News & Views

January 17, 2012 from Information Week – “The results are in from most of the top names in on-premises ERP software, and the results are clear: SAP is leading, Infor and Epicor are doing well, but Oracle is lagging big time. SAP on Friday released preliminary numbers for its fourth quarter ended Dec. 31, 2011, that showed software revenue increased 16% over the year-earlier period to 1.74 billion Euros ($2.2 billion). Software and software-related services revenue were up 12% over Q4 2010 to 3.72 billion euros ($4.7 billion), handily beating analyst’s estimates of 3.6 billion Euros. By contrast, Oracle’s software sales for its fiscal second quarter ended Nov. 30 were up just 2% compared with the year-earlier quarter, whereas analysts expected at least a 7% increase…

Infor reported earlier this month that its software license revenue grew 16% over the year-earlier period in its second fiscal quarter ended Nov. 30, the same time period in which Oracle suffered a 2% decline. Infor acquired Lawson Software last year and is now the third largest ERP vendor after SAP and Oracle, with revenues expected to exceed $2.5 billion. The 16% increase at Infor did not include results from Lawson.

Microsoft is estimated to fall between Infor and Epicor in enterprise apps revenue, but the software giant does not break out financial details of its comparatively small Microsoft Dynamics business.

So with SAP and Infor posting double-digit gains and Epicor verging on that territory in its most recent quarter, what’s the matter with Oracle? As I wrote earlier this month, Oracle customers may be suffering from what Nomura equities analyst Rick Sherlund dubbed “Fusion confusion,” a reference to the new Fusion application suite Oracle rolled out in 2011.

“Contacts tell us that Fusion may be freezing Oracle out of the final stages of some apps deals as customers resist buying the old product but are not convinced the new Fusion suite is ready for prime time,” Sherlund told StreetInsider.com …”

180 View – The good news is that the ERP vendors seem to be on a roll, which is a good sign that the economy is improving.  The explanation for Oracle not doing as well as SAP and other ERP vendors (such as Epicor, Infor and Microsoft mentioned in the article) makes sense. However, it seems that Oracle is now fighting back with hyping and improving their legacy systems. Take a look at http://www.youtube.com/watch?v=R6tdMgmTu7g&list=PL59275E178CD43C4E&index=2&feature=plpp_video to see an impressive video of the new user interface for JD Edwards.

January 6, 2012 from Toolbox.com – “Within the ERP industry it is common to hear software-consulting firms say: “The system failed because our client did not take ownership of their project.” While this is often true, I find this statement a little perplexing…do senior managers in most companies spend millions of dollars on ERP with the goal of failing? Consultants sure make it sound like they do. Second, where were these same consultants when the disaster was unfolding? Suddenly in retrospect, they seem to have all the right answers. Maybe they should have told their client the truth in the beginning…”

180 View – The author mistakenly equates vendors as consultants. A consultant should not be able to benefit from their recommendations.  The author believes that the “consultant”/vendor is not helping firms overcome “no real strategy, focus or methodologies to put ownership in the right place.” Project management will help but it’s not the only factor in a successful ERP implementation. We wrote an article on the top 10 ERP implementation mistakes which can be accessed at http://www.180systems.com/ImplementationMistakes.php.

February 11, 2012 – “…Back when it was starting its $20 billion buying spree of companies in 2006, analysts all said the strategy would fail. There were a lot of compelling arguments why.

People said that the assets of a software company are the engineers and the engineers would go elsewhere. People argued that Oracle fundamentally didn’t know how to write good application software, and they couldn’t buy their way into changing that DNA. People argued that stitching together the disparate systems of PeopleSoft, Siebel, Oracle into Project Fusion would create a Frankensteinian mess of unshippable bloatware. I once wrote a BusinessWeek profile of John Wookey– the man tasked with Fusion in the wake of all the purchases - It’s telling that he’s now at salesforce.com…

What customers wanted instead was convenience and stability. So much work and money had gone into implementing these programs, and no one wanted to rip them out, no matter how much they hated them. They would happily just keep paying on-going maintenance fees to stick with the status quo. By mopping up the cash-rich but growth-challenged enterprise giants, Oracle could amass an installed base and bottom line that would be the envy of the tech world…

180 View – The author believes that many companies are now ready to switch to new systems because of a number of factors which are described in the article. I don’t think that the reasons given are sufficient as the reasons have nothing to do with a compelling business case. We think the title of the article is misleading as there is no evidence that Oracle is anywhere close to being doomed. Even the author “would not count Oracle out”.

Spring 2004 from Information Systems Management – “By definition, ERP systems are both integrated and comprehensive solutions. Each of their modules has many features and options. It is impossible to vet each function and feature before signing on the dotted line. Often, an ERP vendor promises a new feature in the next version of its system. Organizations should be highly skeptical of these promises because they often turn out to be worthless…

Detailed specifications are a requirement for several reasons. How does an organization ever know if a system performs as required if it has never defined requirements? This is the equivalent of asking a building contractor to build a house without detailed blueprints. Detailed specifications should be a major component of the contract that an organization has with the ERP provider and third-party implementer…

ERP software companies usually disclaim all responsibility for hardware and network infrastructure in their license agreement. They assume no liability and place all responsibility on the client for hardware and network sizing and configuration. This places the client in a no-win situation. The client must force the ERP company into assuming some level of ownership in the hardware and network configuration decision. This issue has been the source of several high-profile lawsuits in failed ERP implementations…

Vendors often attempt to disclaim warranties, limit their liabilities, and shy away from as much responsibility as possible. An organization’s job is to negotiate not just the best price but also the most favorable terms and conditions…”

180 View – Although the article is old, it’s still relevant. You will also find tips on negotiating a contract in the article. The authors mention that it’s impossible to vet each function and feature but does not provide specific advice about what to do about it. We recommend prioritization of requirements and having the vendors prove their ability to handle the critical requirements. The authors recommend that the vendor takes responsibility for hardware and network infrastructure. We think this is wishful thinking as most vendors don’t have the ability or knowledge to take responsibility. At the very least, the vendors need to provide detailed specifications so that there are no surprises on performance at a later date.

February 13, 2012 from Computerworld – “A massive Oracle ERP (enterprise-resource-planning) software project being conducted by the U.S. Air Force continues to experience difficulties, with the defense agency deciding to toss out some completed work as part of a restructuring plan that will be announced soon, according to an official communication released last week…

Dubbed the Expeditionary Combat Support System (ECSS), the project was started in 2005 and is supposed to replace more than 200 legacy systems. Its total estimated costs, which were originally placed at about $3 billion, have grown to more than $5 billion…”

180 View – And you thought you had problems. It is hard to understand how such a high profile project could fail so badly. But the problems are likely the same problems that plague other implementations such as lack of clearly defined requirements.

February 9, 2012 from CRM Daily – “Business software maker Oracle Corp. has turned down $272 million in court-ordered damages from SAP AG in hopes of leaving a much bigger dent in its rival’s pocketbook and reputation during a second trial over allegations of corporate theft…

After SAP took over TomorrowNow in 2005, Oracle uncovered evidence that TomorrowNow was breaking into Oracle’s computers to steal instruction manuals and other technical information  about copyrighted software.

SAP acknowledged much of the misconduct before the first trial began in 2010, but argued it shouldn’t be penalized severely because it didn’t gain that much from the stolen data. SAP estimated it picked up about $40 million in revenue from the skullduggery, prompting it to set aside $160 million for the damages that it thought it might have to pay…”

180 View – We think Oracle made a smart move in rejecting the offer. The reason given is they believe they should have been awarded a lot more than the $272M. I think another reason is that they can continue to embarrass SAP in the court of public opinion.

February 6, 2012 from BusinessFinance – “Finance, like other key corporate functions, is under pressure to reduce operational costs while increasing the business value it generates for the larger enterprise. To do so, executives need reliable information that can help them understand whether they are accomplishing their objectives and how their performance stacks up against their peers. Such information can be acquired with benchmarking.

What’s surprising is that fewer than a third of finance organizations, according to Accenture’s own data, use benchmarking. That may be why, as reported in the Accenture report, “The Changing Role of the Finance Organization in a Multi-Polar World,” that only 29 percent of 350 survey respondents said they have a good understanding of where their organization stands in relation to finance functions in comparable enterprises…”

180 View – We agree and have built the business process benchmark tool to help – see http://www.180benchmarks.com/.

February 6, 2012 from Newsfactor.com – “Days after Salesforce.com announced the release of a customer service desk for mobile devices, Microsoft has announced that the new service update for its Dynamics CRM will feature the ability to access full functionality on any device. The cloud -based, mobile client service is intended for Windows  Phone 7.5, iPad, iPhone, and Android  or BlackBerry devices…”

180 View – There has been a lot of hype about enterprise software such as CRM, ERP and BI being available on mobile devices and it looks like reality is catching up with the hype.

February 1, 2012 from SupplyChainDigest – “Last week, we noted the 2011 death of Dr. Eli Goldratt, originator of the “Theory of Constraints,” author of “The Goal,” which introduced TOC to the world, founder of the Goldratt Institute, and much more…

There are two pillars to the Theory of Constraints. One is the starting assumption of all the hard sciences, which is that in all real-life systems there is inherent simplicity. If you can just find that inherent simplicity, you can manage, control and improve the system.

The other pillar is “that people are not stupid…”

180 View – Dr. Goldratt was a brilliant man and we can all learn something from him whether or not we work for a manufacturing company.

180 View – Good advice that most of us don’t take.