Integrated enterprise resource planning (ERP) software solutions became synonymous with competitive advantage, particularly throughout the 1990's. The idea behind ERP systems was to replace "islands of information" with a single, packaged software solution that integrates all traditional enterprise management functions like financials; accounting; payroll; human resource (HR) management; and manufacturing and distribution, and thereby ensure enterprise-wide transaction system coherency. Knowing the history and evolution of ERP within the broader enterprise applications concept is essential to understanding its current use and its future developments. The following is the genesis of enterprise applications by era.
By the time each functional area of a company had developed its integrated software program, the need for tightly integrating them became obvious. The next major shift during the late 1980s and early 1990s was that "time to market" was becoming increasingly short, as the shift from Fordist' mass production to nowadays' prevailing mass-customization (see Glossary*) principles and mindset has irreversibly changed the society and economy standards. Lead times expected by the market continued to shorten and customers were no longer satisfied with the service level that was considered world class only a few years earlier. Also, by the 1980s, competition from Japanese manufacturers and their philosophy has caused US and West European enterprises to look for new efficiencies using information technology.
Namely, customers were demanding to have their products delivered when, where, and how they wanted them. Companies were therefore compelled to develop and embrace the philosophies of just in time (JIT) and closer supplier partnerships as a way to remain competitive. During the same time frame, the cost of goods sold (COGS) was shifting drastically from labor to purchased materials. Consequently, planners needed to know materials allocations or finished goods' available-to-promise (ATP) values, immediately after customer order entry. On the other hand, buyers needed to know the sales plan several months in advance in order to negotiate prices for individual materials. Empowerment of employees was needed to provide the agility that was required to compete in the market.
Hence, the need to develop a system with tightly integrated programs that would use data stored on one common database and would be used enterprise-wide (such as, actions in one department's program driving actions elsewhere), became the highest priority for IT professionals. No longer was it tolerable to submit a request to the IT department and wait several "man-months" of programming time to obtain this critical information. This common-database, company-wide integrated system was named enterprise resource planning (ERP), as companies realized the need to see the entire picture.
This is Part Two of a six-part note.
Part One covered developments from the 1960s through the 1980s.
Part Three will discuss the 2000s.
Parts Four and Five will discuss ERP evolution.
Part Six will look at the future.
*There is a Glossary for the terms italicized throughout this article.
ERP Defined
APICS still defines ERP as follows:
"1) An accounting-oriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders. An ERP system differs from the typical MRPII system in technical requirements such as graphical user interface (GUI), relational database management system (RDBMS), use of fourth-generation language (4GL), and computer-aided software engineering (CASE) tools in development, client/server architecture, and open-system portability;
2) More generally, a method for the effective planning and control of all resources needed to take, make, ship, and account for customer orders in a manufacturing, distribution, or service company."
Given many new very recent functional and technological developments, which will be analyzed in other upcoming articles, many may rightly consider certain parts of the above definition as somewhat outdated or not all encompassing. In general, the second part of the definition holds true, given traditional ERP involves software packages that by and large automate and support the processes of the administrative, production, inventory, and product development aspects of an enterprise.
Impact of the PC
Further on, the cost of technology continued to plummet and the advent of the personal computer (PC) revolutionized once again the face of business management systems. At a fast pace, the large inflexible mainframes were replaced by new client/server technology. The power of these small PCs exceeded the power of the large mainframes that were routine only a few years earlier. It became possible to run a fully integrated MRPII system on a small PC. Still, these systems have trickled down slowly from large to smaller enterprises. Many manufacturing enterprises were not computerized in the 1980s, which is largely true even nowadays in the segment consisting of a great number of small workshops that still go by with little or no computerization at all.
IT, however, gained momentum in the 1990s, when PCs become even cheaper, software more sophisticated, and companies become more amenable to using technology. The changing pace of technology had once again leveraged forward the planning and control systems in recognition of a real business need. In addition, unlike previous evolutions, the ERP software vendors offered these critical business applications also to non-manufacturing companies, which sell "know-how" rather than physical products.
ERP is far more than just MRPII which runs on a client/server architecture, given it encompasses all the resource planning for the enterprise including product design, inventory management, material planning, capacity planning, quality control, forecasting, budgeting, purchasing, distribution, reporting tools, and communication systems, to name but a few. These critical business issues affect not only manufacturing companies but also all companies that desire to achieve competitiveness by best utilizing their assets, including information. In other words, ERP systems should help companies become leaner by integrating the basic transaction programs for all departments, allowing quick access to timely information. However, ERP inherited MRPII's basic drawbacks, which are the assumption of infinite capacity and the inflexibility of scheduling dates, preventing companies from taking full advantage of speedy information flow.
SOURCE:
http://www.technologyevaluation.com/research/articles/enterprise-applications-the-genesis-and-future-revisited-part-two-1990s-enterprise-resource-planning-17229/
Wednesday, August 18, 2010
Performance and Compensation Management at the Core of Human Capital Management?
While decades have been spent investing in automation technologies for better use of tangible assets, only recently have enterprises begun to invest in optimizing human capital. Tactical and administrative human resources (HR) management is morphing into strategic human capital management (HCM).
Part Three of the series Thou Shalt Manage Human Capital Better.
Some might argue that HCM revolves around better performance management and employee compensation. As the economy continues to rebound and talent wars intensify, companies have been increasingly leveraging traditionally elusive "pay-for-performance" technologies that successfully automate and link compensation planning with business and employee performance. Practically every organization regularly reviews the performance of its employees, which most managers confess to be a chore that is ironically the centerpiece of their existence. In other words, most managers hate personnel reviews, and many procrastinate until the HR department or the employees "scream." Since no employees can get a pay raise until they get a review, HR departments implement systems to automate and force the review process as a means to address this.
The aim of performance management systems is to both automate the employee review process and link reviews to organizational performance. The aim is to ascertain whether employees are taking definitive steps to achieve their determined performance goals; whether there are succession plans in place for top managers; what kinds of skills the organization will need in the next few years; and so on. Those are the kinds of questions (and hopefully appropriate answers) that performance management systems should put on the desktops of both managers and employees.
Performance management systems often include or feed into compensation (sometimes also called employee incentive management [EIM]) systems in order to more justly distribute merit-based pay increases. Before deploying such a system, managers would customarily review employees annually around their date of hiring, often with the result that well-deserving employees would not get the increase they deserved simply because the pool of available money had already been spent by the time they received their reviews. Surprising or not, compensation represents more than 60 percent of total corporate expenditures, yet most Global 2000 firms are still not properly rewarding their highest-performing workers. The aim is now to complete employee reviews at the end of the fiscal year, and also manage the merit expense budget by reviewing all performance scores before distributing the pay increases. Additionally, such systems are useful for obtaining a twelve-month view of employee performance, versus focusing too closely on the period that immediately precedes the review. The customary "defeat the purpose of performance review" experience of many managers has been that the company would set the parameters for pay raises and salary ranges at "budget time," and then expect managers to predict the percentage raises individuals would receive, so that the money would be in the budget when time came to review the employee.
More comprehensive performance management systems nowadays include a stronger link to upstream business goals and objectives, as well as a tighter connection to rewards, including merit pay, short-term variable incentives such as bonus or commission awards, and longer-term incentives such as stock grants. Some vendors offer succession-planning software that builds on performance and training systems to identify likely candidates for jobs further up the food chain. Again, the aim is to turn people into a competitive advantage and to ensure that there are programs that pay for performance and reward people for achieving goals that move the enterprise forward. These outlined capabilities should help users not only hire a higher-quality employee, but also better track that employee's performance, and establish a stronger link between the employee's performance and compensation. Enterprises want to be able to raise the bar for high performers while placing low performers on a performance improvement plan.
One illustration could be at an apparel retailer that often fell short of expectations with the launch of a new line of jeans, which prompted it to decide to test market jeans fitters who had been trained through e-learning about the products, how to fit jeans on women, and how to give the best advice. The project purportedly returned a 75 percent increase in revenue, since the fitters began receiving an incentive every time a pair of jeans was sold. There was a performance management solution in the background telling them how they were doing according to their goals, whereby learning, performance, and incentives were all tied together in an integrated way to drive corporate revenue and performance.
For background information see in Thou Shalt Manage Human Capital Better and Tactical Human Resources Evolves into Strategic Human Capital Management.
Leading Vendors
Leading vendors in this space include Authoria (which recently acquired Advanced Information Management [AIM], a provider of compensation management), SuccessFactors, Halogen Software, Workscape (including recently acquired Performaworks), FirstDoor.com, Callidus Software, Centive, Ceridian, HRsmart, Kadiri, ProAlt Technologies (now both part of Workstream Software), Softscape, Kenexa, and enterprise resource planning (ERP) giants SAP, Oracle, and Lawson Software.
In July, Lawson announced the acquisition of Competency Assessment Solutions (CAS), a provider of performance management solutions for the health care industry to comply with reporting standards set by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Compensation management aligned with individual performance management creates a true pay-for-performance environment, and leaders in this realm are tying the workforce to organizational goals and productivity, such as revenue per full-time equivalent employee (FTE). Developing competency models for each work position can be time-consuming and costly, but once conducted, these models can be leveraged across the entire HCM realm to improve the quality of new hires, compel desired employee performance, facilitate employee development, and assist in the development of succession plans. In other words, the entire employee life cycle (acquiring, developing, managing, and measuring performance) can be facilitated.
To recap, HCM has evolved beyond the simple automation of business tasks to the more complex streamlining of traditional HR processes and increasing of efficiencies in the broad management of human capital. Strategic HCM solutions can help organizations transform their people into a competitive advantage by aligning managers and employees with corporate goals of driving business value. Authoria reportedly recently spoke to more than 200 senior HR executives and asked them about their top "pain points." Leading this list was aligning employee goals and corporate goals, paying for performance, and developing top talent. Trying to accomplish these important objectives in a pedestrian way has proven to be equal to finding the fountain of youth or the holy grail. Conversely, well-devised HCM strategies and methods should help execute these priorities and make these initiatives successful.
Moreover, Genesys recently released the results of its HCM trends survey. The vendor's web-based suite PeopleComeFirst streamlines HR, benefit administration and payments, payroll processing, self-service, competency-based learning management, performance management, recruitment, and time and attendance (T&A), and it can be implemented as either human resources outsourcing (HRO) services or as licensed software. According to respondents of the survey, the top HCM priorities for 2006 included talent and leadership development, combined with talent acquisition and retention (45 percent), performance management (21 percent), and streamlining processes (18 percent). In addition, 18 percent of respondents also indicated that aligning people and business goals would be an important priority in the coming year, which shows that the attention of HR departments is increasingly centered upon becoming process experts and improving business processes, focusing on talent acquisitions and subsequent management, and providing better data for decision making. Moreover, 38 percent of respondents indicated that budget expectations over the next 12 months for HR technology and outsourced solutions would increase, by as much as 9 percent in some cases, thereby enabling funding of the services and tools required to support these top priorities.
Evidence of a Shift in HR Applications
Each year, the CedarCrestone HCM survey also provides the latest data on workforce technologies and service delivery approaches worldwide. The early-2006 survey found that there is now a statistical and causal relationship among key HCM applications and operating income growth. Those four applications are workforce planning, competency management, learning management, and an HR-oriented help desk (call center). However, succession planning shows opportunities for improvement, and this is the area that users cite they would like more help on from IT solutions. Logically, the processes and people that are seen as part of strategic core competencies and competitive differentiators are retained in-house. Conversely, non-core and non-strategic services like payroll, US 401(k), pensions, and benefits administrations are frequently outsourced, as well as hardware technology components.
Consequently, there are many indications that strategic HCM applications have moved to the forefront of enterprise application priorities, replacing the prior focus on core transactional systems and employee self-service. Waking up to the realization that their workforce is one of the most critical, yet perhaps one of the most unexploited sources of competitive advantage, and the recognition of the need to align business and individual performance goals (along with better tools to accomplish this) has been driving HCM investments in many companies.
Again, this increase in demand is a result of a shift from a compliance-driven human resource community to an emphasis on human resource management as a strategic differentiator for organizations. In the modern global economy, success (or even survival) depends on critical human factors such as recruiting and retaining the best talents; successfully leveraging skills, knowledge, and competencies; and adapting to change (for instance, by anticipating and planning new positions, job requirements, training, careers, and succession). To this end, HCM software packages should equip organizations with the means to analyze the workforce and strategically manage the company's human capital. They should at the same time serve as a conduit for information to employees, with comprehensive access to their HR information (meaning the ability to view and update such data as address, dependents, benefits, payroll information, and education) and corporate HR information (such as job openings and training enrollment).
When no clear enterprise HCM strategy is in place, managers often formulate their own departmental plans and adopt the technologies they feel they need to support individual and group responsibilities for enterprise performance. Such a situation, where managers bypass the remiss corporate HR organization to define and implement their own technologies and practices to support HCM, was termed HR disintermediation by Gartner.
SOURCE:
http://www.technologyevaluation.com/research/articles/performance-and-compensation-management-at-the-core-of-human-capital-management-18740/
Part Three of the series Thou Shalt Manage Human Capital Better.
Some might argue that HCM revolves around better performance management and employee compensation. As the economy continues to rebound and talent wars intensify, companies have been increasingly leveraging traditionally elusive "pay-for-performance" technologies that successfully automate and link compensation planning with business and employee performance. Practically every organization regularly reviews the performance of its employees, which most managers confess to be a chore that is ironically the centerpiece of their existence. In other words, most managers hate personnel reviews, and many procrastinate until the HR department or the employees "scream." Since no employees can get a pay raise until they get a review, HR departments implement systems to automate and force the review process as a means to address this.
The aim of performance management systems is to both automate the employee review process and link reviews to organizational performance. The aim is to ascertain whether employees are taking definitive steps to achieve their determined performance goals; whether there are succession plans in place for top managers; what kinds of skills the organization will need in the next few years; and so on. Those are the kinds of questions (and hopefully appropriate answers) that performance management systems should put on the desktops of both managers and employees.
Performance management systems often include or feed into compensation (sometimes also called employee incentive management [EIM]) systems in order to more justly distribute merit-based pay increases. Before deploying such a system, managers would customarily review employees annually around their date of hiring, often with the result that well-deserving employees would not get the increase they deserved simply because the pool of available money had already been spent by the time they received their reviews. Surprising or not, compensation represents more than 60 percent of total corporate expenditures, yet most Global 2000 firms are still not properly rewarding their highest-performing workers. The aim is now to complete employee reviews at the end of the fiscal year, and also manage the merit expense budget by reviewing all performance scores before distributing the pay increases. Additionally, such systems are useful for obtaining a twelve-month view of employee performance, versus focusing too closely on the period that immediately precedes the review. The customary "defeat the purpose of performance review" experience of many managers has been that the company would set the parameters for pay raises and salary ranges at "budget time," and then expect managers to predict the percentage raises individuals would receive, so that the money would be in the budget when time came to review the employee.
More comprehensive performance management systems nowadays include a stronger link to upstream business goals and objectives, as well as a tighter connection to rewards, including merit pay, short-term variable incentives such as bonus or commission awards, and longer-term incentives such as stock grants. Some vendors offer succession-planning software that builds on performance and training systems to identify likely candidates for jobs further up the food chain. Again, the aim is to turn people into a competitive advantage and to ensure that there are programs that pay for performance and reward people for achieving goals that move the enterprise forward. These outlined capabilities should help users not only hire a higher-quality employee, but also better track that employee's performance, and establish a stronger link between the employee's performance and compensation. Enterprises want to be able to raise the bar for high performers while placing low performers on a performance improvement plan.
One illustration could be at an apparel retailer that often fell short of expectations with the launch of a new line of jeans, which prompted it to decide to test market jeans fitters who had been trained through e-learning about the products, how to fit jeans on women, and how to give the best advice. The project purportedly returned a 75 percent increase in revenue, since the fitters began receiving an incentive every time a pair of jeans was sold. There was a performance management solution in the background telling them how they were doing according to their goals, whereby learning, performance, and incentives were all tied together in an integrated way to drive corporate revenue and performance.
For background information see in Thou Shalt Manage Human Capital Better and Tactical Human Resources Evolves into Strategic Human Capital Management.
Leading Vendors
Leading vendors in this space include Authoria (which recently acquired Advanced Information Management [AIM], a provider of compensation management), SuccessFactors, Halogen Software, Workscape (including recently acquired Performaworks), FirstDoor.com, Callidus Software, Centive, Ceridian, HRsmart, Kadiri, ProAlt Technologies (now both part of Workstream Software), Softscape, Kenexa, and enterprise resource planning (ERP) giants SAP, Oracle, and Lawson Software.
In July, Lawson announced the acquisition of Competency Assessment Solutions (CAS), a provider of performance management solutions for the health care industry to comply with reporting standards set by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Compensation management aligned with individual performance management creates a true pay-for-performance environment, and leaders in this realm are tying the workforce to organizational goals and productivity, such as revenue per full-time equivalent employee (FTE). Developing competency models for each work position can be time-consuming and costly, but once conducted, these models can be leveraged across the entire HCM realm to improve the quality of new hires, compel desired employee performance, facilitate employee development, and assist in the development of succession plans. In other words, the entire employee life cycle (acquiring, developing, managing, and measuring performance) can be facilitated.
To recap, HCM has evolved beyond the simple automation of business tasks to the more complex streamlining of traditional HR processes and increasing of efficiencies in the broad management of human capital. Strategic HCM solutions can help organizations transform their people into a competitive advantage by aligning managers and employees with corporate goals of driving business value. Authoria reportedly recently spoke to more than 200 senior HR executives and asked them about their top "pain points." Leading this list was aligning employee goals and corporate goals, paying for performance, and developing top talent. Trying to accomplish these important objectives in a pedestrian way has proven to be equal to finding the fountain of youth or the holy grail. Conversely, well-devised HCM strategies and methods should help execute these priorities and make these initiatives successful.
Moreover, Genesys recently released the results of its HCM trends survey. The vendor's web-based suite PeopleComeFirst streamlines HR, benefit administration and payments, payroll processing, self-service, competency-based learning management, performance management, recruitment, and time and attendance (T&A), and it can be implemented as either human resources outsourcing (HRO) services or as licensed software. According to respondents of the survey, the top HCM priorities for 2006 included talent and leadership development, combined with talent acquisition and retention (45 percent), performance management (21 percent), and streamlining processes (18 percent). In addition, 18 percent of respondents also indicated that aligning people and business goals would be an important priority in the coming year, which shows that the attention of HR departments is increasingly centered upon becoming process experts and improving business processes, focusing on talent acquisitions and subsequent management, and providing better data for decision making. Moreover, 38 percent of respondents indicated that budget expectations over the next 12 months for HR technology and outsourced solutions would increase, by as much as 9 percent in some cases, thereby enabling funding of the services and tools required to support these top priorities.
Evidence of a Shift in HR Applications
Each year, the CedarCrestone HCM survey also provides the latest data on workforce technologies and service delivery approaches worldwide. The early-2006 survey found that there is now a statistical and causal relationship among key HCM applications and operating income growth. Those four applications are workforce planning, competency management, learning management, and an HR-oriented help desk (call center). However, succession planning shows opportunities for improvement, and this is the area that users cite they would like more help on from IT solutions. Logically, the processes and people that are seen as part of strategic core competencies and competitive differentiators are retained in-house. Conversely, non-core and non-strategic services like payroll, US 401(k), pensions, and benefits administrations are frequently outsourced, as well as hardware technology components.
Consequently, there are many indications that strategic HCM applications have moved to the forefront of enterprise application priorities, replacing the prior focus on core transactional systems and employee self-service. Waking up to the realization that their workforce is one of the most critical, yet perhaps one of the most unexploited sources of competitive advantage, and the recognition of the need to align business and individual performance goals (along with better tools to accomplish this) has been driving HCM investments in many companies.
Again, this increase in demand is a result of a shift from a compliance-driven human resource community to an emphasis on human resource management as a strategic differentiator for organizations. In the modern global economy, success (or even survival) depends on critical human factors such as recruiting and retaining the best talents; successfully leveraging skills, knowledge, and competencies; and adapting to change (for instance, by anticipating and planning new positions, job requirements, training, careers, and succession). To this end, HCM software packages should equip organizations with the means to analyze the workforce and strategically manage the company's human capital. They should at the same time serve as a conduit for information to employees, with comprehensive access to their HR information (meaning the ability to view and update such data as address, dependents, benefits, payroll information, and education) and corporate HR information (such as job openings and training enrollment).
When no clear enterprise HCM strategy is in place, managers often formulate their own departmental plans and adopt the technologies they feel they need to support individual and group responsibilities for enterprise performance. Such a situation, where managers bypass the remiss corporate HR organization to define and implement their own technologies and practices to support HCM, was termed HR disintermediation by Gartner.
SOURCE:
http://www.technologyevaluation.com/research/articles/performance-and-compensation-management-at-the-core-of-human-capital-management-18740/
Giving a Business Process Management Edge to Enterprise Resource Planning
Once the proof of concept that Exact e-Synergy could be a business process management (BPM) enabler had been made, Exact realized that the technology could also provide an edge to its enterprise resource planning (ERP) product lines. It hopes that Exact Globe 2000 and Macola ES will give user enterprises a greater reach that extends beyond a selected few power users traditionally situated within financial or manufacturing departments. The successful and quick integration of e-Synergy with the Macola back-office solution to create Macola ES was impressive, delivering more information to desktops across the enterprise, and better managing customer service.
For background information on Exact Software see Exact Software Continues with Its Share of Judicious Acquisitions. For a discussion of e-Synergy and BPM see A Single Software Solution That Enables Business Process Management.
Part four of the Exact Software Continues with Its Share of Judicious Acquisitions series. This series will resume January 16.
Traditional enterprise systems typically touch only about a quarter (at best) of an organization, while bundled tools offered by e-Synergy could virtually reach every employee, bringing all employees into the process and tying them more closely to the company's business goals. Though traditional ERP systems cater to the core processes of service- and manufacturing-oriented organizations, there has long been a gap of workplace processes within an organization that yearns for some serious streamlining. For example, IT supported process optimization used to organize internal meetings, including note taking and minute distribution, and managing ensuing tasks has not been tackled. Managing processes for the internal orders of indirect goods and staples or managing and reconciling staff vacation plans, etc. are also areas that can benefit from streamlining. These processes have been neglected because they are not recognized as revenue generators. They are, however, cost generating processes can accumulate to a substantial total cost each year, and are therefore worth addressing.
This is Part Four of a multipart note. This series will explore Exact's strategic groups and global aspirations; and its BPM strategy and products. The series will resume January 19 with Exact's acquisition of Vanguard, and conclude January 20 with user recommendations.
Macola ES
Macola ES may differentiate itself from most peer ERP products through its native "closed loop" workflow management capabilities, which prevent events and tasks from "falling through the cracks". In other words, while most traditional ERP solutions are task-driven, Macola ES is process-driven, and adds structure to processes that are typically handled inconsistently or manually. The software lets users define business rules, processes, and exceptions as an integral part of their distribution, manufacturing, and other operational activities.
To that end, the embedded Exact Event Manager engine is not a mere alert producing application. It lets users define both the event and the outcome (action). Prescribed actions that are not taken within defined guidelines are escalated, so crucial tasks are neither left undone nor unattended. For example, e-mails will no longer drift into "cyber heaven" where they will be left unattended.
Some worthwhile examples of how Macola ES defines business rules include alerting the buyer when goods do not arrive on time from the supplier, and escalating alerts to the vice president of purchasing if the proper corrective action is not taken by the buyer. Macola ES manages exceptions, for example, by generating a workflow task/step to sales personnel when a particular customer stops buying, or alerting a customer service representative, via a workflow task, when credit is rejected on an order, which can allow an alternative payment method such as cash on delivery (COD) or prepayment to be arranged. This real time exception reporting eliminates the need to generate costly and time-consuming batch paper reports that are created after the fact.
The ease of creating workflows and mapping core business processes may distinguish Macola ES from its peer small and medium business (SMB) ERP products. Sure, many traditional ERP solutions will tout some BPM capabilities, but after scratching the surface, one will typically find the workflow to be a mere document routing application, where the components of content management, process execution, and connectivity are lacking. While secure role-based portals, single sign-on, event management, document management, and BPM features are now becoming a "matter of course" for tier one ERP solutions, most smaller ERP providers have yet to introduce these into their software suites, particularly in an integrated and closed-loop manner.
By automating these tasks, e-Synergy represents a broad suite of products, which may still only be a figment of its direct competitors' imagination. Rather than being a typical enterprise application that "crunches" transactions using a relational database, e-Synergy goes a bit further to support longstanding processes within and outside an enterprise that involve synchronized collaboration and document management. Therefore, the suite may indicate an emergence of a new category of software that tackles enterprise relationship management, groupware/workplace collaboration management, and so on. Some leading analysts place this type of collection in the nascent smart enterprise suite (SES) category (see Mid-market Getting the Taste of Some Emerging Technologies).
This is because extensible markup language (XML) and other, related Internet standards have given a semi-structure to the traditionally unstructured data environment, making it more agreeable to IT support. Nowadays, document management and enterprise content management (ECM) systems can store and retrieve unstructured data (see Enterprise Content Management: It Is More Than Just Web Content Management). Other technologies that should be credited for the emergence of similar enterprise systems include portals, search engines, and categorization systems that allow users to access any given information. Integrated report generators allow users to view and report any data from structured and unstructured data source.
For a discussion of the cautions and caveats associated with the emerging BPM market, see Business Process Management: A Crash Course on What It Entails and Why to Use It.
Exact e-Synergy and Exact Globe Combined for Business Unified
Exact has been focusing its research and development (R&D) efforts on its ERP product portfolio and e-business product set (i.e., e-Synergy). These tend to use the same architecture and databases, and integrate back- and front-office solutions. The new versions of the acquired product lines have been based on the same Microsoft-centric architecture. But, the two globally strategic products, Exact Globe and Exact e-Synergy, are tightly integrated on multiple levels. Both products share a single common data model called One-X, and run on the same database, thereby providing two user interfaces (UI) to the same data. However, a possible downside is that they may not have the same look-and-feel. Exact Globe and e-Synergy also share the same core business logic. A single Microsoft Common Object Model (COM)-based framework is used to store and implement business logic in both Exact e-Synergy and Exact Globe.
They also support the XML export and import of data, based on a common, published XML schema used for integration in distributed environments or with external applications. For backwards compatibility, legacy comma separated values (CSV) import flat files are still supported, but Exact's strategic direction will more forward with XML. Finally, an Internet-based installation technology ensures that both Exact Globe and Exact e-Synergy can be installed and updated basically anywhere and at any time via the Internet.
Furthermore, Exact believes that the real opportunities and technological challenges are in connectivity and reporting, since its products and services are offered in several target markets all over the globe. The reporting needs in today's ERP world have completely changed from being only accounting-based to being management by exception. To that end, the One-X concept of the Exact products holds information for knowledge based indicators, such as key performance indicators (KPI) and balanced scorecards. Due to its ease of use and familiarity, today's reporting is dominated by Microsoft Excel, but Crystal Reports is the standard in enterprise reporting. Consequently, Exact pledges to continue to deliver easy-to-use tools for getting users' valuable information into Microsoft Excel and creating customized Crystal Reports.
To suit the specific needs of these target groups, Exact has developed SDK (Software Development Kit) to connect third party applications, devices, and acquired leading, local ERP brands to Exact Globe and Exact e-Synergy. By improving connectivity, the vendor wants to leverage existing investments and provide a path forward in technology. Not only does SDK create a connection between Exact products and the products of other suppliers, but it also provides a means to use a wide range of mobile devices.
Additionally, Exact SDK, the connectivity platform completely based on industry standard Web services and XML, offers the opportunity for IT developers to meet the functional requirements set by their customers, as well as the standard functionality offered by Exact. In other words, the SDK allows users to extend e-Synergy beyond its core functionality to meet specific customer and prospective business demands. Given that expanding businesses unavoidably find themselves creating specialized and highly customized business processes to meet the shifting demands of the marketplace.
Thus, with the recently released SDK Database Editor and e-Synergy Editor, users have the ability to modify two layers of the e-Synergy architecture, including the UI and the database. The result is in the development of new functionality and industry-specific solutions without re-investing in IT solutions.
This was developed in response to Exact's business partners and customers demand for a flexible solution that meet their specific business needs. To that end, SDK complements e-Synergy's extensive configurability by allowing users to customize and integrate a broader spectrum of applications. At the same time, they can keep their total cost of ownership (TCO) low and future product upgrades can be handled easily. Additional features available with SDK include the ability to generate new tables and add fields to existing ones; configure business- and industry-related attachments and add-ons; generate links and connections to information portals and web sites; and extend and enhance elements of code for custom reports.
Priced at $1,000 (USD) per named user, with 10 percent annual maintenance and 10 percent annual support costs, e-Synergy is priced comparably to other licensed enterprise applications. The big difference is that the vendor delivers regular feature updates through maintenance, thus it is situated in a middle ground between traditional perpetual-licensing and more the modern subscription, software as a service (SaaS) models (see Trends in Delivery and Pricing Models for Enterprise Applications: Pricing Options).
Exact Software has placed the product in long term development. There have been no major version releases in the past three years, but any customer on a maintenance subscription contract has access to the new functions that have been introduced at regular intervals during that time. The latest build (version 340) was introduced in early 2005, and its improvements were not as large-scale as the major, annual releases of other ERP products, or even as major as the more frequent quarterly releases found with hosted applications such as Salesforce.com. The e-Synergy revisions generally have been more digestible when it comes to getting users up to speed.
Exact periodically sends enhancement survey campaigns to its existing e-Synergy users. The top three requirement needs from the recent one were 1) the ability to check for duplicates when adding customers, accounts, etc., 2) a simplified way to create multiple workflows, and 3) pop-up reminders for calendar items. In addition to these, the next build will feature the ability for multiple logins for customer portals; security checks (hiding) of accounts; the use of v-cards (electronic business cards) for employees and contacts; the ability to freeze comments upon request; increased options for extensible style sheets (XSS); and more compliance for the US Food and Drug Administration (FDA) Part 11, the US Sarbanes Oxley Act (SOX), the International Standards Organization (ISO), and material safety data sheet (MSDS) requirements.
Exact Pledges for the Future
Exact believes that the key to success for packaged business solutions in the mid-market is to provide technology leadership that connects separate information sources. In this respect, Exact pledges to further integrate its Exact Globe and Exact e-Synergy product functionality and allow these products to connect to other third party business applications and mobile devices. Exact is also admittedly researching and testing the most suitable technological platforms to support its product strategy like Microsoft .NET, Oracle database, and application service provider (ASP) and hosting concepts.
In 2004 and 2005 Exact e-Synergy was fueling license revenue growth, demonstrating that Exact's vision to improve the performance of organizations by allowing access to one information system for all their employees, partners, and entire value chain, is materializing. For instance, North American sales for the e-Synergy product nearly doubled in 2004—which was only its second active year in the market. That growth may likely continue, since Exact has some story to tell, and is investing marketing dollars in appropriately selected media outlets, and other appropriate channels.
All Products Being Enhanced for Now
In addition to the ongoing enhancements for e-Synergy mentioned in A Single Software Solution That Enables Business Process Management, Exact launched its manufacturing and project management functionality for Exact Globe 2003 in the first half of 2004. The product has been further developed to conform to additional country legislations and to use more languages. Its goal is to be the only global mid-market player that offers one globally available product, sufficing local legislations and common business practices. But, for the foreseeable future, one should not worry about whether its other local brands will see enhancements. Two thousand and five has been a year of many significant new product releases, including JobBOSS Versions 8.1 and 8.2, Alliance/MFG Version 6.6, new Exact EDI cross-product solution, etc. With the combination of its solid balance sheet ratios and inventive products, the vendor feels confident that it will, pursue, develop, and achieve its strategic goals of both organic and acquisition growth.
SOURCE:
http://www.technologyevaluation.com/research/articles/giving-a-business-process-management-edge-to-enterprise-resource-planning-18360/
For background information on Exact Software see Exact Software Continues with Its Share of Judicious Acquisitions. For a discussion of e-Synergy and BPM see A Single Software Solution That Enables Business Process Management.
Part four of the Exact Software Continues with Its Share of Judicious Acquisitions series. This series will resume January 16.
Traditional enterprise systems typically touch only about a quarter (at best) of an organization, while bundled tools offered by e-Synergy could virtually reach every employee, bringing all employees into the process and tying them more closely to the company's business goals. Though traditional ERP systems cater to the core processes of service- and manufacturing-oriented organizations, there has long been a gap of workplace processes within an organization that yearns for some serious streamlining. For example, IT supported process optimization used to organize internal meetings, including note taking and minute distribution, and managing ensuing tasks has not been tackled. Managing processes for the internal orders of indirect goods and staples or managing and reconciling staff vacation plans, etc. are also areas that can benefit from streamlining. These processes have been neglected because they are not recognized as revenue generators. They are, however, cost generating processes can accumulate to a substantial total cost each year, and are therefore worth addressing.
This is Part Four of a multipart note. This series will explore Exact's strategic groups and global aspirations; and its BPM strategy and products. The series will resume January 19 with Exact's acquisition of Vanguard, and conclude January 20 with user recommendations.
Macola ES
Macola ES may differentiate itself from most peer ERP products through its native "closed loop" workflow management capabilities, which prevent events and tasks from "falling through the cracks". In other words, while most traditional ERP solutions are task-driven, Macola ES is process-driven, and adds structure to processes that are typically handled inconsistently or manually. The software lets users define business rules, processes, and exceptions as an integral part of their distribution, manufacturing, and other operational activities.
To that end, the embedded Exact Event Manager engine is not a mere alert producing application. It lets users define both the event and the outcome (action). Prescribed actions that are not taken within defined guidelines are escalated, so crucial tasks are neither left undone nor unattended. For example, e-mails will no longer drift into "cyber heaven" where they will be left unattended.
Some worthwhile examples of how Macola ES defines business rules include alerting the buyer when goods do not arrive on time from the supplier, and escalating alerts to the vice president of purchasing if the proper corrective action is not taken by the buyer. Macola ES manages exceptions, for example, by generating a workflow task/step to sales personnel when a particular customer stops buying, or alerting a customer service representative, via a workflow task, when credit is rejected on an order, which can allow an alternative payment method such as cash on delivery (COD) or prepayment to be arranged. This real time exception reporting eliminates the need to generate costly and time-consuming batch paper reports that are created after the fact.
The ease of creating workflows and mapping core business processes may distinguish Macola ES from its peer small and medium business (SMB) ERP products. Sure, many traditional ERP solutions will tout some BPM capabilities, but after scratching the surface, one will typically find the workflow to be a mere document routing application, where the components of content management, process execution, and connectivity are lacking. While secure role-based portals, single sign-on, event management, document management, and BPM features are now becoming a "matter of course" for tier one ERP solutions, most smaller ERP providers have yet to introduce these into their software suites, particularly in an integrated and closed-loop manner.
By automating these tasks, e-Synergy represents a broad suite of products, which may still only be a figment of its direct competitors' imagination. Rather than being a typical enterprise application that "crunches" transactions using a relational database, e-Synergy goes a bit further to support longstanding processes within and outside an enterprise that involve synchronized collaboration and document management. Therefore, the suite may indicate an emergence of a new category of software that tackles enterprise relationship management, groupware/workplace collaboration management, and so on. Some leading analysts place this type of collection in the nascent smart enterprise suite (SES) category (see Mid-market Getting the Taste of Some Emerging Technologies).
This is because extensible markup language (XML) and other, related Internet standards have given a semi-structure to the traditionally unstructured data environment, making it more agreeable to IT support. Nowadays, document management and enterprise content management (ECM) systems can store and retrieve unstructured data (see Enterprise Content Management: It Is More Than Just Web Content Management). Other technologies that should be credited for the emergence of similar enterprise systems include portals, search engines, and categorization systems that allow users to access any given information. Integrated report generators allow users to view and report any data from structured and unstructured data source.
For a discussion of the cautions and caveats associated with the emerging BPM market, see Business Process Management: A Crash Course on What It Entails and Why to Use It.
Exact e-Synergy and Exact Globe Combined for Business Unified
Exact has been focusing its research and development (R&D) efforts on its ERP product portfolio and e-business product set (i.e., e-Synergy). These tend to use the same architecture and databases, and integrate back- and front-office solutions. The new versions of the acquired product lines have been based on the same Microsoft-centric architecture. But, the two globally strategic products, Exact Globe and Exact e-Synergy, are tightly integrated on multiple levels. Both products share a single common data model called One-X, and run on the same database, thereby providing two user interfaces (UI) to the same data. However, a possible downside is that they may not have the same look-and-feel. Exact Globe and e-Synergy also share the same core business logic. A single Microsoft Common Object Model (COM)-based framework is used to store and implement business logic in both Exact e-Synergy and Exact Globe.
They also support the XML export and import of data, based on a common, published XML schema used for integration in distributed environments or with external applications. For backwards compatibility, legacy comma separated values (CSV) import flat files are still supported, but Exact's strategic direction will more forward with XML. Finally, an Internet-based installation technology ensures that both Exact Globe and Exact e-Synergy can be installed and updated basically anywhere and at any time via the Internet.
Furthermore, Exact believes that the real opportunities and technological challenges are in connectivity and reporting, since its products and services are offered in several target markets all over the globe. The reporting needs in today's ERP world have completely changed from being only accounting-based to being management by exception. To that end, the One-X concept of the Exact products holds information for knowledge based indicators, such as key performance indicators (KPI) and balanced scorecards. Due to its ease of use and familiarity, today's reporting is dominated by Microsoft Excel, but Crystal Reports is the standard in enterprise reporting. Consequently, Exact pledges to continue to deliver easy-to-use tools for getting users' valuable information into Microsoft Excel and creating customized Crystal Reports.
To suit the specific needs of these target groups, Exact has developed SDK (Software Development Kit) to connect third party applications, devices, and acquired leading, local ERP brands to Exact Globe and Exact e-Synergy. By improving connectivity, the vendor wants to leverage existing investments and provide a path forward in technology. Not only does SDK create a connection between Exact products and the products of other suppliers, but it also provides a means to use a wide range of mobile devices.
Additionally, Exact SDK, the connectivity platform completely based on industry standard Web services and XML, offers the opportunity for IT developers to meet the functional requirements set by their customers, as well as the standard functionality offered by Exact. In other words, the SDK allows users to extend e-Synergy beyond its core functionality to meet specific customer and prospective business demands. Given that expanding businesses unavoidably find themselves creating specialized and highly customized business processes to meet the shifting demands of the marketplace.
Thus, with the recently released SDK Database Editor and e-Synergy Editor, users have the ability to modify two layers of the e-Synergy architecture, including the UI and the database. The result is in the development of new functionality and industry-specific solutions without re-investing in IT solutions.
This was developed in response to Exact's business partners and customers demand for a flexible solution that meet their specific business needs. To that end, SDK complements e-Synergy's extensive configurability by allowing users to customize and integrate a broader spectrum of applications. At the same time, they can keep their total cost of ownership (TCO) low and future product upgrades can be handled easily. Additional features available with SDK include the ability to generate new tables and add fields to existing ones; configure business- and industry-related attachments and add-ons; generate links and connections to information portals and web sites; and extend and enhance elements of code for custom reports.
Priced at $1,000 (USD) per named user, with 10 percent annual maintenance and 10 percent annual support costs, e-Synergy is priced comparably to other licensed enterprise applications. The big difference is that the vendor delivers regular feature updates through maintenance, thus it is situated in a middle ground between traditional perpetual-licensing and more the modern subscription, software as a service (SaaS) models (see Trends in Delivery and Pricing Models for Enterprise Applications: Pricing Options).
Exact Software has placed the product in long term development. There have been no major version releases in the past three years, but any customer on a maintenance subscription contract has access to the new functions that have been introduced at regular intervals during that time. The latest build (version 340) was introduced in early 2005, and its improvements were not as large-scale as the major, annual releases of other ERP products, or even as major as the more frequent quarterly releases found with hosted applications such as Salesforce.com. The e-Synergy revisions generally have been more digestible when it comes to getting users up to speed.
Exact periodically sends enhancement survey campaigns to its existing e-Synergy users. The top three requirement needs from the recent one were 1) the ability to check for duplicates when adding customers, accounts, etc., 2) a simplified way to create multiple workflows, and 3) pop-up reminders for calendar items. In addition to these, the next build will feature the ability for multiple logins for customer portals; security checks (hiding) of accounts; the use of v-cards (electronic business cards) for employees and contacts; the ability to freeze comments upon request; increased options for extensible style sheets (XSS); and more compliance for the US Food and Drug Administration (FDA) Part 11, the US Sarbanes Oxley Act (SOX), the International Standards Organization (ISO), and material safety data sheet (MSDS) requirements.
Exact Pledges for the Future
Exact believes that the key to success for packaged business solutions in the mid-market is to provide technology leadership that connects separate information sources. In this respect, Exact pledges to further integrate its Exact Globe and Exact e-Synergy product functionality and allow these products to connect to other third party business applications and mobile devices. Exact is also admittedly researching and testing the most suitable technological platforms to support its product strategy like Microsoft .NET, Oracle database, and application service provider (ASP) and hosting concepts.
In 2004 and 2005 Exact e-Synergy was fueling license revenue growth, demonstrating that Exact's vision to improve the performance of organizations by allowing access to one information system for all their employees, partners, and entire value chain, is materializing. For instance, North American sales for the e-Synergy product nearly doubled in 2004—which was only its second active year in the market. That growth may likely continue, since Exact has some story to tell, and is investing marketing dollars in appropriately selected media outlets, and other appropriate channels.
All Products Being Enhanced for Now
In addition to the ongoing enhancements for e-Synergy mentioned in A Single Software Solution That Enables Business Process Management, Exact launched its manufacturing and project management functionality for Exact Globe 2003 in the first half of 2004. The product has been further developed to conform to additional country legislations and to use more languages. Its goal is to be the only global mid-market player that offers one globally available product, sufficing local legislations and common business practices. But, for the foreseeable future, one should not worry about whether its other local brands will see enhancements. Two thousand and five has been a year of many significant new product releases, including JobBOSS Versions 8.1 and 8.2, Alliance/MFG Version 6.6, new Exact EDI cross-product solution, etc. With the combination of its solid balance sheet ratios and inventive products, the vendor feels confident that it will, pursue, develop, and achieve its strategic goals of both organic and acquisition growth.
SOURCE:
http://www.technologyevaluation.com/research/articles/giving-a-business-process-management-edge-to-enterprise-resource-planning-18360/
Vendor Articulates Message and Vision for Product Lifecycle Management
SAP's recent product lifecycle management (PLM) conference, PLM 2006, was a networking event and solution showcase for strategies and new technologies. Also showcased were solutions for product data and document management, new product development and introduction (NPDI), supplier-sourcing strategies and selection, as well as manufacturing process and quality management. With PLM license revenues of $162 million (USD) during fiscal year 2005, and high expectations for future growth, SAP is motivated to push the PLM suite forward. Consistency is the hallmark of any marketing organization; providing a clear message that resonates with the audience and rings true to the organization which develops the delivery products is an especially admirable characteristic of a software solutions provider in a highly competitive market. SAP consistently provides a message to its clients and prospects which reflects its true PLM vision and intentions. The solutions they provide, to organizations needing software tools to streamline product development and collaboration, correspond to their marketing themes. Of particular interest, and a salient differentiator in their conference approach, is the fact that SAP has woven their PLM product solutions message jointly around the new SAP SCM 5.0 product offerings (xApp Manufacturing Integration and Intelligence, as well as SAP NetWeaver and Enterprise Services Architecture [ESA]). The focal point of this message is the ability of enterprises to leverage SAP technologies for connecting supply chain processes with manufacturing and product lifecycle processes as a near-seamless operation. SAP's ability to present a cohesive solution set is founded on its applications solution maps, and on its product lifecycle management dimensions.
Four Dimensions of mySAP PLM
An examination of SAP's mySAP PLM application map illustrates its four dimensions in building-block fashion:
Product and project portfolio management: idea management and concept development, project planning, time and resource management, project execution, and strategic portfolio management. It is also worth examining some key components of this dimension:
* SAP xApp Product Definition (SAP xPD), which addresses the front-end processes for definition and management of ideas, concepts, projects, and products.
* Collaboration Projects (cProjects), which supports phase-based process methodologies; multilevel accounting; and integrations with human resources management (HRM), supplier relationship management (SRM), resource and portfolio management (RPM), financials, document management, and quality management.
* SAP xApp Resource and Portfolio Management (SAP xRPM), which allows for portfolio hierarchies, reviews, prioritization, scoring, and financial impact.
Lifecycle process management: product development, development collaboration and strategic sourcing, prototyping and production ramp-up, sales and service transition, quality engineering, and product costing. Lifecycle process support addresses requirements (as well as functional and product structures), supports virtual teams, and provides one user interface via a workbench for the computer-aided design (CAD) designer and CAD integrations. The web-based SAP PLM collaboration platform, cFolders, provides cross-enterprise processes for enabling virtual teams.
Lifecycle data management: document management, product master and structure management, specification and recipe management, service and maintenance structure management, and change and configuration management. The integrated Document Management System 6.0 (DMS 6.0), in conjunction with a knowledge management and content server, provides a portal for web document access with authorizations, thumbnails, mass change, mass check-in, and digital signatures. The integrated product and process engineering (iPPE) module addresses functional structures, configurables, maintenance structures, and variant configurations.
Corporate services: this uses an Environment, Health, and Safety (EH&S) module for audit and compliance management, hazardous tracking and product stewardship, dangerous goods and waste management, worker health and safety management, and compliance reporting.
These dimensions transcend the three fundamental time horizons (new product development and introduction; maturing of the business model; and service management through to retirement), and are "stacked" over these time horizons, with supply chain management and manufacturing process integration. This provides a clear image of how SAP PLM addresses the complexities of product development through launch, production, service, and retirement. SAP has done a good job of delineating both the business challenges and the information technology (IT) challenges inherent in product lifecycle management.
Future PLM Roadmap
SAP boasts over 5000 companies using lifecycle data management (1500 of those for product development), over 4000 companies using project management, and over 750 companies using EH&S. Customers tend to be clustered in the industries of industrial machinery, automotive, consumer products, high-tech, aerospace, and chemicals life sciences. What's missing is a view of the number of customers using a core combination of lifecycle data management, cProjects, cFolders, RPM, or xAPP Product Definition, in a virtual product development environment. These users are in the best position to comment on the general health and value of the PLM suite. A new cooperative announced in April 2005, called the PLM Alliance, is comprised of a group of SAP development partners, including CENIT, CIDEON, DSC Software AG, and .riess. These partners offer joint development, marketing, and implementation services around SAP PLM. They propose to introduce an SAP PLM "core system," which would include functions like CAD integration, vaulting and data exchange, document management, office integration, release and change management, output management, and catalog part integration, all bundled for rapid implementation. Given their background and expertise in CAD integration, SAP workflow, and SAP web applications servers such as cFolders and cProjects, they are well suited to serve as SAP PLM systems integrators. Their presence will be felt foremost in Europe, but should extend naturally to North America.
SAP's PLM product development and release strategy are clearly founded on the significant advantage of integrating all aspects of enterprise. Recent PLM application enhancements have centered on improving the NPDI process through focus on the product and project portfolio management dimension, improvement of product definition integration aspects, better use of RPM and collaborative project team capabilities, better product design cost estimation (PDCE), and enhancement of the user experience through improved usability and flexibility. Furthermore, the need to streamline the entire implementation process of SAP PLM must not be overlooked. SAP has recognized this need, and has worked on defining various paths as optional starting points for initiating a PLM implementation project. These paths might depend on various pain points, such as the need to extend product structure controls, or to attack a lack of operational controls in research and development (R&D).
SOURCE:
http://www.technologyevaluation.com/research/articles/vendor-articulates-message-and-vision-for-product-lifecycle-management-18508/
Four Dimensions of mySAP PLM
An examination of SAP's mySAP PLM application map illustrates its four dimensions in building-block fashion:
Product and project portfolio management: idea management and concept development, project planning, time and resource management, project execution, and strategic portfolio management. It is also worth examining some key components of this dimension:
* SAP xApp Product Definition (SAP xPD), which addresses the front-end processes for definition and management of ideas, concepts, projects, and products.
* Collaboration Projects (cProjects), which supports phase-based process methodologies; multilevel accounting; and integrations with human resources management (HRM), supplier relationship management (SRM), resource and portfolio management (RPM), financials, document management, and quality management.
* SAP xApp Resource and Portfolio Management (SAP xRPM), which allows for portfolio hierarchies, reviews, prioritization, scoring, and financial impact.
Lifecycle process management: product development, development collaboration and strategic sourcing, prototyping and production ramp-up, sales and service transition, quality engineering, and product costing. Lifecycle process support addresses requirements (as well as functional and product structures), supports virtual teams, and provides one user interface via a workbench for the computer-aided design (CAD) designer and CAD integrations. The web-based SAP PLM collaboration platform, cFolders, provides cross-enterprise processes for enabling virtual teams.
Lifecycle data management: document management, product master and structure management, specification and recipe management, service and maintenance structure management, and change and configuration management. The integrated Document Management System 6.0 (DMS 6.0), in conjunction with a knowledge management and content server, provides a portal for web document access with authorizations, thumbnails, mass change, mass check-in, and digital signatures. The integrated product and process engineering (iPPE) module addresses functional structures, configurables, maintenance structures, and variant configurations.
Corporate services: this uses an Environment, Health, and Safety (EH&S) module for audit and compliance management, hazardous tracking and product stewardship, dangerous goods and waste management, worker health and safety management, and compliance reporting.
These dimensions transcend the three fundamental time horizons (new product development and introduction; maturing of the business model; and service management through to retirement), and are "stacked" over these time horizons, with supply chain management and manufacturing process integration. This provides a clear image of how SAP PLM addresses the complexities of product development through launch, production, service, and retirement. SAP has done a good job of delineating both the business challenges and the information technology (IT) challenges inherent in product lifecycle management.
Future PLM Roadmap
SAP boasts over 5000 companies using lifecycle data management (1500 of those for product development), over 4000 companies using project management, and over 750 companies using EH&S. Customers tend to be clustered in the industries of industrial machinery, automotive, consumer products, high-tech, aerospace, and chemicals life sciences. What's missing is a view of the number of customers using a core combination of lifecycle data management, cProjects, cFolders, RPM, or xAPP Product Definition, in a virtual product development environment. These users are in the best position to comment on the general health and value of the PLM suite. A new cooperative announced in April 2005, called the PLM Alliance, is comprised of a group of SAP development partners, including CENIT, CIDEON, DSC Software AG, and .riess. These partners offer joint development, marketing, and implementation services around SAP PLM. They propose to introduce an SAP PLM "core system," which would include functions like CAD integration, vaulting and data exchange, document management, office integration, release and change management, output management, and catalog part integration, all bundled for rapid implementation. Given their background and expertise in CAD integration, SAP workflow, and SAP web applications servers such as cFolders and cProjects, they are well suited to serve as SAP PLM systems integrators. Their presence will be felt foremost in Europe, but should extend naturally to North America.
SAP's PLM product development and release strategy are clearly founded on the significant advantage of integrating all aspects of enterprise. Recent PLM application enhancements have centered on improving the NPDI process through focus on the product and project portfolio management dimension, improvement of product definition integration aspects, better use of RPM and collaborative project team capabilities, better product design cost estimation (PDCE), and enhancement of the user experience through improved usability and flexibility. Furthermore, the need to streamline the entire implementation process of SAP PLM must not be overlooked. SAP has recognized this need, and has worked on defining various paths as optional starting points for initiating a PLM implementation project. These paths might depend on various pain points, such as the need to extend product structure controls, or to attack a lack of operational controls in research and development (R&D).
SOURCE:
http://www.technologyevaluation.com/research/articles/vendor-articulates-message-and-vision-for-product-lifecycle-management-18508/
IT Governance and Project Portfolio Management: Vendor Delivers a Phase-based Approach
In today's economy, the role of technology has evolved from facilitating operations to strategically driving business. Chief information officers (CIOs) are expected to align technology with the overall business strategy of the organizations they lead. Consequently, project portfolio management (PPM) solutions have stepped in to provide the technology to implement an information technology (IT) governance framework to monitor and to evaluate the investment of projects. Although most PPM vendors provide organizations with the tools to meet these objectives, few provide a strategy to implement a governance framework successfully. In reality, many organizations implement PPM either by mapping the solution to an organization's established IT governance framework, or in a modular fashion meeting the needs to specific business processes (such as portfolio management or project management). The former scenario requires a well established governance framework, while the latter can only meet the partial needs of a less mature organization. In light of this, Pacific Edge has developed a unique approach to assisting a wide range of IT organizations with their specific PPM needs.
Based in Seattle, Washington (US), Pacific Edge has roots in the project management space. Founded in 1998, Pacific Edge delivers a web-based PPM solution focused primarily on the needs of internal IT departments. Its flagship solution, Pacific Edge Mariner, delivers IT governance through PPM and application portfolio management capabilities. In addition, Pacific Edge serves the new product development (NDP) space by offering product portfolio management capabilities. In terms of its target market, Pacific Edge has had the most success at the lower end of the enterprise market, with revenues ranging from $500 million (USD) to $8 billion (USD).
Pacific Edge Methodology
Although the concept of PPM has been around for years, most IT departments have been slow to adopt it. Pacific Edge has recognized that there is diversity in the adoption of PPM frameworks by IT departments. By developing a top-down approach, Pacific Edge offers its clients an option of three stages to implement IT governance within an organization. Based on an organization's state of maturity, its maturity-based provides a streamlined phased approach to quickly implementing project portfolio management (see figure 1).
Specifically, Pacific Edge caters to the following three stages of maturity in an organization:
1. Aligning IT portfolios: The objective at this stage is to help organizations with a limited IT governance framework gain high-level visibility into their portfolio of projects. Pacific Edge proposes a thirty-day timeline to reduce redundancies in portfolios, align business stakeholders with IT stakeholders, identify resource allocation, and balance supply and demand of projects.
2. Managing IT performance: The objective at this stage is to implement tighter process controls and decision workflows. This stage focuses on closing the loop between planning and execution through detailed task planning and time tracking, delivering metrics and key performance indicators (KPIs) for both projects and the available resource pool. Ultimately, organizations at this stage will streamline their projects and service delivery.
3. Maximizing IT value: The objective at this stage is for organizations to manage the complete lifecycle of their IT investments from the time of the project request to the final retirement of the IT investment. This stage focuses on the total lifecycle cost of IT investments, and shifts organizational perspective from project-centric goals to investment-centric goals for improved decision making across the entire organization.
Pacific Edge is unique in its value proposition in that it offers its solution within this three-stage framework, allowing its clients to follow a "pay as you go" track, and to thereby purchase a solution based on their level of maturity.
Pacific Edge Components
Pacific Edge Mariner is Pacific Edge's web-based solution, and it provides organizations with a top-down approach to PPM. With portfolio management at its core, the Mariner solution delivers the following components as a part of its offering:
* Portfolio Management: This module provides integrated decision support to track lifecycle, resource, financial, and project data. Core to its offering, the portfolio management module captures all metrics in a single dashboard to create what-if scenarios and analysis within a predefined approval workflow. Pacific Edge also delivers a user-friendly interface which is highly configurable.
* Project Management: Pacific Edge provides complete out-of-the-box project management functionality including issues management, risk management, document management, and collaboration. This module provides web-based task planning designed for most IT project scheduling needs. For more complex scheduling requirements, clients have the ability to take advantage of Pacific Edge's complete bidirectional integration with Microsoft Project.
* Demand Management: This module enables the capture of all demands, including non-project-related work. The classification and approvals can be set up through a configurable workflow engine which routes all messages and notifies all stakeholders based on defined business rules. As a key differentiator, Mariner has the ability to track and to provide visibility of work items through integration with leading help desk applications.
* Financial Management: This module allows an organization to treat the lifecycle of project portfolios as an investment. Financial models can be configured to track KPIs, including return on investment (ROI), total cost of ownership (TCO), net present value (NPV), and internal rate of return (IRR). The financial management module enables calculations for time-phased costs and benefits.
* Resource Management: This module permits granular tracking of an organization's resource pool for both project- and non-project-related activities. Functionalities include resource allocation, skill matching, and resource utilization. There are also complete timesheet capabilities for approval and tracking of tasks. Mariner delivers excellent capabilities in the tracking of resources, providing a hierarchal view of the resource breakdown structure (RBS).
Product Strengths and Challenges
In terms of functionality, Pacific Edge delivers solid PPM capabilities for internal IT departments managing numerous short-term projects. Pacific Edge's roots in the project management world ensure that the exchange of granular data between active projects and its solution provides executives with a clear picture of their project investments. In addition, the Mariner solution delivers help desk capabilities to track work that is both project- and non-project-related. This is achieved with its pre-packaged Mariner Connectors, which link to various IT services applications (such as HP OpenView Service Desk and HP Service Center). Furthermore, its core strength lies in managing resources, while delivering solid insight to key performance indicators.
Pacific Edge is designed for non-technical business users, providing highly configurable modules. Its interface is user-friendly, and allows organizations to view information relevant to their business requirements. In addition, its project management module provides complete out-of-the-box functionality for project management, as well as complete bidirectional integration with Microsoft Project.
However, similar to the majority of the smaller best-of-breed PPM vendors, Pacific Edge is limited in its ability to handle global organizations. Currently, its primary business model is a direct sales channel with a limited distribution channel outside of North America. In addition, it solution supports only English-speaking regions.
Although Pacific Edge also delivers solutions for PPM for new product development, currently its expertise is focused on PPM for IT departments. Furthermore, its Mariner product presently does not support out-of-the-box integration with business intelligence solutions (such as Cognos or Business Objects) that are frequently demanded by larger IT organizations.
Summary
Pacific Edge is well suited for organizations that have mature IT infrastructures with either limited or no IT governance framework in place. For organizations that are seeking to gradually establish a PPM framework in an affordable manner, Pacific Edge offers a pay-as-you-go model to assist implementation of a successful IT governance framework. In addition, the Mariner product does a good job of covering the main components of PPM, by aligning business stakeholders with IT. For global organizations that require highly complex analytics that can only be delivered through business intelligence, Pacific Edge will likely fall short. Bearing this in mind, its solution is excellent in delivering detailed visibility into an organization's resource pool, and provides highly configurable views to monitor financial metrics of project portfolios.
Another thing to consider when evaluating PPM solutions is the vendor's vertical market expertise. Although Pacific Edge delivers a strong approach to implementing a PPM framework, it is still developing its expertise in various vertical markets. However, from an application point of view, Mariner's ease of use and configurability are designed for organizations seeking to implement an IT governance strategy that will meet their business objectives.
SOURCE:
http://www.technologyevaluation.com/research/articles/it-governance-and-project-portfolio-management-vendor-delivers-a-phase-based-approach-18592/
Based in Seattle, Washington (US), Pacific Edge has roots in the project management space. Founded in 1998, Pacific Edge delivers a web-based PPM solution focused primarily on the needs of internal IT departments. Its flagship solution, Pacific Edge Mariner, delivers IT governance through PPM and application portfolio management capabilities. In addition, Pacific Edge serves the new product development (NDP) space by offering product portfolio management capabilities. In terms of its target market, Pacific Edge has had the most success at the lower end of the enterprise market, with revenues ranging from $500 million (USD) to $8 billion (USD).
Pacific Edge Methodology
Although the concept of PPM has been around for years, most IT departments have been slow to adopt it. Pacific Edge has recognized that there is diversity in the adoption of PPM frameworks by IT departments. By developing a top-down approach, Pacific Edge offers its clients an option of three stages to implement IT governance within an organization. Based on an organization's state of maturity, its maturity-based provides a streamlined phased approach to quickly implementing project portfolio management (see figure 1).
Specifically, Pacific Edge caters to the following three stages of maturity in an organization:
1. Aligning IT portfolios: The objective at this stage is to help organizations with a limited IT governance framework gain high-level visibility into their portfolio of projects. Pacific Edge proposes a thirty-day timeline to reduce redundancies in portfolios, align business stakeholders with IT stakeholders, identify resource allocation, and balance supply and demand of projects.
2. Managing IT performance: The objective at this stage is to implement tighter process controls and decision workflows. This stage focuses on closing the loop between planning and execution through detailed task planning and time tracking, delivering metrics and key performance indicators (KPIs) for both projects and the available resource pool. Ultimately, organizations at this stage will streamline their projects and service delivery.
3. Maximizing IT value: The objective at this stage is for organizations to manage the complete lifecycle of their IT investments from the time of the project request to the final retirement of the IT investment. This stage focuses on the total lifecycle cost of IT investments, and shifts organizational perspective from project-centric goals to investment-centric goals for improved decision making across the entire organization.
Pacific Edge is unique in its value proposition in that it offers its solution within this three-stage framework, allowing its clients to follow a "pay as you go" track, and to thereby purchase a solution based on their level of maturity.
Pacific Edge Components
Pacific Edge Mariner is Pacific Edge's web-based solution, and it provides organizations with a top-down approach to PPM. With portfolio management at its core, the Mariner solution delivers the following components as a part of its offering:
* Portfolio Management: This module provides integrated decision support to track lifecycle, resource, financial, and project data. Core to its offering, the portfolio management module captures all metrics in a single dashboard to create what-if scenarios and analysis within a predefined approval workflow. Pacific Edge also delivers a user-friendly interface which is highly configurable.
* Project Management: Pacific Edge provides complete out-of-the-box project management functionality including issues management, risk management, document management, and collaboration. This module provides web-based task planning designed for most IT project scheduling needs. For more complex scheduling requirements, clients have the ability to take advantage of Pacific Edge's complete bidirectional integration with Microsoft Project.
* Demand Management: This module enables the capture of all demands, including non-project-related work. The classification and approvals can be set up through a configurable workflow engine which routes all messages and notifies all stakeholders based on defined business rules. As a key differentiator, Mariner has the ability to track and to provide visibility of work items through integration with leading help desk applications.
* Financial Management: This module allows an organization to treat the lifecycle of project portfolios as an investment. Financial models can be configured to track KPIs, including return on investment (ROI), total cost of ownership (TCO), net present value (NPV), and internal rate of return (IRR). The financial management module enables calculations for time-phased costs and benefits.
* Resource Management: This module permits granular tracking of an organization's resource pool for both project- and non-project-related activities. Functionalities include resource allocation, skill matching, and resource utilization. There are also complete timesheet capabilities for approval and tracking of tasks. Mariner delivers excellent capabilities in the tracking of resources, providing a hierarchal view of the resource breakdown structure (RBS).
Product Strengths and Challenges
In terms of functionality, Pacific Edge delivers solid PPM capabilities for internal IT departments managing numerous short-term projects. Pacific Edge's roots in the project management world ensure that the exchange of granular data between active projects and its solution provides executives with a clear picture of their project investments. In addition, the Mariner solution delivers help desk capabilities to track work that is both project- and non-project-related. This is achieved with its pre-packaged Mariner Connectors, which link to various IT services applications (such as HP OpenView Service Desk and HP Service Center). Furthermore, its core strength lies in managing resources, while delivering solid insight to key performance indicators.
Pacific Edge is designed for non-technical business users, providing highly configurable modules. Its interface is user-friendly, and allows organizations to view information relevant to their business requirements. In addition, its project management module provides complete out-of-the-box functionality for project management, as well as complete bidirectional integration with Microsoft Project.
However, similar to the majority of the smaller best-of-breed PPM vendors, Pacific Edge is limited in its ability to handle global organizations. Currently, its primary business model is a direct sales channel with a limited distribution channel outside of North America. In addition, it solution supports only English-speaking regions.
Although Pacific Edge also delivers solutions for PPM for new product development, currently its expertise is focused on PPM for IT departments. Furthermore, its Mariner product presently does not support out-of-the-box integration with business intelligence solutions (such as Cognos or Business Objects) that are frequently demanded by larger IT organizations.
Summary
Pacific Edge is well suited for organizations that have mature IT infrastructures with either limited or no IT governance framework in place. For organizations that are seeking to gradually establish a PPM framework in an affordable manner, Pacific Edge offers a pay-as-you-go model to assist implementation of a successful IT governance framework. In addition, the Mariner product does a good job of covering the main components of PPM, by aligning business stakeholders with IT. For global organizations that require highly complex analytics that can only be delivered through business intelligence, Pacific Edge will likely fall short. Bearing this in mind, its solution is excellent in delivering detailed visibility into an organization's resource pool, and provides highly configurable views to monitor financial metrics of project portfolios.
Another thing to consider when evaluating PPM solutions is the vendor's vertical market expertise. Although Pacific Edge delivers a strong approach to implementing a PPM framework, it is still developing its expertise in various vertical markets. However, from an application point of view, Mariner's ease of use and configurability are designed for organizations seeking to implement an IT governance strategy that will meet their business objectives.
SOURCE:
http://www.technologyevaluation.com/research/articles/it-governance-and-project-portfolio-management-vendor-delivers-a-phase-based-approach-18592/
Informix Goes Vertical With Software Vendor ADRM
Informix has announced a strategic alliance with Applied Data Resource Management (ADRM) to develop industry-specific data models to provide packaged analytic components for business intelligence and e-business analytics. The alliance was originally discussed with Ardent Software before their merger with Informix. ADRM currently supports over 10 industries with 23 lines of business and 30 subject areas, which they refer to as "data environments".
ADRM's current client list includes the U.S. Navy, Kraft Foods, and New York Life. The first package to be released by Informix was announced at SAP's SAPPHIRE conference in Las Vegas this month, and is aimed at the consumer packaged goods industry. The demonstration was conducted using Ardent's DataStage product, an Oracle database, and Brio as a front-end query tool.
"In the past few years, the Internet economy has impacted nearly every industry. To effectively compete in business-to-consumer and business-to-business Web-driven markets, organizations require powerful analytic architectures that enable them to transform corporate data into useful information," said Pete Fiore, vice president and general manager, i.Intelligence business group, Informix. "With these packaged analytic offerings, Informix is making it easier and more efficient to deploy the type of industry-specific information architecture that companies will need for competitive advantage in their markets."
"With these highly customizable and flexible sets of components, organizations will have faster, increased access to their data resources, enabling them to better recognize and address the market needs of their specific industries," added Mikael Wipperfeld, vice president, i.Intelligence business group, Informix.
Market Impact
The move towards vertical market templates by Informix mirrors the efforts being made by Sybase to penetrate specific industries with pre-defined ("canned") applications which can be quickly implemented to provide rapid return on investment. The packages also support standard query and reporting tools, including Informix's Visionary data visualization tool (see "A Visionary of Loveliness", April 20, 2000 for more information).
In the new Internet economy, quick turnaround on IT initiatives to provide business intelligence has proven to be a key to success. Informix's attempt to speed implementation in vertical markets is a necessary move in order to continue to compete for business with Internet-centric firms. Their initial effort is aimed at consumer packaged goods, but they intend to offer other verticals in the near future (retail and telecommunications are scheduled for the summer of 2000). These will also be linked to the SAP platform since Informix's Ardent DataStage product already has the capability to read from SAP and write to SAP BW (SAP's Business Information Warehouse). (For further details on this product see "Ardent Software Enters the SAP Data Extraction Market", September 13, 1999).
User Recommendations
Companies in the packaged consumer goods industry may be able to realize very quick return on investment with this product. Potential customers in other vertical markets should discuss the possibility of adding support for their industry to the product suite. It is often common for vendors to add functionality only when requested by a potential customer, so it is not wise to wait and see if your particular vertical is added.
In the software vendor world, it is typically "ask and ye shall receive (maybe)". In addition, customers may be able to negotiate a reduction in the price of the software if they provide assistance in the development of the vertical analytics for their industry. Informix will undoubtedly sell the model to other customers, so it is also in their interest to team with the company to develop the software.
SOURCE:
http://www.technologyevaluation.com/research/articles/informix-goes-vertical-with-software-vendor-adrm-15917/
ADRM's current client list includes the U.S. Navy, Kraft Foods, and New York Life. The first package to be released by Informix was announced at SAP's SAPPHIRE conference in Las Vegas this month, and is aimed at the consumer packaged goods industry. The demonstration was conducted using Ardent's DataStage product, an Oracle database, and Brio as a front-end query tool.
"In the past few years, the Internet economy has impacted nearly every industry. To effectively compete in business-to-consumer and business-to-business Web-driven markets, organizations require powerful analytic architectures that enable them to transform corporate data into useful information," said Pete Fiore, vice president and general manager, i.Intelligence business group, Informix. "With these packaged analytic offerings, Informix is making it easier and more efficient to deploy the type of industry-specific information architecture that companies will need for competitive advantage in their markets."
"With these highly customizable and flexible sets of components, organizations will have faster, increased access to their data resources, enabling them to better recognize and address the market needs of their specific industries," added Mikael Wipperfeld, vice president, i.Intelligence business group, Informix.
Market Impact
The move towards vertical market templates by Informix mirrors the efforts being made by Sybase to penetrate specific industries with pre-defined ("canned") applications which can be quickly implemented to provide rapid return on investment. The packages also support standard query and reporting tools, including Informix's Visionary data visualization tool (see "A Visionary of Loveliness", April 20, 2000 for more information).
In the new Internet economy, quick turnaround on IT initiatives to provide business intelligence has proven to be a key to success. Informix's attempt to speed implementation in vertical markets is a necessary move in order to continue to compete for business with Internet-centric firms. Their initial effort is aimed at consumer packaged goods, but they intend to offer other verticals in the near future (retail and telecommunications are scheduled for the summer of 2000). These will also be linked to the SAP platform since Informix's Ardent DataStage product already has the capability to read from SAP and write to SAP BW (SAP's Business Information Warehouse). (For further details on this product see "Ardent Software Enters the SAP Data Extraction Market", September 13, 1999).
User Recommendations
Companies in the packaged consumer goods industry may be able to realize very quick return on investment with this product. Potential customers in other vertical markets should discuss the possibility of adding support for their industry to the product suite. It is often common for vendors to add functionality only when requested by a potential customer, so it is not wise to wait and see if your particular vertical is added.
In the software vendor world, it is typically "ask and ye shall receive (maybe)". In addition, customers may be able to negotiate a reduction in the price of the software if they provide assistance in the development of the vertical analytics for their industry. Informix will undoubtedly sell the model to other customers, so it is also in their interest to team with the company to develop the software.
SOURCE:
http://www.technologyevaluation.com/research/articles/informix-goes-vertical-with-software-vendor-adrm-15917/
Enterprise Resource Planning for Services, and Professional Services Automation: Where Do You Draw the Line?
Since the late nineties, it has been evident that the enterprise resource planning (ERP) vendors that originally serviced the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries also. By the year 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors, such as SAP and Oracle, had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, such as the health care sector, the public sector, and service based businesses. Simultaneously, professional services automation (PSA) solutions appeared, and best-of-breed vendors such as Changepoint (today Compuware) and Evolve (now part of Primavera's PSA offering) were developing project- and service-oriented functionality. These PSA solutions were aimed at providing the missing pieces linking back-office solutions (typically provided by ERP or accounting vendors) to project management systems, which remain the heart of most professional services organizations (PSOs).
In today's market, ERP vendors are aggressively focusing their efforts on providing the project-oriented functionality once provided by the original PSA vendors. In addition, unlike best-of breed solutions, they provide a fully integrated back-office system. This raises the following questions: Is the PSA concept outdated? Does ERP for services better reflect the marketplace?
From a vendor's point of view, the answer to those questions depends on which side of the fence you stand. ERP vendors will likely prefer the "ERP for services" moniker, which showcases the broad application of their offering outside PSOs such as governmental and health care organizations. On the other hand, best-of-breed PSA vendors will probably embrace the PSA label, and continue to focus their efforts on their unique understanding of the professionals services market—or, as history has proven, change their focus altogether by adopting a project portfolio management (PPM) approach in order to broaden their potential market.
Defining PSA and ERP for Services
The main difference in functionality between PSA and ERP for services is the back-office component. ERP for services applications provide functionality for both the transactional (or operational) components, and the project-oriented components of service organizations. However, PSA typically refers only to project-oriented functionality, specifically for PSOs. As a result, there are two categories of vendors for service organizations:
1. Best-of-breed PSA vendors: These vendors typically market hosted solutions to smaller organizations. Their main target markets are professional services firms, architects, engineers, high-tech firms, as well as any other type of business which provides billable project-oriented services.
2. ERP for services: These vendors are typically traditional ERP vendors, and provide a fully integrated solution with integrated back-office functionality. Since they provide their clients with complete operational and transactional functionality, their offering is broader in application. In addition to project-oriented organizations, ERP for services provides fully integrated operational functionality for non-project organizations, as in the health care sector.
When evaluating solutions for service organizations, it's important to identify the particular organization's business strategy. Smaller PSOs tend to prefer best-of-breed PSA solutions that can integrate with their existing IT infrastructure. Typically, smaller service organizations have a financial package from vendors like Microsoft or Sage that serves as their back-office component, and they will purchase a PSA solution which provides capabilities for extensive time management, expense reporting, resource planning, portfolio management, and project management. Although this option ensures a lower total cost of ownership, the level of integration between PSA solutions and financials modules varies depending on the existing applications within an organization. Furthermore, PSA vendors will provide out-of-the-box integration with only some financial systems, customer relationship management (CRM) packages, and project management tools. In addition, the level of integration (including the level of field mapping, real-time processing use, and batch processing use) will vary from application to application. Consequently, identifying the right solution for an organization's particular infrastructure can be challenging.
For organizations seeking an integrated PSA solution, ERP vendors provide the complete back-office functionality critical to running any service organization. Although this ensures a seamless system for service organizations, it must be noted that many vendors likely will not provide the same level of functionality as their best-of-breed competitors. In general, ERP vendors tend to be stronger on the financials and project accounting side, and weaker in providing core portfolio management and resource planning functionality. Aside from Microsoft Dynamics SL (formerly Solomon), most ERP for services vendors typically target the mid-market and the enterprise market.
ERP for Services: Moving beyond PSA
ERP for service organizations can be divided into two categories:
1. Project-oriented organizations
2. Transactional or operational organizations
Project-oriented organizations fall under the PSA umbrella, and demand the typical business components offered by PSA solutions. However, ERP for service organizations also provide functionality for purely operational or transactional purposes. Vertical markets, such as health care, higher education, government, distribution, hospitality and nonprofit, all fall within the ERP for services category by virtue of delivering primarily transactional services. These markets demand standard back-office functionality (such as human resources and financials modules) to interface with their industry-specific needs. Consequently, numerous ERP vendors have developed integrated systems which offer end-to-end solutions to various vertical markets.
One need only refer to the massive government and health care sectors to recognize that PSA is only a fraction of the ERP for services market. In the health care sector, vendors are offering industry-specific functionality in patient management, health care portals, and clinical or medical document management. Vendors such as SAP, Oracle, and Lawson offer solutions specific to health care. For government services, numerous ERP vendors are offering industry-specific functionality in property management, asset management, utility or building management, and citizen relationship management. The government vertical market has attracted major ERP vendors such as SAP and Oracle, as well as smaller vendors like Hansen, Unit 4 Agresso, and Deltek for government contractors.
Is PSA Outdated?
In order to determine if the PSA label is outdated, it is important to define its meaning (see Professional Services Organizations Automate Their Processes, which provides an in-depth analysis of PSA and its definition). The traditional definition of a PSA solution is that it offers a set of tools which automate and track the processes of PSOs. Although this definition sounds generic, it must be noted that PSA solutions are specifically designed for organizations in the professional services marketplace.
Typically, information technology (IT) service organizations and professional services divisions categorize themselves as PSOs. What sets these types of organizations apart from other service organizations? One word: projects. Organizations seeking PSA solutions are project-oriented. Resource management, portfolio management, project billing, and project accounting are some of the core business requirements that PSOs demand. In reality, PSA is a subset of the ERP for services software category. Playing in the PSA space means that you are competing in specific vertical markets. It is for this very reason that in the last couple of years, some early PSA vendors have adopted a horizontal strategy which embraces the project portfolio management (PPM) space, by targeting internal IT departments across all vertical markets. In any event, it is clear that the PSA marketplace still has a place for best-of-breed vendors which target the small to medium-sized business (SMB) market, as well as for the larger ERP vendors which target the medium and enterprise services market. Consequently, although PSA may be outdated as an overarching software category, conceptually it still has a place as a vertical software category (similar to ERP for government and ERP for health care) in the ERP for services marketplace.
Summary
Organizations seeking PSA functionality need to be aware of the shift in the market place. During the last few years, the original PSA marketplace has experienced consolidation. Vendors such as Changepoint and Evolve have shifted their focus away from PSA. Consequently, users are faced either with smaller PSA vendors which have industry-specific expertise, or with larger ERP vendors which provide broad functionality for service organizations. In light of this choice, organizations must first identify their primary PSA functionality need.
Organizations looking to find the missing links between their financial system and their projects should still consider a best-of-breed PSA vendor that has extensive experience in their vertical market. Otherwise, ERP vendors may be more than adequate in providing the PSA functionality required, within a fully integrated system. Furthermore, it is important to note that as ERP vendors continue to gain market share in the PSA market, ERP for services will eventually develop stronger PPM functionality. Eventually, project driven organizations may be looking to ERP vendors for this type of functionality.
SOURCE:
http://www.technologyevaluation.com/research/articles/enterprise-resource-planning-for-services-and-professional-services-automation-where-do-you-draw-the-line-18496/
In today's market, ERP vendors are aggressively focusing their efforts on providing the project-oriented functionality once provided by the original PSA vendors. In addition, unlike best-of breed solutions, they provide a fully integrated back-office system. This raises the following questions: Is the PSA concept outdated? Does ERP for services better reflect the marketplace?
From a vendor's point of view, the answer to those questions depends on which side of the fence you stand. ERP vendors will likely prefer the "ERP for services" moniker, which showcases the broad application of their offering outside PSOs such as governmental and health care organizations. On the other hand, best-of-breed PSA vendors will probably embrace the PSA label, and continue to focus their efforts on their unique understanding of the professionals services market—or, as history has proven, change their focus altogether by adopting a project portfolio management (PPM) approach in order to broaden their potential market.
Defining PSA and ERP for Services
The main difference in functionality between PSA and ERP for services is the back-office component. ERP for services applications provide functionality for both the transactional (or operational) components, and the project-oriented components of service organizations. However, PSA typically refers only to project-oriented functionality, specifically for PSOs. As a result, there are two categories of vendors for service organizations:
1. Best-of-breed PSA vendors: These vendors typically market hosted solutions to smaller organizations. Their main target markets are professional services firms, architects, engineers, high-tech firms, as well as any other type of business which provides billable project-oriented services.
2. ERP for services: These vendors are typically traditional ERP vendors, and provide a fully integrated solution with integrated back-office functionality. Since they provide their clients with complete operational and transactional functionality, their offering is broader in application. In addition to project-oriented organizations, ERP for services provides fully integrated operational functionality for non-project organizations, as in the health care sector.
When evaluating solutions for service organizations, it's important to identify the particular organization's business strategy. Smaller PSOs tend to prefer best-of-breed PSA solutions that can integrate with their existing IT infrastructure. Typically, smaller service organizations have a financial package from vendors like Microsoft or Sage that serves as their back-office component, and they will purchase a PSA solution which provides capabilities for extensive time management, expense reporting, resource planning, portfolio management, and project management. Although this option ensures a lower total cost of ownership, the level of integration between PSA solutions and financials modules varies depending on the existing applications within an organization. Furthermore, PSA vendors will provide out-of-the-box integration with only some financial systems, customer relationship management (CRM) packages, and project management tools. In addition, the level of integration (including the level of field mapping, real-time processing use, and batch processing use) will vary from application to application. Consequently, identifying the right solution for an organization's particular infrastructure can be challenging.
For organizations seeking an integrated PSA solution, ERP vendors provide the complete back-office functionality critical to running any service organization. Although this ensures a seamless system for service organizations, it must be noted that many vendors likely will not provide the same level of functionality as their best-of-breed competitors. In general, ERP vendors tend to be stronger on the financials and project accounting side, and weaker in providing core portfolio management and resource planning functionality. Aside from Microsoft Dynamics SL (formerly Solomon), most ERP for services vendors typically target the mid-market and the enterprise market.
ERP for Services: Moving beyond PSA
ERP for service organizations can be divided into two categories:
1. Project-oriented organizations
2. Transactional or operational organizations
Project-oriented organizations fall under the PSA umbrella, and demand the typical business components offered by PSA solutions. However, ERP for service organizations also provide functionality for purely operational or transactional purposes. Vertical markets, such as health care, higher education, government, distribution, hospitality and nonprofit, all fall within the ERP for services category by virtue of delivering primarily transactional services. These markets demand standard back-office functionality (such as human resources and financials modules) to interface with their industry-specific needs. Consequently, numerous ERP vendors have developed integrated systems which offer end-to-end solutions to various vertical markets.
One need only refer to the massive government and health care sectors to recognize that PSA is only a fraction of the ERP for services market. In the health care sector, vendors are offering industry-specific functionality in patient management, health care portals, and clinical or medical document management. Vendors such as SAP, Oracle, and Lawson offer solutions specific to health care. For government services, numerous ERP vendors are offering industry-specific functionality in property management, asset management, utility or building management, and citizen relationship management. The government vertical market has attracted major ERP vendors such as SAP and Oracle, as well as smaller vendors like Hansen, Unit 4 Agresso, and Deltek for government contractors.
Is PSA Outdated?
In order to determine if the PSA label is outdated, it is important to define its meaning (see Professional Services Organizations Automate Their Processes, which provides an in-depth analysis of PSA and its definition). The traditional definition of a PSA solution is that it offers a set of tools which automate and track the processes of PSOs. Although this definition sounds generic, it must be noted that PSA solutions are specifically designed for organizations in the professional services marketplace.
Typically, information technology (IT) service organizations and professional services divisions categorize themselves as PSOs. What sets these types of organizations apart from other service organizations? One word: projects. Organizations seeking PSA solutions are project-oriented. Resource management, portfolio management, project billing, and project accounting are some of the core business requirements that PSOs demand. In reality, PSA is a subset of the ERP for services software category. Playing in the PSA space means that you are competing in specific vertical markets. It is for this very reason that in the last couple of years, some early PSA vendors have adopted a horizontal strategy which embraces the project portfolio management (PPM) space, by targeting internal IT departments across all vertical markets. In any event, it is clear that the PSA marketplace still has a place for best-of-breed vendors which target the small to medium-sized business (SMB) market, as well as for the larger ERP vendors which target the medium and enterprise services market. Consequently, although PSA may be outdated as an overarching software category, conceptually it still has a place as a vertical software category (similar to ERP for government and ERP for health care) in the ERP for services marketplace.
Summary
Organizations seeking PSA functionality need to be aware of the shift in the market place. During the last few years, the original PSA marketplace has experienced consolidation. Vendors such as Changepoint and Evolve have shifted their focus away from PSA. Consequently, users are faced either with smaller PSA vendors which have industry-specific expertise, or with larger ERP vendors which provide broad functionality for service organizations. In light of this choice, organizations must first identify their primary PSA functionality need.
Organizations looking to find the missing links between their financial system and their projects should still consider a best-of-breed PSA vendor that has extensive experience in their vertical market. Otherwise, ERP vendors may be more than adequate in providing the PSA functionality required, within a fully integrated system. Furthermore, it is important to note that as ERP vendors continue to gain market share in the PSA market, ERP for services will eventually develop stronger PPM functionality. Eventually, project driven organizations may be looking to ERP vendors for this type of functionality.
SOURCE:
http://www.technologyevaluation.com/research/articles/enterprise-resource-planning-for-services-and-professional-services-automation-where-do-you-draw-the-line-18496/
PeopleSoft: No More a Humble Kid From a Rough Neighborhood?
As reported on a number of IT News Web sites during mid August, PeopleSoft Inc., a leading provider of business applications, has eliminated nearly 70% of outside consulting firms from its preferred-provider list in the past year and is instituting a new certification program for nearly 12,000 individual consultants because of customers complaints about bad service and improper handling of software installation and configuration. The company officials said only 34 of 96 firms remain on the vendor's preferred-partner list. PeopleSoft will require better training for individually certified third-party consultants beginning in October.
In addition, the vendor has bolstered its consulting division, PeopleSoft Consulting, to focus on helping customers deploy e-business systems. PeopleSoft Consulting's own 2,600 consultants currently handle only about 10% of all new business, but the staff will more than double to increase its share to 20% by year's end. In the past, PeopleSoft, Pleasanton, Calif., primarily relied on third-party consulting firms to implement and support its products. Apparently, the new e-business focus is prompted by the recent release of online PeopleSoft 8.
Earlier, on July 20, PeopleSoft Inc. announced its financial results for the second quarter ended June 30, 2000. Revenues, net income and net income per share from recurring operations for the second quarter of 2000 were $420.2 million, $15.9 million and $0.06, respectively. This compares with revenues, net income and net income per share from recurring operations of $360.7 million, $1.6 million and $0.01, respectively, for the second quarter of 1999 (See Figure 1).
Revenues from software license fees for the second quarter of 2000 increased to $109.8 million, a 37% increase from the same quarter last year. PeopleSoft experienced significant growth compared with the same quarter last year in Human Resource Management and Financial applications - up 38%, and Supply Chain Management applications - up 44%. Customer Relationship Management (CRM) applications emerged as PeopleSoft's largest license revenue product line in the quarter. License revenues increased in all major geographic regions, with the United States growing 49% and International growing 31% assuming constant currency exchange rates.
Expenses were $404.0 million for the second quarter of 2000, compared with $365.7 million in the same quarter last year. The increases were primarily in product development, cost of development services and sales and marketing. Development costs increased due to the continuing costs associated with completing the development of PeopleSoft 8, the company's pure-Internet suite of eBusiness applications that was publicly launched at the beginning of July 2000. Sales and marketing expenses increased as the company invested in additional sales personnel and marketing campaigns to drive PeopleSoft 8.
"Demand for PeopleSoft was strong across every product line and geography," said PeopleSoft President and Chief Executive Officer Craig Conway. "It is a major milestone that license revenue exceeded the $100 million mark for the first time since 1998. This is especially significant coming in the quarter prior to the launch of PeopleSoft 8. This quarter marks the transformation of PeopleSoft to an eBusiness company. With the launch of PeopleSoft 8 in the third quarter, PeopleSoft expects to be a dominant competitor in the eBusiness applications market."
"In the last quarter we have dramatically increased our market position and visibility," said Executive Vice President of Worldwide Marketing and Strategy Baer Tierkel. "We are excited with the overwhelmingly positive initial reviews of PeopleSoft 8, our new pure Internet suite of eBusiness applications. In order to maximize the revenue opportunity presented by PeopleSoft 8, we are rapidly adding field sales resources and have launched the largest marketing campaign in PeopleSoft's history."
Earlier, on July 11, in a speech full of criticism of its rivals, PeopleSoft's CEO Craig Conway unveiled its latest product release, PeopleSoft 8, and gave an upbeat outlook for, until recently, the struggling company. He touted that PeopleSoft is well positioned with its new software to take on market leaders SAP and Oracle. PeopleSoft has traditionally been renowned for its congenial corporate culture as opposed to the swashbuckling ways of Oracle or the uptight rigor of SAP. Therefore, one can only picture the audience's astonishment when Conway took the stand and actually started lambasting the opposition in an uncharacteristically strident tone.
"Oracle has become a sociopathic company. It blatantly lies about things. Larry Ellison is maniacal," Conway roared. "In 1990, Dun & Bradstreet Software had 13,000 customers. Where is it now? By the way, SAP has about 13,000 customers too... We live in a tough neighborhood. Oracle spends 11% of its revenue on marketing. In 1999 we only spent 3.5% of our revenue on marketing. That will change. We have to be combative, confrontational, and competitive in our marketing and advertising from now on."
Market Impact
PeopleSoft has turned the corner. While most of its competitors have been faltering during the recent turbulent times, with the exception of Oracle and possibly SAP, PeopleSoft has returned to strong profits and revenue. The bleak days of 1999 and the possibility of being toppled by J.D. Edwards are a matter of the remote past.
The company has also improved its traditionally low international market penetration, with the international license revenue growing 31% year over year. Furthermore, these upbeat results coincide with the winding down of its ambitious R&D endeavors. PeopleSoft invested an exorbitant 27% of total revenue in R&D. That investment is paying off with new product releases that indicate the company is in sync with market trends.
We believe that PeopleSoft may also be in a good position to be a strong contender in a number of industries. While this may not be the case in complex manufacturing until the market witnesses the proven capabilities of its forthcoming PeopleSoft 8 release, it certainly can compete in traditional service industries with its human resources, financial, and recently added CRM and e-business modules. It may also compete in distribution industries like Consumer Packaged Goods (CPG) with its supply chain and logistics functionality resulting from the 1996 Red Pepper acquisition.
While PeopleSoft has so far poorly exploited its purchase of Red Pepper, its new tack of addressing manufacturers' needs may result in far greater success. Namely, PeopleSoft has focused its manufacturing solutions on only consumer packaged goods, high tech/electronics, and wholesale distribution industries. It already has a strong customer base within these industries, primarily with its financial and human resource management systems, but also to a degree with its manufacturing and supply chain modules.
Nevertheless, PeopleSoft faces a number of notable challenges. Despite an impressive growth of license revenue in the last quarter, things do not appear to be quite rosy after a more prodding look. Namely, Vantive products have been the major license revenue contributor (~26%), which means that PeopleSoft traditional breadwinners' (HR and financial systems) revenues have grown much below the ERP market average growth rate, year over year. Moreover, the overwhelming impression is that Vantive has not been utilized to its full potential either despite the fact that the CRM market has been experiencing stellar annual growth. While PeopleSoft now has strong management with an invigorated stance and is running a profitable business, it may be short-lived without sustaining license revenue. The company has a reputation of squandering very promising acquisitions away - the Red Pepper being one. A similar slip-up with Vantive could be disastrous, particularly since CRM, a main driver of the new economy, gives PeopleSoft a golden opportunity.
The company's biggest challenge, without doubt, lies in creating marketing awareness, promoting its new image, products, and the Web architecture as well as in crisp sales execution. While PeopleSoft has more than tripled its marketing budgets and is on the quest to beef up and focus its sales organization, a poor market acceptance of PeopleSoft 8 could be very detrimental to the company's future. We are afraid that betting mainly on enterprise performance management (EPM) analytics and new product architecture, on top of its embellished traditional product offering, will not suffice in the long run. While the number of additionally released applications is impressive, the product portfolio still shows serious functional holes, particularly in its proverbial bogey areas like manufacturing and supply chain management, where its competitive position is not going to improve dramatically very soon.
As for its new image, some might concur that when Larry Ellison ordered private detectives to forage in his competitors' dustbins, PeopleSoft had no choice but to play it tough to survive. While the new stance may initially impress some, how attractive and plausible would be a movie story where Tom Hanks or Michael J. Fox would portray a tough guy winning over bullying characters like Nicolas Cage or Bruce Willis? Nevertheless, all of them may still be eligible for Oscar nomination playing the roles that completely suit them.
Therefore, PeopleSoft should rather focus on delivering PeopleSoft 8 on time, adhering to stringent training of its sales and customer support forces, and on preempting any dissatisfaction of early adopters and subsequent bad publicity. To that end, we approve the company's move to radically improve its customer service & support. The ERP market has traditionally been plagued by a number of dodgy consulting practices or third-party system integrators. Sifting through its partner program and enforcing much tighter control over awarding certifications is definitely a right move, although somewhat belated in PeopleSoft's case.
User Recommendations
Existing PeopleSoft customers should certainly consider the new offering, but avoid selecting it without looking at what the other vendors have to offer. We recommend identifying your clear e-business strategy and conducting a thorough comparison-shopping, at least for the negotiation leverage sake. Contact a PeopleSoft sales representative for more information on PeopleSoft 8 and request a list of recent customers and ask them about the product. Existing users of PeopleSoft client/server-based products may want to inquire about PeopleSoft's future product support and/or migration strategy. Beware of the potentially hidden costs of a migration, particularly for heavily customized installations.
As for potential customers, PeopleSoft remains a very strong contender in enterprise application selection processes within the following industries: utilities, healthcare, service providers, financial institutions, public sector, insurance, higher education and consumer packaged goods. It should be on a short list in any selection where HRMS system, financial modules, and e-business/self-service are the main pillars of an enterprise application. However, since the company has been touting the significant manufacturing and supply chain product enhancements within its new release, which is due later this year, current and potential users are advised to inform themselves about these, particularly in the above-mentioned industries.
Furthermore, companies in other industries may benefit from evaluating PeopleSoft's product components on a stand-alone basis for their e-business needs and leverage that information against other vendors in the selection. Organizations considering extended ERP applications (both web based and network dependent) should consider all options, although PeopleSoft's activities are promising. The notion of a full Internet based solution could save time and money on the integration. An additional consideration might be the complete outsourcing of the ERP application with an Application Service Provider (ASP). Future clients are also advised to request the company's written commitment to promised functionality, length of implementation, and seamless future upgrades, particularly for recently announced offerings.
SOURCE:
http://www.technologyevaluation.com/research/articles/peoplesoft-no-more-a-humble-kid-from-a-rough-neighborhood-16086/
In addition, the vendor has bolstered its consulting division, PeopleSoft Consulting, to focus on helping customers deploy e-business systems. PeopleSoft Consulting's own 2,600 consultants currently handle only about 10% of all new business, but the staff will more than double to increase its share to 20% by year's end. In the past, PeopleSoft, Pleasanton, Calif., primarily relied on third-party consulting firms to implement and support its products. Apparently, the new e-business focus is prompted by the recent release of online PeopleSoft 8.
Earlier, on July 20, PeopleSoft Inc. announced its financial results for the second quarter ended June 30, 2000. Revenues, net income and net income per share from recurring operations for the second quarter of 2000 were $420.2 million, $15.9 million and $0.06, respectively. This compares with revenues, net income and net income per share from recurring operations of $360.7 million, $1.6 million and $0.01, respectively, for the second quarter of 1999 (See Figure 1).
Revenues from software license fees for the second quarter of 2000 increased to $109.8 million, a 37% increase from the same quarter last year. PeopleSoft experienced significant growth compared with the same quarter last year in Human Resource Management and Financial applications - up 38%, and Supply Chain Management applications - up 44%. Customer Relationship Management (CRM) applications emerged as PeopleSoft's largest license revenue product line in the quarter. License revenues increased in all major geographic regions, with the United States growing 49% and International growing 31% assuming constant currency exchange rates.
Expenses were $404.0 million for the second quarter of 2000, compared with $365.7 million in the same quarter last year. The increases were primarily in product development, cost of development services and sales and marketing. Development costs increased due to the continuing costs associated with completing the development of PeopleSoft 8, the company's pure-Internet suite of eBusiness applications that was publicly launched at the beginning of July 2000. Sales and marketing expenses increased as the company invested in additional sales personnel and marketing campaigns to drive PeopleSoft 8.
"Demand for PeopleSoft was strong across every product line and geography," said PeopleSoft President and Chief Executive Officer Craig Conway. "It is a major milestone that license revenue exceeded the $100 million mark for the first time since 1998. This is especially significant coming in the quarter prior to the launch of PeopleSoft 8. This quarter marks the transformation of PeopleSoft to an eBusiness company. With the launch of PeopleSoft 8 in the third quarter, PeopleSoft expects to be a dominant competitor in the eBusiness applications market."
"In the last quarter we have dramatically increased our market position and visibility," said Executive Vice President of Worldwide Marketing and Strategy Baer Tierkel. "We are excited with the overwhelmingly positive initial reviews of PeopleSoft 8, our new pure Internet suite of eBusiness applications. In order to maximize the revenue opportunity presented by PeopleSoft 8, we are rapidly adding field sales resources and have launched the largest marketing campaign in PeopleSoft's history."
Earlier, on July 11, in a speech full of criticism of its rivals, PeopleSoft's CEO Craig Conway unveiled its latest product release, PeopleSoft 8, and gave an upbeat outlook for, until recently, the struggling company. He touted that PeopleSoft is well positioned with its new software to take on market leaders SAP and Oracle. PeopleSoft has traditionally been renowned for its congenial corporate culture as opposed to the swashbuckling ways of Oracle or the uptight rigor of SAP. Therefore, one can only picture the audience's astonishment when Conway took the stand and actually started lambasting the opposition in an uncharacteristically strident tone.
"Oracle has become a sociopathic company. It blatantly lies about things. Larry Ellison is maniacal," Conway roared. "In 1990, Dun & Bradstreet Software had 13,000 customers. Where is it now? By the way, SAP has about 13,000 customers too... We live in a tough neighborhood. Oracle spends 11% of its revenue on marketing. In 1999 we only spent 3.5% of our revenue on marketing. That will change. We have to be combative, confrontational, and competitive in our marketing and advertising from now on."
Market Impact
PeopleSoft has turned the corner. While most of its competitors have been faltering during the recent turbulent times, with the exception of Oracle and possibly SAP, PeopleSoft has returned to strong profits and revenue. The bleak days of 1999 and the possibility of being toppled by J.D. Edwards are a matter of the remote past.
The company has also improved its traditionally low international market penetration, with the international license revenue growing 31% year over year. Furthermore, these upbeat results coincide with the winding down of its ambitious R&D endeavors. PeopleSoft invested an exorbitant 27% of total revenue in R&D. That investment is paying off with new product releases that indicate the company is in sync with market trends.
We believe that PeopleSoft may also be in a good position to be a strong contender in a number of industries. While this may not be the case in complex manufacturing until the market witnesses the proven capabilities of its forthcoming PeopleSoft 8 release, it certainly can compete in traditional service industries with its human resources, financial, and recently added CRM and e-business modules. It may also compete in distribution industries like Consumer Packaged Goods (CPG) with its supply chain and logistics functionality resulting from the 1996 Red Pepper acquisition.
While PeopleSoft has so far poorly exploited its purchase of Red Pepper, its new tack of addressing manufacturers' needs may result in far greater success. Namely, PeopleSoft has focused its manufacturing solutions on only consumer packaged goods, high tech/electronics, and wholesale distribution industries. It already has a strong customer base within these industries, primarily with its financial and human resource management systems, but also to a degree with its manufacturing and supply chain modules.
Nevertheless, PeopleSoft faces a number of notable challenges. Despite an impressive growth of license revenue in the last quarter, things do not appear to be quite rosy after a more prodding look. Namely, Vantive products have been the major license revenue contributor (~26%), which means that PeopleSoft traditional breadwinners' (HR and financial systems) revenues have grown much below the ERP market average growth rate, year over year. Moreover, the overwhelming impression is that Vantive has not been utilized to its full potential either despite the fact that the CRM market has been experiencing stellar annual growth. While PeopleSoft now has strong management with an invigorated stance and is running a profitable business, it may be short-lived without sustaining license revenue. The company has a reputation of squandering very promising acquisitions away - the Red Pepper being one. A similar slip-up with Vantive could be disastrous, particularly since CRM, a main driver of the new economy, gives PeopleSoft a golden opportunity.
The company's biggest challenge, without doubt, lies in creating marketing awareness, promoting its new image, products, and the Web architecture as well as in crisp sales execution. While PeopleSoft has more than tripled its marketing budgets and is on the quest to beef up and focus its sales organization, a poor market acceptance of PeopleSoft 8 could be very detrimental to the company's future. We are afraid that betting mainly on enterprise performance management (EPM) analytics and new product architecture, on top of its embellished traditional product offering, will not suffice in the long run. While the number of additionally released applications is impressive, the product portfolio still shows serious functional holes, particularly in its proverbial bogey areas like manufacturing and supply chain management, where its competitive position is not going to improve dramatically very soon.
As for its new image, some might concur that when Larry Ellison ordered private detectives to forage in his competitors' dustbins, PeopleSoft had no choice but to play it tough to survive. While the new stance may initially impress some, how attractive and plausible would be a movie story where Tom Hanks or Michael J. Fox would portray a tough guy winning over bullying characters like Nicolas Cage or Bruce Willis? Nevertheless, all of them may still be eligible for Oscar nomination playing the roles that completely suit them.
Therefore, PeopleSoft should rather focus on delivering PeopleSoft 8 on time, adhering to stringent training of its sales and customer support forces, and on preempting any dissatisfaction of early adopters and subsequent bad publicity. To that end, we approve the company's move to radically improve its customer service & support. The ERP market has traditionally been plagued by a number of dodgy consulting practices or third-party system integrators. Sifting through its partner program and enforcing much tighter control over awarding certifications is definitely a right move, although somewhat belated in PeopleSoft's case.
User Recommendations
Existing PeopleSoft customers should certainly consider the new offering, but avoid selecting it without looking at what the other vendors have to offer. We recommend identifying your clear e-business strategy and conducting a thorough comparison-shopping, at least for the negotiation leverage sake. Contact a PeopleSoft sales representative for more information on PeopleSoft 8 and request a list of recent customers and ask them about the product. Existing users of PeopleSoft client/server-based products may want to inquire about PeopleSoft's future product support and/or migration strategy. Beware of the potentially hidden costs of a migration, particularly for heavily customized installations.
As for potential customers, PeopleSoft remains a very strong contender in enterprise application selection processes within the following industries: utilities, healthcare, service providers, financial institutions, public sector, insurance, higher education and consumer packaged goods. It should be on a short list in any selection where HRMS system, financial modules, and e-business/self-service are the main pillars of an enterprise application. However, since the company has been touting the significant manufacturing and supply chain product enhancements within its new release, which is due later this year, current and potential users are advised to inform themselves about these, particularly in the above-mentioned industries.
Furthermore, companies in other industries may benefit from evaluating PeopleSoft's product components on a stand-alone basis for their e-business needs and leverage that information against other vendors in the selection. Organizations considering extended ERP applications (both web based and network dependent) should consider all options, although PeopleSoft's activities are promising. The notion of a full Internet based solution could save time and money on the integration. An additional consideration might be the complete outsourcing of the ERP application with an Application Service Provider (ASP). Future clients are also advised to request the company's written commitment to promised functionality, length of implementation, and seamless future upgrades, particularly for recently announced offerings.
SOURCE:
http://www.technologyevaluation.com/research/articles/peoplesoft-no-more-a-humble-kid-from-a-rough-neighborhood-16086/
Epicor's Mid-Market Pitch Becomes Higher For (One) Scala Part Two: How Scala Complements Epicor
Epicor Software Corporation (NASDAQ: EPIC) and Scala Business Solutions (formerly Euronext: A.SCALA, delisted in July 2004), an Amsterdam, the Netherlands-based provider of collaborative enterprise software for mid-size enterprises and subsidiaries of global corporations have completed a merger that began in late 2003. The merger creates the largest independent global mid-market provider of collaborative ERP, customer relationship management (CRM), and supply chain management (SCM) applications based on Microsoft's .NET platform and Web services, with approximately $250 million (USD) annual revenues, nearly 1,500 employees and with over 20,000 customers. The combined company has an expanded global presence with operations and customers in 143 countries, including worldwide coverage of sales, consulting and support for mid-market and large multinationals as well as local enterprises, offering a broad suite of integrated solutions.
Given Epicor's ordeal of the past and the fact that divesting two lateral products in 2001 greatly helped it achieve some much needed stability nowadays (see Latest Development on Epicor's Trying The Divestiture Tack), one could wonder about the wisdom of the renewed Epicor's appetite for acquisitions. After all, the acquisition of former Dataworks had left Platinum (subsequently Epicor) with multiple unrelated ERP products and the inherited daunting task of rationalizing its product development strategy, and, who on earth with a sound mind would like to revisit that experience? Well, concurrently with achieving a turnaround both in terms of its financial performance and of its strategy clarity, Epicor has also for over two years reverted to its, this time possibly more selective, and thus successful acquisition streak starting with the Clarus e-procurement acquisition at the end of 2002, and former ROI Systems and TDC Solutions acquisitions mid-2003 (for more information, see Epicor Picks Clarus' Bargain At The Software Flea Market and Epicor Conducts Its Own ROI Acquisition Rationale).
Moreover, one should note that Epicor has since its progenitor's inception twenty years ago been competing primarily in the true mid-market, which it defines as enterprises with revenues between $50 million and up to $1 billion (USD), and to that end, the vendor has competed mainly with the Vantage (for new business opportunities), Manage 2000, and Avant products in the manufacturing arena, and with the Epicor Enterprise suite (formerly e by Epicor) and the Clientele standalone CRM product for certain service industries. Increasingly, since customers in this mid-market segment are looking for Microsoft SQL Server-based solutions, the Vantage manufacturing product (and its "smaller sibling" Vista, as an introductory-level product) have turned out as better positioned to address this requirement, although both major manufacturing product lines include the broad range of modules for the upper echelon of midsize manufacturing enterprises.
This is Part Two of a five-part note.
Part One detailed the event.
Part Three will discuss the market impact.
Part Four will present merger synergies and challenges.
Part Five will address more challenges and make user recommendations.
Scala Products
Therefore, Scala should complement and further bolster Epicor's offering in many regards, but possibly the royal one would be its ability to firmly position Epicor as a standardized tier 2 or divisional solution for Global 1000 companies. This is owing to Scala's unrivaled global product capabilities amongst peer vendors, which will be explained in more detail later in the text. Otherwise, at first glance the merger looks like a positive move for both companies and their customers, since Epicor obtains a foothold in some complementary geographic regions, and in certain discrete manufacturing and service industries where it has not really penetrated in the past (e.g., industrial machining, pharmaceuticals, light engineering, hospitality, retail, not-for-profit [NFP] organizations, etc.) by acquiring a reasonably run vendor without much excessive baggage.
It is interesting to note that during Epicor's trying years at the turn of the century Scala had performed much better. For example, although the market turbulence during these few years had also taken its toll in Scala's restructuring and cost-containment exercise, still, with revenue of approximately EUR 74 million in 2002, which was a slight 4 percent growth over 2001, Scala then remained a prominent mid-market enterprise applications provider. Although its license revenue declined by 7 percent in 2002, the maintenance revenue increased by 23 percent, given that more than 90 percent of existing customers continued to pay for maintenance. This was, in part, due to an aggressive development program, which saw the release of iScala 2.1 in mid-2002 (see Scala Shows Far More Than a Bit of a Backbone) and a newer version iScala 2.2 in 2003. From 2001 to the end of 2002, the company also doubled its research and development (R&D) headcount to over 200 (out of a 700 total employee headcount at the time), plus 50 development contractors, and geared up its in-house training center, the Scala University in Budapest, Hungary to train and certify its growing ranks of 140 resellers that accounted for 23 percent of its business in 2002.
But, despite impressive growth and cash flow during these years, Scala unfortunately posted a quite disappointing performance in early 2003, possibly at an unwanted time, resulting with a restructuring program that included rationalization of the company's bloated R&D base with the closure of some satellite R&D facilities and the transfer of expertise to the company's cost-effective center of technical R&D excellence in Moscow, Russia, and headcount reduction of approximately 30 percent from the previous employee level, including consolidation of a number of senior management positions.
Possibly more disconcerting was the fact that long-standing customer interest in the new functionality of Web services-enabled iScala 2.2 release then resulted in overcommitment to customer-related developments (whereas the iScala 2.1 release was mainly focused on improvements in the underlying technology platform). As a result, the commercial release had to be delayed to September 2003 instead of previously indicated mid-2003. This delay created a vicious circle-like adverse impact on new license sales, as customers had to wait for new functionality. Even as all these events took place at possibly the worst time for Scala,,Epicor, who struggled at the turn of the century, had ironically meanwhile quite straightened its ship to even appear attractive as a savior to former Scala board in 2003.
Also, these rationalization measures and the eventual release of the product have reverted to increased revenues and a positive operating income afterwards. Namely, by the end of 2003, Scala's results were again exceeding expectations owing to a new product released in September, iScala 2.2 Collaborative ERP, which was hailed as the biggest release of new functionality in more than 10 years, and which has several modular or individual enhancements of interest to manufacturers, including service management, CRM, SCM, asset management, contract management, resource management, business intelligence (BI), workflow management, user interface (UI) customization, and connectivity.
The company has since reportedly seen strong customer demand for the new iScala version, reflected in its healthy sales pipeline, especially in markets where Scala traditionally performs well, including Scandinavia, Eastern Europe, Russia, and China. Nearly 60 percent of Scala's top customers, including both global and local enterprises, have supposedly been actively involved as early adopters since 2002, with many of them already running the new version live. As an example, Tetra Pak is one of Scala's longest-standing customers, with Scala solutions implemented in nearly fifty countries, against SAP at the corporate level.
iScala 2.2
The iScala 2.2 Collaborative ERP system includes
* iScala Core Business Processes, which is a set of business processes that includes multicurrency and multi-legislative financial functionality, asset management, and a set of packaged integration solutions (eXtensible markup language [XML]-electronic data interchange [EDI], financials, and master data integration) which helps customers to improve the business efficiency of their core processes.
* iScala CRM, which is powered by Microsoft CRM (for more information, see Scala and Microsoft Become (Not So) Strange CRM Bedfellows), accessible from both Microsoft Outlook and the Web, and integrates with iScala ERP and other business systems.
* iScala SCM, which is packaged to address typical business needs, starting with logistics (purchase and inventory management), warehouse management (including quality control), manufacturing (planning, configuration, shop floor control), tools (such as lead time management, available to promise [ATP] and drop shipment), and integration solutions.
* iScala Contract Management, Project Management, Service Management, which is a set of business processes that has been significantly improved and extended in the new version of iScala to help customers automate their pertinent business processes.
* iScala Human Resource Management, which includes the global version of the iScala Payroll module that customers can use to improve their personnel management in almost any country, regardless of how complex the legislation requirements.
* iScala Business Intelligence (BI) Server, which provides a broad set of BI and analytics tools to give users access to information they need when they need it to make the right decisions quickly. Designed to make operational and management reporting easier, the product enables users to relatively quickly perform drill-down enquiries and comparative analysis to find out exactly how the business is doing and where improvements are needed.
* iScala Developer, which is an entire development solution for creating vertical and unique company-specific processes inside and outside the iScala system.
Thereafter, in May, Scala announced that the first service release (SR1) of the latest version of the iScala Collaborative ERP system is now available for all existing and potential customers worldwide. iScala 2.2 SR1 includes a wide range of new and enhanced business functionality, such as better connectivity with other best-of-breed warehouse and manufacturing systems, improved features in the supply chain and service management processes as well as availability in two additional languages—Korean and traditional Chinese.
The company has also enhanced its iScala CRM offering to give customers better visibility into the sales pipeline and across sales activities, to improve the quality of leads and closure rates and be able to fully integrate with Microsoft Outlook and other Microsoft Office programs. iScala CRM now comes with standard reports that are reasonably fast and easy to run and with a familiar interface, similar to Outlook, which will possibly help a company extend its applications to more users. For example, a user can create a sales proposal from a Microsoft Word template, use pricing data from their iScala ERP system, and save all versions of that proposal within iScala CRM, keeping track of all the changes in the sales cycle until the sale is closed.
Last but not least, the addition of a brand new iScala Manager Software Developer Kit should interest Scala's indirect channel, who will now be able to add further value by designing new business processes that can easily be added to the standard iScala workflow, to support customer- or industry-specific needs.
SOURCE:
http://www.technologyevaluation.com/research/articles/epicor-s-mid-market-pitch-becomes-higher-for-one-scala-part-two-how-scala-complements-epicor-17667/
Given Epicor's ordeal of the past and the fact that divesting two lateral products in 2001 greatly helped it achieve some much needed stability nowadays (see Latest Development on Epicor's Trying The Divestiture Tack), one could wonder about the wisdom of the renewed Epicor's appetite for acquisitions. After all, the acquisition of former Dataworks had left Platinum (subsequently Epicor) with multiple unrelated ERP products and the inherited daunting task of rationalizing its product development strategy, and, who on earth with a sound mind would like to revisit that experience? Well, concurrently with achieving a turnaround both in terms of its financial performance and of its strategy clarity, Epicor has also for over two years reverted to its, this time possibly more selective, and thus successful acquisition streak starting with the Clarus e-procurement acquisition at the end of 2002, and former ROI Systems and TDC Solutions acquisitions mid-2003 (for more information, see Epicor Picks Clarus' Bargain At The Software Flea Market and Epicor Conducts Its Own ROI Acquisition Rationale).
Moreover, one should note that Epicor has since its progenitor's inception twenty years ago been competing primarily in the true mid-market, which it defines as enterprises with revenues between $50 million and up to $1 billion (USD), and to that end, the vendor has competed mainly with the Vantage (for new business opportunities), Manage 2000, and Avant products in the manufacturing arena, and with the Epicor Enterprise suite (formerly e by Epicor) and the Clientele standalone CRM product for certain service industries. Increasingly, since customers in this mid-market segment are looking for Microsoft SQL Server-based solutions, the Vantage manufacturing product (and its "smaller sibling" Vista, as an introductory-level product) have turned out as better positioned to address this requirement, although both major manufacturing product lines include the broad range of modules for the upper echelon of midsize manufacturing enterprises.
This is Part Two of a five-part note.
Part One detailed the event.
Part Three will discuss the market impact.
Part Four will present merger synergies and challenges.
Part Five will address more challenges and make user recommendations.
Scala Products
Therefore, Scala should complement and further bolster Epicor's offering in many regards, but possibly the royal one would be its ability to firmly position Epicor as a standardized tier 2 or divisional solution for Global 1000 companies. This is owing to Scala's unrivaled global product capabilities amongst peer vendors, which will be explained in more detail later in the text. Otherwise, at first glance the merger looks like a positive move for both companies and their customers, since Epicor obtains a foothold in some complementary geographic regions, and in certain discrete manufacturing and service industries where it has not really penetrated in the past (e.g., industrial machining, pharmaceuticals, light engineering, hospitality, retail, not-for-profit [NFP] organizations, etc.) by acquiring a reasonably run vendor without much excessive baggage.
It is interesting to note that during Epicor's trying years at the turn of the century Scala had performed much better. For example, although the market turbulence during these few years had also taken its toll in Scala's restructuring and cost-containment exercise, still, with revenue of approximately EUR 74 million in 2002, which was a slight 4 percent growth over 2001, Scala then remained a prominent mid-market enterprise applications provider. Although its license revenue declined by 7 percent in 2002, the maintenance revenue increased by 23 percent, given that more than 90 percent of existing customers continued to pay for maintenance. This was, in part, due to an aggressive development program, which saw the release of iScala 2.1 in mid-2002 (see Scala Shows Far More Than a Bit of a Backbone) and a newer version iScala 2.2 in 2003. From 2001 to the end of 2002, the company also doubled its research and development (R&D) headcount to over 200 (out of a 700 total employee headcount at the time), plus 50 development contractors, and geared up its in-house training center, the Scala University in Budapest, Hungary to train and certify its growing ranks of 140 resellers that accounted for 23 percent of its business in 2002.
But, despite impressive growth and cash flow during these years, Scala unfortunately posted a quite disappointing performance in early 2003, possibly at an unwanted time, resulting with a restructuring program that included rationalization of the company's bloated R&D base with the closure of some satellite R&D facilities and the transfer of expertise to the company's cost-effective center of technical R&D excellence in Moscow, Russia, and headcount reduction of approximately 30 percent from the previous employee level, including consolidation of a number of senior management positions.
Possibly more disconcerting was the fact that long-standing customer interest in the new functionality of Web services-enabled iScala 2.2 release then resulted in overcommitment to customer-related developments (whereas the iScala 2.1 release was mainly focused on improvements in the underlying technology platform). As a result, the commercial release had to be delayed to September 2003 instead of previously indicated mid-2003. This delay created a vicious circle-like adverse impact on new license sales, as customers had to wait for new functionality. Even as all these events took place at possibly the worst time for Scala,,Epicor, who struggled at the turn of the century, had ironically meanwhile quite straightened its ship to even appear attractive as a savior to former Scala board in 2003.
Also, these rationalization measures and the eventual release of the product have reverted to increased revenues and a positive operating income afterwards. Namely, by the end of 2003, Scala's results were again exceeding expectations owing to a new product released in September, iScala 2.2 Collaborative ERP, which was hailed as the biggest release of new functionality in more than 10 years, and which has several modular or individual enhancements of interest to manufacturers, including service management, CRM, SCM, asset management, contract management, resource management, business intelligence (BI), workflow management, user interface (UI) customization, and connectivity.
The company has since reportedly seen strong customer demand for the new iScala version, reflected in its healthy sales pipeline, especially in markets where Scala traditionally performs well, including Scandinavia, Eastern Europe, Russia, and China. Nearly 60 percent of Scala's top customers, including both global and local enterprises, have supposedly been actively involved as early adopters since 2002, with many of them already running the new version live. As an example, Tetra Pak is one of Scala's longest-standing customers, with Scala solutions implemented in nearly fifty countries, against SAP at the corporate level.
iScala 2.2
The iScala 2.2 Collaborative ERP system includes
* iScala Core Business Processes, which is a set of business processes that includes multicurrency and multi-legislative financial functionality, asset management, and a set of packaged integration solutions (eXtensible markup language [XML]-electronic data interchange [EDI], financials, and master data integration) which helps customers to improve the business efficiency of their core processes.
* iScala CRM, which is powered by Microsoft CRM (for more information, see Scala and Microsoft Become (Not So) Strange CRM Bedfellows), accessible from both Microsoft Outlook and the Web, and integrates with iScala ERP and other business systems.
* iScala SCM, which is packaged to address typical business needs, starting with logistics (purchase and inventory management), warehouse management (including quality control), manufacturing (planning, configuration, shop floor control), tools (such as lead time management, available to promise [ATP] and drop shipment), and integration solutions.
* iScala Contract Management, Project Management, Service Management, which is a set of business processes that has been significantly improved and extended in the new version of iScala to help customers automate their pertinent business processes.
* iScala Human Resource Management, which includes the global version of the iScala Payroll module that customers can use to improve their personnel management in almost any country, regardless of how complex the legislation requirements.
* iScala Business Intelligence (BI) Server, which provides a broad set of BI and analytics tools to give users access to information they need when they need it to make the right decisions quickly. Designed to make operational and management reporting easier, the product enables users to relatively quickly perform drill-down enquiries and comparative analysis to find out exactly how the business is doing and where improvements are needed.
* iScala Developer, which is an entire development solution for creating vertical and unique company-specific processes inside and outside the iScala system.
Thereafter, in May, Scala announced that the first service release (SR1) of the latest version of the iScala Collaborative ERP system is now available for all existing and potential customers worldwide. iScala 2.2 SR1 includes a wide range of new and enhanced business functionality, such as better connectivity with other best-of-breed warehouse and manufacturing systems, improved features in the supply chain and service management processes as well as availability in two additional languages—Korean and traditional Chinese.
The company has also enhanced its iScala CRM offering to give customers better visibility into the sales pipeline and across sales activities, to improve the quality of leads and closure rates and be able to fully integrate with Microsoft Outlook and other Microsoft Office programs. iScala CRM now comes with standard reports that are reasonably fast and easy to run and with a familiar interface, similar to Outlook, which will possibly help a company extend its applications to more users. For example, a user can create a sales proposal from a Microsoft Word template, use pricing data from their iScala ERP system, and save all versions of that proposal within iScala CRM, keeping track of all the changes in the sales cycle until the sale is closed.
Last but not least, the addition of a brand new iScala Manager Software Developer Kit should interest Scala's indirect channel, who will now be able to add further value by designing new business processes that can easily be added to the standard iScala workflow, to support customer- or industry-specific needs.
SOURCE:
http://www.technologyevaluation.com/research/articles/epicor-s-mid-market-pitch-becomes-higher-for-one-scala-part-two-how-scala-complements-epicor-17667/
International Trade Logistics Challenge Automated Global E-Trading
ommunications and transportation networks improved so dramatically over the last few decades, that even faraway regions and nations around the globe are now within the reach of a mere Internet connection. As a result, companies have jumped into international markets and outsourced their manufacturing and procurement operations to cheaper overseas manufacturers and suppliers, while some have established subsidiaries around the world. The Internet-based e-business promises to further shrink the world into a "global village" as people research, source, and procure products globally via the ubiquitous Web, buy and sell these via various e-commerce sites, storefronts, and marketplaces, and manage international supply chains with collaborative software and trading exchanges.
However, this kind of e-business has yet to surmount the challenge of global trade compliance and the diverse needs of international customers and trading partners. Simply put, many supply chain management (SCM), let alone enterprise resource planning (ERP) vendors lack strong international trade logistics (ITL) and global trade management (GTM) capabilities. Namely, while technology may be rendering a world that appears a lot smaller, the very same real-life world has become a lot more complicated in the process, as many barriers exist to conducting international business over the Internet and most businesses are not yet prepared for that.
The Internet has enabled a networked world and it has enabled a communication infrastructure and emerging enterprise applications, which have opened the door for international trade in earnest. But not many applications really offer multi-enterprise services and software to automate the transportation and Internet-based logistics management needs of a global trading network. In other words, web-based buy- and sell-side applications fall well short of providing automated global trade management and a traditional international trade logistics.
In addition to language barriers, and the fact that diverse countries use different formats for weights and other units of measures (UOM), dates, telephone numbers, addresses, and other commonly used information, other hurdles for e-business are GTM and ITL compliance issues. Collaborative e-business applications must be able to comply with a variety of complex regulations to engage in global trade, and the companies that cannot handle these regulations will leave a lot of money on the table.
There are some indications that almost half of international orders to US e-commerce sites remain unfulfilled because companies cannot handle the necessary customs and duty procedures. On the other hand, billions in US import duty refunds go unclaimed each year by companies that do not understand the trade laws. Enterprises with global operations cannot manage their transportation needs with generic sourcing and procurement applications any longer, and more astute transportation management systems (TMS) will have to help these enterprises address their ever more complex requirements, while the SCM functionality will have to continually enhance supply chain business relationships, transactions, and communication.
Definition of a True ITL and GTM System
As described in more detail in "International Trade or ITL Adoption", ITL and GTM, which are execution systems designed to automate the import and export business process, and whose basic functional components are trade documentation generation and transmission, and regulatory compliance validation, would hence include a complex exchange of information between multiple entities, including suppliers, carriers, freight forwarders, customs brokers, banking institutions, and other third party transportation and storage providers. A true ITL and GTM system is, in effect, an inter-enterprise resource management system, and requires a data model that takes into account the breadth and depth of information exchanged between these interrelated entities. Thus, ITL and GTM systems should support export and import borders-crossing processes, documentation and compliance, accounting, and financial reporting in a multi-currency, multi-language and multi-UOM environment.
Further, customs requires that all imports be coded and categorized, and, because these codes vary among countries, they must also be harmonized from country to country, while restricted-party screening regulations may apply to products that cannot be imported or exported between specific countries for national security, health, and environmental reasons. In addition, countries and localities have different licensing requirements and charge different duties, value-added taxes (VAT), and fees, which altogether amount to a major content-management challenge. Beyond these regulations, there might be many other financial and logistical considerations, since ITL has complex processes for financing, risk management, and financial settlement, prompting financial institutions and software vendors to continue ironing out the applications and services e-businesses require for automating international payments. Suppliers will want integration with their order management systems, whereas retailers will want integration with their sourcing and procurement systems. Alternatively, these functions may be embedded in the ITL solution.
Although global trade requires shipping goods across borders in a multimodal transportation manner, many international shippers do not yet have e-logistics software that provides the necessary visibility and flexibility to e-businesses that want to automate their global supply chains. They also do not have e-procurement software that can analyze the total landed cost (i.e., all the costs of sourcing and shipping a product internationally, including customs management, tariffs, transportation, cost of goods, etc.), although there have been a number of Internet-based logistics tools that are helping companies analyze and reduce costs by automating the processes of booking shipments, keeping customers informed, and making sure goods arrive on time.
On top of all this, the dreadful terror attacks of fateful 9/11 made it excruciatingly clear that companies that manage international supply chains confront additional risks. Namely, prior to that, ensuring shipment security mainly meant preventing theft and pilferage. Needless to say that post 9/11, the security concerns have shifted to clearing receiving parties, identifying who gets in touch with the shipment during its journey, and meeting new and evolving government requirements related to prior notification and documentation.
Security Regulations Compound the Problem
The US federal government has since completed its legislative agenda with congressional approval of a series of laws, including the Maritime Transportation Security Act and the creation of the Department of Homeland Security that has realigned twenty-two former federal agencies and 170,000 federal employees. Resulting from this legislation has been a need for shippers, carriers, and ports to introduce technology to better coordinate global trade processes. New transportation and trade security legislation has instituted far stricter compliance and asset tracking requirements, whereby technology has become vital to meeting the demands of these regulations.
For example, the new 24-Hour Rule from December 2002 requires ocean carriers to provide the new Department of Homeland Security, Bureau of Customs and Border Protection (CBP) with a cargo manifest twenty-four hours before a ship sails from its original port to a US port. Given that manual keying of manifest information can take a few days, which in the past would mean the US Customs receiving cargo data only after the ship has sailed, the rule has ramifications on shippers' contract management, streamlined collaboration with customers, and delivery scheduling. Namely, while even before 9/11 for shippers it was all about getting as much work done as possible prior to reaching the border, the importance thereof nowadays goes without saying, given that most work now needs to get done before the ship even sails.
Also, the Department of Transportation and US Customs have launched Operation Safe Commerce, which is intended to enhance security for international container cargo, and which will make global logistics systems even more dependent on timely, accurate data collection regarding shipment contents and movement. Since manual data entry is time-consuming and prone to errors, global logistics systems operate much better when supported by data collection based on automatic identification technologies such as bar code labels and radio frequency identification (RFID) tags, which can be scanned at strategic locations between point of origin and destination.
RFID is one of the emerging technologies that will drive increased supply chain visibility, control, and compliance. Additionally, the RFID mandate to suppliers from Albertsons, Target, Wal-Mart, and the US Department of Defense proves that RFID will have a significant impact on future supply chain operations (see RFID—A New Technology Set to Explode?).
Conclusion
To recap, exporters continue to struggle to coordinate old-fashioned international freight, financial, and regulatory processes. While these manufacturers might isolate production from inbound logistics, increasing market pressures keep on forcing better coordination. The help might come from their adoption of a new crop of web-based applications aimed at improving intricate multiparty coordination.
One of these, founded in September 1999, is Arzoon Inc. (www.arzoon.com), a San Mateo, CA-based privately-held provider of integrated logistics and GTM technology. Recently acquired by SSA Global, Arzoon, with its operations and offices located throughout North America and Europe, was one of a few dot-com era TMS start-ups that has not only weathered the enterprise applications storm so far, but has also stayed ahead of the curve. Namely, when it acquired From2, Inc., a provider of trade compliance content and automation software in March 2001, it became possibly the first software vendor to provide an integrated TMS and GTM solution. The move has availed Arzoon with a web-based ITL and GTM capability for regulatory compliance, cross-border landed costing, and global trade document generation to its then existing suite for procurement, inventory management, and transportation management.
While many TMS and logistics resource management (LRM) vendors provide a multimodal product, the options for rail have typically been limited, and that is where Arzoon has also excelled. The company has developed Internet transportation technology (logistics exchange) to help companies procure, monitor, and manage services that involve one or more modes of transportation—rail, highway, air, or water.
Global logistics systems should also be well equipped to classify shipments, identify denied parties, collect and disseminate data electronically, and provide the visibility needed to ensure shipment security. To that end, Arzoon LIFE software suite takes the item-level data from the purchase order and then records each movement of the shipment to document who exactly has touched it. The system, which incorporates a database of trade regulations, tariffs, and duties from more than twenty-five countries, lets user companies correct shipping document inaccuracies before goods reach the border, heading off potential problems at border-crossing. The system also lets companies track shipments by multiple reference numbers in a single lead of cargo, providing them with much greater visibility into shipment status. This visibility into individual shipments—via pre-inspection of purchase orders—also makes it possible for the companies to move the freight they absolutely have to and to conversely hang on with less urgent shipments.
Arzoon's acquisition by SSA Global might again indicate that more accelerated restructuring in the logistics services market is inevitable, given a plethora of point solution providers that specialize in narrow areas, from land cost calculation, visibility, collaboration, export compliance, trading document generation, hazardous material handling, to more complete transportation management capabilities. Some of the remaining players would be Vastera, NextLinx, Open Harbor, Precision Software, Nistevo, MercuryGate, G-Log, Xporta, Tarrific.com, Bolero.net, TradePoint (which has recently acquired ClearCross), GT Nexus, LOG-NET, Qiva, BridgePoint, etc. But none of these vendors handles all the requirements of automating global e-business, and some of these vendors have already merged with or acquired other companies to provide more complete offerings. For example, in addition to the above-mentioned intra-market mergers, Qiva, which had originally only sold transportation and supply chain event management (SCEM) software, acquired Capstan in 2002 to strengthen its ability to handle import and export compliance, landed cost calculations, and trade document generation.
Also, a vast majority of the leading ERP and SCM vendors still lack GTM functionality, but considering the continued increase in global sourcing, they are likely to pursue filling this gap via an acquisition of one—or even more—of the above providers.
On a more general note, to know true total landed costs, ensure compliance with customs regulations and denied parties restrictions, and properly record the relationship between buyer and seller, source of supply and product related restrictions, the ITL and GTM system should be able to track all the activities and incremental costs as the shipment is processed from point of origin to final point of receipt. Customs duties and tariffs, as well as associated rates of exchange and transportation costs should be available to accurately calculate total cost of goods, which requires a data model and integration at the product and item level between the ITL system and the order management, warehouse management, and transportation systems. As mentioned earlier on, hardly any vendor handles all the requirements of automating global e-business. While SSA Global stands a chance of achieving that down the track, all of the above issues and requirements should be taken into account during an ITL and GTM system selection, either stand-alone or within a broader SCM framework
SOURCE:
http://www.technologyevaluation.com/research/articles/international-trade-logistics-challenge-automated-global-e-trading-17498/
However, this kind of e-business has yet to surmount the challenge of global trade compliance and the diverse needs of international customers and trading partners. Simply put, many supply chain management (SCM), let alone enterprise resource planning (ERP) vendors lack strong international trade logistics (ITL) and global trade management (GTM) capabilities. Namely, while technology may be rendering a world that appears a lot smaller, the very same real-life world has become a lot more complicated in the process, as many barriers exist to conducting international business over the Internet and most businesses are not yet prepared for that.
The Internet has enabled a networked world and it has enabled a communication infrastructure and emerging enterprise applications, which have opened the door for international trade in earnest. But not many applications really offer multi-enterprise services and software to automate the transportation and Internet-based logistics management needs of a global trading network. In other words, web-based buy- and sell-side applications fall well short of providing automated global trade management and a traditional international trade logistics.
In addition to language barriers, and the fact that diverse countries use different formats for weights and other units of measures (UOM), dates, telephone numbers, addresses, and other commonly used information, other hurdles for e-business are GTM and ITL compliance issues. Collaborative e-business applications must be able to comply with a variety of complex regulations to engage in global trade, and the companies that cannot handle these regulations will leave a lot of money on the table.
There are some indications that almost half of international orders to US e-commerce sites remain unfulfilled because companies cannot handle the necessary customs and duty procedures. On the other hand, billions in US import duty refunds go unclaimed each year by companies that do not understand the trade laws. Enterprises with global operations cannot manage their transportation needs with generic sourcing and procurement applications any longer, and more astute transportation management systems (TMS) will have to help these enterprises address their ever more complex requirements, while the SCM functionality will have to continually enhance supply chain business relationships, transactions, and communication.
Definition of a True ITL and GTM System
As described in more detail in "International Trade or ITL Adoption", ITL and GTM, which are execution systems designed to automate the import and export business process, and whose basic functional components are trade documentation generation and transmission, and regulatory compliance validation, would hence include a complex exchange of information between multiple entities, including suppliers, carriers, freight forwarders, customs brokers, banking institutions, and other third party transportation and storage providers. A true ITL and GTM system is, in effect, an inter-enterprise resource management system, and requires a data model that takes into account the breadth and depth of information exchanged between these interrelated entities. Thus, ITL and GTM systems should support export and import borders-crossing processes, documentation and compliance, accounting, and financial reporting in a multi-currency, multi-language and multi-UOM environment.
Further, customs requires that all imports be coded and categorized, and, because these codes vary among countries, they must also be harmonized from country to country, while restricted-party screening regulations may apply to products that cannot be imported or exported between specific countries for national security, health, and environmental reasons. In addition, countries and localities have different licensing requirements and charge different duties, value-added taxes (VAT), and fees, which altogether amount to a major content-management challenge. Beyond these regulations, there might be many other financial and logistical considerations, since ITL has complex processes for financing, risk management, and financial settlement, prompting financial institutions and software vendors to continue ironing out the applications and services e-businesses require for automating international payments. Suppliers will want integration with their order management systems, whereas retailers will want integration with their sourcing and procurement systems. Alternatively, these functions may be embedded in the ITL solution.
Although global trade requires shipping goods across borders in a multimodal transportation manner, many international shippers do not yet have e-logistics software that provides the necessary visibility and flexibility to e-businesses that want to automate their global supply chains. They also do not have e-procurement software that can analyze the total landed cost (i.e., all the costs of sourcing and shipping a product internationally, including customs management, tariffs, transportation, cost of goods, etc.), although there have been a number of Internet-based logistics tools that are helping companies analyze and reduce costs by automating the processes of booking shipments, keeping customers informed, and making sure goods arrive on time.
On top of all this, the dreadful terror attacks of fateful 9/11 made it excruciatingly clear that companies that manage international supply chains confront additional risks. Namely, prior to that, ensuring shipment security mainly meant preventing theft and pilferage. Needless to say that post 9/11, the security concerns have shifted to clearing receiving parties, identifying who gets in touch with the shipment during its journey, and meeting new and evolving government requirements related to prior notification and documentation.
Security Regulations Compound the Problem
The US federal government has since completed its legislative agenda with congressional approval of a series of laws, including the Maritime Transportation Security Act and the creation of the Department of Homeland Security that has realigned twenty-two former federal agencies and 170,000 federal employees. Resulting from this legislation has been a need for shippers, carriers, and ports to introduce technology to better coordinate global trade processes. New transportation and trade security legislation has instituted far stricter compliance and asset tracking requirements, whereby technology has become vital to meeting the demands of these regulations.
For example, the new 24-Hour Rule from December 2002 requires ocean carriers to provide the new Department of Homeland Security, Bureau of Customs and Border Protection (CBP) with a cargo manifest twenty-four hours before a ship sails from its original port to a US port. Given that manual keying of manifest information can take a few days, which in the past would mean the US Customs receiving cargo data only after the ship has sailed, the rule has ramifications on shippers' contract management, streamlined collaboration with customers, and delivery scheduling. Namely, while even before 9/11 for shippers it was all about getting as much work done as possible prior to reaching the border, the importance thereof nowadays goes without saying, given that most work now needs to get done before the ship even sails.
Also, the Department of Transportation and US Customs have launched Operation Safe Commerce, which is intended to enhance security for international container cargo, and which will make global logistics systems even more dependent on timely, accurate data collection regarding shipment contents and movement. Since manual data entry is time-consuming and prone to errors, global logistics systems operate much better when supported by data collection based on automatic identification technologies such as bar code labels and radio frequency identification (RFID) tags, which can be scanned at strategic locations between point of origin and destination.
RFID is one of the emerging technologies that will drive increased supply chain visibility, control, and compliance. Additionally, the RFID mandate to suppliers from Albertsons, Target, Wal-Mart, and the US Department of Defense proves that RFID will have a significant impact on future supply chain operations (see RFID—A New Technology Set to Explode?).
Conclusion
To recap, exporters continue to struggle to coordinate old-fashioned international freight, financial, and regulatory processes. While these manufacturers might isolate production from inbound logistics, increasing market pressures keep on forcing better coordination. The help might come from their adoption of a new crop of web-based applications aimed at improving intricate multiparty coordination.
One of these, founded in September 1999, is Arzoon Inc. (www.arzoon.com), a San Mateo, CA-based privately-held provider of integrated logistics and GTM technology. Recently acquired by SSA Global, Arzoon, with its operations and offices located throughout North America and Europe, was one of a few dot-com era TMS start-ups that has not only weathered the enterprise applications storm so far, but has also stayed ahead of the curve. Namely, when it acquired From2, Inc., a provider of trade compliance content and automation software in March 2001, it became possibly the first software vendor to provide an integrated TMS and GTM solution. The move has availed Arzoon with a web-based ITL and GTM capability for regulatory compliance, cross-border landed costing, and global trade document generation to its then existing suite for procurement, inventory management, and transportation management.
While many TMS and logistics resource management (LRM) vendors provide a multimodal product, the options for rail have typically been limited, and that is where Arzoon has also excelled. The company has developed Internet transportation technology (logistics exchange) to help companies procure, monitor, and manage services that involve one or more modes of transportation—rail, highway, air, or water.
Global logistics systems should also be well equipped to classify shipments, identify denied parties, collect and disseminate data electronically, and provide the visibility needed to ensure shipment security. To that end, Arzoon LIFE software suite takes the item-level data from the purchase order and then records each movement of the shipment to document who exactly has touched it. The system, which incorporates a database of trade regulations, tariffs, and duties from more than twenty-five countries, lets user companies correct shipping document inaccuracies before goods reach the border, heading off potential problems at border-crossing. The system also lets companies track shipments by multiple reference numbers in a single lead of cargo, providing them with much greater visibility into shipment status. This visibility into individual shipments—via pre-inspection of purchase orders—also makes it possible for the companies to move the freight they absolutely have to and to conversely hang on with less urgent shipments.
Arzoon's acquisition by SSA Global might again indicate that more accelerated restructuring in the logistics services market is inevitable, given a plethora of point solution providers that specialize in narrow areas, from land cost calculation, visibility, collaboration, export compliance, trading document generation, hazardous material handling, to more complete transportation management capabilities. Some of the remaining players would be Vastera, NextLinx, Open Harbor, Precision Software, Nistevo, MercuryGate, G-Log, Xporta, Tarrific.com, Bolero.net, TradePoint (which has recently acquired ClearCross), GT Nexus, LOG-NET, Qiva, BridgePoint, etc. But none of these vendors handles all the requirements of automating global e-business, and some of these vendors have already merged with or acquired other companies to provide more complete offerings. For example, in addition to the above-mentioned intra-market mergers, Qiva, which had originally only sold transportation and supply chain event management (SCEM) software, acquired Capstan in 2002 to strengthen its ability to handle import and export compliance, landed cost calculations, and trade document generation.
Also, a vast majority of the leading ERP and SCM vendors still lack GTM functionality, but considering the continued increase in global sourcing, they are likely to pursue filling this gap via an acquisition of one—or even more—of the above providers.
On a more general note, to know true total landed costs, ensure compliance with customs regulations and denied parties restrictions, and properly record the relationship between buyer and seller, source of supply and product related restrictions, the ITL and GTM system should be able to track all the activities and incremental costs as the shipment is processed from point of origin to final point of receipt. Customs duties and tariffs, as well as associated rates of exchange and transportation costs should be available to accurately calculate total cost of goods, which requires a data model and integration at the product and item level between the ITL system and the order management, warehouse management, and transportation systems. As mentioned earlier on, hardly any vendor handles all the requirements of automating global e-business. While SSA Global stands a chance of achieving that down the track, all of the above issues and requirements should be taken into account during an ITL and GTM system selection, either stand-alone or within a broader SCM framework
SOURCE:
http://www.technologyevaluation.com/research/articles/international-trade-logistics-challenge-automated-global-e-trading-17498/
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