. Align MO goals with the biggest marketing challenges
o Measuring marketing ROI and demonstrating value
o Balancing marketing strategy and tactics
o Creating common goals for marketing success tied with other groups
Some companies using MO mentioned that they “practice marketing accountability (setting specific commitments, tracking and adjusting performance)” to measure and demonstrate ROI. Others said they use MO “to balance big-picture, strategic planning with day-to-day marketing execution decisions.” MO was also used to make better use of “other groups in the company who have a stake in marketing decisions.”
#4. Get buy-in from senior management and outside departments
o Integration with the sales organization to tie sales objectives with MO goals
o MO personnel having an early role with business units for product development ideas
#5. Conduct regular reviews to improve MO functions
Typical topics covered in these reviews are:
o Annual or quarterly marketing planning
o Budgeting and resource allocation
o Creative issues and brainstorming
o Education and team development
o Marketing portfolio investment evaluation
o Operations optimization
If you have never experienced MO, reading the above sounds like more marketing speak. It is definitely for larger organisations and you usually have to go through the stages of marketing accountability. At JDE, it required quite a culture in marketing to get us started, but that was the post-Y2K and -9/11 era, and marketers realised it was needed to help us survive in our jobs.
Many companies are going to find getting MO systems difficult, in the same way that HR managers struggle to justify investment in HR systems. Also, marketers are traditionally not a measurement-bound group of people, unlike sales, and therefore are likely to resist. Furthermore, few marketing managers will have a clear idea what measures to employ.
I’m not sure how many recent marketing-oriented graduates from SA universities have had the exposure to this new type of system, and whether it is generally taught at universities yet.
Back in the pre-Y2K era, when I first encountered ERP, one of the selling points that the ERP vendors used to tout was their ‘industry best practice’ solutions. This meant that they had determined that for a particular industry (say buggy whip production) that best way to do things was to follow a set of processes that their software encapsulated.
I don’t know how many companies were convinced but that message, but its fallacy was brought home to me recently when we visited a company in the heavy manufacturing industry. Not that best practices are wrong per se, but its likely that they were developed in first-world environments, and transferring them to developing-world situations is not straightforward.
During our walk around the factory, we were told at more than one location that the factory managers had tried implementing procedures that were considered first-world best practices but had failed on every attempt. In some cases the reason was lack of advanced support infra-structure on the shop floor, but in other cases it was due to the level of education and training of the workers, cultural attitudes, and language issues.
So when we implement at the factory, we have to be aware of the local ’way of life’ and not try and impose practices just because some ‘northerners’ think they should work. Once again, it shows to me the importance of enterprise software vendors recognising local conditions when they sell their solutions. I’m afraid that too many international (US?) vendors have little idea about how things work outside the environment they are familiar with, and then cannot understand why some countries struggle with implementations.
The website TechnologyEvaluation.com has done a brief evaluation of 2 Oracle ERP products – JD Edwards EnterpriseOne (the old OneWorld) and Oracle’s own E-Business Suite (EBS).
Interest for me was in these areas:
- the JDE product out-ranked EBS in the functional aspects but not in product technology, presumably because JDE still has AS/400 aspects whereas EBS is Linux-based.
- the products were described as “two of the most popular enterprise solutions available in the marketplace today”. That must be a US-centric opinion because, as I said before, none of the Oracle ERP range are doing well in South Africa and I am told by a JDE user that JDE sites have dropped or intend to drop the product and move to SAP.
This is a question that I have raised before, and anecdotal evidence indicates that many ERP resellers are not happy with their ERP principal. However, from the blogs I follow I get the impression from other countries that ERP vendors are better are working with their partners and developing business than they are in South Africa.
Our two vendors are SYSPRO and Microsoft. Colleagues in the company have recently been complaining about SYSPRO’s bureaucracy and lack of flexibility in dealing with customer issues. The advantage for us, however, is that as SYSPRO is a local company we can escalate issues up the executice chain. They also have in-depth knowledge of local conditions and market expectations and have in many cases been more than ready to accommodate requirements from prospects, in particular.
Microsoft is a different case. Other colleagues in the company are nearly at the stage of telling Microsoft Dynamics to get lost. So what does Dynamics lack in SA? Firstly, stable long-term management; four different heads in four years does not provide stability for partners or continuity of strategy. Secondly, I my opinion (and as I have said before), the local team are very much execution-bound, meaning that strategy, planning and decision-making gets done in Europe by people who don’t have in-depth knowledge of local conditions and market expectations. Thirdly, again in my opinion, Microsoft is too process-bound to be flexible enough when they need to be.
Instead of operating the SA unit as a sub-division, I think Microsoft could learn a lot by studying how Bidvest and Murray and Roberts, both SA success stories, allows their subsidiary companies a great deal of latitude and flexibility while at the same time focusing on some core financial, market and customer metrics.