News & Views

March 2012 from Oracle – “The last great wave of ERP modernization occurred in the lead-up to Y2K, but according to industry experts, a unique set of business, economic, and technological forces are converging to make ERP modernization a top priority once again in 2012…

The panelists identified the following forces that are driving this burgeoning phenomenon.

• Volatile economic conditions
• Increased scrutiny by equity firms into the IT systems of pre-IPO, high-growth firms
• Increasingly aging ERP systems that are becoming very expensive to maintain
• Old systems ill-adapted to transformed business conditions in 2012
• Faster to deploy, lower overall total cost of ownership (TCO), and lower-risk access to enterprise-class software…”

180 View – We agree with the article that ERP demand has picked up. However we disagree with the causes stated above. We think the primary driver is a better economy and 2012 will likely be followed with even more demand in 2013 and 2014 as the economy gets back on track. Despite the logic of retooling when things are slow, most companies are not prepared to invest in technology when they are forced to lay off their employees. However, as the economy improves, the need for better systems becomes more critical. Growth can be achieved by hiring more people to get the work done or by investing in a new system that should allow growth with the same number of employees. Another big factor is in the next article.

March 14, 2012 from InfoWorld – “…More than 50 years after Cobol came on the scene, the language is alive and well in the world’s largest corporations, where it excels at executing large-scale batch and transaction processing operations on mainframes. The language is known for its scalability, performance and mathematical accuracy. But as the Boomer generation prepares to check out of the workforce, IT executives are taking a fresh look at their options…”

180  View – Another major reason for switching systems is the retirement of boomers who will no longer support legacy systems even if they still work well.

March 27, 2012 from The Enterprise System Spectator – “Last week I attended Microsoft’s annual Convergence conference, for users and partners of its Dynamics line of enterprise applications. The back-to-back briefings were a great opportunity to get an update on where Microsoft is going with enterprise applications.

But the big news from my perspective is that by the end of 2012, two of Microsoft’s ERP products, GP and NAV, will be available on Microsoft’s Azure cloud…”

180 View – As usual The Enterprise System Spectator is informative. Take a look at the article to learn about the benefits of the Microsoft cloud.

March 14, 2012 from Forbes – “…NetSuite has found itself fashionable. Last year its revenues totaled $193 million, up 16% with operating losses of $25.6 million. Its stock has jumped 248% in the last two years. Ellison’s 50.5% stake, worth $930 million, is no longer a mere rounding error in his $27 billion net worth…

And maybe just as important, for him, NetSuite is grabbing Microsoft’s customers…

NetSuite is also making inroads at SAP…

Then there’s this wrinkle: NetSuite sometimes finds itself competing against Oracle…”

180 View – NetSuite started off as a solution for small business but it has steadily added functionality that make it an alternative for larger companies. For example, NetSuite now offers a separate module called OneWorld which provides complex organizational structures and consolidation. Is it a coincidence that JD Edwards (one of Oracle’s ERP systems) used to call their system JD Edwards OneWorld?

March 2012 from CAmagazine and written by Michael Burns – “…The whole selection process will take a minimum of three to four months, with most of the time allocated to waiting for the vendors to respond to the RFP and preparing for the demonstrations. We are very sympathetic to vendors that go through this rigorous selection process. They can spend a lot of time only to find out they were unsuccessful. The least we can do is give them time to respond to all our requests and to be honest in our evaluation of their system…”

February 17, 2012 – “It is amazing how quickly technology moves. Today, cloud computing and mobile technology are changing the way enterprises and consumers live, work and play.  But even with advances made each day, enterprise-level IT continues to move at the same old plodding pace. No doubt, the speed of technology innovation makes it difficult for CIOs to make long-term IT plans. And to be fair, how can a Wall Street IT organization even envision what it will be running 24 months from now?…”

180 View –The author discusses an Oracle implementation for a large insurance client that will evolve over 18 months. And claims “Long deployments are counterproductive, as customers and employees (not to mention boards) now measure enterprise IT with the same yard stick they use when buying a new Smartphone.” There is a fundamental misunderstanding by anyone that thinks an ERP system is somehow comparable to a Smartphone. An ERP system is not something that you simply turn on and it all works. It takes time and rushing it can be a huge problem especially for small and mid-sized companies that don’t have resources that can be dedicated to the implementation.

February 21, 2012 from BlogNotions – “…It is no secret most software-consulting firms will attempt to pile as many of their consultants on your project as humanly possible. At the same time, the situation I find most unnecessary is when firms convince their clients more experts are required to do the work their existing consultants should be able to do…”

180 View – It is hard to understand how any company would overstaff a project unless they have no concern for their budget. Nevertheless consulting firms do specialize and it may be necessary to have more than one firm involved. The trick is to make sure that there is no overlap. For example, we sometimes get involved in ERP implementations from a high level project management perspective but never involved in the day-to-day implementation. Our role is to provide guidance to the internal project manager and to review documents prepared by the vendor for completeness and reasonability. A good project manager will develop a clear definition of roles and responsibilities to minimize the risk of any overlap.

November 2011 from ACA Group and written by Lisa Anderson – “…One of the largest and most commonly repeated mistakes is to forget about the culture.  It doesn’t matter if you’ve purchased the latest, best, world-class system; if you haven’t considered your culture in your selection and implementation plans, you can count on failure…”

180 View – I have a lot of respect for the author, Lisa Anderson. However I disagree that “It’s all about culture change”. We believe that most employees will welcome the change as they learn new skills and become more marketable and help make the company for which they work more profitable. Resistance is possible but it’s when employees think they are going to lose their job or their life is going to be hell for months because they must do their day jobs but also work on the ERP implementation at the same time.

February 20, 2012 from The Enterprise System Spectator – “… SAP Business ByDesign (ByD) is a full multi-tenant ERP offering for SMBs. It is a well-known fact that SAP’s first attempt at ByD employed a single-tenant architecture, similar to that proposed by Lai in his blog post. That iteration was not successful in that, according to SAP spokespeople, they could not get that approach to scale cost-effectively. So, SAP took an extra two years or so and rewrote ByD as a completely multi-tenant application. The system is rolling out in multiple geographies worldwide, in local data centers where required, presumably with security and privacy measures commensurate with SAP’s high standards for customers. The system is cost-competitive with other SaaS ERP offerings and has grown quickly to over 1,000 customers at the end of 2011…

180 View – Check the article out for a better understanding of multi-tenant architecture.

November 17, 2012 from CFO – “The selection and implementation of a new Enterprise Resource Planning (ERP) system is probably the most critical IT decision you and your organization will ever make and it’s not an easy task identifying which of the available solutions will meet your organization’s evolving requirements. An ERP system will have a huge impact on the success and growth of your organization, so it is important to follow a selection process when choosing your system…

Nowadays, a core ERP system from an established vendor can be assumed to provide the basic functionality. This means that a shortened Request for Information (RFI) approach can be adopted. With this approach, the buyer first does some basic research to understand what is available on the market using an RFI, reviews requirements in light of what is possible, short lists two to three vendors and then focuses purely on the areas that are critical to the business and likely to be a challenge to a supplier – for example, complex multi-currency requirements, multi-company requirements, or complex non standard reporting. Get to know the vendors and understand their offering in detail.”

180 View – Although the white paper was sponsored by Unit4 Business Software, it was written without bias and is a good source of advice for an organization about to embark on an ERP selection process. We especially like the point about focusing on the critical requirements. We think some consultants get paid by the number of requirements in an RFP or use tools that contain every requirement known to man and the poor vendor must respond to all of them and the selection team needs to analyze all the data.

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.