STEP UP - download.microsoft.comdownload.microsoft.com/documents/uk/advisor/reality/stepupagear.… · ERP/SCM adoption, with penetration rates at 3% for US small businesses, 11%

Lean IT Special Report

EVALUATING ERP • CRM FOR SMEs • BUSINESS PROCESS EFFICIENCY

STEP UP A GEAR

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Document2 15/2/05 2:05 pm Page 1

Lean Manufacturing is a concept that has been around for someyears. Pioneered by the Japanese automotive industry, it is a com-plex business and management practice aimed at cutting the fatfrom manufacturing organisations, driving them towards greaterproductivity and making them more responsive to the growingsophistication of their customers.

Lean Manufacturing is based around five key elements, that canbe simplified as:

1. Eliminating non-value added activity from the organisation

2. Reviewing the way that products are provided and delivered

3. Improving efficiencies by reviewing the product ‘flow’

4. Producing goods at the rate of customer demand

5. Seeking perfection - continuous improvement and educating staff on how to identify and deal with waste

In a recent AMR Research paper Alert , the concept of “Lean IT”was introduced in the context of describing Microsoft BusinessSolutions’ strategy and product set. This is a very interesting con-cept and one worth exploring further.

If we overlay what a Lean IT approach would bring to organisa-tions with the basic tenets of lean manufacturing outlined abovewe can see the sense in this approach:

1. Eliminating, streamlining and / or automating unnecessary and wasteful business processes (examples: removing costly, paper-based invoicing and procurement processes and replacing with e-procurement and e-invoicing solutions)

2. Putting business information in the hands of the right business executives at the right time, allowing them to review business performance and react to the way the business is functioning

3. Improving efficiencies by reviewing and streamlining business processes, using integrated business applications to increase productivity and cut costs from the organisation

4. Reacting and interacting with customers better through customer insight applications, developing closer relationships with customers and meeting their needs faster and better

5. Ensuring that employees are actually using the technologies to continually improve business processes and effect change in the organisation. Provide familiar environments that reduce

wasted time and effort, allowing people to focus on value-add tasks that continuously improve the performance of the business and the individual.

Lean IT is thus about driving cost down in any organisation,streamlining operations, increasing productivity and producing amore customer-centric and responsive company that is able tocompete in today’s business marketplace, whatever industry theyreside in.

Microsoft Business Solutions’ strategy fits perfectly into this philosophy. Microsoft has developed a comprehensive portfolio of business applications aimed at the SME sector, each with itsown specific position and capabilities. As AMR’s BruceRichardson states, “there is no need [for Microsoft] to discontinueany of the products” as each serves a defined need that SMEshave identified. These products are also supported by a partnerecosystem of over 8,000 companies, each delivering tailored solutions that meet the needs of the SME wherever they are located around the world.

The second critical area where Microsoft Business Solutions ismeeting the needs of the SME and delivering on the promises of‘Lean IT’ is that of integration. As development across all productlines becomes increasingly integrated with ‘larger Microsoft’, sothe familiarity of business applications increases to any user.Tighter integration with Microsoft Outlook and, in the future,with Microsoft Office is creating a user experience that ensuresSMEs are able to see tangible business changes as well as lowertraining costs.

This key aspect of development should not be overlooked.Lessons have been learnt that training and re-training staff in dif-ferent environments for different applications often means theseapplications become under-used, even shelved. A critical successfactor for any SME and for the concept of Lean IT is that tech-nology is used to its fullest extent and the familiarity and ease-of-use of the interface is a pre-requisite for this to be realised.

Lean Manufacturing has had a massive and positive impact on the manufacturing industry, forcing companies to re-think theirprocesses and what/how they deliver competitive edge to the market and their customers. While we are discussing a very much simplified philosophy here with Lean IT, if it creates anenvironment and mentality in the world’s SME organisations thatmakes them question what their business applications are reallydelivering and realise that there are now affordable, integrated andeasy-to-use business applications solutions out there that mostimportantly deliver real world business change and savings, thenwe are all surely onto a winner?

Lean IT - how Microsoft Business Solutions is delivering the next generation of business applications to

support the business needs of today’s SMEs

Advertisement Feature

Jon Hughes, director Microsoft Business Solutions partner group, Microsoft Ltd

Lean IT.qxd 4/2/05 9:33 am Page 1

CBR INDEX4 Gearing Up Small and medium enterprises have become the

latest target for business application vendors. CBR investigatesthe potential benefits to SMEs and what the vendors are doing tomeet the requirements of smaller businesses.

8 A Small Victory? As the SME market becomes a core battleground for enterprise application software vendors, CBR assessesthe strategies of the vendors involved and the role of partners indelivering results.

12 Lean Thinking How easy is it to evaluate the alternative ERP systems in the context of meeting core business processes andenabling the delivery of a lean IT system? CBR investigates.

17 Great Expectations CRM is finally beginning to be applied tosmall and medium enterprises. CBR reports on whether the SME market will prove a success for targeted CRM deploymentsand projects.

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Contents

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Small-to-medium enterprises(SMEs) are expected to spend $1tron information technology by theend of 2006, according to SMEresearch specialist AMI-Partners.Little wonder then that the SMEmarket has become a key focus forenterprise hardware, software andservices suppliers in recent years.

BT Group and PC giant Dell haverepackaged their managed servicesin order to target the demands ofsmaller vendors, while in 2003 IBMchairman and CEO Sam Palmisanoannounced that the company wouldbe investing $100m in new programsto attack the SME space and intro-duced scaled-down versions of itsdatabase, infrastructure and systemsmanagement products.

Nowhere has the drive towardsSMEs been more apparent than inthe enterprise application market,however, where reduced spending byenterprise businesses has forcedenterprise resource planning (ERP),customer relationship management(CRM), and other business softwarevendors to look elsewhere to drivetheir aggressive growth strategiesand maintain revenue and shareprice levels.

“It’s pretty obvious why larger vendors are taking an interest inSMEs, because that’s where themarket is,” says Gerry Carr, mar-keting manager for SME customerrelationship management specialistSage CRM. “That’s where the moneyis to be found.”

The focus on SMEs has driven consolidation in the market as well as the development of newstrategies to focus enterprise applica-tion suites and business models at the requirements and needs ofsmaller businesses.

At the same time, smaller busi-nesses are becoming more matureabout their use of technology, aiming4

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APPLICATIONS FOR SMEs

Small and medium

enterprises have

become the latest

target for business

application vendors.

Matthew Aslett

investigates the

potential benefits to

SMEs and what the

vendors are doing

to meet the

requirements of

smaller businesses.

to link disparate systems across thebusiness to reap the promised effi-ciency gains associated with moreautomated business processes.

“If you look at any business, it’s notnecessarily a lack of profit that forcesSME organisations out of business,it’s cash flow. If you think about what ERP can do to help improvecash flow, it’s very important for themid-market,” says Jon Hughes,director of the partner group withMicrosoft Business Solutions, which

defines SMEs as those with 50 to1,000 employees.

“There’s been a number of diver-gent pressures and drivers that have brought this forward,” saysAnthony Peake, Oracle head ofapplications and industries mar-keting, EMEA. “Traditionally largeenterprise projects have been high-cost, long-term projects but in recentyears we’ve seen more subsidiary anddepartmental projects and businessflow projects.

“The culmination in all of this isthat more and more projects are notlooking at a product but at a particular business pain or objec-tive,” he continues. “The results ofthis are that man-years of implemen-tation have been turned into man-days, the cost of applicationshave been reduced, and there hasbeen an increased focus on applica-tion integration. The applicationvendors have driven into the uppermid-market.”

Figures from industry specialistslike AMI-Partners make clear theopportunity for business application

Gearing UpFeedback: [email protected]

“More and more projects are not looking at a product but at a particular business painor objective.”

Anthony Peake, Oracle head of applications and industries marketing, EMEA

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usage of CRM applications at just 5% among US small businesses,compared to 12% among mediumbusinesses, and 54% among US large businesses.

The figures are similar forERP/SCM adoption, with penetrationrates at 3% for US small businesses,11% for US medium businesses, and60% for US large businesses. Theresearch house warns, however, thatenterprise application vendors haveto be wary of meeting the needs ofsmaller businesses.

As the table Perception of theImportance of Enterprise Apps makesclear, the importance of these applications to a business differsdepending on company size. Notonly that but requirements also differ by vertical, and individualbusiness drivers.

AMI breaks down SME customersinto four tiers, with tier-one (enter-prise adopter) businesses viewing ITsimilarly to larger business; tier-two(cutting edge adopters) embracingnew IT solutions but lacking theresources for full-scale adoption;tier-three (value for money adopters)looking for proven success amongcounterparts before taking theplunge; and tier-four (need helpadopters) only employing IT solu-tions when under threat of losingcustomers or suppliers.

“To increase SMB adoption, enter-prise software vendors need to betteridentify and map products, channels,and price points to the differentrequirements of each segment,” saysLaurie McCabe, VP of SMB Insightsand Business Solutions at AMI.

Microsoft has increased its pres-ence in the SME application spacethanks to its acquisitions of SMEapplication specialists Great Plainsand Navision. In this regard, it hastaken a different approach from ven-dors such as SAP and Oracle, which

vendors in the SME space.According to AMI, small andmedium businesses in the US spent$1bn on ERP, sales force automation(SFA), CRM, and supply chain plan-ning (SCM) software in 2003.

This is just a small proportion ofthe $14.6bn spent by all US compa-nies on the same software during theyear, but while spending on thesesoftware segments by large busi-nesses is expected to rise by 4.9%annually in coming years, SMEs areexpected to increase their spendingby a compound annual growth rateof 14.3%.

Clearly, here is a growing marketfor enterprise software vendors thathave been forced to rely increasinglyon maintenance revenue from largebusinesses to preserve their revenuegeneration.

Not only is the SME applicationspace growing but, according toHughes, the market is also wide open.“If we look at the mid-market ERPmarketplace around the globe, it’scharacterised by the fact that there’sno single global player,” he says. “Theleading vendor in this space is ‘other’;it’s traditionally been served by localvendors in local markets.”

Carr agrees that the SME applica-tion space is ripe for the picking.“We’re still talking about a market

that’s far from saturation point,” hesays. “Some people are still usingnon-CRM products like Outlook toenable CRM.”

While there are advantages forapplication vendors in targeting theSME market, the drive to improveefficiency and flexibility is alsoencouraging smaller businesses toinvestigate greater investment intechnology to increase responsive-ness to business change.

“It’s been a slow process,” saysCarr. “Companies such as ourselveshave been trying to educate themarket for some time about the ben-efits. I think the products are nowbetter, I think they’re being soldbetter, and the goals are more real-istic. There’s still a level of scepticism,but it’s a pretty healthy scepticism,and they’re ready to listen.”

While the adoption of businessapplications by SMEs has historicallybeen targeted around financial andaccounting applications, that situa-tion is now changing, according toHughes. “The market is growing andmaturing and there is strong demandin the mid-market to extend into thebroader world of ERP,” he says.

According to recent figures fromAMI, there is plenty of scope forincreased adoption of business applications among SMEs, with the

VERY IMPORTANT & IMPORTANTUS SMALL BUS (%) US MEDIUM BUS (%) US LARGE BUS (%)

ERP apps 3 26 66CRM apps 5 23 65Integrating front- and 11 33 58back-office systemsSCM software 3 12 47Electronic partner and supplier connections 15 31 51SFA apps 6 18 47

Source: AMI Partners

PERCEPTION OF THE IMPORTANCE OF ENTERPRISE APPLICATIONS


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have attempted to repackage theirsoftware for the SME space.

Whether those vendors will be ableto do that is the subject of greatdebate. “We, in acquiring GreatPlains and Navision, acquired twocompanies who have specificallydeveloped products for mediumbusinesses, which does make usstand out from the enterprise ven-dors,” says Hughes.

“You cannot take an enterprisemodel around ERP and deploy it tothe mid-market. Navision and GreatPlains are designed for speedydeployment and quick ROI.”

Sage’s Carr goes further. “SMEcompanies are not stupid, theyrealise these products [from tradi-tionally enterprise-focused vendors]are not built for them and the mar-keting and sales channels are notappropriate. The products we havehave always been aimed at the SME market.”

Peake denies that enterprise appli-cation vendors such as Oracle do notunderstand the demands of the SME,maintaining that the company hasundertaken extensive research intothe demands of smaller businessesand shaped its strategy accordingly.

According to that research, thefinance and human resources areaaccounts for 30% to 40% of ITspending among smaller companies,with business intelligence, ordermanagement and reportingaccounting for a similar figure. Theremaining 30% or so is split evenlybetween line-of-business applica-tions such as manufacturing orCRM, and vertical applicationsrelating to the business focus.

Targeted SME applications“We’ve looked at the E-BusinessSuite applications we have and thebest practices of implementation forsmall business problems,” saysPeake. “Most of our partners areSMEs in their own right and we alsopaid them to come in and developsolutions for a particular market.”

The result, according to Peake, is acore suite of applications targeted atSME requirements that can beimplemented in less than 40 dayswith one consultant, or 90 days if the

the customer, each contradictingeach other,” says Oracle’s Peake.

Microsoft’s Hughes agrees. “Ifyou’ve got very stove-piped businessprocesses internally and it’s quite dis-connected, then delivering CRM inthat environment is very chal-lenging,” he says. “What you can dois fix the processes through ERP andthen move into CRM.

“As a general theme, inventory andstock management are a very big partof what we do, the idea of connectingpartners and suppliers is secondary,”says Hughes. “Once that’s in placethe financial director and managingdirector can begin to understandhow the company is performing.”

Transitional approachWhile many businesses might lookto take on ERP and CRM projects intandem, the business flows createdby ERP enable a single view of thecustomer that can be translated intocustomer relationship improvements.“Once you’ve got that data in placethen you can put the processes inplace to change that customerapproach,” says Hughes.

As an SME CRM specialist, SageCRM has seen its market focus become the target of Microsoft, Oracle,SAP, Siebel and Salesforce.com,among others in recent years. This increases the competition andalso, as Sage’s Carr notes, the complexity of choice for SMEs.

“SMEs just have to be careful that they’re buying appropriate technology to their need. It’s impor-tant that SMEs look to within theSME community to get their solu-tions and not bite off more than theycan chew.”

full suite with the various line-of-business additions is chosen.

The role of business partners forapplication vendors targeting theSME space cannot be underesti-mated. Smaller software vendorshave traditionally been the key sup-pliers in this space, and have anunderstanding of the requirementsthat customers in different verticalmarkets want, that enterprise appli-cation vendors lack.

“To compare a professional servicesorganisation to a manufacturingorganisation is madness: you needsolutions that meet these differentcustomer types to succeed,” saysHughes. “Traditional ERP vendorshave tended to do that themselves,but that approach does not work inthe mid-market.”

“It’s a differential of scale andscope,” adds Sage’s Carr. “Smallerbusinesses look for more out of thebox. What they use it for can be dif-ferent: they’re going for a simpleforecasting tool, for example, so it’sreally about stripping away the com-plexity and making it easily under-stood. To work with partners whofocus on the SME sector is critical.”

While the importance of SME and vertical specialists remains,application suite vendors also have arole to play in providing the corefunctionality that links these applica-tions together, providing the processintegration that can bring aboutimproved business efficiency.

“The idea of a global vendor providing the core business logic,enabling local vendors to provide the industry application function-ality, is very appealing to them,” says Hughes.

As part of its research into SMErequirements, Oracle surveyed65,000 SMEs a year ago to investigatetheir key business drivers, and whilethe need to be more competitive andreduce cost came out top with 53% ofrespondents, the need for consistentIT also figured highly with 35%.

“Customers have traditionally goneto SME vendors and boughtaccounting software, then marketingsoftware or a simple salesforceautomation tool... the problem is thatcreates islands with different views of

Many of the enterprise application vendors targetingsmaller businesses might be doing so in an attempt tomaintain their revenue growth, but they are also clearlyserious about understanding and meeting thedemands of SMEs. Whether they will be able to do so isanother matter, but the focus on partners will be key.For SMEs, local and vertical specialists have always beenproviders of application expertise, and this will continueto be the case. Whether those SME specialists end upworking with and recommending applications fromenterprise application vendors remains to be seen.

CBR OPINION


Solution:Cannon did not want to change the client-centric approach of its automotive parts,fleet and warehousing operations. But at thesame time, it needed to stay competitive inorder to be able to add value to the customerin the first place. Doye says: "We have aresource such as a truck and it has to travelas short a distance as possible, with the mostweight and make the most drops in theshortest amount of time. The profit driver isgetting the highest efficiency and utilisationout of our resources. We're not working onbig margins here."

Cannon had previously developed systemsspecifically for individual customers. Itchose Microsoft BusinessSolutions–Navision because it considered itthe only system to be able to replicate theapproach in a standardised environment.

The system has since grown from justfinancials to encompass warehousing anddistribution and also includes CommerceGateway for bringing in EDI messages fromcustomers. It replaces an in-house systemdeveloped with Compsoft's applicationdevelopment and data management tools.

The advantage of bringing the systemtogether on a packaged application is that ithas forced a rationalisation. "What we hadprior to Microsoft BusinessSolutions–Navision were lots of standalonesystems – a location system, stock system,distribution system, planning system andaccounts separate to that.”

Despite the obvious synergies, within

Cannon's three separate divisions the indi-vidual operations perform distinct tasks.“We ask our customers about their individ-ual needs, so our product is tailored to theirindividual requirements.”, said Doye.

Cannon was desperate to retain this tailor-ing to clients and considered MicrosoftBusiness Solutions–Navision to be the onlyproduct on the market capable of deliveringsuch flexibility. The Microsoft BusinessSolutions–Navision development environ-ment, C/SIDE, built around its RDBMSdatabase, comes with the product and bothMicrosoft Business Solutions Partners andend customers are encouraged to tailor it totheir needs.

Part of the reason Cannon chose MicrosoftNavision is to retain programming in-house,to be responsive to customer needs. Thiswas the only product on the market that wecould do that with.

"One of the strengths in having a customer-focused system is when the customerphones up with a problem, you can hopeful-ly solve it immediately. In a normalreseller/customer environment it can takeweeks. With Microsoft BusinessSolutions–Navision you can easily buildspecific functionality – it's totally respon-sive, so we won't lose our competitiveadvantage."

EDI:Many of Cannon's customers send EDIorder information. Metaphorix has amendedthe Commerce Gateway so, throughMicrosoft's BizTalk Server integration

Cannon Group Limited


product, it can accept the huge volume oforders. Having this automatically feedinginto the back-end system means taking onnew clients is far easier.

"Because of the way we have implementedthe commerce gateway, there are a variety ofmaps that support a variety of information,"says Doye. "Between all of these we getmost of the problems any customer couldwant solving by standardising the end resultwithin the system. There are usually costand time implications in taking on a newEDI relationship. But we can take on a newclient instantly, without having to gothrough a major planning process."

The need for EDI support means the systemhas to be incredibly reliable – orders comein throughout the day so if it were to godown, Cannon would be hamstrung. Ordersthat come in over the Internet are sortedbased on delivery performance criteria, thesystem organises the picks in the ware-house, ships product containers, then pub-lishes order delivery status, stock informa-tion, warehouse information and ultimatelyproof of delivery on the web.

The use of the web has in turn reducedadmin further. "We can do things better andsmarter and spend time on other things thatmatter. Instead of taking numerous calls perday asking where an order is, we take onecall if there is a real problem and we candeal with it."

Conclusion:Working with Metaphorix, Cannon hasmanaged to retain the customer specialisa-tions that are required while building themonto a base of common functionality. It hasalso connected the disparate systems.

Having a common set of functionality willhelp in the future, Doye says: "It's given usa set of business processes to base our workon going forward. When we were develop-ing our own product everybody got every-thing they wanted. When you standardise,you say that person wants this and this per-son wants that and you give them somethingthey are all happy with."

Cannon Group traces its origins back to the early 1900s from the village ofMilton near Abingdon in Oxfordshire. Separate businesses were amalgamat-ed in the mid 1990s and Cannon sees obvious synergies between them.Finance Director Ian Doye explains: "If a company manufactures automotiveparts, it either goes on a production line or on the shelf as a part to be sold.Cannon provides the packing debug."

Cannon.qxd 3/2/05 11:38 am Page 1

Consolidation is now the key trend in the enterprise softwaresector, as the potential for signifi-cant new revenue streams fromlarge enterprises is drying up. As aresult, the medium-sized busi-nesses have risen in importance asthe generator of fresh income.

Virtually all of the larger enter-prises have already adopted an enterprise-level software suite, so it isunlikely that they would considerswitching to another platform in thenear future.

Recent takeover activity shows thegathering pace of the consolidationfactor. Oracle has swallowed up Peo-pleSoft, which had previouslyacquired JD Edwards. Oracle has aninitiative underway called ProjectFusion to harmonise the three envi-ronments, while still supporting thetrio of suites in the meantime.8•

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As the SME market becomes a core

battle ground for enterprise application software

vendors, CBR assesses the strategies of the

vendors involved and the role of partners in

delivering results.

MBS, Oracle and SAP are posi-tioning their platforms and mar-keting campaigns to appeal tomedium-sized, often fast-growthcompanies. This is certainly wherethe next push for ERP sales growthwill take place. The role played bychannel partners will be a key factorin the success and failure of any SMEsales initiative.

Another key theme of the changingenterprise software market is thedrive to deliver lean IT systems andprocesses (see box, What is Lean?),that assist in both reducing waste andadding value to the user company.

The three large enterprise vendorswill be competing with a host of less famous suppliers for the ERPbudgets of medium-sized organisa-tions. However, there is plenty ofscope for expansion and the smalleruser businesses may well be tempted

A Small Victory?

Feedback: [email protected]

In recent years, Microsoft has alsoemerged as a force in the market,acquiring technology from Navision,Great Plains and Axapta and the for-mation of Microsoft Business Solu-tions (MBS).

Ongoing consolidation is takingplace at all levels of this market. Forinstance, Infor Global Solutions, anemergent enterprise resource plan-ning (ERP) supplier, signed a defini-tive agreement in January to take overenterprise software systems providerMapics for about $346.8m. If the dealstays the course, then the combinedcompany would boast over 17,500customers in 70 countries.

The Mapics board has concludedthat its own acquisition strategywould not be as beneficial toinvestors as combining with Infor, alarger vendor. The deal is expected togo through in the second quarter.

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mirroring an identical trend at thevendor level.

MBS is looking for hungry partnersto drive its interests forward: outfitsthat intend to double or triple theirturnover year on year. Included inthese sales drives is the goal of morewidely proliferating other Microsoftsystems, such as SharePoint PortalServices, the .Net environment andBizTalk, says Hughes.

In line with this strategy, the MBSproducts such as Navision versionfour and Great Plains now have aninterface that closely resembles Out-look, with business intelligenceengines and SQL reporting built in.

Oracle agrees that SMEs are nowhighly important to its interestsgoing forward, according to AlanHartwell, VP of marketing within theUK and Ireland operation.

“The new direction is clearly themid-market. Our software couldhave always been deployed formedium-sized companies and wecan both generate and fulfildemand,” says Hartwell.

One obstacle could be the fact thatsmaller companies are not set up topurchase from large software ven-dors, says Hartwell. Implementationcould be difficult if there is a small ITdepartment, or one does not exist.

To get round this issue, Oracle isproposing packaged versions of itssolutions that can scale with a mid-sized company as it grows. Hartwellalso promises that fast deploymentwill be available from Oracle. Andwith hundreds of partners in the UKand 8,500 across Europe, Hartwellcan justly claim that the vendor’schannel is already in place. Thesepartners can deliver anything fromthe Oracle database, through to thefull E-Business Suite.

An example of the Oracle channelin action is a partner called Compel-Sysao, which has supplied the OracleE-Business Suite to Pilot, a fast-growth fashion retailer in the UKwith turnover of £100m ($189m) and100 branches nationwide. Deployingthe CompelSysao EBSSE softwarewith the E-Business Suite helped theOracle partner win the Pilot contractunder competition from several rivalvendors.

to introduce software from the bigthree vendors on an incrementalbasis, so long as sufficient integrationis in place.

Market statistics for ERP show thatthe category called ‘other’ far eclipsesthe shares attributable to the top-tiergroup of suppliers. This is one of thereasons why the majors see themedium-sized companies as such apotentially lucrative opportunity.

Jon Hughes, director of the MBSPartner Group, forecasts thatprogress could be slow and ratherlabour intensive in the SME market,as boundaries within target compa-nies will need to be traversed.

“The issues faced by large enter-prises are ultimately the same asthose for medium-sized organisa-tions: they require frictionless busi-ness processes and a smooth flow ofinformation,” he says.

The major enterprise software vendors will have to deliver fastuptime, according to Hughes. Andhe further states that top-tier vendorsmining the mid-market will need todeliver at least an initial 70% fit oftheir software suites to a prospect,although he suspects that this per-centage probably needs to be higher.In any case, the fit will need to be100% to satisfy those people assigned

to spend on enterprise-style solu-tions in the mid-market.

The channel is essential to the MBSsales drive to medium-sized organi-sations, stresses Hughes. MBS hasaround 200 business partners in theUK. The hallmarks of this partnerbase are vertical industry expertise,the desire to generate healthy rev-enue streams and the ability todeliver a fit of the MBS suites to auser company’s specific needs.

Evision, a Scottish company with asolid focus on the constructionindustry, is one example of such apartner. “Evision has a suite calledBuidIT, with software based onindustry expertise sitting on top of thecore MBS platforms,” Hughes says .

Overall, MBS will target as manyvertical slices of medium-sized enterprises as possible, with theexpertise in the partner base beingable to provide the 100% fit of MBSsoftware with a medium-sized company’s processes.

The MBS partner community isactively raising venture capital to fur-ther develop their businesses basedon the MBS proposition, saysHughes. There are also a significantnumber of mergers within the MBSpartner community and this consoli-dation of the channel seems to be

“The issues faced by

large enterprises are

ultimately the same as

those for medium-

sized organisations:

they require friction-

less business

processes and a

smooth flow of infor-

mation.”Jon Hughes,

Microsoft BusinessSolutions Partner

Group director


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Paul Roberts, finance director atPilot, reveals that the companyneeded to update its decade-old sys-tems, taking the opportunity to con-solidate data and get an up-to-date,real-time reporting capability andsupport future expansion.

The Oracle approach to the mid-market is to progressively introducesolutions that do not require a stepchange. Rather the Oracle goal is toinstall elements of its softwarewithout risk and based on Java andopen standards, according toHartwell. Big bang implementationsdo not suit the dynamics of the ERPmarket and probably did not servethe interests of enterprise-level usercompanies in the past.

SAP is committed to the SMEmarket, according to Kieran Raf-ferty, SAP director and general man-ager, SME UK and Ireland. Hereveals that SAP already has hun-dreds of implementations amongsmall and medium-sized companiesin the UK, which have less complexneeds. The entry points for smallercompanies range from 10 to severalhundred employees.

SAP Business One is simpler andless expensive than the full suite soldto large enterprises, says Rafferty. Itrequires less training and consultingtime and demands a less sophisti-cated hardware environment. SAPBusiness One allows users to get ben-efits immediately, according to Raf-ferty. And the software can be imple-mented in as little as a week in someinstances. All-in-One delivers aff-ordable, scalable solutions to smalland mid-size companies, SAP says.

“At SAP we realise that to continueour growth, we must reach out tonew markets as well as help ourexisting large customers connecttheir ERP systems and data to other

integral, long-term business relation-ships and revenue opportunities.

“SAP offers small and mid-sizedbusinesses three different solutions,providing customers with an oppor-tunity to develop their infrastructureincrementally,” Rafferty says.

SAP Business One is an affordable,integrated solution designed specifi-cally for small and medium-sizedbusinesses. It includes embeddedCRM functionality as part of its corefinancials, manufacturing and otherenterprise management capabilities.

The family of mySAP All-in-Onesolutions, which have been developedby SAP and its partners, addresses theneeds of companies with specificrequirements for defined industrysegments. SAP partners offer pack-ages for key customer relationshipmanagement (CRM) scenarios,which are based on best practicesbuilt into mySAP CRM.

SAP claims that its partner certifi-cation program ensures that only thebest partners work with the vendor.SAP’s SME partner programmeemphasises the quality of partnersover quantity and provides thesethird parties with the support and the close working relationship theyneed to succeed.

Rafferty points to SAP’s proventechnology expertise. The vendorprovides state-of-the-art tools to helpits partners engage customers andsolve their key problems. Being amember of SAP’s elite SME partnernetwork will ensure deeper, long-term business relationship, revenueopportunities and success, he adds.

The messages coming from the bigthree enterprise software providersare clearly bullish and will unsettlemany of the incumbent suppliersthat have traditionally served SMEs.It all promises to be an intense mar-keting affair.

departments and even to other cor-porate partners and suppliers in thebusiness chain. The small and mid-market represent a great opportu-nity,” Rafferty says.

SAP claims to be committed todelivering the same standard of plat-form for small and medium busi-nesses as the company provided pre-viously to larger corporations. Andlike the other enterprise softwarevendors, SAP is putting a lot ofemphasis on the channel.

“We’ve chosen to ensure theintegrity of the SAP brand byworking with a select group of part-ners that understand our customers’mission-critical business needs andcan fulfil the same commitment,”Rafferty says.

SAP sees this as a unique relation-ship, ensuring that smaller businessespurchasing solutions from SAP andits partner resellers are selecting notonly a software provider, but also lifetime advisors. By limiting itspartner network to resellers whoshare a deep understanding ofsmaller businesses, SAP says it iscommitted to delivering competitiveopportunities for its partners.

SAP clearly has proven technologyexpertise and tools to help its part-ners engage customers and solve keyproblems. Being a member of SAP’selite SME partner network ensurespartners that they will enjoy more

The global enterprise software suppliers have been eyeing up SMEs for some years now. In thepast it could be argued that the top-tier vendors did not have the ‘lean’ systems to serve the needsof growing businesses. However, the supplier community now appears to be better prepared,offering enterprise-style solutions that provide a better fit for small and medium customers, while promising to support expansion as it occurs. Another shift of emphasis among the largersoftware vendors is the renewed willingness to co-habit with existing systems deployed by smaller companies. It it clear that the SMEs will be a dogfight when it comes to enterprise-levelsoftware sales.

CBR OPINION

Lean philosophies have gripped the enterprise software vendor community. As Hughes at MBSexplains, being lean means cutting out waste as a front-end activity. But the scope of this approachgoes further, with the aspiration to deliver higher levels of value to the customer, ultimatelyextending this value to the small and medium companies.

This value equates to prompt and accurate information flows, says Oracle’s Hartwell. He sees leanprocesses leading to ROI calculations and standardised business practices across an organisation.When such circumstances prevail, the supply chain is never clogged up and information can be usedto influence business decision making in a more immediate way. Greater agility available at the systems level should also support faster and more accurate decision-making.

WHAT IS LEAN?

Henning Kagermann, SAP CEO

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Challenge:Talacre Beach needed a powerful ERP solu-tion to run its caravan sales, to manage theuse of facilities and to provide the manage-ment team with real-time information.

Solution:Microsoft Navision, combined with thedevelopment of a powerful sales tool fromCedilla Systems, was able to provide thefunctionality and flexibility the customerneeded.

Benefits:• £250,000 of costs have been stripped out

of the business over 12 months• A redeployment of personnel has been possible, thanks to increased automation of management accounting processes

• Budget holders now have all necessary reports automatically emailed to them, saving time and money

Summary:At the heart of Talacre Beach’s businessoperations is its holiday caravan sales andmarketing division, which includes the callcentre. The call centre makes outbound callsto generate appointments for the park basedsales teams, and a real need was identifiedto increase the effectiveness of the telesalesteam via a customer relationship manage-ment system (CRM). Talacre Beach neededa sophisticated enterprise resource planning(ERP) capability that was both simple to useand highly effective.

Business Challenge:Talacre Beach complained of a “paper trail”of documents between the call centre, parksand other departments. For instance, whencall centre staff made a sales appointmentfor a field sales representative, details of theappointment were faxed to the park wherethe sales advisor was based, the results ofthe appointment filled-in and faxed back tothe call centre, for the information to be re-keyed into the system at a later date.

Dean Styger, Talacre Beach FinanceDirector, says: “We needed more flexibilitythan our previous system could provide.

There’s a lot of applications available, whatmakes the difference is identifying the solu-tion that will meet your needs.”

Solution:One example of the value Cedilla brought tothis project was in the development of a toolto help Talacre Beach automate the salesorder process. Cedilla worked extensively todevelop a wizard-driven system to processsales orders for Talacre Beach; it was giventhe name ‘Deal Maker’.

The Deal Maker puts the company in com-plete control of the sales process, the salesadvisor may view the implications of eachdecision on the profit of the deal, allowingthem to make adjustments and offer dis-counts or giveaways confident that they canmeet a required margin. Should an existingcustomer wish to upgrade or cancel anexisting agreement, the system shows theimplications of cancelling the currentfinance package.

Prior to the Microsoft Navision system,there was no single repository of informa-tion on caravan stock; Talacre Beach wasmaintaining separate systems for each of its5 caravan sites.

Caravan stock availability is now always up-to-date, facilitating caravan sales and theholiday rental division to operate effectivelyand with minimum delay. Cedilla havedeveloped an interactive map allowing thecustomer to select an available caravan bymodel, year or even by manufacturer. Thecustomer can view selected photographsand even see the view from each caravanwindow (via a static image), before decid-ing to purchase or rent a van on any of theTalacre parks.

Dean Styger says: “We have seen a greatimprovement in our internal communica-tions and our sales and finance teams arenow working much closer together thanbefore.”

Having seen the potential benefits of a prop-

Talacre Beach Caravan Sales


erly integrated ERP system as the projectwas unfolding, Talacre commissionedCedilla to develop a park and facilities man-agement system built on MicrosoftNavision technology.

The system holds detailed information onowners, plots, caravans and staff. Thisallows each site to respond quickly andeffectively to customer requests. TalacreBeach use the system to log one-off cus-tomer requests (such as repairs or replace-ment items), or to schedule cyclical jobs(such as hedge trimming, general parkmaintenance duties or utility meter read-ings). Under the Microsoft Navision sys-tem, the full maintenance history for eachcaravan is now available, providing the cus-tomer with more detailed information priorto each purchase.

Conclusion:There are a number of system enhance-ments planned for the future, including theintegration of Microsoft Navision withTalacre’s retail and security systems. Forexample, customers will be able to use aswipe card for entry into the park or cara-van, or to purchase goods and services.Microsoft Navision can collect all the data,and produce a final account for the cus-tomer on check-out. The integration ofMicrosoft Navision with both bars andrestaurants and facilities booking (such astennis courts and golf) is expected to revo-lutionise the day-to-day operation of theCompany’s holiday parks. Talacre Beach arelooking at benefits in a number of areas,including greatly increased efficiencies andreduced costs on each transaction with acustomer on-site, and improved security byreducing the handling of cash on site.

Dean Styger is certain that the choices hemade were the right ones: “The good thingabout Microsoft Navision is that it is a wide-ly supported product, so no one need beconcerned about its future. We choseCedilla as our implementation partnerbecause they took a real interest in our busi-ness, we got an excellent response fromthem and they won our trust. The imple-mentation went very well and we arealready planning the next phase of enhance-ments.”

Talacre Beach Caravan Sales is a leading caravan and holidayhome leisure park company with five sites in North Wales.

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How easy is it to evaluate the alternative ERP systems

in the context of meeting core business processes and

enabling the delivery of a lean IT system?

Matthew Aslett investigates.

When Toyota published details of its ToyotaProduction System in 1978, the lean produc-tion system it represented revolutionised thecar manufacturing process. It soon spread to large-scale manufacturing as a whole with just-in-time (JIT) production systemsenabling manufacturers to reduce systemresponse time to ensure that the productionsystem was able to react to fast-changingmarket demands and business requirements.

The birth of JIT production also promptedthe arrival of the manufacturing resource processing software market – the precursor to today’s enterprise resource planning (ERP) systems.

Almost 30 years on and the principles at thecore of the Toyota Production System are aliveand well, and in the process of being transferredto IT service delivery. These will take the formof utility and on-demand computing modelsthat promise to deliver IT services that can toreact to changing business requirements.

There are many potential barriers to thedelivery of ‘lean IT’, however, and ironicallyone of those could turn out to be the ERPsystem. While ERP software suites might helpthe business to run more smoothly byautomating tasks and providing systems toenable lean manufacturing, the systems them-selves are traditionally monolithic, expensive,and liable to exhausting deployment projects.

While ERP systems can be customised toindividual business needs, vendor consolida-

tion and upgrade cycles mean that many ERP system users might be looking at a change of suppliers right now, and the pace ofchange in the industry is likely to leave anysystem behind.

According to CBR studies, enterprise appli-cation upgrade costs can easily reach seven fig-ures, or 30% of the overall annual IT budget.The consensus is that an organisation cannotcarry out a serious enterprise applicationupgrade in less than two years.

These are hardly the sort of figures that willenable IT systems to react to quick-changingmarket conditions, and not exactly the condi-tions to attract small to medium enterprises(SMEs), the latest target for ERP suppliers.

By the time a customer has gone through theprocess of selecting an ERP supplier, the speci-fications on which their choice was based arelikely to be out of date, and that is ignoring thetime it takes to get the software deployed,implemented and tuned.

What is needed is a new approach to evalu-ating the performance of the ERP system itself, one that takes into account its ability toadapt to changing business processes, as well as a new approach to defining those busi-ness processes to enable them to change tobusiness requirements.

“The bottom line, all of this relates toprocesses, which is different from a lot of other categories of software,” Doug Burgum,senior VP of Microsoft Business Solutions,

Lean Thinking


1. Eliminate waste 2. Minimise inventory 3. Maximise flow 4. Pull production from

customer demand 5. Meet customer requirements 6. Do it right the first time 7. Empower workers 8. Design for rapid changeover 9. Partner with suppliers

10. Create a culture of continuousimprovement

TEN RULES OF LEANPRODUCTION

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“As you go further up the scale youcan afford more and have more timeto investigate the choices, and you’remore likely to have someone whounderstands what a business processis,” Karlin continues.

“Getting the correct modelling ofyour business processes is the singlemost important thing to do for abusiness of any size,” he says.“Accounting and ERP products areso complex that a traditional evalua-tion of looking at different features isnigh-on impossible. As you go downa size of a company, the job offinding out what an application doesis way too long and complicated foran SME to do.”

Multiple choiceThe choice of ERP applications is acritical decision for small businesses.Consolidation in the industry hasreduced the number of choices avail-able in recent years, but there are still a number of vendors to choosefrom. SMEs also now have the choiceof enterprise vendors who are pur-suing them aggressively, eitherthrough targeted versions of theirenterprise products, or the acquisi-tion of SME specialists.

AMR has identified the main activ-ities to lay the groundwork forselecting and implementing an ERPsolution. These are establishing thetrue basis for competition in yourindustry; determining which busi-ness processes enable a competitiveposition within this basis for compe-tition; identifying key performanceindicators; and assessing which ven-dors and products provide the mostcompelling fit and ownership costfor a company’s critical drivers.

While many businesses are awareof their key business strategies basedon competition in their industry,matching the resulting critical suc-cess factors with business processes isanother matter. According to AMR,however, the benefits of doing so areworth the hard work.

“Our view of successful projectsreveals that attaining substantial ROIis achieved by improving existingprocesses and innovating newprocesses that speed delivery, reduceoverheads, and create new marketopportunities,” the report continued,before outlining how to go about it.

told a meeting of financial analystslast year.

“This is about helping people auto-mate processes. But the thing aboutprocesses, processes change,” he con-tinued. “Processes change becausecustomers demand it; processeschange because companies grow;processes change because companiesget acquired; and one of the biggestcosts around ERP systems is that theERP systems cannot change whenpeople want the processes to changewithout expensive consulting.”

Effective evaluationA recent report from applicationresearch specialist AMR Researchconfirmed the importance ofrecognising business processes in theselection of ERP systems. “Driven byindustry changes, many of the oldbusiness models and processes areno longer effective,” wrote AMR’sDave Caruso in the report. “As aresult, the information systems thatpower these new processes must bereplaced to be competitive.

“A fresh approach to selecting anERP system is warranted,” he added.“This new approach must recognisethat it’s not a high percentage matchof features and functions to your

existing business that will help yourcompany succeed: it’s knowing whataligns your system to the true basis ofcompetition in your industry.”

The report, entitled Maximising theImpact: A Strategic Approach to ERPSelection for SME Manufacturers,focused as the title suggests on smallto medium enterprises and manufac-turers, but the approach advocatedwill resonate with businesses of anysize in any industry.

While the principles of lean ITapply to organisations of any size, therequirements of SMEs mean thatenabling flexibly requires a differentview of ERP systems. “You have tomatch and marry to businessprocesses, so the product has got tobe very flexible,” says Jon Hughes,director of Microsoft Business Solu-tions partner group.

“ERP was always left to the largeorganisations that could afford it,and for larger organisations withglobal processes they tend to be morerigid,” he adds. “Medium-sizedorganisations need to flex veryquickly and I think the technologyhas matured and the price pointshave come down, and are now defi-nitely in the range of mid-marketorganisations.”

Oracle’s head of applications andindustries marketing, EMEA,Anthony Peake, agrees. “A lot of bud-gets available for big-bang projectshave eroded while smaller enterprises’investment in IT has expanded, alsothere’s been more proven success soSMEs who don’t like to be on thebleeding edge can see that there’s farless risk [in ERP],” he says.

“The SME requirements have comeup, and the cost of solutions and theway they’re packaged have comedown to meet the needs of SMEs. AnSME is different to a large enterprise,a large enterprise can take a risk – it’snot going to stop the business: anSME will die tomorrow if it takes thewrong decision.”

David Karlin, managing director ofSage’s mid-market division, concurs.“Very similar options are available tosmaller businesses, but their sizemeans they very often have to goabout it in a different way,” he says.“The weighting of packaged softwareto a major IT project is different thesmaller a business is.

Doug Burgum,Microsoft BusinessSolutions seniorvice president


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“Many of these business processeswill be new to organisations as theygrapple with supply chain and e-business-driven changes that busi-nesses must make,” it continued. “Tointegrate them successfully, man-agers must link business process tostrategic business drivers.”

The overall message from AMR isthat the business processes identifiedas critical to success should be usedto define competition in a company’sspecific industry as the basis for ERPselection, rather than the traditionalcriteria of features and function, andvendor strategy.

These factors cannot and shouldnot be ignored, of course, but AMRrecommends that business processesshould be at the heart of any deci-sion, including demonstrations offunctionality.

Microsoft’s Hughes agrees. “Thewhole idea of going through aprocess design stage and matchingthat to the core functionality, ortaking the opportunity to reviewbusiness processes, I think compa-nies do that,” he says. “Unless youtake the opportunity to review busi-ness processes... it’s about once thesystem’s in, how do you exploit it toget future growth?”

Demonstration scriptsIf a customer is to fully understandthe capabilities of a potential ERPpurchase, they should not onlyobserve the basic functionality andproduct set, but also developscenario demonstration scripts thatreflect key business processes.

AMR added that while it is important vendors follow thesescripts to demonstrate their prod-ucts’ ability to meet business require-ments, customers should also allowvendors to present alternative busi-ness processes.

Oracle’s Peake sees that happening.“We, with our partners, present tothem the best processes, the bestbusiness flows from our experience,although if they have processes they want to stick to we can workwith them,” he says. “A particulararea where we have an advantage is that configuration is better thancustomisation.”

Partners and the channel can mouldthe solution to fit the requirements.”

According to Sage’s Karlin, “thereare surprisingly few differences inbusiness processes” for small andlarge vendors in a similar field, butthat does not mean that one size fitsall. “The way in which you do it mightbe completely different,” he adds,“although the base fundamentals ofthe business process are the same.”

The future of lean ITBut do those base fundamentals meet the demands of lean IT? Karlin,for the moment at least, is notconvinced. “I think that’s anappealing concept and it will getcracked at some point, buteverybody’s a long way fromcracking it,” he says.

“I think that’s still a very difficultprocess in IT, and is very difficult todeliver today,” he says, before addingthat this could improve with toolsthat measure software metrics. “I canimagine a world where those toolsare widespread but they’re not theretoday. On-demand focuses on areaswhere hardware usage is at a pre-mium and if you’re an SME, CPU-usage is not necessarily a problem.”

Oracle’s Peake disagrees, however.“As people have looked at stove pipesin their production processes, in thesame way as lean has worked, havingislands in IT by department andchanging that over to a holistic envi-ronment for your organisation, theability to have lower-cost IT systemsin a grid is not just a theory, it’s beingput into practice,” he says.

“The theme around lean IT is asappropriate to the enterprise as it isto the mid-market,” says Microsoft’sHughes. “It’s about maximising theefficiency of organisations.”

In targeting the SME space, Oraclehas come up with E-Business SuiteSpecial Edition, a packaged variant of the E-Business Suite enterprisesoftware for SMEs that promisesfixed-time, fixed-cost, fixed-scopedeployments. “We’re selling thesame software as we do to largeenterprises but it’s packaged for theirrequirements and delivered throughpartners,” says Peake.

“What we offer is 80% configuredwith all the best practices,” he adds.“But built into the price is the abilityto add that 20%, which could be thebusiness processes that give them acompetitive advantage, and we don’twant to lose those.”

Microsoft’s Hughes maintains thatthe enterprise vendors will struggleto match the model of Great Plainsand Navision, two SME applicationspecialists acquired by Microsoft toform its Microsoft Business Solu-tions group that have always tar-getted the SME space and alreadybuilt up partnerships with SME spe-cialists.

“The way I see it developing is themarket is served today by vendorswho develop applications from theground up from soup to nuts. We seethose vendors reducing their devel-opment time by building on Navi-sion and Axapta,” he adds.

“The products deliver out of thebox 70% of the functionality requiredand match 70% of the processes. It’sabout how you get the extra 30%.

The growing complexity of ERP systems, combinedwith an increased number of vendors targeting SMEs,makes evaluating ERP systems a complex task. As theproducts themselves have matured, the biggestdifferentiator could well be how a vendor matches andextends a customer’s business processes. Certainly inenabling the delivery of lean IT systems that are able torespond rapidly to changing business requirements, afocus on business processes will be essential.

CBR OPINION

Anthony Peake,Oracle EMEA headof applications and industries marketing


Benefits:• Speedy and accurate analysis• Ready access to information for remote

users• Direct inbound invoice processing reduces

redundancy and cost in the buying process• Improved buying process management

Summary:CHE was operating antiquated systems thatwere preventing it from achieving opera-tional visibility and control. The companychose Microsoft BusinessSolutions–Navision software supported byits solutions partner TVision Technology.The solution provides CHE with much clos-er yet flexible control over the business.

Business challenge:The hotel and leisure sector is extremelychallenging. Operators have to maximisethe yield from each establishment. This isnot limited to room occupancy but also cov-ers activities like restaurant and bar sales,conference, business and leisure facilities.CHE's systems were not up to the challengeof running a modern hotel portfolio and thecompany realised that devolving day-to-daymanagement responsibility was of little useunless local managers and their staff had adegree of control over the assets they man-age.

At the same time CHE needed to maintaincentral control because senior managementneeded a way of readily understanding per-formance while remaining alert for anom-alies or deviation from standard practices.Part of the key to executing on this strategyrequires that both local and central manage-ment see the same information in as close toreal-time as possible.

David Cook, financial director explains:

"We need detailed metrics across a range ofactivities. Such things as accommodationbooked by corporate, general leisure andagents each have different price structuresand we want to see how the sales mix can beinfluenced. Our old systems could not read-ily provide this level of information."

In addition, CHE wanted to make localaccountability a reality. CHE prides itself onproviding its management with industryleading training but maximising the fruitsof this investment requires that managershave information readily to hand. "If man-agers are to be accountable then we need togive them information ownership," saysCook.

Solution:Following a detailed evaluation, CHE optedfor Microsoft Business Solutions–Navisionusing Microsoft's Terminal Services withsoftware and implementation services beingprovided by TVision Technology.

Terminal Services provides an efficient wayof connecting multiple, remote sites to acentral control centre. "As far as I am aware,with 40 units, this is the UK's largest rolloutof this product combination to date," saysRichard Thompson of TVision.

"It was a challenging project becauseChoice Hotels not only had a demandingimplementation schedule but were alsolooking for a highly flexible solution."

Cook notes that success depends on havingthe right partner and in this context foundthat: "TVision has proven itself to be a goodfit for our business – they understood whatwe needed early on and this ensured theproject completed within the agreed time-frame."

Choice Hotels Europe


Benefits:Cook cites a range of high impact benefitsthat were almost immediate. "We wantedspeed and accuracy of analysis and wequickly achieved." Cook cites issues likepayroll comparison for front of house oper-ations as a key metric the company neededto understand. "We used to have to contactthe hotels by phone – now it's available onthe desktop." Elsewhere, central purchasingis able to see buying patterns and is there-fore able to start considering how to consol-idate suppliers as part of a strategy to drivedown cost. At the same time, this hasallowed Purchasing to see how hotels areperforming and spot when managers are notfollowing procedures. Also, the companyreports significant savings as a direct resultof its ability to provide management auton-omy: "Entering invoices directly into thesystem as they are received, either locally orat head office is so much more efficientthan the old batch processing method," saysCook. But most important is the fact thecompany now operates from a ‘single ver-sion of the truth' while ensuring there isflexibility. This means that as the company'sneeds change, the system can adapt accord-ingly.

Future trends:"This has been a highly successful projectthat has produced a great result and there is,I am sure, more to come," says Thompson.Cook is more than satisfied with the imple-mentation but is aware the company has thepotential to get much more out of the sys-tem. "We have achieved a lot in a shortspace of time but I am aware we're onlyusing a fraction of Microsoft Navision'spotential. I want for instance to move tographical reporting as this is much easierfor business line managers."

Further down the road, CHE hopes to notonly achieve greater insights into operationsbut also further improve its buying and pro-curement operations: "I'd like to take advan-tage of our international status to encouragegroup buying. Microsoft Navision's systemscan cope with this."

Company description:Choice Hotels Europe runs 35 hotels in the UK under the Clarion, Sleep Inn,Comfort Inn and Quality brands. In business since 1986, the company cur-rently generates revenue of £75 million and is publicly listed on the Londonbased FTSE.

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Challenge:A replacement for the company's DOS sys-tem which would adhere to complexaccounting process and project managementissues prevalent in the construction industry,while offering additional time and cost-sav-ing features.

Solution:Microsoft Navision Construction Editionwith the following modules: GeneralLedger, Applications for Payment,Retentions, Payables and Receivables, CISreports and Payroll Management.

Benefits:• Easy-to-use Windows® interface to reduce

re-training time and cost• Built-in support for construction industry

accounting and tax regulation needs• Consolidated reporting tools • Internet support to allow future e-procure

ment solution development

Background:The core business of YBS is in the foodindustry, and its largest regular client isASDA; over 50 ASDA stores have been fit-ted out to date. Company growth meant theoriginal DOS-based accounting system wasshowing its age.

YBS accountant, Paul Harrison, explained:“The old DOS system was good for its dayand we had spent a lot of time customisingit but it was becoming sluggish and addingadditional users was difficult.”

In September 2000, Harrison started look-ing at replacement systems: “What attractedus to Microsoft Navision was its flexibility,which would allow us to create a system thatoffered the best features of our old system.”

YBS selected CoMet-IT based on its proventrack record. Brian Alsford, ManagingDirector and founder of CoMet-IT took ahands-on approach with YBS: “The con-struction industry was an area we hadlooked at for a while as many firms are still

using DOS-based systems.”

“YBS had a DOS system that had beenmodified to provide the best possible func-tionality. We knew that using the processflow as a starting point, with the power ofthe Microsoft Navision programming lan-guage we could build a much better systemwith more features and offer a foundationfor future growth and innovation.”

Solution:Typically, YBS will employ contractors andspecialists who all need the relevantConstruction Industry Scheme rating andpaperwork from the Inland Revenue. Thisaffects how much is taxed at source and howa contractor is employed. Failure to providethe correct paper work can result in fines forYBS from the Inland Revenue. Anothercomplication is the project payment processthat uses independent surveyors to assesshow much work has been completed at spe-cific milestones.

Harrison says: “What we needed from thenew Microsoft Navision system was a levelof intelligence to help us plan a profitableproject and then keep track of all the differ-ent elements, so that managers can keepwithin budget and regulatory constraints.”

With CoMet-IT as the implementation part-ner, the main project got underway in early2001.

“The team from CoMet-IT spent about twomonths modifying the basic MicrosoftNavision system while we ran our old sys-tem for ongoing projects. By April, themajority of this work was done and we thenran both systems in parallel for a further twomonths while we conducted training andmade smaller modifications based on sug-gestions from users.”

“After two months of successful operationof the new system running in parallel, wefinally switched over on 1 July 2001. Wehad several large projects on at the time so

Yorkshire Building ServicesAdvertisement Feature

it was critical that the construction man-agers were able to work with the new systemstraight away. Because we had kept themethodology of the old DOS system with animproved interface and new time saving fea-tures, it was a smooth migration.”

“CoMet-IT have been a good solutionprovider to us and delivered what they saidthey would on time and on budget.”Harrison adds.

Conclusion:“The new system has much more function-ality than the old DOS system and is allow-ing us to keep a tighter control on projects.We have fewer problems such as incorrectCIS paperwork or budget overruns as thesystem is able to automatically highlightproblematic areas.” explains Harrison.

The software migration also allowed YBS toupgrade its IT hardware, and benefits interms of network performance and user pro-ductivity have also been a major bonus.

Harrison believes that the new system hascontributed to the increased growth of YBS:“In 2001 we had a turnover of £9.8 millionwhich increased to £13.2 million in 2003.But we still use the same number of projectmanagers to handle the increased workloadand this is a direct consequence of the effi-ciency of Navision.”

“Microsoft Navision Construction Editionwas a good investment for us, and we arenow looking at streamlining our procure-ment process by using it as part of an inter-net-based procurement solution.”

The success of Microsoft NavisionConstruction Edition has prompted CoMet-IT to make the solution available to a num-ber of partners including Blue Chip DataSystems and TVision Technology.

Richard Thompson, Managing Director ofTVision, adds: “We have experience of pro-viding other business solutions to severallarge clients within the construction indus-try such as Balfour Beatty CivilEngineering and John Laing. MicrosoftNavision Construction Edition is a strongsolution that is ideal for others across theindustry.”

Company description:Yorkshire Building Services Ltd (YBS) was formed in 1992 and has grownrapidly to include clients such as ASDA and LA Fitness. The servicesoffered include the design, build and installation of mechanical, electrical,refrigeration and air handling services.

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CRM is finally beginning to be applied to small and medium enterprises.

Angela Eager reports on whether the SME market will prove a success for

targeted CRM deployments and projects.

Vendors view the small to medium enterprise(SME) market with all the relish of a big catwatching a herd of antelope, but the SMEs underobservation are afforded protection by their sizeand skittishness. Unless vendors can demonstratethat their customer relationship management(CRM) systems can produce a positive return,SMEs simply will not invest.

SMEs have every reason to be suspicious of ven-dors because many of them are only stalking themarket because revenue from the high-end is dryingup. Attitudes are also tainted by the scent of failurefrom early, large-scale CRM implementations.

“The damage in the early days of high-profile failures has done medium-term damage and sloweddevelopment of the market,” says Gerry Carr, mar-keting manager of the CRM division of SME busi-ness applications specialist Sage. “When large ven-dors come to the mid-market they can be less thanconvincing, so SMEs are right to be sceptical of thelarge vendors.”

But it is not just suspicion over vendor motiva-tions and their ability to understand SME require-ments, there are also questions over what CRMreally is and the value it can bring to a SME. “CRM isstill not well understood,” says Microsoft’s UKCRM product manager Jason Nash. “It is not like aword processor that everyone understands. CRM insmall and medium businesses is an inexact science.”

There is still a lingering belief that CRM is onlysuitable for large companies and has no place inSMEs, which is why Microsoft says its biggest com-petitor in the SME sector is Excel. As a result, ven-dors are concentrating on presenting software andstrategies designed to solve specific business needs.It is not about CRM but “doing joined up customerexperience management and customer interactions,doing the key themes from CRM. It is CRM but it isnot CRM terminology,” explains Nash.

Great Expectations


Larry Ellison, OracleCEO and founderand majority ownerof NetSuite


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At its most basic, CRM enablesautomation of customer-relatedactivities, which drives down costsand should increase accuracy, butthere are also the issues of recon-ciling customer demands with busi-ness needs and bringing together themany facets involved in customermanagement.

First-level SME CRM implementa-tions are focusing on sales fore-casting and marketing – using CRMsoftware to help organise andmanage marketing budgets and trackmarketing campaigns – and salesforce automation. There is also adrive to use it for customer service, toreplace existing solutions that eitherdo not work or do not enable accessto data stores.

A CRM system also tackles com-munication, integration and theneed for shared information. AsNash points out, Excel is great foraiding decision making but theproblem is that the decisions will be based on non-shared data, whichwill ultimately damage the quality of the decision making, bringingbusiness risk.

Clearly there are different levels ofsophistication with regard to CRMbetween SMEs. While some arefocusing on automation, others aremoving on to the next stages. Nashbelieves there has been a slight shiftin focus from automation to insight,with SMEs looking to use CRM toimprove the quality of customerinteractions in order to generatemore sales.

“[Within SMEs] there is a lackknowledge to enable a joined up cus-tomer experience, of the knowledgeof sales processes and whether cus-tomers are profitable. Some compa-nies don’t even know that some cus-tomers are not profitable,” Nash says.

Firm foundationsCarr cautions companies not to runbefore they can walk and says this level of insight is usually found at the final level of a four-stageimplementation. “Insight andanalysis can help but you need astrong foundation so it is importantto take it in stages. A minority areready for analytics. Automation of

implement and administer, that doesnot mean CRM itself is simple.

By its very nature, CRM is complexbecause it is not a discrete technologyor business function: the businessstrategy and enabling technologyneeds to cross and integrate thewhole business operation. There is adifference between simplifying tech-nology and simplifying CRM.

Communication, communicationAt its heart, CRM is about communi-cation, between people, betweeninternal departments and betweenthe organisation and its customers,partners and suppliers, and thatrequires heavy duty work in areassuch as data and process integration,identifying, analysing, documentingand managing business processesand workflow enablement.

“[CRM] is complex. You have totake the internal pain,” warns Carr.“If you don’t go through the pain it is not going to work. You willeither have a useless product or just push the pain point two yearsdown the line.” Denying the painraises the risk of replicating the mis-takes made by the large enterpriseCRM pioneers.

Processes are key to the pain andthe success or otherwise of CRMimplementations, even in SMEs.Processes need to be identified, doc-umented and understood and work-flows need to be examined andchanged if necessary because there is

sales, service and marketing is stillthe main driver.”

Despite the risks of going too far,too fast, SMEs are taking to CRM as aconcept because they have the sameneeds as big businesses. “Their needsare as complex, if not more complex,than large organisations but theydon’t have the manpower, software,budgets or IT people,” says ZachNelson, CEO of NetSuite, the smallbusiness application specialist set up in 1998 by Oracle CEO LarryEllison. It is not just a resourcingissue: “They are more complicatedbecause they cannot throw money atthe problem,” he adds.

External pressures are also havingan effect in business-to-business sce-narios where SMEs are comingunder pressure from large customersto understand their processes andcomply with their mode of opera-tion. “They sell to larger businessesand larger business are puttinggreater demands on them,” saysNelson.

Being smaller does not mean busi-ness requirements are any less com-plicated either. “You don’t have tohave a large number in absoluteterms before it makes sense to have aCRM system,” says Carr.

The need to balance simplicity andcomplexity is a defining theme ofCRM for SMEs. While they do have arequirement for uncomplicated soft-ware that is affordable, manageableand usable, that is quick and easy to

Marc Benioff, Salesforce.com CEO


CRM is challenging and prospective SME investorscannot avoid the steep learning curve. Software canmake it easier at the start, as can learning from theexperiences of large enterprises and taking a phasedapproach to CRM in terms of vision and implementation,but there will always be a curve to get to the next level.There is no way of avoiding the hard work of examiningthe business, its needs and mode of operation, itsprocess and workflows, and determining what worksand what is needed. Understanding the business hasalways been the challenge with CRM and it is nodifferent in the SME arena.

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no point in automating just to enablea bad process to be completed faster.“CRM improves the speed ofprocesses: but if it is flawed it willonly do the wrong thing morequickly,” says Microsoft’s Nash.

According to Nash, SMEs have anadvantage over their large enterprisecounterparts because they are willingto change. “In large enterprises thereis an inherent desire to hold on toprocesses. They are viewed as sacro-sanct so the implementation is abouthow to make CRM work with theexisting business processes. In SMEsprocesses are also important but theyare more flexible when imple-menting CRM systems. Our partnerswork with the customers to seewhich processes are right and changethem if necessary.”

Nash believes that the size of thebusiness impacts the ability to reviewprocesses and act flexibly. The chal-lenge is that because process automa-tion is the power behind CRM,processes need to be kept simple andvendors – as well as customers – arenot always able to meet the challenge.

Vendors have reduced complexityfrom a technical standpoint throughthe use of technology standards suchas XML and web services, and dif-ferent deployment models such asthe on-demand model promoted byvendors like Salesforce.com, Net-Suite and latterly high-end vendorand mid-market wannabe Siebel.There are also promises of integratedtechnology and applications plat-forms, as proposed by Microsoft forsome point in the future.

There is also growing interest inintegrated front and back-officesuites such as those from NetSuiteand SAP based on the idea that CRMshould not be sold as a singlesolution, particularly in the SMEmarket, because it needs to embracethe whole organisation.

One of the drivers for CRM inSMEs is dissatisfaction arising fromthe use of separate products,according to both NetSuite’s Nelsonand Sage’s Carr. Nelson says many ofits customers came to it for CRM butbought into the suite because theyhave tried “dis-integrated” systemsand now want something more.

With businesses rethinking theirapproach in order to put the cus-tomer at the centre of the business, itmakes sense to have customer dataat the heart of the operation, using it as the single source of truth for all operations. This is somethinglarge enterprises and their supplyingvendors such as SAP, Siebel andOracle have learnt and SMEs canbenefit from.

While they are developing andtrying to retrofit customer data inte-gration solutions to bring their datasources together, SMEs have theoption of avoiding the problemsfrom the start. A complete systemwill also make it easier to implementand manage end-to-end processesbut at the risk of limiting flexibilityand customisation.

Tricks of customisationPackaged suites will not be suitablefor every business. They may beinappropriate due to the presence ofan existing set of applications that itis not feasible to replace or may lackthe scalability or customisationability needed by larger or morecomplex businesses.

Customisation is a tricky issue. Itspurpose is to better fit the software tothe way the business operates. How-ever, it is expensive and risky and wasone of the issues behind the lowCRM ROI experienced by some largeenterprises. One way to reduce costand risk is to opt for vertical marketversions that are already configuredwith common processes and work-flows, thereby reducing the need forcustomisation.

Customisation is an area of majorphilosophical difference betweenvendors. SAP offers a totally generictake-it-or-leave-it CRM suite. Sagefocuses on horizontal functionalitywhile providing its customers withthe scope to customise. Microsoft’smodel is similar but it looks to part-ners to develop vertical and customversions. Similarly, Salesforce.comoffers a generic version of theproduct but differs from the othersby providing the Sforce developmentplatform so customers and third-party vendors can build their ownextensions and integrations.

The approach of these SME spe-cialists contrasts with that of high-end Siebel who last quarter re-entered the SME market with anew dedicated division, an embry-onic partner program and SMEproducts in the form of a hostedCRM solution. It believes in thevalue of vertical versions. “The dif-ference is with industry-specificcapability a company can use thetechnology against the way theyoperate as a company,” says BruceCleveland SVP and general managerof Siebel’s SMB business division.

“We do not outsource develop-ment to the customer,” he says. “It isludicrous, customers should nothave to develop [the application]. Sixto 18 months additional work isrequired if you outsource develop-ment. We don’t believe in out-sourcing development.”Generic, horizontal CRM systemstend to work for smaller businessesbut as they grow and their needsextend beyond simple automationthey need to be able to customiseprocesses and data models, build andintegrate with new applications todifferentiate their business forcompetitive advantage.

Clearly, CRM can never be com-pletely simplified so all vendors canhope to do is simplify from a tech-nology perspective while using theirknowledge of SME requirements toreduce complexity on the businessfront. This has the benefit ofenabling SMEs to access CRM andbegin to see what sort of value it candeliver; the downside is that itpushes out many of the difficultiesby a couple of years.

CBR OPINION

“[CRM] is complex.

You have to take the

internal pain. If you

don’t go through the

pain it is not going to

work. You will either

have a useless

product or just push

the pain point two

years down the line.”

Gerry Carr, Sage CRM division

marketing manager

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STEP UP - download.microsoft.comdownload.microsoft.com/documents/uk/advisor/reality/stepupagear.… · ERP/SCM adoption, with penetration rates at 3% for US small businesses, 11%