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May 2015
CAN NEXT GENERATION ERP AWAKEN THE FORCE?
“THERE HAS BEEN AN AWAKENING. HAVE YOU FELT IT?”
Mint Jutras has been researching and writing about “next generation” Enterprise Resource Planning (ERP) for the past two years. Of course it is always fun to use metaphors relating enterprise software to Star Trek themes and to fantasize about exploring new worlds and boldy going “where no man has gone before.” Next generation ERP is faster, more technologically enabled and more in tune with the evolving needs of the galaxy. But in 2015, the anticipated release of the next installment of another epic space opera franchise prompts us to ask, “Is the Force with you?” The Force, of Star Wars fame, allows users to perform supernatural feats, and also amplifies human physical abilities with added speed and improved reflexes. Can cloud, mobile and social features, combined with rich analytical capabilities and broader and deeper functionality, awaken this Force in your business?
DEFINING NEXT GENERATION ERP
In ERP, The Next Generation: The Final Frontier, Mint Jutras described the next generation of ERP as solutions that provided:
• Expanded functional capabilities • New user experiences and new ways of engaging with ERP • Custom configuration without the need for invasive programming • More innovation • Better integration
But we also proposed that it wasn’t the depth and breadth of functionality that qualified an ERP solution as “next generation,” but the underlying enabling technology. Star Trek was all about sleek and futuristic technology, including starships that could travel at warp speed, transporter beams, (wireless) communication devices, weapons that could be placed on “stun,” and other electronic gadgetry that might not seem so futuristic today. But all these pieces of technology had something in common. They weren’t just cool to have; they served a real need. And so must the technology that makes ERP “next generation.”
Advanced technology must serve a purpose, whether that purpose is added features and functions, better visibility to the business or easier
Data Source In this report, Mint Jutras references data collected from its 2015 Enterprise Solution Study, which investigated goals, challenges and status and also benchmarked performance of enterprise software implementations used to actually run a business.
At this time almost 400 responses have been collected from companies of all sizes, across a broad range of industries. The survey remains open. Click here to participate.
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communication. Cool technology in search of a problem to solve adds little value. And technology alone will not grow your business or solve business problems. Today growth and performance are always a combination of people, process and technology.
Although the characters could be heroic, Star Trek was perhaps best known for the technology that helped the crew of the starship USS Enterprise explore new worlds. The Star Wars franchise was better known for “the Force.” The Force was an energy that could be harnessed to perform supernatural feats and to amplify other common physical traits of speed and reflexes. The ability to use the Force varied between characters, but it was clear those abilities could be improved with training. Of course the movie assumed an advanced level of technology, particularly in the use of robotic droids and space travel, but it was more about enhancing human performance.
So while next generation ERP is empowered by advanced technology, the next step is to harness the power to help people make better decisions, faster. That means empowering those people with data and tools to better communicate and collaborate. ERP can provide more features and functions than ever before. But to enhance the performance of the business, you need to enhance the performance and potential of the people running the business.
Of course, if ERP is going to enhance the performance of your people, those people need to actively participate in using it, including those at the top. It was almost unheard of for top executives to put their hands directly on ERP just a few years back, instead relying on super users or subordinates to bring them the data they needed for critical business decisions. But the accelerated pace of business makes this impractical today. Not only does it slow the process, but it also filters the data, intentionally or unintentionally, with assumptions and unsolicited opinions.
Figure1: Level of Executive Access to ERP
Source: Mint Jutras 2015 Enterprise Solution Study
The Star Wars franchise was better known for “the Force.” The Force was an energy that could be harnessed to perform supernatural feats and to amplify other common physical traits of speed and reflexes. .. it was more about enhancing human performance.
So while next generation ERP is empowered by advanced technology, the next step is to harness the power to help people make better decisions, faster.
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Fortunately the pattern of executive involvement is changing. Our 2015 Mint Jutras Enterprise Solution Study finds some, if not all executives at most companies have some level of direct access to ERP (Figure 1). So what is the secret to getting all executives to engage with ERP on a regular basis? It’s actually no secret at all. Simply give them the features and functions needed to run the business, and make it easy enough to use. But is that really the way software is selected today?
Mint Jutras has been following the priorities of selecting ERP for years. We would present a list of selection criteria and ask survey respondents to rank each on a scale from 1 to 5, where 1 was “not a consideration” and 5 was “Must have/Most important.” In days gone by, fit and functionality always topped the list. But over the past few years another selection criterion crept up in importance and appeared to be running neck and neck with fit and functionality. That criterion was “Ease of Use.”
Given the pervasiveness of consumer technology today, this comes as no surprise. And in many ways, it makes sense. All the features and functions in the world won’t do you any good if you can’t figure out how to use them. But easy to use software that lacks the functionality needed to run the business is equally lacking. So which is truly more important?
In order to answer that question, the 2015 Enterprise Solution Study changed the format of the question, again listing the different criteria, but this time forcing the participants to stack rank them from 1 (least important) to 10 (most important).
Table 1: Selection Criteria Priorities (ranked from 1 to 10)
Source: Mint Jutras 2015 Enterprise Solution Study
In order to limit the criteria to a list of 10, we consolidated several and implied “ease of use” in the broader criterion of “user experience.” You can train someone to overcome the challenges of hard to use software, but will people want to use it? User experience remains in the top half, but when forced to
Selection Criteria Priorities
Survey respondents were asked to stack rank the different selection criteria from 1 (least important) to 10 (most important). They were not allowed to have two ranked at the same priority, forcing them to decide on the order of importance.
All the features and functions in the world won’t do you any good if you can’t figure out how to use them. But easy to use software that lacks the functionality needed to run the business is equally lacking.
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stack rank all the criteria, functionality rules. “Fit and functionality” rose once again to the top of this list, followed by the completeness of the solution. It is not enough to deliver a complete solution that must be pieced together. An end-‐to-‐end solution is preferred. And rounding out the top three was quality of built-‐in reporting and analytics.
ERP has long been famous (or perhaps infamous) for being easier to get data into than information out of. Good reporting may have sufficed in the past, but with more executive-‐level decision-‐makers using ERP, analytics become more important. What’s the difference between reporting and analytics? Simply put, reporting answers questions you have while analytics helps you ask the right questions. And those questions change as business conditions change. Ask the right questions and the Force is strong within you.
Several other factors are instrumental though in awakening the Force within your ERP implementation and your business. Features and functions are only marginally effective unless they can be made available to the people that need them, where and when they need them. So unless you only have inside sales people, access to the functions that help them manage contacts, customers, quotes, orders, products and pricing must not require them to be at a desk in your office. You want them out beating the bushes in the field. You want your manufacturing supervisors on the shop floor, right? But you also want them connected to schedules, inventory and production orders. You want approvals of expedited purchase orders immediately, but you don’t want those approving managers to be tied to their desks.
So you need the access anytime, from anywhere capabilities of the cloud. And because you might not always have a laptop and a WiFi connection (and even if you do…), you need to access many of these functions from mobile devices. And while you’re at it, wouldn’t the ability to follow all this activity and engage in collaborative conversations with other managers and co-‐workers empower decision-‐makers? Wouldn’t you like to be able to perform a Google-‐like enterprise search across all your enterprise data? Of course you would. For this you need cloud options, access through mobile devices and “social” capabilities.
But none of these capabilities are an end in of themselves, but rather a means to an end. The goal is a solution that best supports the business with functionality that is easily consumed, provides excellent visibility and facilitates good communication.
THE RIGHT FUNCTIONALITY, EASILY CONSUMED
Any good ERP solution provider will provide innovation, typically delivered through upgrades and new releases. For many years, enhancements to ERP came slowly. Most solution providers scheduled releases every 12 to 18
What’s the difference between reporting and analytics? Simply put, reporting answers questions you have while analytics helps you ask the right questions. And those questions change as business conditions change. Ask the right questions and the Force is strong within you.
The goal is a solution that best supports the business with functionality that is easily consumed, provides excellent visibility and facilitates good communication.
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months, and often there was little enough value added to justify the effort of moving forward. After all, the upgrade process could be very disruptive. Releases were skipped and customers got woefully behind, sometimes only moving forward when the vendor stopped supporting its current release. Improved development tools for next generation ERP allow vendors to deliver more innovation, faster. Yet while 43% of our survey respondents upgrade on a regular basis, 30% still skip releases and 11% would prefer to never upgrade. In order to keep pace in consuming this innovation and take full advantage of it, the upgrade process needs to improve. This can happen in a variety of ways.
DEPLOYMENT MODEL One way is to change the deployment model. Those that choose software as a service (SaaS) for deployment are relieved of much of the burden of the upgrade process.
This is reflected in their approach to consuming innovation. The percentage with no interest in innovating shrinks to less than 2% and the best performing implementations (those determined to be World Class) are also the best at consuming new functionality at an accelerated pace (Figure 2).
Figure 2: What is your approach to consuming innovation in a SaaS model?
Source: Mint Jutras 2015 Enterprise Solution Study
SaaS can also be a vehicle for more rapid development and delivery of innovation. Of course the pace of innovation can vary quite significantly from vendor to vendor. Those who offer their solutions exclusively as a multi-‐tenant SaaS solution have a distinct advantage of only having to maintain a single line of code. With multi-‐tenant SaaS, multiple companies use the same instance of hosted software; configuration settings, company and role-‐based access personalize business processes and protect data security. Contrast this with single-‐tenant SaaS where each company is given its own instance of the (hosted) software. This adds more of a burden to the upgrade process for the solution provider, which may also have an impact on its ability to innovate.
Factors that Prevent Upgrades
Mint Jutras asked survey respondents to stack rank the factors that might prevent them from upgrading. In order of likelihood:
1. Too much potential disruption to our business
2. Cost and effort 3. Not enough value to support a business case
4. Customization presents barriers to upgrading
5. Uncertainty over quality of release
World Class ERP Performance
Mint Jutras defines World Class in the context of an ERP implementation. We use a composite metric that includes: üActual measured results experienced since implementation
üProgress made in achieving company-‐specific goals
üCurrent performance in selected KPIs
The top 20% of survey respondents comprise “World Class.” The remaining 80% are referenced as “All Others.”
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Solution providers that deliver the same solution both on-‐premise and via SaaS are forced to maintain multiple versions of the software. Very often the software is offered on a choice of platforms and databases, and the vendor must support multiple release levels determined by its customers’ ability to keep pace with upgrades. For every person-‐day it spends on innovation, it spends another multiple of that day making sure it works across multiple environments. Choice can be very good but with it you might sacrifice the added bonus of accelerated innovation.
Fortunately SaaS deployment is not the only way to speed the delivery and ease the consumption of new functionality.
LOOSELY COUPLED VERSUS EMBEDDED INNOVATION In ERP, The Next Generation: The Final Frontier, we introduced the concept of “loosely coupled” applications. This is in contrast to tightly integrated, embedded code. Mint Jutras has always defined ERP as an integrated suite of modules that forms the operational and transactional system of record of a business. “Integrated” is a key word in the definition. The suite of modules is designed and delivered to all work together seamlessly. Yet there are different ways of delivering integration.
At first glance, “loosely coupled” versus “tightly integrated” might seem like the age-‐old argument between integrated suite and “best of breed.” But it’s not. That old argument was really about the trade-‐off between full integration (with lighter-‐weight functionality) and rich features and functions (requiring additional effort for interfaces and often resulting in redundant data that needed to be synchronized). Today’s loosely coupled applications can deliver a rich set of features that would rival the best of “best of breed,” remove redundant data and still be seamlessly integrated.
Even if it is chockfull of the deepest and richest functionality on the market, the drawback of a classic tightly integrated suite is that all the pieces of the suite have to march forward together. This places an enormous burden on the software developers. It takes massive efforts of coordination by the vendor to make sure all the new and modified pieces of the puzzle more forward together. And it takes similarly massive efforts of coordination for all departments within its customers’ organizations to take those next steps altogether.
The advantage of the concept of “loosely coupled” is in allowing new functionality to be added without requiring the full suite to move. It takes a concentrated effort, a different application development methodology and some advanced technology to preserve the seamless integration of loosely coupled components, but the advantages are clear. New features and functions can be released when they are ready and customers can choose to
Multi-tenant versus Single-tenant SaaS
Multi-‐tenant SaaS: Multiple companies use the same instance of hosted software; configuration settings, company and role-‐based access personalize business processes and protect data security.
Single-‐tenant (or Multi-‐instance) SaaS: Each company is given its own instance of the (hosted) software, but may share common services, such as an integration platform, and security.
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implement them individually. All departments don’t have to move forward in one giant lock step.
It is not so important to understand how this is delivered. You didn’t know how the transporter beam on the USS Enterprise worked. But you knew what happened when Captain Kirk said, “Beam me up Scottie.” The integration may be event-‐driven or message-‐based. It may be object-‐oriented and/or rules-‐based. It may use a semantic layer or XML. Understanding the underlying technology is less important than knowing the pace of innovation and how granular the consumption needs to be. Must you go through a full upgrade cycle to avail yourself of any new features or capabilities? Or can you opt in to new features on your own schedule? The answers to these questions will vary from vendor to vendor and even from feature to feature provided by a single vendor. In the end, the objective is to avoid putting yourself in a position where you must wait years to consume new innovation.
Then of course, you need to understand what options you have in terms of accessing data along with all this new and improved functionality. Gone are the days when you could assume you only needed access to data for decisions when you were sitting behind a desk in an office. Cloud options and mobile capabilities are important tools in unlocking the insights that have often lurked just beneath the surface of ERP implementations.
ARE CLOUDS IN THE FORECAST?
We have already seen the potential impact SaaS can have on the delivery of innovation. Many use the terms cloud and SaaS interchangeably, but in fact they are not the same.
• Cloud refers to access to computing, software, storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.
• SaaS is exactly what is implied by the acronym. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another’s) computer. It generally is paid for on a subscription basis and does not reside on your computers at all.
All SaaS is cloud computing, but not all cloud computing is SaaS. Traditional on-‐premise or hosted solutions might (or might not) be accessed via the cloud, although this is more likely to be a private cloud.
Therefore, the cloud has implications regardless of deployment model. The majority of ERP solutions can be accessed through a cloud, but we find quite a lot of diversity in how web-‐accessible ERP is across the sample of companies
It is not so important to understand how innovation is (technically) delivered. You didn’t know how the transporter beam on the USS Enterprise worked. But you knew what happened when Captain Kirk said, “Beam me up Scottie.”
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participating in our 2015 survey (Figure 3). Some require software (sw) to be installed on the device used to access ERP.
Figure 3: How web-‐accessible is your ERP?
Source: Mint Jutras 2015 Enterprise Solution Study
Devices might run the gamut from desktops to smartphones. In 62% of these companies, the entire application is web-‐accessible, while only select functions are web-‐accessible in 26%. If you are among the 13% with no web-‐based access you are woefully behind. You may be riding a moped when your competitors are riding Jedi speeder bikes.
In almost half (49%), no software is required on the device. This means that access simply requires a browser and proper security. For the 39% indicating some enabling software is required on the device, this might be the equivalent of the client software that was required in the days of client-‐server or the more modern equivalent of downloadable apps. But this is more limiting in that a user on the road (or at home) cannot simply gain access through a browser on any available device with a browser. This is the “access any time, from anywhere” advantage of the cloud.
This “access any time, from anywhere” capability is all some (28%) of our study participants are asking for. But more (39%) prefer a real SaaS solution. Those considering a SaaS solution anticipate many of the potential benefits listed in the sidebar, on average selecting 3.17 individual advantages of SaaS. But those that have actually deployed SaaS solutions find it even more appealing, selecting 52% more (4.82 on average) of the potential benefits as those that were actually realized.
Regardless of whether SaaS is in your future or not, cloud is a critical factor in awakening the Force within your company. It is also a prerequisite for providing access through those mobile devices we have all become so attached to.
Potential Benefits of SaaS
• Lower total cost of ownership
• Reduce cost and effort of upgrades
• Ability to treat as operating expense rather than capital expense
• Lower start-‐up costs • Elimination of
hardware and associated maintenance
• More strategic use of IT
• More innovation/ through more frequent updates
• Ease of remote access for distributed workforce
• Improved IT security • More viable business
continuity plan (e.g. natural disaster)
• Lower risk • Reduce or eliminate IT
staff • Ease of bringing up
new remote sites • Speedier business
innovation
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TAKING ACTION WHILE ON THE MOVE
As noted earlier, top-‐level executives are becoming more directly connected to ERP. You might attribute this to the fact that all of us are simply more “connected” today – period. The less tethered we are to wired connections, the more tethered we are to the business. We are always on, always reachable, whether we are sitting in an office, flying across the globe, on vacation or at our children’s soccer games or dance recitals. Smart phones and tablets can be credited with (or blamed for) keeping us in touch and within reach.
While mobile access to data in ERP is relatively low on the priority list for ERP selection criteria, this is not an indication there is little value to be gained, but more an indication that mobile access is simply a means to an end. The end goal is better visibility and faster reflexes. Some tasks and functions lend themselves better to being performed on mobile devices. We asked survey respondents to prioritize tasks and functions that might be valuable to mobilize (Table 2).
Table 2: What tasks and functions are most valuable to mobilize?
Source: Mint Jutras 2015 Enterprise Solution Study
Weighting factors determined priority
Each task or function in Table 2 was assigned a weighted priority where the following weights were assigned::
3 Must Have 2 Would be Useful 1 Nice to Have 0 Woulrdn’t use
The top 4 tasks were extremely close in ranking, with the priority differing by less than 4%.
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We weighted the responses by how useful they would be on a mobile device and sequenced by order of priority. Table 2 is sorted from highest to lowest. However, we should note that the first four tasks listed were very similar in priority, with the weighting varying by less than 4%.
Tasks associated with customer relationship management (CRM) and sales force automation topped the list. Presumably these sales forces are not inside sales, but rather those out in the field. The next three however are less function-‐specific and are more about taking action faster (and more effectively) in response to events or changing conditions. This is all about amplifying speed and reflexes in ways that a few short years ago would have seemed to be supernatural.
A mobile device can immediately connect your road warriors and your mobile executives to enterprise data and functions. But a successful enterprise is never a one-‐man or a one-‐woman show. When it comes to awakening the vast potential of a business, there is power in numbers. While many of us would love to be able to take the perfect employee and create an army of clones to bring to bear in battling the competition, we need to find other ways to fully leverage the human resources we do have today. We need “social” capabilities.
SOCIAL MEANS VISIBILITY AND COLLABORATION
“Social” has some unfortunate connotations in many circles. Many equate it to social media. Even though these individuals might acknowledge the potential impact of social media on their businesses, that impact is assumed to be limited primarily to marketing and public relations, perhaps extending to customer sentiment. In that context and given our definition of ERP, the two have little or nothing to do with each other. We have further evidence of this presumed disconnect in noting that social capabilities rank the absolute lowest in terms of priorities in selecting ERP.
But there is more to “social” than just social media and a stronger connection to ERP than many envision. An ERP with social capabilities is one that has easy and intuitive search capabilities. It has a highly configurable user interface that can result in a very personalized user experience. It pushes data to those that need to know, instead of waiting for it to be pulled. It captures “conversations” and associates them with the appropriate business objects (customers, orders, products, etc.). And it employs the concept of following, not (just) people, but business objects and events like sales orders, customers and products. It can collect activity against these business elements into activity streams that can be subscribed to and monitored.
The result is better visibility, better collaboration and quicker reflexes, fewer surprises and more proactive management. When we broke these elements
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out and asked survey participants to rate their value, suddenly social capabilities are seen in a new light (Table 3). Collectively these are all recognized as having very significant value. However, in getting buy-‐in from all constituents, you might not want to use the term “social.”
Table 3: Would these “social” capabilities be useful?
Source: Mint Jutras 2015 Enterprise Solution Study
CONCLUSION
“There has been an awakening. Have you felt it?” Or are you slumbering along with an ERP that lacks any or all of these advanced capabilities?
• Do you have all the feature functionality that would best run your business? Is that functionality keeping pace with new requirements? Are you keeping up with innovation?
• Do you have rich reporting and analytical capabilities that both answer your questions and helps you ask the right ones, the ones that will drive growth and improve performance?
• Are you taking full advantage of the cloud? • Do you empower your mobile decision makers or are they still
tethered to desks or reliant on super users and subordinates? • Can these decision makers react with speed and accurate reflexes? • Can they collaborate easily, capturing and following conversations
about customers, orders, products, etc.?
If the answers to all of these questions are a resounding, “Yes!” then the Force is strong within your enterprise. If not, then it is time to take action. Whether this means upgrading your current solution, migrating to a new one from the same provider or seeking out alternatives, do so with these questions in mind. And throughout your quest, may the Force be with you.
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About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing 40+ years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 9 years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.
