For about twenty years, my focus on marketing and selling enterprise software was on business decision makers foremost, and technical people second. The software I was involved in was large-scale, on-premise applications with a high initial license purchase. That has changed in the last two years. Continue reading
I have just spent 10 days in the USA, split between a week just south of Los Angeles in Costa Mesa, and several days in Lawrence, Kansas. Although I have been to the US several times before, this time it was different, for reasons I explain below. But also because I may have figured out the essence of what makes the US different to other countries when it comes to business and technology.
My previous visits were either as a pure tourist, or as an overseas employee of a US company coming to get an update on future plans and directions. For those work-related visits, I was a passive recipient. This time it was different. I went to the US to attend a sales conference organized by my employer in South Africa. This time I was one of the people helping to set future plans and directions. This time I had to actively engage – mainly, though not exclusively, with people who work in our North American offices about their concerns and issues.
One of the ongoing issues is that we, i.e. South Africans, don’t understand the US. In the past, I have always supported the view that while the US may start earlier with certain things, there’s not that much difference when it comes to business. But at the end of the sales conference, I had a strong feeling that things were much more different than I had been able to understand.
On my previous working visits, I received direction from US head office people, and used to consider them rather ignorant of the world outside the USA. Now the roles were somewhat reversed: I was the head office person, and they were saying people like me were ignorant of their world.
It took a few days after the intensity of the sales conference, staying with family in Lawrence, and talking with my South African brother-in-law who works at the University of Kansas, to distill what I think is the essence of the difference. It was after a visit to a local supermarket, Dillons, that it occurred to me.
It’s what is considered basic.
For each product category, e.g. bread, the range at Dillons was two or three times more than I have seen in South African, or UK, supermarkets. Moreover, the products in Dillons exploited every single consumer niche you could imagine, no matter how specialized the niche. In others words, the choice and competition was greater than I had experienced. I surmise that this makes US consumers more demanding than consumers elsewhere, and makes what they would consider basic different.
When hearing the North American sales people talk about their market and competition, the same kind of impression arose:
product category range + exploitation of niches = high degree of expectation from business
It’s something for both sides to consider. If you enter the US market to do business, be aware of how the needs and requirements will differ and be at a higher level. On the other hand, for US companies operating internationally, don’t expect the same issues to be of concern, and don’t assume US concepts are universal.
When it comes to business software, the requirements of a US business are likely to be greater or more detailed than business in other countries because what is considered basic fo US business is different. The same duopoly then applies – overseas software companies must get really immersed in the US to learn what is needed, US software companies may not find the same functional requirements from businesses in other countries.
As the CFO of an organization, your responsibility is to ensure efficient and effective financial operations and records, and influence overall strategy. An ERP is the foundation of the operations of a business. For a CFO, it enables you to track and report on all business transactions, analyse information, ensure governance and compliance, and increasingly do this via mobile devices. Therefore, you need to be very sure your ERP project will deliver what the business requires, and also what was promised.
Before going ahead with an ERP project, you should have addressed these questions.
Planning and selection
- What is the executive board’s experience with business software? Will there be sufficient executive involvement beforehand, and how will it be maintained during the project and afterwards?
- Are the business objectives clear, and is there detailed understanding of what you want to achieve? Do you just want a new system, or do you want to change the business – its processes, what roles people perform?
- How will you engage with vendors? Will you short-list with the use of an extensive RFP (Request for Proposal) sent to lots of vendors; use recommendations and peer contacts to identify a smaller number of vendors; do your own research on the Internet to identify possible vendors; employ the services of an external consultant?
- How will the chosen solution impact the way you do business – what aspects will it dictate to you, and what can you change to suit your needs?
- What benefits do you expect, and where will you look to find:
- Increased revenue
- Decreased costs
- Improved quality
- Better customer service
- Shortened manufacturing cycle time
- More accurate inventory information
- More streamlined processes
- Have you got details of all the costs involved?
- For the obvious items – software, infrastructure, services, training, support
- For less obvious ones – budget for data conversion/take on, third party software integration, change management, process modelling.
- How will you ensure that the consultants engaged for implementation can be treated as:
- trusted advisors
- knowledgeable and experienced in your industry issues
- What are the cost, time and effort implications of upgrading the ERP software?
Implementation and training
- Is the project scope clearly defined? How will you handle the scope changes that so often happen during an ERP project?
- Are the right internal people involved? What might their agendas be?
- How will training take place? If the staff needs proper training, how will it be scheduled to minimize the effect on their day-to-day work, bearing in mind they will also need the time and opportunities to practice and learn the new skills.
- How will the project impact both the intended users and the current IT team? How will they manage time on work vs. on the project?
- How will the ERP software work with other applications that the business relies on?
- How easy is it to access information via reports, or other sources?
- What procedures need to be implemented to safeguard governance, regulatory reporting and compliance?
Ongoing use, management and maintenance
- What ongoing training and education programs need to be instituted so that staff continue to use the system effectively?
- What strategies are required so that the ERP system encourages the standardization and classification of information across the business
- How will you extend the ERP system from just a transactional system to one that assists with planning, analysis and insight?
- What people and policies will you put in place to maintain the Return on Investment of the ERP system?
- How often will you review the alignment of the ERP with the business?
This was originally published on the SYSPRO Smarter ERP blog
What I would call the “old tech companies” – SAP, Oracle, and to some extent Microsoft – seem to be getting further away from the core where they started, and are beginning to look more like IBM and HP.
This notion was kicked off by Vinnie Mirchandani’s question ‘What happened to the SAP I knew?‘
It used to be in tune with business process leadership … Its (reduced) attention to apps has been diffused even more by years of seemingly wasted BYD investment and digesting acquisitions like SuccessFactors.
Oracle has strayed from the software path into hardware, and competes against ‘former’ partners IBM and HP. It seems like the company wants to own not only the vertical stack – from base hardware up to the software applications – but also wants to have a piece of the entire software value chain, for example, buying market automation maker Eloqua and content vendor Compendium. Apparently, the reason for this is to build a portfolio of applications to compete against Salesforce.
When it comes to Microsoft, they now wants to focus on “high value” activities that consumers and business users prioritize. Is that code of owning more of the customer’s wallet? The new Microsoft strategy is discussed further here and here. In some cases, Microsoft’s strategy seems quite different, but it also seems to be doing much the same as the others.
The situation that SAP and Oracle are putting themselves into was nicely described as being ‘too big to succeed.’
… anyone visiting Oracle OpenWorld this year would have seen a company teetering under the sheer bulk of the steroid-drip of acquisitions it has made over the years …
… SAP has also bulked up its product and customer base, and there’s a genuine risk that, at least when it comes to the SAP field sales team, it has become increasingly difficult for anyone outside to top echelons of the company to articulate the full value of SAP’s vast portfolio to customers and prospects …
… I think it’s time to admit that economies of scale work well in industrial companies with industrial processes, but sheer size is no advantage in a service economy. In a service economy, or any economy that depends on getting people to come together in order to provide innovative services to customers, doing more with less – the mantra of the economies of scale mavens – simply doesn’t work.
What really gets me about the strategies these companies are pursuing is that it seems to show they are more worried and more focused on growing revenues for shareholders, than what their customers want.
For a while I have been using a web-based service called Mammoth. Mammoth allows you to save text, images and other online content, as well as notes, into a single place for later use. In my case, I use it when researching issues I need to write about, or reference, for my job as a product marketer.
Mammoth allows you to create ‘boards’ which store the content about a particular subject. Boards can be shared so that people in different locations can edit the content collaboratively. A standard board in Mammoth is ‘Talk to Us’, which is shared with the Mammoth support team, and this allows me to address any issues I have with Mammoth online. Whenever I have logged an issue, I get a response via the board usually in a few hours.
In one case, Mammoth made a change to the user interface (UI) which made it look worse for me, so I logged a note on the Talk to Us board. There was a bit more discussion and clarification about the UI issue on the board, but what interested me was that 24 hour later when I logged on to Mammoth, the UI problem had been addressed. The application was fixed and changed without me having to do a thing.
It made me re-evaluate my view of cloud-based services.
- A problem with an on-premise application always requires the user to do something to fix it, usually download and install a software patch. With a cloud service, the problem is fixed once in the cloud, everyone gets it at the same time, and new software has to be installed.
- A problem with on-premise software is reported either by a phone call or an email, which then has to be discussed and confirmed before it can be transcribed and referred to the software development team. With a cloud service, you log an issue online in one place, the issue can be quickly confirmed and then be relayed speedily to developers.
Imagine if you could do that with enterprise software – ERP, CRM, warehouse management.
- Customers could report problems so much quicker, and probably have a better support experience
- No need for each customer to update the software with maintenance releases to fix bugs
- Customer could log enhancement requests in a more effective way, and perhaps even get previews of enhancements before they go live
- The development team work on supporting one codebase, in one location, for everyone
- No need to ship CDs of software around the world
Wouldn’t that world be better? Oh wait, it’s called Software-as-a-Service and it’s here already.
The problem is that while the promise sounds simple and wonderful, the realities of transforming to that promise require major changes in thought, approach and practice – and moreover, for traditional software vendors, major investment expense.
The views of Frederick Taylor on scientific management have defined the way organisations have operated for over 100 years. The view that to improve efficiency and profits you need to focus on processes, has dominated the culture of business, and has led to the emergence of a market for various solutions to cater for this view – the ERP software industry is one.
A new approach is starting to emerge now, one that I think challenges the Taylorist view. This new approach is more a product of, and holds value for, the way business will work in the 21st century. The new approach is referred to as the social enterprise. Another term for it, enterprise 2.0, is described by its author, Prof. Andrew McAfee of MIT, as:
the use of emergent social software platforms within companies, or between companies and their partners or customers.
Social software enables people to rendezvous, connect or collaborate through computer-mediated communication and to form online communities.
Social enterprise puts the emphasis on people, not processes.
In his book, People Buy You, Jeb Blount points out that a major problem for business is that the balance of forces has swung far towards the side of technology, process and systems as the way to improve business, and far away from interpersonal skills. We have wrung so much efficiency out of process management that it is becoming an increasingly marginal return to find greater efficiencies. Human interaction and interpersonal skills are going to be the new competitive edge for business.
Geoffrey Moore, author of classic technology marketing books Crossing the Chasm, and Inside the Tornado, has been pointed out that business has spent the last few decades on improving their Systems of Record – the systems that handle business transactions like sales and purchase orders, inventory and supply chain management, production planning, customer relationship management, and others. He now believes those systems are no longer a source of competitive advantage. Moore argues that business needs to transform, to empower its employees by providing better communication and collaboration mechanisms, both inside the business and between businesses. What will enable this transformation is a new set of Systems of Engagement, which focus on communication and promote collaboration.
Doesn’t that sound like an emphasis on interaction and people, rather than process?
The problem at the moment is that businesses are run by people who have grown up with the Taylor view of the world. When it comes to enterprise strategy, that “social” really doesn’t count for much when it comes to enterprise strategy, according to a study by KPMG.
What is the state of social enterprise adoption? An Altimeter report mentioned:
social media is extending deeper into organizations and, at the same time, strategies are maturing
A Deloitte survey showed that many C-level executives are starting to recognize the importance of social enterprise.
I have to admit, however, that I am not yet convinced that reports like these paint the true picture.
Why should sceptical, Taylor-oriented executives consider Moore’s systems of engagement? The answer is because the business world has changed, we are now in an era where agility and adaptability is required, not rigid command-and-control structures; where mobility and cloud computing are the key technologies, not mainframes or client-server. According to Moore, the questions that need then to be asked are:
Systems of engagement do not make competence cultures more competent. They make collaboration cultures more collaborative. The key questions are: 1) Is that a good thing in your industry today? and 2) Are the people in your enterprise—specifically your CEO and your CXO peers—really up for this?
The second question is important because it requires the equivalent of making a square peg fit into a round hole.
If the artistic argument appeals to you, I liked this interpretation by Hugh MacLeod:
What do you think about social enterprise? Is it a fad, or a new way to which businesses will have to adapt?
A blog has appeared on Brian Solis’ site – Social Business is Dead! Long Live What’s Next! We may have to come up with some other responses to the Taylorists
On 11th July there was an announcement of a major re-organisation and strategy change at Microsoft. I have been waiting to see what analysis would be about the impact of the re-org on the Microsoft partner base, but the comments I have seen related mainly to the Dynamics (ERP and CRM) partners -for example, here and here . The sector of the partner base I am interested in is the Application Development (AppDev) partners, what used to be called ISVs (Independent Software Vendors).
Firstly, let’s agree that Microsoft is not what it used to be. As one journalist has noted:
Microsoft’s glory days are behind it [although] it remains enormously important to the entire technology industry …
Secondly, as an analyst commented, the announcement showed that Microsoft’s CEO Steve Ballmer believes the company needs to shift focus:
from a software company to a company that builds software powered devices (e.g. the Windows tablets) and software powered services (e.g. Azure) … trying to become a platform company, that brings together all the different pieces of the large Microsoft product family
What I have not seen yet is the recognition that one of the challenges is going to be getting Microsoft’s partners to buy into the strategy change. Microsoft has a large partner base and derives much of its business via its partners, who in turn generate revenue from selling and implementing Microsoft products (IDC). According to a report from the recent Microsoft Worldwide Partner Conference (WPC), the buy-in from partners is not happening to the extent Microsoft wants it – only about 3 percent of the partners have got involved in cloud services business (20,000 out of 650,000). Another report notes that Microsoft customers have not bought into the cloud either – 89 percent are not using any of Microsoft’s cloud products.
The scary question to partners at WPC from Microsoft’s COO Kevin Turner was “where’s the other 630,000 we have? What do you need?”. It’s scary on a number of grounds.
- Microsoft seems to have accepted the hype that everyone wants to switch to the cloud, and therefore its partners should be moving in that direction. That does not recognise what a huge disruption that will be for partners, like the App Dev ones. My response to Mr Turner would be “How much are you willing to pay us to move?”
- It may indicate that innovation from Microsoft is going to be focused on the cloud, and that for “on-premise Windows networks, your days are numbered.”
- There is an apparent inability to differentiate between between the needs and buying decisions of the enterprise and consumer markets. For a consumer, moving to the cloud can be accomplished quickly and without much disruption, although there are still concerns about privacy and security. For the enterprise, the ramifications can be much greater, and the process more complex and with significant disruption.
Against the view that the cloud is the new way to go, a survey of solutions providers showed that conventional software sales are still the biggest segment of the market, and still growing. Also, customers may be interested to hear about cloud solutions, but when the decision comes they opt for a conventional sale.
Some years ago I wrote “Is Microsoft like ‘old’ IBM? and made this comment:
IBM had 20-30 years as ‘master of the universe’ until the early 1990s. I wonder how long Microsoft’s good times will last?
Microsoft’s good times may now have ended, and they are going through the same upheavals that IBM had to go through in the 1990s to stay relevant. It took IBM a long time to change, and for Microsoft it is still probably early days. Even before the WPC event and the re-org announcement, David Chappell remarked after Microsoft Build (the developers’ conference) that:
The level of change we’re seeing right now is extraordinary. Both servers and clients are changing at the same time
And although he was referring to Windows 8, this comment could apply more broadly:
Given the magnitude of the change, though, it’s going to take everybody a while to work out how that change should look
Microsoft has given its partners the company’s new vision, but it is not going to be easy for either Microsoft or its partners to make the changes to achieve the vision, nor will it be easy to persuade customers to agree to them. Who knows where we will be in 3-5 years time?
If you are a partner, is this change threatening or promising? Do you now need to re-evaluate your Microsoft partnership status and objectives?