Software strategies and more…

(Boston, MA) With the formal inclusion of Sybase into the SAP family, SAP’s leadership team outlines their strategy for enterprise mobility and unwired business intelligence.

It’s encouraging SAP will continue with its model of acquiring market leaders, yet rather than ‘shoehorning’ them into their corporate culture it will continue to cultivate the innovation and expertise those organizations developed as a independent units. Its my opinion that given rampant consolidation, shifting market trends, and dynamic customer requirements this model allows broader flexibility for SAP and its functioning sub-brands in developing and delivering relevant enterprise solutions.

In today’s briefing by SAP’s executive team, Bill McDermott, Jim Snabe, John Chen and Vishal Sikka, they unveiled their strategy across three lines of business:

• enterprise mobility,
• business analytics, and
• enterprise information management.

Key components of today’s announcement included:

1. A roadmap for their mobile enterprise platform, due to go live by Summer 2011 and supporting all mobile O/S, market leading devices, and integration with SAP Business Suite and SAP Business ByDesign.
2. An industry portfolio for enterprise information management focusing on broad database support for SAP business applications.
3. An update to their business analytics and business intelligence road map outlined at this year’s SAPphire conference.
4. And, an outline of their advances and proposed solutions in in-memory computing and database technologies.

So why is this all relevant?

In a market that is becoming increasingly mobile and as devices (phones, laptops, slate computers, etc.) are making near quantum leaps in processing power and sophistication the value of enterprise technology is at the highest where it is nearest to the end user. Combine this with on-going globalization of manufacturing, distribution, financial, and retail networks and the ever increasing socialization of customer and market data and SAP is attempting to leap frog its competitors in this space, namely IBM, Oracle and Microsoft.

The integration of SAP and Business Objects + Sybase starts to realize the opportunity in the long-tail of decision making. As outlined in Chris Anderson’s Long Tail theory, and applied to the enterprise, few but high value and broad impact decisions are made at the CxO office but many micro-decisions are then made on the shop floor, customer service engagement, etc. The challenge has been to turn these executive strategies into a profitable business acted on by everyone equally. Today’s announcements are about leveraging the SAP’s solutions in conjunction with Sybase in-memory and mobile information management so that business information can readily be cascaded to end-points across the organization in an increasingly effective manner.

SAP promises to continue to build upon the individual ecosystems of SAP, BOBJ, and Sybase to drive innovation within each company’s ecosystems to create a multiplier effect that will allow SAP to become the premier provider of enterprise information management and delivery. This bolsters their combined ability to address core system differentiation as well as advanced line-of-business solutions and services.

Lucky me, I didn’t attend SAP’s Sapphire in Orlando, Florida nor did I have time during the week to watch more than Hasso’s presentation, but I rose early on a Saturday to catch some of the highlights via the videos on Sapphire now. As such, here are some of my thoughts:

Vishal Sikka: ‘Real’ Real Time Computing:

In Mr. Sikka’s presentation he touched on two areas of innovation by SAP, those being:

1. Reach – How can SAP help companies expand their research
2. Real Time – A fundamental shift to real time data

In this post, I’ll take some of his highlights from the second and add some of my own thoughts:

We are currently experiencing a new period of convergence. In the ‘twenty-teens’ we are starting to witness dramatic advances in hardware (both on-premise but mainly mobile) that is spurring a change in how we conduct business and our daily lives. Changes in processing power, architecture, software-as-a-service and how software is being written and deployed is making this possible. Vishal’s keynote at SaphireNOW spent a fair bit of time discussing and postulating what this might mean for business applications and the people that use them.

Some of the points in the keynote included that in 2003 processors “hit a wall”, so Intel and others have focused on multi-core systems and software systems have had to adapt and those that can take advantage are at a tremendous advantage. And, “RDBMS was initially developed when memory was expensive, this is no longer the case… we’ve now used a single blade sever up to 2 TB of SSD.”

He’s correct in stating that this does create incredible speed advantages over disk storage and software that was build with 1960s and 1970s computing architectures that relied on a file and retrieve time of search and access algorithm may not be competitive for much longer. In fact, SAP cited a customer that has over 74k tables, 2.5 TB system, tables, processes across multiple industries and countries was testing their new architecture both software and the hardware partnership with HP. The challenge is that while SAP may be able to optimize solutions that are 100% SAP architecture, how does this impact systems that are not SAPs, data storage tools from other vendors, antivirus, etc.? I am not clear on these capabilities, but I do think that SAP’s long time focus on organic development of tools, may make it easier for the initial investment to realize the gains from optimizing SAP applications and data sets.

Mr. Sikka also discussed a reorganization of some of SAP research departments, “[we] put together teams, SAP’s MaxDB, T-REX (search/in-memory column storage), and Roster tools.” In the key note he stated that this enabled them to develop an in-memory data processing technology that can process 2 megabytes of data in one-millisecond in each core, this scales linearly per core. Because we store data in columns (and compression is better) resulting in 10-15x compression ration per database. Process data in DB in incredibly fast speeds with zero aggregates.

And finally he introduced HANA, or High-performance analytical appliance, a joint product launched by SAP and HP deploy and appliance that can attach to existing ERP R/3. Last time I was at Sapphire there was also a launch of an joint HP and SAP product that also focused on BI. If memory serves this met with moderate uptake, but more importantly it precluded the later announcements of SAP bolstering its BI business with the acquisition of Business Objects. I am not saying that this means that SAP will look at M&A for companies that can do this….rather Hasso infers this in his keynote immediately following Sikka’s.

POV: HANA sounds damn impressive and gives SAP a significant boost in new technology to talk its customers about. Given this will work with older versions of R/3 that are optimized, we can expect that many customers will be very interested taking this for a test drive. Does this alone promise to catapult SAP ahead of competition? I am not sold on that, but I do think that the combination of this plus mobility (in my next post) will make for some very interesting innovation and potentially game changing offerings to new and existing customers over the next 12-36 months.

Not that much of a surprise to those watching SAP‘s moves over the past 5 months. The changing of the guard combined with a big promotions and promises of in-memory based ERP and BI tools meant SAP needed to bolster its assets and the acquisition of Sybase just made sense. In addition, the need for SAP to start building a bit of an empire like nemesis Oracle has done meant that SAP needed to step outside its more traditional lines of business and incorporate adjacent solutions and technologies needed by its customer base.

Make no mistake about this deal though, SAP needed to back its in-memory promises with some substantial clout. Sybase has invested heavily in the development and testing of in-memory databases with its Adaptive Server Enterprise and SQL Anywhere technologies.  With SQL Anywhere this should boost SAP’s ability to deliver functionality its customer needs for transaction, inventory and financial applications across the business more effectively and across more devices and platforms. ASE gives a big boost to SAP Business Suite users and the power they are looking to handle incrementally more and complicated transactions across large office locations. By moving to in-memory and optimizing its ERP applications and BI tools for them SAP is hoping to lure more customers who may be looking to rid themselves of expensive database license and maintenance costs. And by doing so these customers may get significant boost in performance, scalability and reporting flexibility.

As far as the impact on cloud and SaaS business, in-memory tools may have a growing impact on virtualized servers, application and hosted data centers are looking to bring more services into an as a Service model. Also the partnership of SAP and long-time customer Research in Motion (RIM) may get a big boost as SAP (with SQL anywhere) offers a significant boost to business users using RIM’s popular Blackberry mobile devices to augment and deliver business insight.

My point of view: This was as much an needed move by SAP to both aid in business growth as well as deliver the road map its been preaching to its customers for nearly the past year. Its no accident this happens right before SAPphire in Orlando and we can expect even more in-memory news in the coming weeks. I also expect SAP to continue acquiring firms that it can add to its ecosystem, most likely a server virtualization player – and to do so in the next 12 months.

Today I attended Jive Software’s Get Social tour stop in Toronto and left impressed not only with the company’s software and strategy, but with the quality of attendance at the event. The event featured a hour and a bit of keynotes including a look at how Canada’s RIM has used Jive’s SBS to deploy mybackberry.com. What impressed me the most was the level of interest and activity from Canada’s largest companies. In the breakout I attended there was representation from 4 of the 6 largest banks, well known national law firms, ad agencies and professional services companies.

Personally, my interest in attending came from discovering significant interest in the integration of social software tools within business processes. In fact I have touched on this in several blogs already (here, here and here) and have found myself spending an increasing amount of time fielding questions from financial professionals on the topic of how their investments in tools like SAP or Microsoft Dynamics along with SharePoint can be further leveraged to move people from communal watering holes of information (ala SharePoint, Stellent (now part of Oracle), OpenText, etc.) to proactive, automated community distribution networks. All the while business execs these social services/tools to be part of existing business processes and applications from ERP to CRM to BI – and not to have to rip and replace investments they’ve already made.

To address this need Jive has developed its Social Business Software platform. This platform is based on a addressing a need to leverage existing technology investments – both on-premise and software as a service – made by organizations and intertwine social tools which are quickly maturing from the consumer technology world (Facebook, twitter, DIGG, etc.) into the business arena.

The Jive SBS solution should be very interesting to companies who’ve found themselves sinking in email, departmental collaboration websites, individual shared drives with unique folder structures, client-based office productivity tools, or aging client server business applications with little web extensibility. Their idea is to offer software solutions to organizations seeking to bring current consumer focused social features into the context of a secure, robust business processes and integrate these into the existing information and presentation layers used by their employees. Think ‘facebook’ that allows individual users to create ‘friends’ of co-workers, partners, suppliers and also applications – ERP, data repositories, content management systems, etc.

An interesting quote from the Jive Software presenter was that one of their goals is “…to enable the solutions from being ‘place-centric’ (e.g. a data or content repository) to ‘you-centric’.” The promise of this approach is to enable content relevance to the job you and/or your employees are doing – further amplifying the time to value that the business or community can benefit from. This can be achieved by using technology to enable systems to constantly seek information based on your criteria and deliver internal and external content in a timely fashion to the end-user.

I’ll be writing more on this topic, but for now my advice (based on what I have seen so far) for organizations  looking at social technology solutions that can fit into existing business processes is to:

• Plan – Look at (audit) how your employees are communicating in the office versus outside the office. Determine how this may or may not fit into different aspects of your business process and technologies.
• Promote – Promote activities which promote collaboration that benefits the organization, team and individual. Begin to recognize good ideas from individuals and identify who might be a super user by department and even age group (e.g. don’t have a 20 something trying to sell social tools to a 50 something CEO)
• Execute – Pick a part of the business that demand business process rigor, but also has an affinity for new technologies. Obtain the buy-in and support from the executive in charge and pilot a solution that brings together social technologies with financial, customer and partner data. Observe its usage, recognize individual contribution and learn from the effects this has on average and advanced users.
• Deliver – Realize this is a game changer. IT must be involved, but the business user will in some cases control the success of the project based on how they adopt and use the technology in conjunction with their specific needs. Don’t bury the data in a common format you make them adhere to – rather encourage them to rank and promote what they find valuable. Deliver an experience rather than a product.
• Hand over control – The hive of users will self organize around value and efficiencies. This is seen in nature and technology and is paramount to successful social software. In your planning you should have covered the governance and controls needed that are required by your business and ensured these are documented for your users. Now let them drive the interest and improvements of the software going forward.

The last part (IMHO) is the innovation aspect that is key to socializing your business.

I have been thinking of a hybrid cloud for a while.

Over the past several years it was my opinion that certain technologies made sense to offer as a SaaS business model. Tried and true IT services such as datacentre, processing power, storage, application hosting etc. allowed for businesses of all sizes to access infrastructure or platform technologies in a fairly vanilla format to scale their IT capabilities at the rate of business need rather than and invest and wait or wait and invest approach.

Now it occurs to me that many mid and large organizations are better off utilizing a ‘hybrid cloud’ architecture to meet the needs of their employees, business processes and the extended business. This hybrid cloud focuses more on the client side applications and business processes. Yet this model is far from simple.

One article I recommend reading is by Vanessa Alvarez and is called “Management Tools will be the Cloud Glue”. In short, the article talks about new management tools that utilize web and open source tools to address the different workloads and functions that businesses need as their data, applications and business processes – that are enabled by IT travel across mainframe, client/server, and SaaS/PaaS/IaaS models – and make these visible to the IT department. Interesting companies doing this include CloudSwitch , enStratus, and Intelliden (now part of IBM).

Another by Charles Babcock is “Hybrid Clouds Floating to Enterprise Forefront” . In his InformationWeek article Babcock also talks about the challenge of adopting infrastructure and platform as a Server tools while also addressing governance and security requirements. Again the theme here is the need of more complex businesses to manage their data and ensure that custom processes are effectively implemented across the business – whether this is on-premises, hosted, or integrated with a pure cloud solution.

Both of these articles touch on the needs of more mature organizations and their challenge to combine technology that has been customized to meet existing business processes with the scale and availability of cloud services. It has been my opinion, given my experience in the ERP space as an analyst and product manager for Microsoft Dynamics, that partners and ISVs would be well positioned to offer line of business applications as a service. This would allow for organizations that had a stable core ERP (finance, operations, supply chain, etc) environment to implement and grow in a more ‘dynamic’ fashion.

Yet, as I continue to think about why this has been slow to happen it occurs to me these partners and ISVs must still struggling with multitenancy issues. In other words, the line of business processes that I assumed would naturally lend themselves to the cloud are also those that may have been most customized. Thus while they can be hosted, this is typically in isolation (single tenancy). Such a model is not (profitably) scalable the way platform as a service and even ‘office’ as a service is.

So what may be the next step?

I feel the future for many organizations will still be a hybrid cloud model. The maturing of management tools and services will help many organizations focus on managing their data and information security while optimizing its provisioning across on-premise and cloud services. In the case of business applications this may take the form of core accounting tools being brought into the cloud akin to how many HR and payroll apps already are. Through management and security tools more accounting, billing, payable information can be exposed to a greater number of planning, operations and eco-system tools that live both locally and within the cloud.

I am still working collecting more insight on how mid and large organization can successfully adopt a hybrid solution and welcome your point of view.

Woke up to read (amongst a weekend worth of posts) the following article from Information Week’s Global CIO: Oracle’s Larry Ellison Declares War On IBM And SAP.

I must admit it hasn’t been a secret that Oracle has been marshaling for this battle, after all any company that spends approximately $25 Billion in acquisitions since 2005 (source) must start making money back at some point. The ‘billion dollar’ question in my opinion is whether the promised fusion of all its applications really works?

Having worked for a company that at one time stated an intent to unify its ERP code across all of its disparate applications only to find that neither customers or partners wanted this – not to mention the engineering pitfalls that become readily apparent – I doubt whether the current plans for fusion can be met in a way that will appease all the stakeholders Oracle needs to oust IBM or SAP as the respective market leaders in high-end servers and business applications.

In the Global CIO article, “Ellison promised that the second half of 2010 will be a momentous one for not only Oracle but also the entire IT industry and its enterprise customers because that’s when Oracle will roll out its completely reengineered Fusion software lineup along with more integrated and optimized Oracle-Sun systems, along the lines of the wildly successful Exadata 2.” Given this promise happened during the Oracle earnings calls, I cannot see how this is much more than a rally cry to sales that he hopes to the Wall Street will echo in an increase of stock price.

By the way Oracle’s stock price, much like Larry’s bid to win the America’s Cup back for many years prior to this one, has been stuck in the doldrums - neither rising or falling much over the past several years – recently it has grown at market average but still trailed SAP, IBM and Microsoft’s growth. A reflection that while Oracle has been busy amalgamating and consolidating many IT players there has not been an overwhelming belief that will pan out for Oracle or its customers.

One important aspect of fusion that Oracle promises, but again trails some of its immediate rivals, is that Oracle promises many of its fusion application can be run either on-premise or via the cloud. SAP realized the need for this hybrid strategy when it attempted in 2007 to launch Business By Design and Microsoft has been working on this since 2005 with its Software+Services strategy. And IBM has been driving its ability to deliver infrastructure as a service and many of its applications as a service for the past several years as well – these have culminated into its Smarter Planet initiative. So Oracle is far from being a thought leader here.

Personally, I think the most telling quote is at the end of the article, Larry says, “So we’ll be delivering those applications both by selling the software directly, kinda the old way of doing it, which is still the most popular, by the way; we’ll be selling the Fusion applications integrated with our hardware—our servers and our storage and our networks; and we’ll be selling it on the cloud.” He later added, “our cloud or somebody else’s”.

This is worth noting if you read the article on Oracle sniffing (original post by Dennis Howlett). Might one conjecture that by acquiring SUN and (especially)  JAVA that Oracle will start charging customers relentlessly for access to any products Oracle deems ‘fused’ thus boosting revenues at the potential expense of customer privacy and satisfaction? Will customers stand for this (thus allowing Oracle to achieve the stated path of dominating IBM and SAP in their respective markets?) or might their customers seek out comparable solutions from IBM, SAP and others for database, BI, ERP, CRM, etc during their next refresh?

Time will tell.

Recently I noted that SaaS vendors that specialize in business applications are attempting to roll out new programs to attract channel partners and reduce customer churn based on more stickiness in their contracts. One example is here.  As such, I did some research around the web and found a really good blog here that is worth a read to the growing market of ERP, CRM and BI SaaS providers.

The blog articulates the three critical areas for SaaS vendor success, those being (and I quote):

1) Number and cost of prospects acquired

2) Velocity rate and conversion costs of turning prospects into customers

3) Churn Rate

Mr. Cleveland then goes on describing why addressing churn rate is crucial to long term success and as such it needs to be someone’s daily job. I wholeheartedly agree with this point.

In my most recent role with a very large software multi-national, I lived in a world where teams and virtual teams constantly mulled over business strategy, marketing execution, sales excellence, etc. More often than not these teams failed if there was not two things 1) a clear leader 2) a leader with authority.

The reason I feel this is important is that in a very recent discussion I had with a VP of Operations at a North American company that uses SaaS happened to comment the reasons they continue to stick with SaaS are:

1) the trust that the vendor can do the job better than they can (b/c its their focus);

2) the belief that SaaS is the future; but most importantly

3) they forged a strong relationship with the vendor and have someone accountable on their side if there is a problem.

It’s interesting to me that to address this that vendor’s might try to develop a partner network to displace this responsibility. Not to say it cannot work, but I question for how long? And how committed is the vendor to the partner and their ability to support the end customers?

Rather than SaaS customers waiting for vendors to define the engagement model that best suits them, it is my opinion that this is the best time for end-user and those ‘fence sitters’ that are starting to seriously consider SaaS to run, manage and secure business applications that they begin sharing ideas and examples of what assurance they needs/expect from a provider.

My advice for end-user when engaging a SaaS supplier, they need to ensure they have a master agreement of their expectations in place. A good starting place is here with the SaaS customer bill of rights. Take this very well written document and use it as a starting place for a SaaS Master Agreement template – potentially similar to current IT vendor/support Master Services Agreement that you may current have.

(update) I was referred to a document “All About Cloud ROI” can be accessed at http://www.itincanada.ca/itpublic/All_About_Cloud_ROI.pdf that outlines Cloud ROI that was brought to my attention by a reader. Thanks!

Dynamics NAV is not dead. The delay makes both business and customer sense, here is my two cents on why.

At the time Dynamics NAV 2009 (’6′) launched I was the product marketing manager for Dynamics ERP in Canada. The launch brought significant improvements to NAV 5 with regards to 3-tier architecture, .Net tool integration and many new role-tailored and partner ready components. The biggest challenge at the time wasn’t partner readiness, end-user readiness or the stability of the platform. In fact, many of these were well in place based on Microsoft’s early adopter programs and had gone through rigours tests for compatibility, stability and extensibility.

The challenge – and I kid you not – was that NAV 2009 was launched in the U.S. the week the leaders of the three largest automotive manufactures flew their private jets to Washington D.C. and subsequently further accelerated the impact of the recession in the U.S.A and globally. As such, NAV 2009 and then NAV 2009 SP1 entered the market in the depth of a recession and at a time when many customers were stalling or dropping plans for ERP up-grades all together.

This had a significant impact on the growth and adoption of Dynamics NAV 2009, which has the largest installed base of any Dynamics product. As Microsoft Dynamics serves predominately the midmarket, partners who had NAV customers and prospects turned in many (not all) cases to securing their base and helping these customers survive and build as needed. Combine this with the promise of many new features coming in NAV 2009 SP1 (delivered in August of 2009) and it just made sense.

As the market for ERP has began to recover in the Fall of 2009 and the deployments of NAV 2009 SP1 just beginning to gain momentum I certainly understand why the launch of NAV ’7′ would be delayed. Simply put the change in architecture from 2-tier to 3-tier effects many existing customer upgrades and the custom or third-party solutions and add-ons. While sales slowed, customer and partner education efforts did not. Now NAV 2009 is ready to come into its own and allow many customers both upgrade and newly deploy a solution with integration into more of Microsoft stack of applications and leverage significant advancements in web tools to extend NAVs capabilities to other parts of their business. 

While I am no longer with Microsoft, I feel this delay will help the vendor, its partners and its customers adopt a solution that has much to offer without having to worry about being rushed to the next version. Further ISVs can continue to integrate their solutions into the NAV 2009 web services layer easing future customization and migration efforts.

Having worked on the analyst and vendor side of the ERP equation I have learned there is one thing that means more to a CEO and CFO than the cost of the software and its implementation. That is the time it takes to ‘go live’ once the selection has been made. A common term for the costs during this time is ‘time to value’.

For midsized firms investing in ERP can be one of the most expensive investments to the business. The costs can go far beyond software and services as these projects often impact all employees, partners and customers. The wrong choice – or the right choice poorly implemented or adopted – can impact careers, business effectiveness, and (potentially) customer confidence. To address this, vendors have invested in implementation templates and methodologies to address how their partners and customers can see results faster and manage moving from phase 1 of an implementation to the second and even third.

One methodology that seems to be getting results is SAP’s Fast Start. SAP began training its partners on Fast Start in 2008, but uptake has been accelerated by the recession as the vendor has looked to grow its midmarket presence all the while companies wary of long implementation times from tier 1 solutions felt they were in many cases better off doing what they could with less. Partners who have adopted Fast Start have reported go live with SAP Business All in One of less than a month. A figure unheard of in the past and placing SAP’s offering in line with implementations of solutions like Sage’s Accpac, Microsoft’s Dynamics GP and even many of the emerging ERP SaaS offerings. To SAP’s credit they’ve made information about Fast Start open to not only their channel but to the customers as well.

Time is money and if a solution (esp. with small or midsize firms) takes too long to implement both motivation and interest in adoption can wane quickly. Not to mention the impact that a prolonged implementation cycle can have on profits, business stability, and the organization ecosystem of partners and customers.

Regardless of the solution selected, customers should take it upon themselves to understand what can be expected in terms of ‘time to value’. This can be deduced from past deployments (references), partner implementation capabilities and tools, and vendor frameworks and training programs. Business executives/sponsors and IT decision makers should consider these when developing the RFP used to identify the vendor and/or partner solution fit with their needs.

Have you ever noticed the price premium of duck over chicken in restaurants?

There are many reasons (e.g. numbers raised in captivity, diversity of usage across products, cost to domesticate, maintenance, etc.) and I am sure you can come up with more on your own,. Fundamentally though, ducks and chickens are both birds and I imagine that if consumers wanted eat more duck that vast farms wouldn’t be outside of our capabilities.

Nonetheless, comparing the domestication of common water fowl versus a staple of our diet isn’t the purpose of this blog. (And yes, I did both Bing and Google my question and did not find a discrete answer. Has nobody but me wondered this question?) Rather my analogy came to me on my walk home as I was thinking about a debate I listened to and read/researched about today.

The latest in the ERP SaaS debate arose from recent research released by the Panorama Consulting Group and was commented on by others. The report stated, “Software as a Service (SaaS) implementations take less time than on-premise ERP, but deliver less benefits: 6.2% vs. 6.9% cost as a percentage of sales, and nearly 50% less likely to deliver expected business benefits.” These concerns were not new and after a simple search I found older posts on this topic (see reference below).

In response to Panorama’s release and webcast, vendors on both sides of the SaaS discussion began promote their views. As an analyst, former ERP product manager, and marketer I can see why the arguments on each side make sense, but fundamentally (repeated from paragraph 1) I think that there will be fewer and fewer large, intricate on-premise ERP implementations over the coming decade. The challenge then becomes not whether the vendor has ERP SaaS solutions, rather how their approach fits the needs the customer is seeking to address.

In my analogy, the ‘duck’ represents more complex line-of-business SaaS offerings that integrate into existing systems and can be entwined with other systems via industry standard (.Net or J2EE) code or in some cases proprietary legacy code. Think of the later as that layer of fat on a duck beast that needs to be cooked perfectly to create that flavour and texture worth paying a premium for – or in the context of an business application it represents the custom tailoring to generate competitive advantage.

Meanwhile ‘the chicken’ in most cases may be the ERP SaaS for the rest of us. It’s not as glamorous as the duck, but do we really need it? This version of ERP SaaS will be easier to deploy and something more apt to be ‘just turned on’ to deliver just in time, flexible, yet secure business application services to our users. Think of this as the ERP SaaS that addresses the commodity part of the market – currently serviced by a wide variety of packaged financial, billing, accounting and payroll applications.  This version will offer simple core functionality, but will be dressed up by vendors, partners and end-user that are then able to share their customizations and tweaks within their organization and across others. 

From a consultant or integrator’s perspective, the duck will always be a better choice than the chicken. Yet, for the customer while the exotic nature of the former may seem enticing, often the needs of the organization may be better suited to choosing the later and leaving room for other investments that can improve the implementation, adoption and sustaining of their business application needs.

Research shows we are still at the early stage of ERP SaaS and while certain parts of the ERP portfolio are commoditizing (core financials, accounting, etc) other business applications components are continuing to provide significant value to an organization (lean manufacturing, quality management, global sourcing and inventory management, etc). As such, vendors and their partners should work together to outline roadmaps that assure customers their current and future investments are sound.  Clarity is a key to customer satisfaction.

In the customer’s eyes, the ‘hero vendors’ will offer a choice of how to deploy, support and integrate a mixed ERP environment that grows (and contracts) with the needs of the business. Successful ERP SaaS solutions will allow customers and their partners to invest in standards based technologies to amplify the usage of the commodity components (e.g. extending financial data to line of business professionals) in a format that ‘makes sense’ to their users. At the same time, more complex ERP SaaS solutions will be deployed to meet the needs of select requirements (e.g. discrete operations modules for pharmaceuticals). These SaaS solutions will be sought after as both on-premises and via the cloud.

Customer and vendors can benefit from both versions of the ERP SaaS as they share the benefits of high quality solutions while mitigating costs. Moreover they can deploy solutions more equitably throughout their business and ensure many of the latest innovations are applied seamlessly.  In fact by adopting the cloud approach to SaaS, both ERP vendors and customers may benefit from the network effect of innovation at fractional costs.     

In conclusion, it my opinion that the choice the customer makes should be based on the relevance and business need to move, consolidate, rip and replace their current business application for something new. None of the current business assessments, benchmarking, research/consulting efforts should be foregone with the expectation that an ERP SaaS will deliver the goods without equitable investment on the parts of all parties. The market is evolving and there are choices out there to fulfill different needs and expectations and often the choice that is most appealing may also draw a higher level of scrutiny resulting in greater opinions on satisfaction. So consider your needs and willingness to take risk and the ability of your organization from its IT department to its users to stomach the exotic versus the staple.

References:

http://www.sdn.sap.com/irj/scn/weblogs?blog=/pub/wlg/17888

http://panorama-consulting.com/saas-vs-on-premise-erp-software-understanding-fact-and-fiction/

http://mybibeat.wordpress.com/2009/09/27/is-saas-right-for-your-business/

http://panorama-consulting.com/2010-erp-report-erp-implementation-costs-and-durations-declined-last-year-but-so-did-business-benefits-realized/

http://www.successfactors.com/company/technology/

http://seekingalpha.com/article/149603-why-gartner-s-saas-satisfaction-survey-is-misleading

http://www.gartner.com/it/page.jsp?id=1062512

http://www.crmforecast.com/tco.htm

http://www.enterpriseirregulars.com/5055/the-future-of-financial-force-com-how-salesforce-com-benefits-too/

http://blog.financialforce.com/2010/02/15/accounting-billing-fastest-growing-area-for-saas-utilization/

http://news.cnet.com/8301-13846_3-10453066-62.html

http://www.informationweek.com/news/software/erp/showArticle.jhtml?articleID=221600849&subSection=CRM

http://en.wikipedia.org/wiki/Duck

http://en.wikipedia.org/wiki/Chicken