Why did SAP buy SuccessFactors?

SAP's Strategy
With acquisition of SuccessFactors, Bill McDermott and Jim Snabe have named the Founder & CEO - and cloud visionary, Lars Dalgaard, as head of the combined cloud solutions business at SAP. With over 10 years of experience driving SuccessFactors to a phenomenal 15M business users - over 2-3 times the nearest competitor, Lars is uniquely positioned to drive this business for SAP. SAP's goals are to enable businesses of all sizes to unleash the power of cloud computing to help the world run better.

Lars has been given:
􀂃 Over 3,000 developers to accelerate the delivery of our cloud solutions
􀂃 Over 1,000 sales people to aggressively pursue cloud opportunities worldwide
􀂃 Over 2,000 sales support and GTM people to drive enablement
􀂃 This represents over 12% of the human capital resources at SAP!
􀂃 Coupled with the $3.4BN investment by SAP to acquire SuccessFactors, that’s quite an investment!

SAP's Promise
SAP is committed to win in the cloud market by leveraging all its assets. For current SAP on-premise customers, SAP will offer them the opportunity to move to the cloud when they are ready and to do it in a way that leverages all of their investments in SAP on-premise products. For new customers, we offer a broad set of solutions that can be rapidly deployed with lower cost of ownership. Our products are deployed on a secure and reliable cloud that scales to meet the needs of any size business.

Summary
SAP believes the full potential of cloud computing can only be realised if cloud solutions enable end-to-end business processes. The alternative is to lock business data and users in separate point solution clouds that will only slow businesses down in the end. We are differentiated by the fact that only SAP can deliver integrated cloud solutions to the enterprise that do enable end to end business processes.

If you would like to talk with SAP on this topic and what this could mean to your business, please feel free to contact Colm Fagan, HCM Sales Specialist. His email address is: colm.fagan@sap.com

Mobility solutions a part of your ERP solution?

The analysts have spoken. The vendors are delivering. The customers are buying.

Is Mobility the next wave of a critical component of an ERP solution provided by the ERP software vendor or ISV (Independent Software Vendor) Partner like CRM, WMS, eCommerce and others items were in the past?

Mobility solutions cover a range of components that make the solution unique compared to other parts of an ERP solution such as CRM, WMS and eCommerce. The unique components are hardware (devices), off-line/ on-line capability, communication security and support. The unique nature of the solution demands new business and support models for vendors and ISV’s that bring mobility solutions to the market.

The challenge for the IT market is to provide their customers with the next wave of automation that should become a default offer of every mature ERP vendor.

The opportunity for businesses is tremendous if you read and believe the messages of the analysts.

“Only 15% of Your Business is plugged into your business management (ERP) system”, AMR, The Enterprise Resource Planning Spending Report, 2005-2006.

"This year (2010) the mobile worker population will reach the one Billion people mark and by 2013 it will grow to 1.2 Billion. That is one third of the global population”, Stephen Elop at Convergence 2010.

“Users should look beyond ERP cost optimisation toward the growth possibilities that ERP offers when used with various cross-domain technologies”, Gartner, September 2009.

According to IDC the average investment for mobility solutions is around $ 6,500 AUD (4,000 Euro) per user while the savings are estimated around the $ 13,500 (8,150 Euro) per user per year. These kinds of numbers make it almost a no brainer to at least investigate how mobility could save costs in your business in the areas of: Warehouse, Sales, Field Service, Marketing, Manufacturing shop floor, Retail, Transport. Mobility connects internal staff with external staff in real time and the structured information (processes) with unstructured processes.

With this in mind and with the general mind set of ‘doing more with less’ and cutting costs, mobility encourages staff to become more productive and effective anytime and anywhere. Mobility solutions are the next wave of solutions that can exactly provide this to businesses. It enables people to connect to an ERP solution and therefore connect real-time to business data, logic and processes. This provides businesses benefits such as; time savings to process information, increase the accuracy of data, provide business insights to key stakeholders in the business to make better decisions faster and even creates additional revenue streams.

Worldwide ERP vendors such as SAP, Microsoft and Epicor have strong offers in the market either supplied by the vendor itself or via their partner model. SAP has signed a definitive merger agreement to acquire Sybase that provides enterprise mobility solutions and is positioned in the leaders quadrant in the 2009 Mobile Enterprise Application Platform Magic Quadrant.

Microsoft partners such as Dynamics Anywhere supply dedicated mobility solutions to the Dynamics ERP channel. In Australia Hands-on Systems has developed a Mobility Solution framework for Dynamics ERP and solutions for sales and warehouse . Epicor took over the local Microsoft Mobility partner Spectrax in August 2009.

The analysts have spoken. The vendors are delivering. Are you looking to the mobility solution opportunity that is part of your current or new ERP solution soon?

Is an ERP solution an Industry solution?

If your business is looking for a new integrated IT Business Solution, what is your vision with regards to the type of solution you are looking for? 

1. An out of the box ERP solution that covers all the basic process functions/ business processes within a business?
2. A very specific niche industry solution that meets your particular industry processes.
3. A mix of 1 and 2, being an ERP solution with a level of industry specific functionality that meets your business requirements til certain extend.

In this article I would like to share with you how to discover the depth and quality of point 3 and qualifying whether it is a possibility. I assume here that this is the preferred solution for your business given it is going to provide your people with the most benefits.

Industry specific

What does this actually mean? How should it reflect in an ERP solution? When an industry specific or vertical solution for an industry is mentioned, I envision a niche solution in a specific part of the supply chain that addresses specific business challenges that occur in that industry. Let me give you an example.

Manufacturing is not industry specific; manufacturing widgets (discrete with a make-to-stock manufacturing policy) is completely different from making bread rolls (semi process, with batch manufacturing policy). The manufacturing policies, the flushing methods (backwards and forwards), demand forecast models, Bill of Material versus Recipients, by-products, co-products are some of the elements that are different.

Distribution/ Wholesale is not industry specific. Distribution of liquor is completely different from distribution of whitegoods for example - the pricing models, compliance with the government and bonded warehousing.

And the same is valid for Retail, Financial Services and other core industries.

Therefore we could conclude that industry specific should be more specific. A way of measuring/ checking is with the SIC (Standard Industrial Classification). Industry specific should be at least 2-3 codes deep and therefore software vendors/partners providing ERP solutions that cater for that niche level.

It is relatively easy to verify if software vendors/ partners are doing this by looking to their website, references, looking to the industry focus of their marketing activities, checking if they are a member of certain associations and attend key industry events.

Once you engage with a software vendor/ partner, check if they speak your industry language and know your key business challenges related specifically to your industry. These are critical checkpoints to make sure you not only select the right solution but also implementation partner.

Cloud computing – Sunshine or rain or?

Cloud computing - a hot term that is becoming part of the standard IT vocabulary alongside Web services and SAAS. Is it just hype like eCommerce was back in 2000?

So what is Cloud computing? I ask this question because there are many different definitions in the market currently and at the same time it is perceived as something that IT Vendors need to offer to stay up to date with technology.

According to Wikipedia Cloud computing is Internet-based computing, whereby shared resources, software and information are provided to computers and other devices on-demand, like a public utility.

What does that mean to your business?

The best way to explain it, is to provide you with an example, Hotmail and Gmail are two great examples of Cloud Computing. The data, application, security and interface are all accessed via the internet by a computer or mobile device of choice, with a certain level of flexibility. The benefits of that are tremendous of course - Simplicity, independency and many more. It is a (new) delivery and cost model to provide IT applications to businesses.

ERP and CRM in the cloud!

Salesforce, Microsoft and Oracle are delivering part of this Cloud computing concept in the market for CRM today. The difference is still the flexibility of the application itself in terms of modifying it to its unique needs for a specific customer. You can subscribe yourself to the ‘Cloud computing’ service today and have theoretically your CRM application up and running the same day. It is basically a hosted environment . Please read this blog article for a high level overview on the difference between hosting, co-location and on-premise.

ERP via Cloud computing - now that is a stretch! Not so much from a technology point of view but more from a business concept in itself. Ask yourself one question to verify the concept ; “Do you trust to have your financial data stored on a server farm”? Technically it should be ok, right…? Maybe it is similar to the idea of internet banking. It was perceived as dangerous and risk-full and now the mass of us is doing it because it is just so easy and saves us time. Have a look at the ERP application, Open Bravo that is completely “in the cloud”.

Other points to consider is how the integration with ERP, CRM and other productivity tools such as email, word processing, data analysing tools such as Excel, Cognos etc. will work on your desktop.

Microsoft On-line services via Telstra is an offering to the market that brings all these aspects together. Mail, Word and Spreadsheet processing, Document Management, Communication and CRM all via the internet hosted at Telstra via a subscription model.

According to Steve Ballmer, CEO of Microsoft, Microsoft is shifting their work (and staff) to the Cloud. It is about 70% now and will be 90% in one year time. That is significant. Microsoft has worked hard on making the platform, server, operating system and productivity tool Microsoft Office ready for the cloud. Windows Azure™ is the foundation for this. It provides IT partners with a platform to build applications on and it provides customers with applications available via the internet.

Steve Ballmer speaks about the five key dimensions of cloud computing. And Salesforce has a simplified video about what Cloud computing is on its website.

My tip: Keep an eye on this development and when you select a new IT Business Solution that you want to have installed on-premise perhaps look to the innovations of the solution itself, if it has the capability to be installed in the cloud with the possibility of providing you the same user experience.

How the “Millennial generation” can impact your business?

Accenture recently researched the behaviour of employees and students of the so called “Millennial generation” (14 to 27 years old). The research surveyed 5000 employees and students, and here some interesting observations that were a result of this survey:

1. 37% shared that the availability of advanced IT Technologies is an important reason when choosing an employer;
2. 39% use mobile phones that are not supported by the employer;
3. 29% admit that they don’t actually know if there is an IT policy or not;
4. 32% expect that they can install their favourite applications (social networking, instant messaging) after they have been working at the company for a while.

Accenture points out that companies need to take this behaviour into account otherwise they risk it becoming difficult to hire and keep staff. Also their position in the market will be at risk since there is a lack of innovation with regards to IT.

How do IT Business Solutions can have a positive impact on this?

When I asked one of our younger staff what the key points are for them to work with an IT Business Solution, they mentioned the following points:

• Pleasant interface
• Easy to use
• Simple
• Smart
• Fast

Is that not true about Linkedin, Facebook and Instant Messenger….? And should that not be the case for IT Business Solutions anyhow?

If your business is looking at selecting a new IT Business Solution you might want to take these aspects into account. The Millennial generation is our next work force generation, we better keep up with them!

CRM offerings in the market.

There was a lot of hype around CRM (Customer Relationship Management) just before the Y2K period. Siebel (acquired by Oracle) positioned itself very strong in this market, new CRM players appeared, and ERP vendors were playing catch-up by incorporating a CRM solution in their ERP solution.

CRM as a business concept is one of the oldest and most vital business concepts existing in history. It is the IT Business Solution market that can assist the business with this. With the range of CRM solutions available to your business nowadays, there is a wide range to select. Beside what is available out of the box, integration with productivity tools such as Microsoft Outlook, Office and Mobile devices, and adaptability of the CRM software itself, it is the offering model that determines the breadth and depth of these previous points.

What offering models are there available on the market?

1. On premise – the CRM software application is installed and configured on your server within your network;
2. Co-location – the CRM software application is installed outside your network and your business owns the server and CRM software;
3. Hosted – the CRM software is available via an internet browser. The CRM software and server is outside your network and is not owned by your company.

Which model suits your company best?

The table below provides you with an overview with the set of critical points per offering model. Depending on your business CRM strategy, each of these offering models have pros and cons.

I hope this provides you a framework to advance the right CRM software for your business.

Order in the chaos

Warehouse Management Systems for your organisation?


Many organisations are still working with a maze of technology silos to support their business processes. We also call these silos islands of automation & information.

And, whilst the supply chain management function has been reasonably well served by more traditional Enterprise Resource Planning (ERP) systems, and/or Finance Systems enhanced with Microsoft® Excel or other types of spreadsheet applications, the supply chain execution function has required companies to acquire additional technologies such as Warehouse Management Systems (WMS) that do not easily interoperate with the ERP backbone systems.

The continuous struggle for higher throughput and shorter time-to-market now compels companies to look for integrated solutions as a replacement for these fragmented silo systems to achieve both their supply chain management and supply chain execution objectives.

Companies increasingly recognise that their replacement strategy must include integrated solutions not only for the corporate functions traditionally supported by ERP systems but also for execution processes such as the shop floor and the warehouse. However, whilst integrated shop floor control systems are a standard feature of most integrated ERP packages today, integrated warehouse planning & execution systems are not.

Experience in the field has shown that the supply chain managers find it difficult to articulate the added value of WMS as a component of a wholly integrated ERP solution.

This blog article with these challenges in an attempt to provide business decision makers within supply chain organisations further insight into this domain.


The origin of WMS
Some twenty years ago, WMS were only used by companies that had warehousing as one of their core-activities. These systems were monolithic, with excessive implementation duration and costs. However, as technologies improved, costs also came down and WMS saw adoption by medium sized companies who concluded that such systems would improve their overall performance & efficiency with an acceptable return on investment (ROI).

Over time, these systems have been further enhanced and now include planning algorithms, Radio Frequency (RF) facilities and functions to support cross docking, order picking, ABC analysis, as well as inbound, outbound, replenishment and removal processes.

Unfortunately, many of the early WMS systems either had limited or no integration to mainstream ERP systems. Enabling the integration proved a very cumbersome, time consuming and expensive process. Moreover, it was not in real-time...


IT Business Solution (ERP)-Providers
By the end of the nineties, ERP software providers began including WMS as an integral part of their offerings. Originally, these systems were only meant for the high-end enterprise market, as the costs to implement were substantial. However, more recently these solutions have become more accessible to Small and Medium Enterprises (SME), as mainstream ERP vendors embed WMS functionality into their ERP packaged solutions.

Market Structure
Most organisations who begin the evaluation process to replace their aging and fragmented systems increasingly understand that they need an integrated solution for their core planning & execution processes. In many cases, WMS is a key component of the evaluation.

However, the WMS is not something that should be considered as simply a minor component of the broader SCM system replacement strategy. In almost all cases, the sheer volume of processes that have to be supported by the WMS will have a deep impact on the organisation and will ultimately force companies to rethink and re-engineer many of the supply chain processes. That is why careful evaluation of requirements and selection is vital to have the right balance between likely change management impacts versus tangible benefits achieved by implementing a WMS.

In order to determine whether a WMS can generate the amount of added value to justify its acquisition and implementation, it is useful to keep the following five segmentations of the WMS market in mind:


Private and Public Warehouses
The market for WMS can generally be divided into two major categories: private warehouses and public warehouses.

Public warehouses store goods and products that are not their property. These Third or Fourth Party Logistic Providers (3 PL or 4 PL) provide warehousing and related functions as services to other companies.

This type of company provides storage, distribution and transport as basic services while related services like distribution, billing, re-packaging/ kitting, order picking, etc. are often included in its offerings.

This kind of business has its own set of specific requirements that are hardly or not at all applicable to private warehouses. For this category of company, the need for a sophisticated WMS is self-evident because it will have different interactions with the multiple companies that use its services and the large variety of goods and processes that such a public warehouse needs to provide and manage. The complexity of this type of warehousing arises from the fact that these warehouses (in the physical sense) are divided into a number of separate warehouses, each related to one of their customers. Simultaneously, special storage areas (like those that require cooling) are shared by the stored goods of all their customers.

Private warehouses are an integral part of the specific enterprise and the goods and products inside are thus the property of that enterprise.

Not every company requires a WMS as the achievable added value correlates closely with the complexity of the warehouse processes. Generally, the added value of a WMS increases as the complexity increases. This complexity follows from such factors as; seize of the warehouse(s), number of items, number of units (bulk, pallet, box, and single item), storability, transfer time, temperature sensitive, track and trace, etceteras.

A good approach to judge whether a manufacturing company can potentially benefit from a WMS is based on an analysis of the manufacturing policy of the pertaining company.

- Engineer-to-Order (ETO), Make-to-Order (MTO)
Companies that fall in these categories cannot realise much benefit from a WMS the majority of the time. Such companies have typically low stock levels as raw materials or parts are delivered on a JIT (Just in Time) basis. Moreover, deliveries of raw materials or parts are already allocated to a specific contract/ project and for that same reason; such industries do not maintain a stock from which they supply their customers.

- Configure-to-Order (CTO), Assemble-to-Order (ATO),

These manufacturing policies are a grey area. The more parts and raw materials that need to be in stock, the more half finished and completed products that need to be kept in the warehouse. Consequently, the increased variety of labels that need to be serviced means a higher complexity of the warehouse processes, and thus a higher achievable added value through application of a WMS.

- Make-to Stock (MTS)
Again, depending on the overall complexity for this category of manufacturing companies a WMS offers the largest window for the realisation of added value by proper application of a WMS. Generally, we see a large amount of different products in various stages of completeness, a large variety of packaging, a wide range of storage requirements regarding time and other conditions. All these factors increase the complexity of the warehouse processes. The nature of these MTS industries follows from the fact that they do not manufacture based on specific orders but deliver out of stock. The manufacturing is based on statistical analysis, demand forecasts and the data provided by the WMS.

Application and organisational disciplines.
A properly implemented WMS offers numerous advantages to the customer’s organisation.

Firstly, the WMS provides detailed stock control. It not only shows how much of a certain item is in stock, but also its location, its packaging, by whom that item was delivered, when it was delivered or manufactured and on the basis of what purchase or manufacturing order.

Secondly, if the WMS is properly integrated as a standard module with the ERP system, organisations use the WMS data for a great variety of applications. For instance, integration between the WMS and financial administration systems will not only save time, but also will also dramatically reduce error levels because the data does not need to be entered twice.

Additional benefits also flow from optimised manufacturing control and warehouse usage by having real-time visibility of stock levels. Minimum stock levels can also be reduced, resulting in savings of applied capital and space.


Even when problems occur in the manufacturing process, the WMS can provide data to identify, by location, the products to be isolated, removed from store & quarantined. The downstream impact on sales can then be assessed and recovery plans developed.

Equally, the WMS will prove invaluable in supporting product recalls from the field because it can provide fast & reliable information about product shipments thus reducing companies’ exposure to consequential damages.

All these advantages combined result in more efficient processes and better customer service levels.

Integration
Companies have become cautious regarding ERP-implementations. Most enterprises have experienced that system integration and mapping their specific business requirements to packaged applications is not always a simple process.

Moreover, best practice evaluation and selection processes today focus very heavily on technological aspects like system integration, extensibility and interfacing, rather than limiting the assessment solely to application functionality.

Customers can generally be more confident of the technical stability of their WMS choice if it is either a functional module offered by their ERP system provider or, in the case of 3rd party WMS, if it has an interface to the customers’ ERP system that is certified by the ERP system provider.

For some companies, deploying a WMS could be overkill in terms of controlling your inventory. Warehouse and inventory management strategies can vary depending upon the complexity of specific organisations. Therefore, it is critical that the software selection matches not only the management strategy but also the complexity of the given environment. For most companies it is a choice between 3 basic strategies:

Core Inventory Management (IM): The system stores the number of items and in which location they are stored. Stock Keeping Units is an option here already in order to optimise your stock levels per location depending on lead-time, supply and demand.

Warehouse Management (WM): the main warehouse processes, receive, put-away, pick and ship are supported by documents now. Your inventory can be managed through these documents and so the physical operations are managed separately from the purchase and sales processes.

Warehouse Management Systems (WMS): Within the locations, zones and bins are defined now. Strategies for Put-away, replenishment and pick can be performed now in order to reduce the operation costs and increase the customer service.

In all cases, it is recommended that customer organisations and solution providers satisfy themselves and each other that data exchange between the ERP system and the WMS operates as required, since a substantial part of the achievable benefits, and overall ROI are dependant upon those exchanges.

RFID

Radio Frequency Identification (RFID) is a great example of a leading technology enabler that can significantly improve the planning and execution of supply chain operations both within and between organisations.


The main difference for companies working with RFID is that they move from task oriented to object oriented operations. So, what does that mean?

With RFID, update of the movements of inventory into the ERP application will happen when the physical inventory is moved (which is not the case with Radio Frequency (RF) and manual registration of inventory movements). The major benefits of this are:

• Decrease inventory handling and operational costs.
• Increase inventory visibility and accuracy.
• Real-time availability of inventory information across the supply chain.

Summary and conclusions

Over the past two decades, Warehouse Management Systems (WMS) have matured from specialised systems strictly related to specific types of warehouses to powerful, general-purpose system modules provided by ERP-vendors.

WMS can provide significant added value to an organisation. This is true, for so-called Third or Fourth Party Logistics Providers, and especially manufacturing companies in the Manufacture-to-Stock category because of the relatively high degree of complexity of their warehousing operations. These companies have realised substantial benefits from the application of a WMS.

For some companies a WMS may be overkill in terms of controlling inventory. Warehouse management is a combination of business strategy and applications software that can support that strategy. For this reason, validate if the software vendor you have on your list provides different levels of warehouse and inventory management & control systems to enable your business to match the application software to their particular needs, complexity and budget.

RFID (Radio Frequency Identification) is a great example of a leading technology enabler that can significantly improve the planning and execution of supply chain operations both within and between organisations.


In order to capitalise on the inherent potential of WMS, it is fundamental that the WMS be seamlessly integrated with the other modules of the ERP system. This allows for both horizontal and vertical integration of business processes within an organisation, thus enabling speed, no errors, the highest customer service levels and optimally reduced costs of operations.

The software roadmap; valuable to your business or not?

Globalisation has contributed to a reduction of worldwide leading software vendors due to acquisitions, mergers and discontinuity. And this will continue. A proof point of all that is the fact the short-term ‘JBOPS’ does not exist anymore. ‘JBOPS’ stands for: J.D. Edwards, Baan, Oracle, PeopleSoft, SAP; the global leading five ERP companies of the late nineties.

J.D. Edwards and PeopleSoft have been acquired by Oracle while BAAN has been acquired by Infor.

In 2000 Microsoft bought itself into the IT Business Solution market space by acquiring Great Plains and later on (2002) Navision just after Navision acquired Damgaard. SAP acquired TopManage Financial Systems (SAP Business One) and more recently Business Objects and Sybase while SAGE has been in aggressive acquisition mode. Epicor did no major acquisitions compared to the ones mentioned before.

Discontinuity and continuity are stronger than ever before.

Because of the impact of change on the organization, placing an order for a new IT Business Solution is not something that a business wants to do and then need to do again every two years. The average refresh cycle is between five and ten years and companies that achieve this path can have the latest technology if they choose a vendor that consistently invests in Research and Development and provides the benefit of a manageable upgrade path. In this case the users do not have to go through the disruption of evaluating, learning and implementing another new system at the same time they are busy performing their jobs, because for an upgrade the basic architecture and operational method is the same.

With this in mind, the following aspects are important to your business when purchasing an IT Business Solution from a software vendor or solution provider:

1. Continuity
2. Support life cycle
3. Innovation

Working for over ten years in this industry, I am amazed how businesses actually do spend minor attention to the future software roadmap and perform a risk analysis for relatively a large investment.

Here is a simple approach of doing due diligence on these aspects.

Ask the solution provider (vendor or implementation partner) for the software roadmap of 2-4 years ago. Read it and then analyse how much of this has been actually applied in the IT Business Solution that they have demonstrated to you.

After that exercise ask for the current software roadmap that covers the next 2-4 years at least. I predict that you will read this document in an educated manner and perhaps with mixed interest. It gives you a much better idea of what software companies are actually doing with the maintenance that you pay. How much of that has actually been put back into the future releases of the IT Business Solution? Something that your business potentially can benefit from again.

It should provide you with a certain level of comfort that this IT Business Solution provides you with innovative technologies to let your staff be even more productive and your business be able to further cut cost and be more profitable.

To have an analogy with buying a car here; you could perhaps compare it with checking the oil level of a car engine and this time also getting insights on what the oil level has been in the past. You get even in a position to check under the hood and be able to see what new engine technologies have been applied. You now know upfront if the car you are looking to buy is actually already leaking oil and/or is going to leak oil soon or if it is a car that will keep running smoothly, and will be upgraded with a turbo, or perhaps a hybrid module if you pay your maintenance.

Interface or embedded development?

A fair and crucial question that affects your staff, infrastructure, initial and on-going costs.

The platform and development environments of more and more IT Business Solutions (ERP, CRM and POS) are open and provide standardised development environments in order to better interface with another software application. SOA (Service Oriented Architecture) is a major contribution to developing cost effective interfaces and mitigating stability and availability risks.

At the same time, this enables software vendors to develop within the IT Business Solution and therefore provides the same business functions and logic in the same database and interface.

With that in mind, what factors do determine whether the development of an interface or development of new functionality within in the IT Business Solution is better?

My thoughts on this in priority order are:

1. Enabling people
2. Business risk
3. Initial cost and recurring cost (development and licenses)

Enabling people

Let’s not forget that businesses don’t gain insights, make decisions, close deals or invent new products and services.

People do.

Your staff is the most valuable asset to your business. Software is instrumental to enabling your staff to get the best business insights, make the best decision and bottom-line to be effective, productive and to excel the business.

Keep that thought, determine now what is the best for your staff, different applications and therefore interfaces or one interface? This might well be the case but keep the business flow into account, what does it mean for staff to complete a business process that interlinks with this separate application. Does it affect the productivity? Can it create errors? If it is a complete separate process than this specialised solution might be well the case if not, do understand the consequences and the cost of the problem that might occur.

Business Risk.

Business risk in terms of stability and the availability of the interface. An interface means per definition more complexity and extra efforts from a platform and possible database maintenance perspective and business reporting. Having tools in place that monitor the transport of the information and alert staff if transport of data fails.

It should not be a showstopper; it should be a factor to take into account to make a considered call.

Initial cost and recurring cost.

What are the different cost components of these two options?

I hope this provides you some rich insights on whether an interface is the best for your people and therefore business or an integrated business solution?

Different needs – Different Environments

People have different needs with regard to processing and reviewing data based upon their roles in the organisation. Therefore it may be preferrable to have different environments (user interfaces) in which to enter, process and analyse business information. More and more software vendors (try to) embrace this philosophy.

Traditionally IT business solutions (e.g. ERP and CRM) were the central repository of entering and source of getting information out to analyse the business.

The last couple of years software vendors have been focussing on getting the information out of the IT Business Solution in such a way that it provides benefits to organisations such as:

• Enabling confident decision making in an environment that is easy and familiar to use;
• Fitting with IT systems that business already have invested in such as Microsoft Office and Server systems and therefore reinforcing and leveraging your existing IT investments;
• Supporting collaboration to enable people to work more effectively across departments, companies and supply chains.

In 2005 AMR brought a report out and stated based on a study that 85% of the staff in an organisation are Non-ERP users however need information out of the ERP system to perform their job more effectively.

For example since 2004 SAP and Microsoft have been working hard on letting SAP and the Microsoft Office system working closer together. More information on this you can find here: http://www.duet.com/about/index.aspx

And since 2000 Microsoft has been working hard on letting their Microsoft Dynamics ERP and CRM applications natively work together with the Microsoft Office and Server systems. More information on this you can find here: http://www.microsoft.com/dynamics/en/us/fits-systems.aspx

The diagram shows the mapping of an ideal solution environment based on the different needs people have. The challenge that software vendors have is to let information entered in the IT business solution seamlessly flow through to other solution environments. Out of the box interoperatibility, choice of platform and security methods are key to this.

The diagram might help you to evaluate how software vendors that you have selected embrace this strategy and what the skill sets are of your implementation partner(s) to realise this within your organisation.

Discover “The Pain Chain”

In my previous blog I mentioned briefly the concept of “The Pain Chain”. The Pain Chain is a part of a methodology to determine the Key Business Requirements (KBR’s) of your business. The methodology is from the Infomentis Group - http://www.infomentis.com/

It is a methodology that is used by some of the software vendors to explore with you the business challenges and KBR’s. In this blog I focus on an element that you actually could use yourself to prepare yourself for an IT Business Solution software vendor/ implementation partner selection.

"The Pain Chain" is a concept to very easily visualise the challenges your business has. What the cause of these are, the consequence as well as the relationships of these between departments and organisation level (e.g.: operational, management, executive). It is an extremely powerful visual tool (map) to get to the source of challenges and discuss with the right people how they could be potentially solved. The solution could be a process change for example of or an IT business system change. In case you are starting the journey of selecting a new IT Business Solution, this map could guide you which IT Business Solution fits your business the best for now and the long term.

How do I start to create “The Pain Chain” map.

What you need is the following:

- Pile of post-it notes

- Three questions to ask to the people that should be interviewed to get the map in place


The three questions are:

1. What are your current challenges (pains) in regards to perform your job and what business processes do they impact?
2. What is the cause of this challenge? (Note: here you discover if the issue is caused by another level in the organisation and/or department, I also call this “down the pain chain” and you discover the “tactical pains” (TP) here. Examples of these are:
   a. I have no way of accurately recording forecasts;
   b. Our procedures are too manual;
   c. We can’t view information in real time;
3. What is the consequence of this challenge? (Note: here you discover what the impact is of this challenge and for who in the organisation, I also call this “up the pain chain”. There are different type of so called consequential pains (CP); strategic, financial, internal and political.

Let me give you a simple example;
You are working in a wholesale distribution organisation and we start at the Warehouse Manager and ask him/her the first question. The answers you get is:

• Inventory is not accurate (TP)
• Too many wrong items in stock (TP)

When you continue the journey and ask the Purchase Manager about these TP’s what the consequence is than you discover the following:

• Inventory costs too high by 15% compared to budget.

This is a consequential pain as a result of the TP’s.

When you than ask the Director of the business, his/ her answer is:

• Improve profit margin by 15%.

This is the actual Key Business Requirement (KBR). If you put these answers on post-it’s, sort them in a hierarchy than you start to get the so called “Pain Chain”.

It is important that the KBR’s are measurable. With selecting the software solution, you should focus on letting the solution fix the TP’s. With the pain chain it becomes than clear how that impacts the rest of the organisation.

I hope this helps your business to discover what the KBR’s are and by what TP’s and CP’s they are feed.

The cost of the problem

“The cost of the problem”; what does that mean? How can you discover it in your business? And how does it help you to qualify which IT Business Solution is the right solution from a capability perspective and investment justification perspective.

We could state that overall the core objectives of implementing an IT Business Solutions is (not in particular sequence)

1. Improve productivity of your staff (do more with less or at least the same);
2. Improve the products and/or services you deliver to your clients and partners in the supply chain;
3. Enhance your position in the market by being more competitive (e.g; agility, adaptability, richer business insights that can drive your business in the best direction).

The outcomes of these objectives should result bottom-line in two results:

1. Saving of cost;
2. Increase profitability.

Based on these two measurements the well-known term Return on Investment (ROI) can be calculated afterwards. Afterwards….? I should be able to do this upfront so we can justify the investment and select the best IT Business Solution for now and the long term.

I cannot agree with you more.

Question is; how do you get to this point? One of the exercises business could perform is to analyse “the cost of the problem”. The cost of the problem analysis provides you with the information:

1. What the problems are in the business, how they relate and how much it the business cost currently.
2. A valid list of challenges to verify how the potential new IT Business Solution could solve these and what the investment would be in order to solve.

How? My tip is to let your departments write down their top three challenges they currently face and let them articluate this into cost and or time aspect. Cost could be related to the amount of time it takes to perform a certain activity that could be performed much faster if…, errors that occur and the consequence of that (extra time, missing out on revenue), losing sales due to not having certain information available etc.

Many occasions I have visited companies (prospects) that are out there in the market select (maybe ‘find’ in this case is the better word) a new IT Business Solution. They are aware on a high level why they are looking for a new IT Business Solution and many times have their requirements outlined in the most detailed level. A budget has been established (based on what?) however cannot exactly pinpoint the challenges they have in their organisation currently, how they impact other departments, what the cause and consequence is of them and most importantly what it currently cost the business to deal with these problems. We call this in the IT Business Solution world a map of “The Pain Chain”. More on this in the next blog.

Once you have this information available you have a decent framework to go out to the market and select (not find) an IT Business Solution that meet your requirements, solve your current business challenges and understand how much time and money it will save the business and therefore what the Return on Investment will be once this solution has been implemented.