The future of ERP: Why the ‘big ERP’ approach is dead
Posted by Rudolf Melik in Cloud computing, Enterprise Software, project workforce management, software as a service on February 22nd, 2010
Interesting in-depth analysis by Infoworld on how the traditional huge multi year enterprise software investment and implementation paradigm has changed as a result of competitive pressures, technology (primarily cloud computing), the current economic chaos, and other world events.
Industry consultant Reed sums it up this way:
“‘Empower me. Give me the tools to create differentiating processes that allow me to define myself from my competitors. And make sure that it’s easier for me to do, so I don’t have to hire 100 programmers. Give me the building blocks to put that together quickly, so that it’s just humming in the background, and leave me free to focus on what makes us better than other companies.’ That’s what customers are expecting now and really want.”
Here are some other noteworthy informational tidbits:
The “single global instance” dream dies: One ERP system: a single, global instance of business software applications running our entire business and our business lines, seamlessly uniting our CRM, supply chain and business analytics applications. Efficiencies. Integration. Savings. Fewer headaches. That’s been the dream at many companies and for CIOs since Y2K — a dream most often fed to them by eager ERP vendors.
Bill McDermott, president and CEO of SAP America, stares out the tinted glass wall overlooking the bustling convention floor and then dives into the same pitch he gives the pilgrimaging executives [at SAP's Sapphire event]. “You have ERP,” says SAP America’s CEO. “The next step is to expand it to CRM and the supply chain.” The idea, he says, is to control all the data in a company by standardizing on one system for the front end and using one data source for the back. His pitch reaches its climax when McDermott sounds the message SAP has been trumpeting all week: It’s time to move to a single instance.
In other words, McDermott is telling CIOs to forget the multiple systems their companies use today, rip them out, and replace them with one ERP system — with one data store — that serves the entire company, no matter how diversified or geographically spread out it is. That, he says, is how to get the most bang for your IT buck.
That dream has now faded for many companies. Even at SAP. “I think the concept is evolving,” Say contends. “There’s a pretty open acknowledgement that — is it practical to get to a single instance across all functions of a very large, global enterprise? No. That’s not a realistic goal any more. We’re living in a world where multiple systems have to be networked together, have to communicate openly with each other and need to have sophisticated enough infrastructures on top so that the business can manage it.”
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The “more evolved” thinking, Say suggests, is this: Companies can achieve consistencies and efficiencies in their business processes without having to use one singular system that manages the entire landscape.
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Call it what you will: software as a service, on-demand computing, Web-based software, cloud computing. Doesn’t matter, because business software experienced via an Internet connection and browser is already here. Resistance is futile, stupid and short-sighted. At this point, however, no one (save for the SaaS vendors, perhaps) is advocating for wholesale rip and replaces of on-premise ERP installs.
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But as enthusiasm for traditional, on-premise, expensive and complicated software deployments wanes even further, Web-based software options hosted in either public or private clouds will become even more attractive for companies big and small looking for low costs and easily consumed apps, analysts say
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“The supervendors have architected enormous complexity in order to be able to sell across so many different verticals, in so many industries,” says AMR’s Richardson. “I think there’s a need for simplicity, and the Salesforce.com and Workday people get that.”
What is amusing is a quote from an ERP cloud vendor with their “anytime, anywhere access” mantra and slogan as if their one size fits all ERP “suite” message is any different from the mega vendors like SAP, Oracle. The bottom line message of this article is the “big one size fits all software” days are over or numbered at best.
By the end of 2009, Gartner forecasts that global SaaS revenue will reach $7.5 billion, which is an 18 percent increase from 2008 revenue of $6.4 billion.
Looking out even farther, Gartner predicts that the SaaS market will show consistent growth through 2013 when global SaaS revenue will total more than $14 billion for the enterprise software markets.
Two years from then, in 2014, is when Saugatuck predicts big change: “SaaS will become integral to infrastructure, business systems, operations and development within all aspects of user firms, with variations in status and roles based on region and business culture.”
“There are many things happening here that are good for users, good for the IT profession, good for business. It’s just good, good, good,” Pierce says. “You know, what’s slowing this adoption are all the priests of the past — all the preservationists. All the interests that are built up around the edifice that is enterprise software. … Cloud computing is a dream come true.” says Todd Pierce, CIO of Genentech
Acquisitions aside, how will the cadre of ERP vendors approach the future? Like those robots in the Transformer movies, the MISOH cartel, and other traditional ERP entities will have to change their “shapes,” and alter their strategies to stay with the times (and already have, to some degree). That means embracing — rather than resisting — on-demand and SaaS-based computing software-delivery models. And you can bet you’ll be seeing fewer and fewer “cloud computing” rants from big ERP execs, like the one that Oracle’s Ellison gave in fall 2009.
For example, in an odd 2008 interview with ZDNet, Lawson Software CEO Harry Debes proclaimed that the SaaS industry would “collapse” in two years. In the interview, Debes also noted that Lawson was a happy Salesforce.com user. In fall 2009, during an interview with CIO.com, Debes stands by his comments, saying that the feedback from Lawson’s customers at the time, which was that they did not want a SaaS solution, “was compelling.” That’s changed. And today, Debes says, “I’m a very big fan of cloud computing,” though his on-premise business still has a bright future, he contends.
Talkin’ ’bout the next generation
It’s just that the recession and years of questionable return have forcefully introduced a new strategy: Leave the commodity ERP processes to the back office (such as payroll and HR), but make damn sure that front-line users are freed from the banality and inflexibility of the Ghosts of ERP Past.
Industry consultant Reed sums it up this way: “‘Empower me. Give me the tools to create differentiating processes that allow me to define myself from my competitors. And make sure that it’s easier for me to do, so I don’t have to hire 100 programmers. Give me the building blocks to put that together quickly, so that it’s just humming in the background, and leave me free to focus on what makes us better than other companies.’ That’s what customers are expecting now and really want.”
Bill McDermott, president and CEO of SAP America, stares out the tinted glass wall overlooking the bustling convention floor and then dives into the same pitch he gives the pilgrimaging executives [at SAP's Sapphire event]. “You have ERP,” says SAP America’s CEO. “The next step is to expand it to CRM and the supply chain.” The idea, he says, is to control all the data in a company by standardizing on one system for the front end and using one data source for the back. His pitch reaches its climax when McDermott sounds the message SAP has been trumpeting all week:
It’s time to move to a single instance.
In other words, McDermott is telling CIOs to forget the multiple systems their companies use today, rip them out, and replace them with one ERP system — with one data store — that serves the entire company, no matter how diversified or geographically spread out it is. That, he says, is how to get the most bang for your IT buck.
The Recession Generation
Posted by Rudolf Melik in Automation and Collaboration, Current Affairs, Generational Trends, Globalization, The Global Economy, project workforce management on January 28th, 2010
In this Newsweek article http://www.newsweek.com/id/229959 the author explores the impact of the recent financial crisis, the new age of uncertainty, and severe economic downturn on employment and spending patterns.
Some key takeaways:
- It’s no accident that the psychology of entire generations is shaped by the milieu in which they grew up; economic research tells us that our lifelong behaviors are determined in large part by the seismic events—good or bad—of our youth
- Even one really tough year experienced in early adulthood is enough to fundamentally change people’s core values and behaviors
- Recession babies not only invest more conservatively, they tend to make less money, choose safer jobs, and believe in wealth redistribution and more government intervention
- This division between capital and labor and the permanently high unemployment that it seems to encourage not only depresses wages, it depresses people; a large body of research shows they tend to withdraw from their communities and societies after being laid off (their spooked neighbors, encouraged to work ever harder, do too)
- Parental unemployment has huge negative consequences for children, making them more likely to fall behind in school, repeat grades, and exhibit anxiety disorders
- The worry today, say Reich, Soros, and political scientists such as Harvard’s Robert Putnam, is that fearful, vulnerable people will become more easy prey for ugly class politics, being drawn, as Reich puts it, to “populist demagogues on either side of the political spectrum.”
- Americans generally have a high tolerance for inequality. Yet that tolerance may wane as we enter a new age in which young graduates can’t expect to do better than their parents—and one in which Wall Street is perceived as being able to continue business as usual while Main Street struggles. “Americans are OK with inequality,” says Reich, who believes we are at a tipping point, “as long as they feel the system isn’t rigged.”
All this said, there are some glimmers of hope in the New Normal.
- Post-crisis, consumers are putting a greater value on time spent with family and friends than on money (a good thing when there’s little of the latter around)
- There’s also a glimmer of possibility that hard times might make us nicer to each other … simply thinking about money made subjects less sensitive to pain, and less likely to help each other or want to connect with strangers
Gartner Highlights Key Predictions for IT Organizations and Users in 2010 and Beyond
Posted by Rudolf Melik in Automation and Collaboration, Cloud computing, Current Affairs, Enterprise Software, IT Management, project management, software as a service on January 21st, 2010
Here are Gartner’s predictions for the coming years in IT:
http://www.gartner.com/it/page.jsp?id=1278413
The most interesting one is “By 2012, 20 percent of businesses will own no IT assets”. The argument they make is that essentially more and more organizations will use cloud computing and refrain from buying their own equipment. Also, more and more users will access corporate data using personal mobile communications and their own laptops. In other words the company will own and control less hardware; the equipment will all be owned and managed by third parties.
This is a surprising and rather aggressive prediction. I agree with the trend and I can see a future in which IT departments focus a lot more on strategic initiatives rather than managing now commoditized IT equipment and infrastructure. Cloud computing is radically transforming the IT function and will have a major unquestionable impact on IT budgets and how IT is perceived within the organization. But 2012 is awfully close. I do not think the transformation will occur so quickly.
The Laws of Simplicity
Posted by Rudolf Melik in Automation and Collaboration, Enterprise Software, project management, project management software, project workforce management on January 20th, 2010
In these prior blog posts:
Occam’s Principle Applied to IT Investments
I outlined how Occam’s Razor principle could apply to product design and IT investments. I recently stumbled on to the writings of John Maeda who has authored a book on the laws of simplicity. A summary of the laws can be found here:
http://lawsofsimplicity.com/category/keys?order=ASC
A review of the laws is a good refresher for anyone in charge of project management, new product development and software design. The last law states: Simplicity is about subtracting the obvious, and adding the meaningful. This is actually Occam’s principle which I described and provided some examples for in the above mentioned posts. In fact as John Maeda mentions in his book and on his website Occam’s principle is really an encapsulation of the first nine laws.
The Importance of Taking Breaks
Posted by Rudolf Melik in Good Books and Articles, project workforce management, workforce management on January 13th, 2010
Here is an interesting article on the importance of taking breaks:
Some excerpts (although reading the entire article is definitely highly recommended):
Ever wonder why our best ideas come when we’re in the shower, driving, daydreaming, or sleeping?
When you look deeper into these ingeniously elegant solutions and brilliant flashes of insight you can see that they came at strange times and in random locations. They didn’t occur while actually working on the problem but after an intense, prolonged struggle with it followed by a break. A change of scene and time away seems to have played a part.
Most “creatives”—artists, musicians, writers, etc.—instinctively know that idea incubation involves seemingly unproductive times, but that those downtimes and timeouts are important ingredients of immensely productive and creative periods. But until fairly recently the how, when, and why of being kissed by the muse was something of a myth and mystery, explained only by serendipity.
New studies show that creative revelations tend to come when the mind is engaged in an activity unrelated to the issue at hand; pressure is not conducive to recombining knowledge in new and different ways, the defining mark of creativity.
While no one yet knows the exact process, there’s an important implication for all of us: putting pressure on ourselves to try and make our brains work harder, more intensely, or more quickly, may only slow down our ability to arrive at new insights. In other words, if you’re looking to engineer a breakthrough, it may only come through a break. Your brain needs the calm before its storm.
As one example, one of the best decisions we made at Tenrox was to shut the company down between Christmas and New Year’s. We do not schedule any internal or external project work, customer calls, visits or implementations during this time. Our professional services and support team is also asked to provide nothing more than essential services by a handful of people who are on call. We have done this for the last two years and it has been an incredible success. Our team returns to work well rested, creative, and fully reenergized. We very much encourage our team to take breaks and all their vacation time on a regular basis. Working hard without sufficient breaks and “off the grid” time leads to an unproductive uninspired team.
Would be great to hear your perspective and suggestions for taking breaks and how you apply this to your project teams.
The Year in Review in Software & Services and 90% Software Maintenance Margins
Posted by Rudolf Melik in Enterprise Software, project management software, project workforce management, software as a service on December 25th, 2009
Here is a good short review of enterprise software and services stories in 2009.
What caught my eye was Brian’s referral to 90% software maintenance margin as a bad thing. Brain, most software companies invest significant dollars in infrastructure, R&D and new product development. Healthy profit margins from on-demand services and support are an absolute necessity. Without those margins no software company can attract great talent, investors or even consider any new ideas.
As an example, at Tenrox while 9 out 10 new customers are opting for Tenrox on-demand we still do have and support on-premise customers with perpetual licenses. One of these customers had gone without support for eighteen months thinking the software works great and they do not need our support, updates or innovations. Well something went wrong and they called our service team asking for help. They wanted to pay time and material for us to jump on the problem and fix it. We explained our policy that they must reactivate support, pay a penalty for the reactivation, and get up to date before we can even look at the problem. This customer was quite frustrated and did not take the news very well at all.
As a software company we have no choice but to establish such policies. Tenrox is not a consulting “time and material” provider. The profits and good margins from on-demand services and support are absolutely essential for continued innovation and first class customer support.
Interview with Microsoft Project’s Seth Patton
Posted by Rudolf Melik in Enterprise Software, project management, project management software, project workforce management on December 9th, 2009
Here is an interesting interview with a marketing director at Microsoft Project regarding their product roadmap and strategy.
http://www.enterpriseirregulars.com/500/interview-with-microsoft%E2%80%99s-seth-patton/
I guess Seth has not kept up to date with technology trends all that much. If Microsoft’s strategy is to try and drive out independent software vendors (ISV) they are not going to do all that well with their customers or partners. With Software as a Service and cloud computing, best of breed is a clear hands down winner in this market. Just look at the huge success stories of salesforce.com, RightNow, Taleo, and Success Factors all of which are SaaS offerings; there are so many more SaaS and cloud winners out there. I think Microsoft is better off focusing on strengthening its ISV partnership base instead of alienating them with this kind of thinking and interviews. This is not forward thinking.
Here is another interesting exchange in the interview:
While PPM products, Microsoft’s included, contain many of the functions needed by professional services firms, they are still some key functions not available within Project just yet. These include: client billing; dedicated time entry for vendor, client, contractors, etc.; two-way interfaces with payroll systems; proposal tools; and, more. Nonetheless, Seth reminded me that thousands of Microsoft partners are service firms as well as users of Project in client work.
This sounds a lot like the old we have it all ERP type of talk. Well then I guess customers should wait another 10 years for Microsoft to develop these and other capabilities. Or customize the heck out of Microsoft Project to fulfill the gaps they perceive in the solution and to get what they need like these other companies he mentions have.
I still remember the first time I read a brochure from one of these large vendors. The brochure said they do everything under the sun. I got the same impression with virtually every release of Microsoft Project. To this day, all of these products have only fallen behind more, become more bloated, more complicated, and more out of touch with what customers really need.
A Sincere Apology
Posted by Rudolf Melik in Good Books and Articles, Human Resources for Project Managers, project management, project workforce management, workforce management on November 30th, 2009
In the fifteen years I have been with Tenrox I have seen two kinds of people managing businesses and running projects:
- Type 1: A person who apologizes for his or her own mistakes and accepts the mistakes of others
- Type 0: One who never says sorry, denies everything
Like most companies we have both types of people at Tenrox. Thankfully we have more type ones than zeros. Recently, there has been a huge surge in customer activity and we need everyone at Tenrox to be at the top of their game these days to try and serve every single one of our users.
A few days ago I had to talk to a type 0 project manager regarding some of the issues we have with his performance, the projects he manages, his overall approach to the challenges we have, and how important he is given the current resource crunch.
As usual, his automatic patterns kicked in. I got the “It is just your impression”, “but you don’t understand”, “no this is not true”, “you are wrong” … types of responses. This is a hard working person with good intentions and reasonable abilities. Unfortunately, his inability to take responsibility for any mistakes, wholeheartedly apologize for them, and his constant slippery denials virtually guarantee that he will always be nothing more than a second rate mediocre consultant or project manager, at best.
I sometimes call myself the Chief Mistake Officer at Tenrox followed by a list of my personal and professional mistakes just in the last twelve months to try and convey how important it is for everyone to take chances, innovate and get out of their comfort zone … but none of that is any good if we don’t have the capacity to sincerely apologize and to accept our mistakes.
Here is a very nice article on the power of apology: http://ccr.byu.edu/content/power-apology.
I hope more of our team members adopt this mindset.
Localism – There’s No Place Like Home
Posted by Rudolf Melik in Automation and Collaboration, Generational Trends, Globalization, The Global Economy on October 13th, 2009
A great article by Newsweek magazine (http://www.newsweek.com/id/217029/page/1) on the trend towards staying local. Here are some of the key takeaways:
Perhaps nothing will be as surprising about 21st-century America as its settledness.
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Yet in reality Americans actually are becoming less nomadic. As recently as the 1970s as many as one in five people moved annually; by 2006, long before the current recession took hold, that number was 14 percent, the lowest rate since the census starting following movement in 1940. Since then tougher times have accelerated these trends, in large part because opportunities to sell houses and find new employment have dried up.
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Our less mobile nature is already reshaping the corporate world. The kind of corporate nomadism described in Peter Kilborn’s recent book, Next Stop, Reloville: Life Inside America’s Rootless Professional Class, in which families relocate every couple of years so the breadwinner can reach the next rung on the managerial ladder, will become less common in years ahead. A smaller cadre of corporate executives may still move from place to place, but surveys reveal many executives are now unwilling to move even for a good promotion. Why? Family and technology are two key factors working against nomadism, in the workplace and elsewhere.
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Nothing allows for geographic choice more than the ability to work at home. By 2015, suggests demographer Wendell Cox, there will be more people working electronically at home full time than taking mass transit, making it the largest potential source of energy savings on transportation.
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Some studies indicate that more than one quarter of the U.S. workforce could eventually participate in this new work pattern. Even IBM, whose initials were once jokingly said to stand for “I’ve Been Moved,” has changed its approach. Roughly 40 percent of the company’s workers now labor at home or remotely from a client’s location.
Scrum Project Management
Posted by Rudolf Melik in Automation and Collaboration, project management on September 24th, 2009
Here is an amazingly good video that describes the Scrum development methodology in less than ten minutes. I highly recommend it to anyone who wants to get a quick and effective introduction to a new and now proven project management and software development methodology. We have started to use scrum in some of our R&D projects. We decided to use Agile/scrum to develop two new product modules that require a highly iterative creative approach. We continue to use traditional PMBOK type project management for feature enhancements and core product development. After some debate we concluded it is better to initially apply Scrum to “blue sky” type R&D projects. What we learn from these new projects can then be applied to our feature enhancement and core product development efforts. I will be able to share our experiences regarding these new methodologies in about six months when we are closer to the end of these pilot projects.
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Sponsored By Tenrox
