Web Hosting

In the lower-end discrete assembly-to-order (ATO) manufacturing realm, Made2Manage has found a market with good opportunities, and it has developed most of the part-and-parcels it needs to defend its turf. Thus, while the competition cannot be discounted for Made2Manage's revenue slump, the customers' no decision' stance still seems to be the vendor's biggest adversary. Its primary competition still comes from North American Tier 2/Tier 3 vendors focused on small-to-medium enterprises (SMEs), all of which Made2Manage can in effect compete against, given its target market focus and/or sole Microsoft technology deployment.

From its early days in 1986, the company has put all of its efforts solely into serving discrete manufacturing SMEs in need of enterprise application solutions that are intuitive and, consequently, easy to use and implement. End users of smaller enterprises have indeed long been impressed with the product's intuitive user interface (UI) with Windows metaphor, which provided ease of system navigation (the "Navigator" feature) and of information retrieval (the "Locator" feature), and with underlying workflow & messaging system capabilities (the "Notifier" feature).

However, during last few years, Made2Manage has further evolved from a vendor of traditional MRP/ERP software to a provider of one-stop-shop' enterprise business applications. The company has, gradually, mostly by developing internally, and partly through acquisitions or partnerships, garnered a line of integrated collaborative e-business, customer relationship management (CRM), business intelligence (BI), and advanced planning and scheduling (APS) components within its core ERP solution.

In other words, the Made2Manage Enterprise Business System now offers a broadly integrated application solution for automating business processes from selling and product design, finance and human resources (HR), customer service and support, through scheduling and distribution, basically, it contains most of the functionality that any company would expect even from a top-tier enterprise applications provider alike. It includes traditional ERP capabilities (i.e., financials, distribution & logistics, procurement, production & shop-floor control, sales, estimating and quoting, quality management and customer service), along with extended enterprise applications such as supply chain management (SCM) (i.e., demand planning, APS and finite capacity scheduling), CRM, and BI. As mentioned earlier, Made2Manage recently added an enterprise portal and a new integration layer to its suite, utilizing XML (eXtensible Markup Language) web services based applications via M2M's VIP e-commerce portal running on the Microsoft.NET platform.

The last two years were particularly active for its product development department, since it released two new major product versions during 2001, with over 900 enhancements largely as a result of feedback from its user group, as well as a series of new extended-ERP products. 2002 has seen the release of M2M ERP 5.0 SQL, now with support for multi-site manufacturing (integrating production, finance, engineering, sales, HR and quality control measures across multiple operations) and some enhanced financial capabilities. Other key new features include progress billing for project-orientated industries and multi-dimensional inventory management (see Made2Manage Offers New Functionality And A VIP Treatment). 2001 product extensions would include M2M Synchronizer (that utilizes a combination of optimization and Theory of Constraints (TOC) scheduling module in alliance with ILOG); M2M BI in the form of Advanced Notifier; M2M CRM; HR/payroll; and Fixed Asset Register. As for the future, Made2Manage aspires to expand both geographically and functionally, albeit still while penetrating more its discrete manufacturing SME arena. The firm has aspirations to move more into multi-site, multi-language, multi-currency, multi-national manufacturers with its new functionality, but will not desert its heartland nor will it depart from its adherence to the Microsoft .NET strategy for its ongoing web-based developments. The above-mentioned partnership with Infoscan should further extend the M2M's opportunity beyond traditional manufacturing realm.

Incidentally, in addition to choosing the right focus and the appropriate accompanying functionality footprint, the company has concurrently been trailblazing the majority of its peers with regard to the technological aspect of its product. The object-oriented product architecture has been devised entirely from scratch in-house within the Microsoft context. With the release of Made2Manage for Windows in late 1995, Made2Manage became an early adopter of Windows NT and was reportedly the first manufacturing software application to receive the "Designed for Windows 95" endorsement.

This is Part Two of a three-part note.

Part One discussed recent developments.

Part Three will cover Challenges and make User Recommendations.

Using Microsoft Technology

Today, Made2Manage uses Microsoft's technology virtually for all aspects of its product development, and its strategic relationship with Microsoft has proven to be of the utmost importance given its market segment's infatuation with the technology, whose performance, reliability and scalability has long been significantly improving. By leveraging the capabilities of the Microsoft platform only, Made2Manage should be in a better position to be responsive to delivering new functional features that its customers may demand. In contrast, a smaller vendor that covers multiple platforms often spends more than a half of its R&D budget on porting issues; thus making a cross-platform solution the prerogative of only bigger vendors.

Given the vendor embraced Microsoft platforms (e.g., Visual FoxPro, SQL Server, VBA) long before the advent of the .NET framework because they were far more affordable than midrange or mainframe alternatives, adopting .NET would be the next logical move. The .NET strategy has been Microsoft's view of harnessing Internet based on XML, Simple Object Access Protocol (SOAP), and it is a view of the next-generation Internet computing environment as consisting of Web Services accessed by devices that interact with other services and content applications.

The integration between disparate components should be made possible through XML Web services, which are small, reusable applications written in XML, de facto a universal coding language used for data exchange. XML Web services should enable communication between dissimilar sources and foster common interfaces for client-to-client, client-to-server, server-to-server and service-to-service data exchange. Although counterpart competing Java 2 Enterprise Edition (J2EE) platform might offer the equivalent features and it might have the advantage of an early start (at least 2 years) and a cross-platform deployment that is attractive to larger enterprises, many small manufacturing systems vendors may see strategic advantages in harnessing .NET technology (see Liberty Alliance vs. WS-I; J2EE vs. .NET; Overwhelmed .YET?).

Recently released Visual Studio.NET (VS.NET) has virtually provided Microsoft with a tool to compete on an equal footing with the formidable J2EE community of developers and abiding vendors. For instance, by comparing Java Server Pages (JSPs) with Microsoft's equivalent, Active Server Pages (ASPs) tools, one could even notice .NET taking off feature wise. Both ASPs and JSPs provided component architectures for generating HTML Web pages dynamically, but the new version of ASP for the .NET platform, ASP.NET, reportedly adds the ability to separate Web page visual controls from the business logic used to generate it. Further, made2Manage cites .NET to be a more productive development environment that should reduce the amount of coding. For instance, when rendering a Web page, the XML document is automatically converted into an object with its own properties and methods, eliminating the need to write additional source code.

Still, because the .NET framework is fairly new, vendors are at varying stages of adding or migrating their functionality to the new technology. To that end, Made2Manage has so far finished migration of its above-mentioned hosted portal modules, such as M2M VIP, which enables customers to view information such as order status through a simple Web page. As for its business suite, .NET applications available already include Order Status, Order Entry, Invoice Status, Product Catalogue, Inventory Availability, Request for Quote, Quote Status and some other features for sales staff and distributors.

Therefore, Made2Manage belongs to a selected group of vendors that have delivered their products leveraging .NET and other Microsoft technologies much sooner than Microsoft Business Solutions (MBS) division, Epicor, Frontstep, Syspro, and Best Software being the other examples. Having been an early adopter of SOAP, Web Services, Microsoft BizTalk, Office XP Web Components, VS.NET, and the Mobile Internet Toolkit (MIT), the company was especially pleased and honored to share the stage with Microsoft's CEO Steve Ballmer in February in Chicago at the launch of Microsoft's VS.Net as one of several showcased applications that had made the move to .NET early.

Spearheading Wireless and Mobile Technology

Further, as the time might have also come for more widespread adoption of wireless and mobile technology on the shop floor, Made2Manage seems to be spearheading the trend. These offerings have not gained much momentum during their first push of a few years ago though, and they have so far been confined to ostentatious functions such as mobile travel arrangements and sales force automation (SFA). Steadily, however, wireless solutions that leverage PDAs have gained traction in areas such as field service, order placing, inventory checking, alerting, plant scheduling and plant maintenance, which have a natural need for mobility.

Concurrently, a number of things have additionally morphed in the past few years that may make the timing right for a practical wireless/mobile solution to make an impact on the shop floor/warehouses. There has been a convergence of technologies and advancements both in the software and the hardware that has provided a foundation to make these solutions viable. For example, a significant improvement has been accomplished to bring these applications down to a size that will fit onto a thin client like a PDA or tablet, without holding out on functionality. In its first attempt, the technology could not support the idea, except in a very basic fashion, which was of little use to the people on the shop floor. Of particular help were also the recent proliferation of small devices, and the fact that the price point has come down dramatically. Wireless access points can now be set up for less than $200, and the wireless devices themselves cost only several hundreds dollars each, with both prices expected to go even more down in the future.

This may mean that a clipboard carrying outdated information, and the practice of running back and forth from the production and warehouse areas to the office to get current manufacturing information, including job orders and inventory data, will now become a matter of an archaic past. M2M Mobile Manager indeed replaces the clipboard and post-it notes approach, but because it is a wireless read/write client to the live back-office system, the wealth of information such as shop-floor schedules, inventory levels, customer information, job, work center, part number, shipping info, and sales/quote orders info remain current (i.e., there is no need for PDA cradle synch-up). Filtering capabilities should allow for quicker location of critical-only data, within no more than 3-4 taps. The solution is also roles-based, with the initial available roles focusing on specific tasks in manufacturing, sales, purchasing, and shipping. Roles' range expansion is expected in the future, as the development of the mobile solution has been simplified by use of the Microsoft MIT tool with which, Made2Manage develops a M2M Mobile Manager role once, and the toolkit takes care of the technical intricacies of formatting that role for different PDA platforms, which should curb development.

Program Flexibility

More on the technology front, in addition to being entirely Microsoft-centric, the M2M software is available in a multiplicity of ways from traditional license purchase, to rental and leasing options, with both client/server and web-based delivery. The company's proactive grasp of the hosting/application service providers (ASP) opportunity is commendable, particularly in light of its peers' tardiness and/or non-compelling value proposition in that regard. While manufacturers usually prefer to keep their critical information in-house, many may still opt to use Made2Manage hosted applications for collaborative commerce with the best of both worlds' hybrid hosting principle, which is available through M2M VIP portal. With this solution, Made2Manage hosts the collaboration servers, but not the sensitive data, which is kept behind the customer's firewall via a little piece of software called a managed gateway'. This way, the vendor not only can host its own offerings, but it also hosts e-business applications such as web sites and e-mail and collaborative tools.

Possibly thought leading is the company's readiness to provide mid-sized discrete manufacturers with a number of portals that offer a broad range of collaborative, interactive and personalized applications including, vendor managed inventory (VMI), virtual design' - collaborative engineering design tools (e.g., AutoCAD and ProEngineer), on-line trading exchanges, with streamlined inter-business processes and workflow, and access to information resources via M2M VIP that offers trade partner-facing portal functions and thereby solidifies relationships with distributors, suppliers, employees, and customers (in other words, improves communications within the entire channel, both up- and downstream).

Made2Manage also offers a Web-based training and support program for its customers called M2M University. This subscription-based education program along with additional service and support functionality is available through a customer-facing portal called M2M Expert, giving users on-line access to a knowledge base of logged queries and faults and their solutions. Another example of Made2Manage's alertness in service and support cost reduction by harnessing the latest technology, like live Web-based training, to deliver inexpensive users' training. As a summary, by leveraging the above advanced technologies, the company has been agile enough to spar with a constantly morphing business environment, and to meet the latest customers expectations of 24/7/365 access availability to place and track orders, or to obtain any urgent system support.

Made2Manage has long offered pricing models on a value-based foundation, which should be amenable to its cost-conscious mid-market customers. While it still offers applications on a per-seat basis, many applications also are offered on a subscription basis that reduces the upfront cost and spreads the expense over the useful life of the application. Again, M2M VIP portal, as well as its educational services, are offered on a subscription basis. For example, a user company can have 5 people go through training, or have one person go through training 5 times, which should gives enterprise the flexibility it needs. Given that M2M VIP does not necessarily require the hardware, software, and maintenance investments that other solutions typically require, it may bode well for the new revenue stream despite the current difficult economic climate.

Also, the company has been savvy in developing an indirect channel to supplement its direct sales force and to address the low international presence and recognition. Customers and VARs should benefit from the recently instituted "Team One" reseller program because it allows both internal and external sales groups to share consulting services, education and product configuration/customization services. Almost all of its VARs are located in North America, where the vendor sells both directly and through VARs (with an equal revenue contribution), while in the new markets like the UK, sales are through sole VAR agreements.

This concludes Part Two of a three-part note.

Part One discussed recent developments.

Part Three will cover Challenges and make User Recommendations.



SOURCE:
http://www.technologyevaluation.com/research/articles/made2manage-affirms-its-technological-astuteness-part-2-strategy-16860/

Quick ramp-up, lower implementation, and the almost non-existent support costs of hosted software services makes utility or on-demand pricing appealing customers. However, vendors embarking on these new pricing models (see Parts One and Two), which treat software as a service, are sure to experience growing pains. Traditional upfront licenses provide a "big gulp" of revenue which decreases between releases. However, utility or grid computing, which is more or less a pay-as-you-go software-as-a-service, generates bite-size chunks of recurring revenue. Comparable revenue from the new model will emerge, but only over a longer period. This and waning technology-related services (and its revenue) can produce unsightly red marks on income statements. Moreover, eventual success is still, by no means, assured.

Organizationally, vendors must also make fundamental changes to sales and support processes for subscription or on-demand, transaction-based pricing. Consequently, the implications for business models are profound. Software vendors must rethink the kinds of functions they provide; how best to deliver those capabilities; and what approaches to take through the channel. Recurring revenue comes with the caveat of business model readjustment, and not only because the "piece of the pie" that resellers take will be quite smaller than what they were used to with licensed software. Value-added resellers (VARs) will now have to focus on volume and velocity. They will have to rethink their expertise and skills mix, particularly in the vertical savvy. In other words, solutions will now revolve in their acumen of automating and streamlining business processes instead in packaging software technology.

Other major potential hosting disadvantages include

* Hosting is still nascent, with customers being early adopters.

* Potential security risks exist, since customers' confidential and mission-critical data reside at the hosting provider's or ASP's location off-site.

* Hosting becomes more costly over the long run, especially with declining traditional software license fees.

* Hosting still offers little or no support for software modifications, customizations, or integration into key legacy systems.

* Users will have decreased control over infrastructure and deployment, and dependence on the provider for the quality and prioritization of IT services.

* Users will have little to no control over hardware and software upgrades.

* Support costs are essentially negated and a monthly per user charge is assumed.

Yet despite these fears, the benefits of a more reliable, recurring revenue stream, single-instance implementation, and doing away with disruptive upgrade cycles makes the new business model attractive to vendors. Subsequently, this win-win combination which benefits both customers and vendors has already attracted a few vendors to the pure "software as a service" business model.

This is Part Three in the Trends in Delivery and Pricing Models for Enterprise Applications series.

Salesforce.com Spearheads the CRM Software as a Service Model

Lately CRM software has proven quite amenable to hosting because it is a static sales management and automation system. It can quickly reach a break-even point in the outsourced deployment model. Hence, Salesforce.com, one of the thought-leading providers of customer relationship management (CRM) and sales force automation (SFA) software-as-a-service, has espoused a sort of a disruptive innovation. It has recently rattled the CRM establishment with its hosted CRM solutions and appealing price and implementation advantages. Salesforce.com also offers a pure-play application service provider (ASP) system, designed specifically for the hosted model. The monthly per-user charge, which starts at $65 (USD), includes everything without an up-front software license fee. Reasonable cost, ease of use, intuitive user interfaces (UI), broad (but not terribly deep) functionality, and rapid deployment are the latest values that small and medium businesses (SMB) now worship and what Salesforce.com has embraced. Likewise, Salesforce.com has never been content to remain a mere hosted/on-demand CRM provider and has built a hosted applications platform and developed a CRM application atop of it. Salesforce.com even prospered during the IT downturn, by reaching the $50 million (USD) revenue mark in less than four years since its inception in February 2000. Consequently, it has one of the most successful initial public offerings (IPO) in 2004.

SalesForce.com claims to have exceeded a critical mass of users with over 190,000 subscribers in 12,500 companies, in over 70 countries. Customers pay a monthly, per user fee to access its Web-based CRM application. The vendor claims it can accommodate customer-specific configurations and that it interfaces to most major enterprise resource planning (ERP) and back-office systems. Perhaps it is the continuous upgrades and attractive product additions, like the customization and integration platforms, that keep customers coming. Its customers range from shops with as few as two users to Fortune 500 companies with hundreds of users. This has amounted to an estimated $170 million (USD) in revenues during Salesforce.com's last fiscal year.

Nonetheless, the forays of Siebel, the CRM leader, into hosting will also raise the bar through embedded workflow and analytics, built-in connections to back-office systems, and the provision to migrate and upgrade to the on-premise application. Besides this, Siebel claims the first and only industry-specific hosted software for industries like insurance, hi-tech, automotive, communications and media, financial services, life sciences, manufacturing, and consumer goods. It is the only one with fully hosted contact center capabilities, and has a scalable and secure hosting infrastructure via its partnership with IBM.

Similarly, the CRM giant also offers the ability to implement on-premise or hosted CRM solutions, as well as hybrid CRM solutions that combine the two. Indeed, the Siebel CRM OnDemand—Industry Editions offerings may provide it with the competitive differentiation needed to convince prospective customers that Siebel can offer deep, industry-specific CRM features at affordable rates. Priced at approximately $100 (USD) per user, per month (with an introductory offer of $70 USD per user, per month), the CRM OnDemand editions are viable options for extending Siebel's SFA, customer service, and marketing solutions to certain parts of larger firms—including small remote offices and foreign subsidiaries. It is also an option for channel partners, such as brokers, dealers, and resellers. Most recently, Siebel announced Siebel CRM OnDemand Release 6, which introduces pre-built, industry-specific solutions, advanced sales effectiveness capabilities, and an expansion of Siebel CRM OnDemand's analytic capabilities. Other features include the "mail merge" capability for Microsoft Word; pre-built support for reporting and analysis within Microsoft Excel; and enhanced customization. The product costs $70 (USD) per user, per month, whereas industry-specific solutions are also available for $100 (USD) per user, per month.

As a response to the challenge, Salesforce.com, recently announced its Winter '05 edition. Because the vendor is a provider of "software as a service" for customers by browser, and like its predecessor, Winter '04, the 2005 release does not require installation. Instead, existing users have immediate access to new features and tools. Among the available features is an integrated analytics engine with personalized dashboards that users can customize to show snapshots of metrics and sales key performance indicators (KPIs). Further, real-time alerts can deliver notifications of important events, such as contract deadlines, via e-mail, to both networked and wireless-connected devices. Enhanced workflow creates business rules and triggers to automate and standardize business processes, which to date have been the privilege of traditional, on-premise CRM software.

The Winter '04 release had a new contract management sub-module that helps salespeople create and track customer contracts. It also had enhanced integration with legacy, third-party applications, and popular desktop applications such as Microsoft Word and Excel. Additionally, it supported dozens of languages and all major global currencies. Equally notable, was the global translation workbench feature which provided on-the-fly translation and allows reports to be composed in the language and currency of choice automatically. As for letting users customize the behavior of a hosted CRM application, custom objects and so-called "s-controls" allow enterprises to extend the Salesforce.com database, and build custom applications, screens, and forms without the need for on-premise infrastructure.

Like earlier releases, Salesforce.com Winter '05 is available in multiple packages—Personal, Team, Professional, and Enterprise editions—which fit varying company sizes and whose costs vary accordingly. Furthermore, Salesforce.com also delivered its Web services-based integration platform for building hosted applications, sforce 5.0, to all users as part of the Winter '05 rollout. Also referred to as an "on-demand application server", sforce 5.0 should allow developers to customize, integrate, and extend the Salesforce.com UI, business logic, and data model. Users will also be able to host and store code for new custom applications, then use the salesforce.com service to deploy and manage them.

Likewise, Customforce.com, was also recently released. It is a new on-demand customization toolkit that eliminates the need for programming, yet still allows the customer control over every feature of the application. Modifications and customization are relatively simple with this toolkit. Salesforce.com also introduced Supportforce.com, an on-demand customer service and support application, in September 2004. With this, customers can deploy global contact centers and help desks fairly quickly without software using the platform.

This may reveal another trend in the CRM market that supplements the need for the integration to back-office and other enterprise applications. Rather than delivering "canned" hosted solutions, new CRM offerings focus on giving users more for less, including improved flexibility and customization, through configuration rather than through dreaded source code changes.

Other CRM Vendors

Similarly, other on-demand start-up CRM vendors, such as NetSuite, Salesnet, RightNow Technologies, or Intacct have delivered similar new tools and development environments that let user organizations customize their products. Database tables or custom code can be added to create unique functionality that, unlike conventional enterprise applications, will not break every time a new version arrives. Still, these vendors will soon have to balance offering expanded functionality with data quality services. This will need to be done without making the hosted technology too complex and thereby "fly in the face" of their differentiation from packaged on-premise applications. There are some indications of slower support response times and of the growing complexity of the aforementioned products because as the time goes by, users will require more functionality. One of the key value proposition and sales successes of hosted CRM has been its simplicity, but, if ongoing functional enhancements are needed by customers that have expanding operations, the cost-benefit equation might shift to the on-premise or hybrid model.

Another vendor with a value proposition along similar lines is ACCPAC, now part of the Sage Group/Best Software, that plans to expand its foundation built during the past few years and help partners move into the more predictable revenue generating area of hosted services. Interestingly, the hosting option was one of the few new dimensions that Sage and Best have always lacked in their portfolio (see Will Sage Group Cement Its SME Leadership with ACCPAC and Softline Acquisitions?).

Launched in 2000 and based on Computer Associates' Unicenter TNG infrastructure, ACCPAC Online hosting service offers applications with an ASP model. As a result, ACCPAC's solution providers have more options to tailor solutions that best fit customers' needs. The ACCPAC Online Preferred Accountant Subscription Services (PASS) program was thus designed to enable accounting VARs to become virtual ASPs (VASP), with ACCPAC being the ASP "in the shadow". In addition to what may be unique deployment flexibility, which allows selected applications to run either on the premise or to be hosted, ACCPAC may be the only vendor among its peers that is also an ASP. Finally, in addition to ACCPAC CRM, ACCPAC has long had success with hosting its ERP and accounting packages. Meanwhile, in the realm of accounting, Intuit recently claimed to have doubled the customer base of QuickBooks Online Edition during 2004, which 26,000 small businesses paying $20 or so per month for the accounting software.

This concludes Part Three of a four-part note.

Part One defined pricing options.

Part Two detailed utility computing.

Part Four will cover software as a service business model and make user recommendations.



SOURCE:
http://www.technologyevaluation.com/research/articles/disruptive-innovations-on-demand-pricing-models-and-vendors-17871/

A typical ERP system now offers broad functional coverage nearing the best-of-breed capabilities; vertical industry extensions; a robust technical architecture; training, documentation, implementation and process design tools; product enhancements; global support and an extensive list of software, services and technology partners. While it is not a system-in-a-box yet, the gap between its desired and actual features is becoming smaller every day.

ERP vendors, on the other hand, are not doing so well, possibly because they have been busy developing, acquiring, or bundling new functionality so that their packages go beyond the traditional realms of finance, materials planning & management, and human resources.

Users' visions of ERP are evolving from tactical to strategic, and users are no longer willing to choose between integration and function. Within the next two years, ERP will be redefined as a platform for enabling e-business globally.

Therefore, users need to be aware of the trends within the ERP market so they can take into account all the necessary factors when making an ERP software selection: product functionality, product technology requirements, vendor corporate strategy, and vendor corporate viability.

Overall user recommendations are included in this final note on the eight ERP software trends.

About This Note

This is a four part note, which each part covering two of the eight trends we have identified. Each part contains links to the preceding parts. The trends covered in each part are:
Part 1:

* ERP Functional Scope Expansion

* Sharper Vertical Focus

Part 2:

* Flexibility, Agility & Interoperability Enabled by Adaptable Architecture

* Web-Basing of ERP Systems

Part 3:

* Provision of e-Business Components

* Mid-Market Shakeout

Part 4:

* Advent of Application Hosting Services

* New Pricing Models

7 - Advent of Application Hosting Services

Application Service Providers (ASPs) have arisen on the Internet in response to such ERP woes as support expenses, misbehaving applications, and server downtime. Assuming an organization ports all application functionality to an ASP, the only real concern for internal IT individuals would be ensuring a rich and stable connection to the Internet. ASPs use a "Thin Client" configuration, which means that any hosted application accessed by an end user, such as e-mail or word-processing application, is transmitted to the desktop via a series of streaming screenshots, thereby minimizing the need for excessive bandwidth and software installations on the client machine.

The downside is the long-term cost of "leasing" the service. One of the primary benefits of outsourcing is the initial negation of "up-front" costs associated with the implementation of a production system. However, after certain period of time, the outsourced system will cost more than an "in-house" production system. An analogy may be made to a group of 3 college roommates who need a big-screen television to watch football. Each roommate pays $20 per month for 3 years, totaling $2160 when the television could have initially been purchased for $1200. The appeal is immediate gratification coupled with reduced initial financial pains.

The main challenge facing most ASPs is how to drive down long-term costs while accumulating a solid revenue stream. One of the cost inhibitors for ASPs is the amount of dedicated bandwidth they must maintain to support thousands of users. Another challenge facing ASPs is Service Level Agreements (SLA); if for some reason the ASP loses Internet connectivity, customers will lose connectivity to outsourced production systems, which negatively impact their internal SLAs.

The key to an ASPs success will lie in the targeted marketplace. Those ASPs targeting large organizations will most likely fail or scale back their profit margin in order to gain business. Those ASPs who can successfully market to small-to-midsize enterprises (SMEs) while providing industry-specific focus and good technical support coupled with frequent software and hardware upgrades will experience good success.

We believe that, within the next three years, application hosting will not be the dominant delivery model (less than 30% of installations) for packaged delivery for SMEs, but will represent the supplementary business model that the more nimble ERP players will have to provide (70% probability).

Outsourcing Advantages:

* Predictable, fixed cost for a customer.

* Reduced setup and configuration time, and greater operational simplicity.

* All upgrades applied to ASP servers. No need for client or desktop upgrades.

* Limited funds required for initial startup.

* Reduced need for internal IT support.

* ERP package maintenance performed automatically by external experts.

Outsourcing Disadvantages:

* Outsourcing is still in its infancy, first customers being early adopters.

* Potential security risk since customers' confidential and mission-critical data reside at the ASP's location.

* Becomes more costly over a long run.

* Offers little or no support for software modifications/customizations.

* Decreased control over infrastructure and deployment.

* Limited to Direct Access Points for your ASP or need for secondary Internet access account depending on user travel plans.

* Little to no control over hardware and software upgrades.

* Support costs are essentially negated and a monthly per user charge is assumed

User Recommendations

The following types of enterprises should consider using ASP services:

1. Those with limited investment capital and those that do not have an IT department.

2. Those that do not anticipate a high rate of change in the way they do business.

3. Those investing in an application to streamline costs rather than to enhance revenue.

4. That that lack resources for the rapid implementation of a distinct project that possibly does not require complex integration with existing applications (e.g., HR/Payroll administration, email, etc.).

8 - New Pricing Models

As the nature of ERP software evolves into services and/or hosted models, the market might be experiencing the beginning of the end of user-based licensing. One emerging pricing model holds out the promise of users paying only for what they use through power-based, stratified pricing models. The Internet use is the driving force behind this licensing shift since it makes software accessible to a new realm of casual users, like visitors to a company's Web site.

Furthermore, since fewer than one in four ERP projects deliver workable solutions that last six years or more, clients are increasingly wary of committing huge sums of money before they have obtained measurable return on investment (ROI). To that end, the licensing of ERP software products is undergoing a fundamental shift from traditional up-front fees to incremental or success-based pricing. Success-based pricing is a popular alternative especially for small businesses and startups that lack the IT budgets of larger, established companies. It allows these companies to acquire software for a lower entry cost and pay more only as their business expands.

Implications of This Trend

Vendors who embark on the transition to the new model are sure to experience growing pains, however. As traditional license revenues decline, recurring revenue generates comparable figures only after time. This can produce unsightly red marks to appear on income statements and eventual success is by no means assured. Organizationally, vendors must make fundamental changes to sales and support processes for transaction-based pricing.

For users, success-based pricing models offer a "pay-as-you-grow" alternative to up-front license fees. Though often touted as cheap and convenient, these models can bring unexpected IT costs down the road. As with any long-term contract, prospective clients should carefully review the fine print to understand the implications that transactional revenues will have on future expenses. A transaction may appear cheap at $10, but detailed growth projections that factor in per-transaction increases, milestone increases, as well as other contract attributes are a must for companies to understand the magnitude of future payments. Also, without a fixed upfront price, planning of yearly IT budgets will become much more difficult.

Summary and Overall User Recommendations

Without a doubt, ERP remains the information backbone for contemporary manufacturing enterprises. However, today's ERP systems are required to address more than the processes taking place within the walls of an enterprise. They must be able to address the players and processes involved in extended enterprise - the people and partners that the manufacturers collaborate and coordinate with in their supply chains.

While the Web and e-commerce will continue to be a major ERP direction, we foresee more ERP trends will appear on the radar screens of industry observers and IT managers. Easier enterprise applications integration (EAI), more flexible pricing, reduced need to customize an application and easier customization when needed, product design collaboration/product lifecycle management (PLM), tools for business process change analysis (beyond a mere business process modeling), and embedding analytical applications and knowledge management are some of the best prospects among the next wave of ERP hot-buttons.

Users' need to understand their e-business requirements and critical business processes can never be overemphasized. Not knowing their present business state of affairs as well as their strategic intent and direction will disqualify any future ERP system implementation from being a success. Clarifying this should help users create a long list of vendors to include in an ERP package selection. Precedence should be given to vendors with a proven vertical focus on the user's industry.

Users should also be aware of consolidation in the ERP market, and corporate viability should play a prominent role in every selection process. Virtually all software selection teams appreciate the importance of product functionality and product technology requirements in making the right decision. Too often, however, these are the only criteria that play a role in the decision-making process. Other often overlooked factors can determine the eventual success or failure of a new system, including vendor corporate strategy, global service and support capabilities, financial viability, and, of course, cost. 'Bolt-ons' should be selected only from official business partners of the primary ERP vendor, after making sure that partnership is not a mere marketing pitch.

With the Internet making access to enterprise applications both cheaper and easier, it is becoming increasingly difficult to imagine why a manufacturing company would remain without them. Success-based and power-based pricing, as well as applications hosting might offer compelling financial incentive for small to midsize companies to consider an acquisition. The Internet will not eliminate traditional application licensing, but these trends will cause a significant percentage of application license revenues, at least 15%, to shift to transaction-based models within the next 18 months. Absolute market growth will also occur as the Internet streamlines the ability to roll out applications to a greater number of users, though it will be tempered somewhat by reduction of support and maintenance fees that result from web-based deployment of these services.

Large and small companies can benefit immediately from engaging in Internet-based trading exchanges and/or portals. By signing on to an e-market, whether a public exchange or a private network hosted by the vendor or a large "anchor tenant" supplier, a corporation can effectively outsource its entire tactical procurement operation, at least for commodity items. Continuous Planning, Forecasting & Replenishment (CPFR) will be the collaborative paradigm of choice for direct goods procurement and non-commodities over the next five years as it allows large companies with several key suppliers and/or resellers to individualize their relationships while at the same time exploiting the speed and efficiency of the Internet. For the longer term, CPFR will provide the framework for end-to-end collaboration across the entire supply chain.



SOURCE:
http://www.technologyevaluation.com/research/articles/where-is-erp-headed-or-better-where-should-it-be-headed-part-4-asp-s-and-new-pricing-models-16367/

Eqos's valuable engagement-based experiences discussed in the

previous part of this series (please see One Vendor's Quest to Garner

a Global Sourcing Ecosystem) were parlayed into the 2006 launch of

Eqos 3.0 and the more recent launch of Eqos 4.0 in May 2007. Eqos's

Web-based applications help retailers streamline and scale their

sourcing operations by allowing every member in the supply

chain—whether located in Boston (US), Pretoria (South Africa), or

Beijing (China)—to collaborate online and access the most up-to-date

information on the sourcing process of consumer goods.

Based on best practices learned through its work with such retailers

as Best Buy and Tesco, the updated Eqos product enables retailers to

manage the sourcing process of goods, from initial concept and design

through to product specification, bid management and assessment,

landed costs estimation, packaging, sampling, testing, and final

order confirmation.

Hosted by Eqos (www.eqos.com), the solution includes critical path

management, workflow management, reporting analytics, and an

alerts-and-exceptions function. Pertinent information, including

product images, can be entered into a master repository, which

reduces duplication and errors, and provides a single view of the

supply pipeline—accessible to approved internal or external users.

The solution, which also enables the monitoring of suppliers from a

quality compliance and risk management perspective, has continually

improved its intuitiveness. It now allows all levels of designers,

technicians, and buyers, as well as supplier personnel, to easily

track the sourcing process.

Another major breakthrough for Eqos came mid-2006, when Edgars

Consolidated Stores Limited (Edcon), the leading retail group in

South Africa for clothing, footwear, and textiles, selected the

vendor's global sourcing solution to improve supplier collaboration,

support the expansion of its retail supply chain, deliver the latest

fashions to consumers faster, and boost bottom line profitability.

The solution has since been implemented by a joint Eqos and Accenture

team working closely with the Edcon merchants.

Operating in Johannesburg as Edgars Department Store since 1929,

Edcon today offers ten retail brands: Edgars (offering clothing,

footwear, kitchenware, household textiles, and housewares), Jet

(clothing and footwear), C N A (books, stationery, and music), Red

Square (cosmetics), Boardmans (housewares, household textiles, and

kitchenware), Legit (young women's fashion), Jet Shoes (footwear),

Temptations (intimate wear), Prato (footwear), and JetMart (general

merchandise such as clothing, kitchenware, music, do-it-yourself

(DIY) items, small electrical appliances, household textiles, health

and beauty products, and stationery). Grouped within the Edcon

department stores and discount divisions, the above brands cover

multiple categories throughout the approximate 1,000 stores located

across South Africa, Botswana, Namibia, Swaziland, and Lesotho.

Eqos Today

Consequently, Eqos is currently supporting some of the world's

leading retailers by hosting their near 15,000 users (which include

retailers, agents, suppliers, and other trading partners) in over 55

countries. Eqos is a professionally managed and growing organization

of about 70 employees, and the vendor has been consistently

profitable, with quarter over quarter growth. It has recently

experienced physical expansion, opening offices in Boston,

Massachusetts (US) in early 2006, and in Hong Kong, China in early

2007. This latest investment has signaled the company's commitment to

supporting more fully customers' sourcing operations in Asia.

Eqos's global expansion comes as more retailers establish sourcing

offices and strengthen relationships with agents and strategic

suppliers throughout Asia. The company's Hong Kong office provides

retailers and their trading partners with Mandarin, Chinese, and

English language support across numerous time zones and geographical

regions. Eqos supports more than 4,000 users in China alone. On a

global basis, the company manages more than 5,000 transactions a day

and 100,000 user logins per month, thereby supporting the management

of nearly 38 billion dollars (USD) worth of inventory annually.

The most recent US customer win took place in April 2007; retailer

H.E. Butt Grocery Company (H-E-B) selected Eqos's business solutions

to support and expand its global sourcing and supplier management

operations, as well as to enhance its private label offerings by

improving supply chain collaboration and visibility. H-E-B opened its

first store in 1905 in Kerrville, Texas (US), and today is one of the

nation's largest independently owned retailers, serving a broad range

of customers. With more than 300 stores in Texas and Mexico, the

supermarket chain earns revenues in excess of 12 billion dollars

(USD). Now based in San Antonio, Texas, H-E-B employs more than

60,000 partners and serves millions of customers in over 150

communities. Known as an IT innovator, the retailer claims to have

consistently outpaced its competitors by offering differentiated

products and services through a variety of formats.

Another trend that has played a key role in Eqos's success is that

retailers are increasingly implementing private label strategies to

help grow their revenues. As reported in The Promise (and

Complexities) of Private Labels (and given the recurring private

label theme thus far in this article), there is clearly a growing

trend among retailers toward offering private (or the retailer's own)

labels and brands. Consequently, a fundamental reassessment of the

structure of global sourcing has occurred; companies are now

reconsidering whether they need agents or other middlemen at all,

since more and more, companies can now work directly with

manufacturers via Internet trading exchanges. Given some reported

success with lower-priced house brands, retailers in several

segments, including fast-moving consumer goods (FMCG), consumer

electronics, and apparel, are increasing their focus on private label

merchandise (which is typically imported) to take advantage of margin

improvements, improved quality consistency, and brand loyalty.

For instance, retailer Best Buy realized that it could not compete

with the likes of Sony and Panasonic in high-end, premium electronics

equipment, appliances, and computers because of these two brands'

loyal customer bases. However, Best Buy also realized that no such

customer loyalty exists for accessory items. Therefore, the retailer

has come up with its own line of competitively priced cable products,

as well as other peripherals, such as external drives, USB ports,

keyboards, etc. The retailer has also found a niche market receptive

to private label TV sets and consumer electronics, at the low and

mid-range price points.

Eqos's Current Mission Enabled by a Service-oriented Architecture

Platform

Eqos's current mission is to become the leading provider of global

sourcing and supplier management solutions for the retail supply

chain worldwide, empowering sourcing and procurement executives and

clerks to improve time to market, increase customer value, improve

margins, decrease operating costs, and scale private label business.

In other words, the idea is to enable customers to increase their

span of control over their global supply bases, thereby driving

competitive advantage and promoting collaborative product and

supplier innovation. This is to be achieved by simplifying,

standardizing, and scaling the processes associated with the sourcing

of private label merchandise across the entire supplier network, by

working collaboratively with suppliers. These processes span from the

initial product concept through to production and delivery to the

retailer's distribution centers (and in some cases, into the

after-sale phases).

In addition to software and support, Eqos offers hosting support,

user community management, and applications management services.

These offerings stem from Eqos's acknowledgement that over time,

companies have invested in technology to support their business and

supply chain processes. The desire of companies to protect their

investments must be balanced with the agility and speed that the

market is demanding. This means that newly acquired capabilities must

complement existing IT environments in a way that seamlessly

integrates information and processes across both old and new systems.

The idea (if not an imperative) is to leverage retailers' legacy

enterprise resource planning (ERP) and supply chain management (SCM)

applications to build forward-thinking cross-enterprise processes

that promote collaboration between retailers and their suppliers,

buying offices, and other trading partners.

Logically, global sourcing and supplier relationship management (SRM)

demand control of enterprise processes and close collaboration with

suppliers (all of which may have very different systems or levels of

IT expertise). Thus, managing the extensive and diverse retail supply

chain requires a simple approach to workflow and project management

that is supported by network-wide collaboration.

The Eqos Collaboration Platform is built on service-oriented

architecture (SOA) given the closeness of the peer-to-peer (P2P) and

SOA concepts, and underpins the entire Eqos solution suite with a

flexible architecture that can adapt to rapidly changing business

needs and IT landscapes. The application addresses global sourcing,

product lifecycle management, and supplier management business flows.

It not only streamlines integration with trading partners, but also

handles internal integration using flexible extensible markup

language (XML)-based servers.

Early in 2006, Eqos announced the launch of its new platform release,

Eqos Platform 7, which was primarily an "architectural" release with

the following three principal areas of advanced development:

1. A technology move to Microsoft.NET technologies and Microsoft

SQL Server 2005 database to provide better performance. Solution

developers can use these well-known and widespread technologies to

extend the core capabilities of the Eqos solution.

2. Further performance enhancements through a more flexible data

schema. This new approach has addressed the needs of customers that

are embedding collaborative solutions more deeply into their business

and increasing the traffic through them, by providing easier

navigation and customization of data and reports. To that end, the

platform's latest release has significantly improved the scalability

and has reduced demands on supporting hardware by two-thirds,

allowing more data and concurrent users to be managed than ever

before.

3. Enhancements that further simplify the collaborative

application developer's experience, making these applications even

more productive. Such enhancements include a richer web user

interface (UI), improved password management, and quicker data entry.

At a technical level, customers have since been able to define,

customize, and manage their web pages and web UI configuration,

thereby simplifying the configuration, maintenance, and expansion of

application web sites. Further, improved, more flexible installation

and configuration options allow customers to adapt the application to

meet their changing requirements.

The application is accessible to other programs by using the power

and flexibility of integration via Web services (see Understanding

SOA, Web Services, BPM, BPEL, and More). XML is used for data mapping

and process definitions to Web services, legacy systems, and

databases, or to any other third party system. Again, this brings us

to the important ability of leveraging existing applications (that

is, a view and the extraction of the data from several disparate

source systems), such as order management systems, warehouse

management systems (WMSs), item masters, vendor masters, etc., and

aggregating them on a single screen, thus minimizing traditional

“hard-coded” integration costs.

This is part two of the series One Vendor's Quest to Garner a Global

Sourcing Ecosystem. Part three takes a deeper look at Eqos's global

sourcing offerings and how they could serve the retailing sector.



SOURCE:
http://www.technologyevaluation.com/research/articles/a-retail-sourci

ng-suite-built-on-experience-19126/

On March 7th, PeopleSoft announced PeopleSoft eCenter, a next-generation ASP providing integrated eBusiness applications. PeopleSoft eCenter is designed to offer rapid deployment and proactive services for PeopleSoft eBusiness applications, with single-vendor accountability and an enhanced customer experience.

ECenter offers access to PeopleSoft front- and back-office applications, as well as both buy-side and sell-side e-commerce solutions. Using an Internet portal customized to specific business environments and users, the application incorporates a scalable, thin client based on the PeopleSoft 8 Internet Architecture.

It is available in North America and will be rolled out globally over the next year. PeopleSoft's partnerships with certified outsourcing providers allow customers to choose a hosting service that best meets their needs.

PeopleSoft eCenter delivers integrated core back-office solutions such as the PeopleSoft Human Resource Management System and PeopleSoft Financial Management. The eCenter also hosts PeopleSoft eProcurement for sell-side e-commerce.

In the second half of 2000, PeopleSoft expects to start hosting their eStore, Customer Relationship Management suite, Supply Chain Management, solutions for Government and Higher Education, and business intelligence solutions, as well as non-PeopleSoft applications through eCenter. They also plan to host trading exchanges for business-to-business buying and selling over the Web.

They have designed eCenter to deliver an enhanced user experience through each phase of a customer's application hosting experience. The PeopleSoft eCenter self-service portal can be customized for companies and individual users. It offers Vantive's eHelpDesk to enable customers to review problem status and asset information, search for product information, and query existing resolutions for known problems. PeopleSoft eCenter will also provide Web chat, allowing customers to exchange information with each other.

The company is also offering customer relationship managers as a single point of contact for customers. These managers are dedicated to PeopleSoft eCenter customers to escalate and expedite their service issues. The eCenter provides dedicated 24x7 customer support. In addition, eCenter customers will have access to PeopleSoft implementation project managers throughout the implementation phase.

PeopleSoft eCenter offers the reliability, scalability, and security of leading, global e-business infrastructure providers, including Exodus Communications, Sun Microsystems, Cisco Systems Inc., MCI WorldCom, and Pilot Network Services.

Market Impact

Depending on who you listen to, PeopleSoft is either behind, or on track with their competitors. SAP, JD Edwards, and Oracle have all made ASP related announcements within the last year. We are also seeing mid-market ERP vendors such as Great Plains joining the movement. Ahead or behind may be a function of ambitious marketing departments. The true measure is application availability, the number of customers using the solution, and how the e-business suites are adapted to perform over the Internet.

To that end, PeopleSoft may be late in relation to mySAP.com or JD Edwards. While PeopleSoft's eBusiness is designed for organizations of all sizes, they are focusing on rapidly growing businesses, such as start-ups and "dot coms." The service is designed so companies can take advantage of PeopleSoft's solutions and expertise without incurring many of the up-front costs of a large-scale system purchase or having to manage relationships with multiple vendors.

With ASP market estimates ranging from $8 billion to $22 billion by 2003, these companies are pushing pre-sales to lock customers into their solutions. It's too soon to tell the ultimate "winners", but innovation, strategic partnerships, and open connectivity will continue to dominate their offerings.

User Recommendations

Start-ups and fast growing companies have a plethora of choices. We suggest identifying the needs of your organization in relation to resources and future growth. Some of the immediate benefits of the application service provider model are access to robust solutions with limited investment (comparatively speaking), reduced hardware costs, and limited IT resource costs. However, additional issues such as support, scalability, and response time need to be considered.

While not mentioned in PeopleSoft's eCenter announcements, we believe that PeopleSoft intends to maintain a License Based fee structure. Most ASP models rely on a "pay as you go" model. If you are considering PeopleSoft's solution, identify the fee architecture and compare it to other offerings before signing an agreement that might lock you into a 3-5 year contract.



SOURCE:
http://www.technologyevaluation.com/research/articles/peoplesoft-s-asp-play-15614/

Oracle Corporation has long prospered in the application service provider (ASP) and hosting space with its vision to deliver "software as a service" through the Oracle On Demand offerings (in former incarnations called Oracle.com and Oracle Business Online). At the applications level, Oracle has over 200 customers within the Oracle E-Business Suite On Demand program. Here pricing is based per module and is similar to standard licensing, whereby the license is either perpetual or for a certain period. Product support is about 22 percent or so of the license price per year. Implementation, which is based on the on-line life cycle, is of a fixed scope and fixed fee.

Part Two of the Enterprise Application Players Keep Refining Their Value Propositions series.

Moreover, this offering also has an MSP option involving application management, database management, systems management, and optional hardware management. If the hardware is located at Oracle's data centers (the so-called @Oracle option), Oracle will host users' servers and manage the infrastructure. Alternatively, companies can leverage their existing hardware investment and Oracle will remotely manage the software residing at the location of their choice. With this @Customer option, users can manage their hardware internally or have it hosted and managed by a third party vendor or ASP.

Despite challenges, both SAP and Oracle will be formidable forces in the hosting space because of their intimate knowledge of their application, in respect of other ASPs; their infrastructure and organizational stability; and their vast capital, which is still a problem for many ASPs. Both giants, however, face the challenge of not easily integrating with other software products.

By leveraging its partners to develop solutions for vertical industries, SAP might have a notable advantage over Oracle. Oracle has a lower tolerance for customizations and may face a channel conflict with other Oracle ASPs, and system integrators (SIS). Also, while there is a price parity of $120 $150 (USD) per user, per month between the two offerings, SAP has the much broader, vertically-oriented functional scope of the mySAP ERP suite, whereas as many as 80 percent of Oracle hosting instances are still limited to Oracle Financials. SAP also touts a dedicated one-to-one, single-tenant relationship with every hosting client and provides an assigned hosting account executive. This works well for clients who, despite the cost and scalability advantages that multi-tenant hosting options can provide, tend to be wary of one-to-many hosting models where their mission-critical data is managed in an open environment.

Still, SAP needs to be careful not to take too long to roll out its forthcoming industry solutions. Given that SAP supports a few dozen industries, at its current rollout pace, it will take SAP at least two years to align SAP Hosting with its numerous on-premises industry solutions so it complement its offerings. This will give SAP's competitors significant time to deliver similar offerings for at least a few industries. However, SAP Hosting may be more promising for small and medium businesses, but only if SAP maintains its partner sales arrangements and continues to commit, motivate, and compensate its partners for the development of vertically-oriented extensions.

This is Part Two of a two-part note.

Part One covered the event and the market impact.

User Recommendations

As issues of Internet security, privacy, and multi-vendor product interfaces are addressed, the number of vendors adopting the software-as-a-service business model will undoubtedly grow. Using hosted arrangements will also make sense, not only as a cost reduction exercise, but as a solution for manufacturers in high-tech and electronics and for similar complex manufacturing segments that are outsourcing portions of their manufacturing operations or are dispersed geographically with their own manufacturing and distribution centers.

As with any decision of strategic importance, whether to use a hosted applications service or not requires due diligence. This is pertinent to both vendors and potential customers. Although the promise of reduced implementation risk and time, lower upfront costs, and so forth justify the hosting/ASP model, there is an entirely new set of issues for mid-market organizations to consider. Some of the issues include the technical capability of the ASP to administer the program; the ASPs' industry focus; the application's customizability; the ability of the ASP to guarantee connectivity; the pricing model chosen; and how to negotiate a service level agreement (SLA). These need to be addressed in conjunction with evaluating the capabilities of the software package, and understanding whether the ASP offering differs from the traditional licensed offering. Clients should diligently and comprehensively evaluate the benefits, as well as the potential business constraints of the hosted option, and they should make assessments based on referenced clients.

More comprehensive guidelines for determining if you should consider the ASP model along with thoughts on selecting an ASP can be found in The ASP Decision and Are ASP Applications Right for You?.

Despite the bad impressions left by the largely ill-fated first generation of hosted providers, and owing to the positive outsourcing news from vendors like Oracle, Salesforce.com, ACCPAC or NetSuite, mid-market enterprises might benefit from objectively evaluating the next-generation ASPs. Generally , the following types of enterprises should consider using hosting/ASP services:

* Those with limited investment capital and those without an IT department.

* Those that do not anticipate a high rate of change in the way they do business.

* Those investing in an application to streamline costs rather than to enhance revenue.

* Those that can jettison most of the organization's aged legacy infrastructure.

* Those that lack resources for the rapid implementation of a distinct project that possibly does not require complex integration with existing applications, such as HR/payroll administration, e-mail, etc.

Look for the following characteristics amongst the hosting vendor/ASP candidate providers:

* Amenability to reasonable customization and interfacing to legacy systems

* Service-oriented architectures (SOA), Internet-based architecture, and standards-based interfaces

* Support for specific vertical industries or business processes

* Hybrid services that can coexist with on-site systems

* Sound policies for privacy and security

* A sound track record of SLA maintenance at originally quoted price levels and a quick payback

* Sound financial viability and geographic coverage

* The ability to track and provide key metrics for application and network availability.

For users, success-based pricing models offer a "pay-as-you-grow" alternative to up-front license fees. Though often touted as cheap and convenient, these models can bring unexpected IT costs down the road. As with any long-term contract, prospective clients should carefully review the fine print to understand the implications that transactional revenues will have on future expenses. A transaction may appear cheap at $10 or so, but detailed growth projections that factor in per transaction increases, milestone increases, as well as other contract attributes may reveal additional costs. Also, without a fixed upfront price, planning of yearly IT budgets will become much more difficult.

Interested customers should certainly consider SAP Hosting mySAP All-in-One offerings and carefully determine their needs and implementation framework, keeping in mind typical problems that come with new product releases. Organizations seeking a Web-based solution and out-of-box functionality with little or no customization may benefit from evaluating the offering. Support, connectivity, ease of use, security, acceptance, and scalability are only a few considerations. Current users of older SAP traditional client/server product may benefit by exploring the ramifications of switching to the hosting/ASP mode. However, decision-makers should be aware of SAP's extended rollout periods while it aligns industry editions of SAP Hosting with all of its on-premises industry solutions and defines how they will mesh or complement the on-premises industry offerings.

If SAP Hosting is the final choice, future clients should consider the following:

* Negotiate the license fee per component if the entire mySAP ERP breadth is not needed (after a thorough consideration).

* Provide for future incorporation of mySAP ERP or mySAP Business Suite components by bundling them into your contract now at negotiated license fees.

* Stay away from consulting partners who do not follow SAP's stringent implementation methodology; the best scenario would be to use an SAP Certified partner.

* Conduct preliminary research on the industry expertise and reference accounts of a regional SAP Certified service partner. Also, familiarize yourselves with the solution's strengths and weaknesses within certain vertical industries.




SOURCE:
http://www.technologyevaluation.com/research/articles/enterprise-application-alternatives-what-you-should-be-asking-oracle-and-sap-17895/

Tero Software is a private company that was originally founded as a

consulting firm in 1979 with the aim of teaching organizations about

preventative maintenance strategies and how to automate them through

the use of computerized maintenance systems. In the mid-1990s, Tero

began delivering its own Web-based request management system, which

helped users deal with in-coming phone, fax, e-mail, and paper work

requests. In 1997, based on the success of its first Web foray, it

released its own Web-based maintenance management system, Web Work.

Tero's systems now help clients manage maintenance facilities, fleet,

and plant equipment. The company is headquartered in Coquitlam,

British Columbia (Canada).

Business Background

Tero is a software development firm that also offers consulting

expertise. While the company originally focused its attention on

organizations in the forestry and mining industries, its current

solutions address the education, military, and government sectors, as

well as the property management and manufacturing industries. Tero's

solutions are primarily used by many small and medium businesses

(SMB), though the company is also gaining tier one customers that

appreciate its slimmer solution. Most of Tero's target clientele have

revenues of between $100 million (USD) to $500 million (USD). Tero

resellers are based throughout North America, India, the UK, South

Africa, Poland, Russia, Iran, and Asia.

Supporting the Customer

Tero's Web Work solution is available in an application service

provider (ASP) hosting model with twenty-four hour a day, seven day a

week support. However, some clients prefer to have their own on-site

installations, for which Tero provides customer-specific service

level agreements (SLA).

Web Work is a system system with robust work order management and

equipment history functionality. However, Tero is particularly proud

of its method for supporting data division. An organization may have

many facilities and each facility may have many plants in separate

data divisions. The Web Work solution allows clients to separate data

from these various plants, so that people at a given plant can view

only information related to their job functions, while maintaining

one database and a common naming convention. This system allows, for

example, a regional manager who runs four or five plants to get

reports on, and see data for, all those plants. Moreover, because

there is a parent/child relationship in the hierarchy going all the

way up to the head office, it is possible to view reports on

activities and costs from a national, regional, or local perspective.

Another of Web Work's strengths is its reporting functionality, which

demonstrates Tero's ease-of-use philosophy. Tero believes that

information technology (IT) personnel and analysts should not be the

only ones capable of producing reports. In fact, according to Tero

General Manager, Rob Saare, "By giving the report writing back into

the hands of the maintenance manager or the maintenance folks they

can now report on the littlest aspects or the largest aspects of

their jobs." Thus, Web Work's reporting functionality enables

maintenance personnel to readily create custom reports that

drill-down and detail the work they have actually done.

These strengths are the basis for a Tero success story involving the

Washington State Patrol (WSP), which runs the US State of

Washington's police department. The department is responsible for

maintaining approximately sixty buildings and facilities, as well as

overseeing inventory that includes a fleet of about 1,600 vehicles.

To complicate this, the WSP has several divisions, including a supply

division and an electronic services division, and had to deal with

the inefficiencies of maintaining separate databases for each

division. Tero helped solve this problem through a series of meetings

that got the divisions working as a team and that established that a

single database and a common naming convention would enable the whole

organization to work more efficiently.

In the year and a half since those meetings, the WSP has successfully

moved from maintaining separate databases to having only one

database. The WSP supply division uses Tero's purchasing module, and

collaborated with Tero to incorporate several new features. The

electronic services division is now able to manage all the

organization's radios and electronics. At long last, all the

divisions communicate with each other and follow the same business

practices.

Challenges

One of the biggest challenges Tero faces is encouraging clients to

overcome maintenance practices that have been ingrained over time and

do not necessarily work as well as they could. Though many companies

assert that this is not an issue with their practices, Tero has often

found that it can refine and improve their practices once its

consulting arm has the buy-in of people within the organization. As

Rob Saare states, "We try to teach people that it's all about people,

process, and tools. The software is merely a tool, it's a means to an

end, a data-repository if you will. The process: if you follow the

methodology in the software you inherently have immediately success."

The Future

The next important projects on Tero's roadmap include many interface

improvements. Since Tero has built its product on Microsoft

technology, it will take advantage of .NET and extensible markup

language (XML) to provide drag-and-drop functionality, more user

customization, and more user-defined screens and graphical user

interfaces (GUI).

Tero also hopes to expand the applicability of its solutions, as it

is seeing more interest in the area of IT asset management (ITAM).

Tero has noted that IT assets can be maintained in the same way as

facilities, fleet, and inventory, and so it is letting customers know

that they can run all maintenance and asset management activities on

one package.



SOURCE:
http://www.technologyevaluation.com/research/articles/the-tec-quick-c

ase-for-tero-software-18384/

Recent industry estimates target the Business to Business e-commerce market to reach $1.3 trillion by the year 2003. Enterprise Resource Planning companies, like SAP, J.D. Edwards, and PeopleSoft are rushing to establish a foothold in this expanding market through the creation of e-business applications. These "e" applications are leveraging the Internet to connect suppliers, business partners, and customers in an effort to streamline business processes.

The Baan Company has made recent announcements regarding its entry into the e-commerce arena. While the challenges of creating "e" offerings are great, Baan's are even more substantial. They have suffered loss of market share, mediocre product development, and extended financial loss over the past 24 months. The recent departure of their CEO Mary Coleman, delivers another blow to the already troubled company.

In the past 36 months, Baan has made several attempts to expand beyond its core ERP functionality and stimulate sales growth. Initiatives include the introduction of an enterprise application framework, vendor enhanced plug-ins, sales force automation tools, customer resource management, and the latest trend, business to business e-commerce.

In November, Baan announced its Open World framework for connecting business applications. On January 4th they announced a strategic reorganization to focus operations on e-enterprise solutions for the manufacturing industry.

Stemming from the Open World initiative, Baan has announced "E-Enterprise" as a product suite to help deliver business to business functionality. Built on a common technology platform, the "E-Enterprise" solution offers three primary applications:

Baan E-Sales: a selling system that allows customers to browse, interact, configure, order, and monitor delivery status. A subcomponent of e-sales is the e-configurator tool, which delivers support for "real-time" sales configuration on the web.

Baan E-Collaboration: a system that allows employees and business partners to interact on-line.

Baan E-Procurement: an "indirect" procurement solution that connects to Baan's ERP-based procurement functionality.

"E-Enterprise" is not alone in this market. Baan faces stiff competition from industry giants such as SAP with its "mySAP.com" offering, J.D. Edwards alliance with Tradex/Ariba, and PeopleSoft's partnership with Commerce One.

Product Strategy and Trajectory

Currently Baan is focusing its E-Enterprise sales efforts on manufacturers within their existing client base. The notion is to establish the product suite and use the existing client base to help refine the e-business applications. Baan hopes this introduction and refinement will coincide with their customer's Internet education and grow with their needs. If this stage is successful, they will focus on winning new accounts.

They are 6 - 8 months behind their competition. Competitor, J.D. Edwards has inked a deal with marketplace mover Ariba. SAP has established hosting partnerships with IBM, Exodus and others, while also pursuing ten vertical markets. If Baan wishes to compete in the ERP/e-commerce environment, they will need to consider similar initiatives within the year.

Product Strengths

MS Focus: Baan has selected Microsoft's Back Office Suite as the single platform to base their E-Enterprise products. By leveraging Microsoft's architecture, Baan can deliver an electronic commerce solution faster by using readily available - industry accepted components. Focusing on this single platform will provide this struggling company the opportunity to master the hosting, implementation, and product refinements required to expand their e-commerce offerings.

ERP Integration: A second strength is their ability to integrate with Baan's ERP product that has over 3000 installed users. Creating functional connections between an ERP system and web applications is complex. Having created the ERP solution, Baan is in good standing to leverage internal resources to integrate the technologies.

Indirect Procurement Focus: A third strength is its focus on "indirect" procurement. Baan describes "indirect" as consumable goods, such as office supplies and computer equipment. Efforts by Staples, Office Max, Dell, and others have established working models for the electronic procurement of consumables. Connecting with these resources will help bolster the functionality of their product suite.

Product Challenges

Unix Dilemma: While the choice of Microsoft's Back Office Suite is listed as a strength, it may represent a double edge sword. We estimate 70 percent of Baan's existing ERP customers are Unix based. As a result many companies may not be ready or willing to support a Microsoft operating platform at this time.

Client Leverage: Baan may have difficulties leveraging its existing client base. Companies interested in "e-business" may need to move faster than Baan is willing. Boeing, a Baan ERP client, recently chose Oracle to implement its e-procurement initiatives. While this is only one customer, Baan will need to provide feature rich and tightly integrated solutions, if they wish to maintain the existing client base.

Performance Challenges: Operating systems and feature rich solutions are essential, but speed is also important. Creating price books dynamically, obtaining real-time quotes, and capturing on-line configuration data can easily strangle a network. Baan does not have performance metrics or benchmarks available for the E-Enterprise solution. As new clients adopt the solution, they will need to pay close attention to performance metrics in order to provide usable solutions.

Vendor Predictions

In order to be successful, Baan will need to focus on its core client base of manufacturers. However, it will need to refine its focus to accommodate specific manufacturing industries.

Expect initiatives to target the automotive and air/space/defense industries within the next 6 months.

Expect primary "E-Enterprise" revenues to be derived from existing clients in the short term, thus providing a window of 5-8 months to establish functionality.

Expect an announcement regarding a hosting partnership in the next 1-2 months.

If the hosting announcement does not include an ASP component, look for one within the next 4 months.

Also, expect announcements identifying a vertical market within in the telecommunications industry within 4 months.

Vendor Recommendations

If Baan is to survive this turbulent stage we recommend:

They must execute their e-commerce development and roll out extremely well.

They must concurrently maintain and improve their ERP solution.

Establish hosting agreement(s) to support and promote their "e" initiatives.

Identify vertical markets outside of the "manufacturing" comfort zone.

Create or link to a digital marketplace allowing customers to benefit from mass purchasing capabilities.

Define and publish a long-term e-business plan.

User Recommendations

For new clients considering Baan's complete product offerings keep in mind this company is in trouble. We suggest you evaluate the features, price, and corporate viability of all vendors before making a selection.

For existing Baan clients, we suggest keeping the "E-Enterprise" solution on your long list. If you're interested, perhaps the existing relationship could be leveraged to dramatically reduce the cost of the "E-Enterprise" suite. Consider negotiating a pilot or trial period at no cost to you. Also, use the Baan opportunity to negotiate a lower price with competitors. If Baan is willing to provide their solution at a low cost, or even free of charge, use that information with other vendors.



SOURCE:
http://www.technologyevaluation.com/research/articles/baan-e-commerce-a-wing-a-prayer-a-single-platform-15205/

Seemingly unfazed by (although certainly aware of) a tough economic environment and/or by its heavyweight competitors' recent initiatives, ACCPAC International (www.accpac.com), an independent subsidiary of Computer Associates International, Inc. (NYSE: CA) that has been offering accounting and a broader range of other enterprise business solutions for small and mid-size businesses, continues to expand its products footprint and operations worldwide. To that end, its latest product offering now ranges from accounting to include customer relationship management (CRM), human resource management system (HRMS), manufacturing, warehouse management system (WMS) and many aspects of e-commerce. On December 18, ACCPAC also announced that it has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) relating to a proposed initial public offering (IPO) of common stock. All of the shares are being offered by ACCPAC International, Inc., and the offering will be managed by RBC Capital Markets, SoundView Technology Group and Adams, Harkness & Hill, Inc. Although the registration statement relating to these securities has been filed with the SEC, it has not yet become effective. These securities may therefore not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

During the past year ACCPAC has announced the following:

* Acquisition of AGS Software, Inc. for point-of-sale software (POS)

* Acquisition of eWare Limited for CRM software

* Acquisition of manufacturing software from Lahey Software

* Release of ACCPAC Advantage Series version 5.0 for a 100% web-based accounting solution for mid-sized companies.

* Release of ACCPAC Advantage Series for the Linux desktop

* Release of ACCPAC Exchange the first Electronic Data Interchange (EDI) offering to integrate mid-market accounting applications with IBM Business Exchange Services, aimed at delivering affordable EDI transaction documents over the Internet.

* Release of Simply Accounting 2003 the new version of its integrated accounting program for small offices/home offices (SOHO).

* Formation of the ACCPAC Sales Success Distribution Program a global distribution program for ACCPAC third-party developers.

* An agreement to collaborate with CGA Online Services Corporation to develop CGA Online a new web-based online system that will provide a single source of information and services for Certified General Accountants (CGAs)

This is Part Three of a four-part note.

Parts One and Two detail recent ACCPAC announcements.

Part Four will cover Challenges and make User Recommendations.

Market Impact

ACCPAC is definitely not a stranger to the business applications market. Quite the contrary, enter its long incumbent status (since 1979) and proverbial focus on the small and medium businesses, its broad and well-attuned product portfolio developed mainly internally and through a limited number of sensibly acquired solutions that address the needs of the market segment, its large customer base (over 0.5 million users in over 130 countries worldwide) and a far-reaching distribution channel of over 6,500 Business Partner relations including value added resellers (VARs) and consultants, many retail outlets in the near future, in addition to telesales, direct email & Web ordering, look for ACCPAC as significant obstacle (in addition to Intuit and Best Software) the likes of Microsoft, Oracle, PeopleSoft and SAP should face in their entry of the market segment.

Headquartered in Pleasanton, CA, USA, with offices in Australia, Canada, India, Mexico, the Middle East, South Africa, Southeast Asia and the UK, ACCPAC was acquired by Computer Associates (CA) in 1985. In 1996, it was established as an independent business unit of CA, and it has had its own executives managing its business ever since. The fact that it has neither been divested by CA like a number of former interBiz products (see CA Unloads interBiz Collection Into SSA GT's Sanctuary) nor it has lost its brand recognition amid CA's naming convention might speak favorably about the vendor's viable independent value proposition. On the other hand, the ability to leverage its giant parent's numerous (and sometimes advanced and/or emerging) technologies, sales channel and partnerships, has certainly helped so far.

Still, after more than two decades of prominence mainly within core financial/accounting solutions for the lower-end of the market, ACCPAC has lately been making big strides to extend its reach and turn into a full-fledged comprehensive e-business software provider for small and medium enterprises (SMEs). To that end, during the past few years, the vendor has added many new solutions in the areas like CRM, warehouse management, e-commerce, point of sale (POS), and human capital management (HCM).

As a result, its product arsenal now includes ACCPAC Advantage Series, ACCPAC Pro Series, ACCPAC HR Series, ACCPAC Business Analysis Suite, ACCPAC eTransact, ACCPAC Exchange, ACCPAC eCRM, ACCPAC Warehouse Management System, ACCPAC ePOS, Simply Accounting, FAXserve and ACCPAC Messenger products. Further, through its ACCPAC Online hosting service, which was launched in 2000 and which is based on CA's Unicenter TNG infrastructure, the company also offers applications using an applications service provider (ASP) model, giving its solution providers more options as they look to tailor solutions that best fit customers' needs.

The ACCPAC Online Preferred Accountant Subscription Services (PASS) program was thus designed to enable its accounting VARs to become virtual ASPs (VASPs), with ACCPAC being the ASP in the shadow'. In addition to possibly unique deployment flexibility (i.e., there is a possibility of selecting which individual applications will be run on premises and/or hosted), ACCPAC is likely the only vendor amongst its peers that is an ASP as well. While the other vendors also provide hosting alternative, they have to do it through third ASP parties, which often may mean some additional licensing and/or implementation, service & support intricacies to the end user. This could make an order winning difference to some customers who prefer to deal solely with one vendor.

On the other hand, the difficult economy has created a situation where the customers, particularly those with multiple dispersed locations worldwide, too seem to prefer the subscription model, as capital budgets have been slashed, and everyone would prefer to avoid one up-front lump payment and stretch it over a prolonged period of time. Although the move from software as a standalone, or pre-packaged, solution to software as a service will not happen overnight, given unsustainable financial model of many early applications service providers' (ASPs) and due to many hosting snafus of the recent past (see Hosting Horrors!) , in a few year's time, gigantic IT providers such as IBM, EDS, Microsoft, Oracle, Accenture and the likes will likely be competing with CA in the ASPs market, giving thereby hosting another fresh breath of air. Thus, ACCPAC's plan is to expand on the foundation it built during the past two years and help partners move into this more predictable revenue generating area of hosted services.

ACCPAC Strengths

ACCPAC targets small and medium enterprises (SMEs) with up to $250 million in annual revenues and with up to 1,000 employees that are in need of enterprise application solutions that are intuitive and, consequently, easy to use and implement. The company has indeed often met this market's requirements of competitively and scalable priced, functional products, ease of modification, relatively short implementations, and dependable service and support. ACCPAC has traditionally been offering its customers just needed (neither overwhelmingly comprehensive nor meager & insufficient) functionality they can easily digest but still deploy to its beneficial use. The modules can be implemented in a gradual fashion to tackle the most burning issues first. Also, the simplicity and flexibility of the product, bundled with the experience within financials and accounting, often do not impose serious business process reengineering (BPR) but still produce benefits like pervasive information sharing and process efficiency.

End users of smaller enterprises have also been impressed with the product's intuitive rich-client Windows user interface (UI), which provides ease of system navigation and of information retrieval and analysis. While functionally, there has been ever-diminishing difference from one general ledger (GL) or accounts payable (AP) product to another at the enterprise level of products, ACCPAC might have still be leading the pack in delivering multicurrency/multinational and inter/intra-company consolidation capabilities and in built-in financial report writers that provides flexible query and report creation without programming.

For instance, the Pro Series has over 60 reports and report formats that may be customized from a rich matrix of user-selected options, and that can be viewed, printed, exported to spreadsheet software, sent via e-mail or saved on disk. Reporting options can even be significantly increased by the use of Crystal Reports, which offer users a DHTML-based reporting option. Another sleek feature is "DataDriller", which is a flexible, all-purpose query tool used to search and display record information from any data file (even non-ACCPAC) with instant data drill-down capability. Each view is a grid/spreadsheet list of database records using defined columns. Recent enhancements to the DataDriller feature include the ability to sort data views by clicking on the column header, a CopyFrom option to create customized pick lists for an individual user ID, and incremental search capabilities with automatic filtering and the option of using temporary tables as source tables for creating a data view. As for the Advantage Series, it also offers extensive cross-module drill-down facility, but through different means. Reporting options are extensive within both product lines, with a sizable number of standard canned reports, in addition to financial reporting via Excel, ad-hoc reports via Crystal Reports and via own ACCPAC Query product among others.

As mentioned earlier, in addition to its SOHO offering called Simply Accounting, ACCPAC offers two flagship core accounting product suites, both being a foundation to its more complete set of the above-mentioned newly released enterprise applications beyond core ERP scope. Its chief original product would be the ACCPAC Advantage Series, formerly ACCPAC for Windows, whereas the ACCPAC Pro Series is the product suite formerly provided by Software Business Technologies (SBT), which ACCPAC acquired in 2000. Given the product had been branded as Pro Series even while with SBT, ACCPAC has retained that brand name, and has thereby likely gained an additional visibility in a market catering to light manufacturing and warehousing companies. This should be further boosted by the new ACCPAC WMS radio frequency (RF)-based warehouse management product that also integrates a wireless bar code reader and web-based remote management to streamline the picking, packing, and shipping process. As mentioned earlier, recently, the vendor has also added to its offering the suite of manufacturing products originally developed by Lahey Software to integrate with Pro Series.

Both Advantage Series and Pro Series are positioned for the small to mid-size enterprises. One of the key products' positioning differences lies in source code access, as the Pro Series has always provided full source code availability for code modification throughout the suite. To that end, complete Microsoft Visual FoxPro source code allows professional programmers to make unlimited extensions and enhancements to address unique business-specific needs or interfaces. Additionally, the Customization Manager' module enables users to customize screen forms as sub-classes of existing forms and make custom screens available to specific users or companies, without changing the code. The above provision of source code might be attractive particularly against the background of ever increasing market awareness of the following facts: 1) that almost every business changes, and software must change with the business, 2) that even small businesses are really unique one size can never fit all, and 3) that custom software is a requirement for many enterprises, even for the smaller ones.

Although the Advantage Series does not provide source code per se, it offers many entry points for other applications to integrate, even to the degree that core business logic is accessible to be leveraged by the third party product. Further, Advantage Series is web-based and Simple Object Access Protocol (SOAP) compliant, fully accessible without intermediate web-enabling technology such as Citrix or Microsoft Terminal Server (MTS), while the Pro Series is not yet web-based. Transaction data and other processes can now be performed using an Internet browser via the company intranet or the Internet. Several extended-ERP applications, including eCRM and eTransact bring additional wireless and web-based functionality to the module suite. Advantage Series also has much stronger international features in terms of languages, taxation support, and currency handling than its Pro Series counterpart. Still, both product suites can be built upon to form a full suite of integrated web-based business applications. To that end, accounting, HR, CRM, POS, and WMS are tightly integrated with Advantage Series, while the manufacturing functionality is tightly integrated and available through selected third party products (e.g., COSS Systems and EMR Innovations' ProcessPro 2K3 product). With Pro Series, however, accounting, CRM, manufacturing and WMS are tightly integrated, while the HR integration is still in progress.

Applications Geared For Growth

Additionally, ACCPAC applications are geared for growth since virtually all the major product lines are tiered into graded editions that share the same design and technology despite differing levels of functionality, aimed at enabling customers to select a product with features, and at a price point, that best suits their current needs. As the company grows, it should then move up to more advanced functionality without re-learning software or rebuilding databases. Although its competitors also offer scalability and migration options to more advanced functionality at the later stage as well, most of them still offer it via more disparate products leveraging disparate technologies, which often have to be relearned from scratch, and, consequently, often the migration is not much easier than an implementation anew. Conversely, ACCPAC editions within a product suite (i.e. Advantage Series or eCRM) share similar functionality and screens, but differ in terms of maximum number of users supported and related pricing.

For instance, the ACCPAC Pro Series is available in two basic editions: Enterprise and Small Business, which differ in the specific set of features and modules included but share the same user interface (UI). For instance, the Small Business Edition includes the System Manager, General Ledger (GL), Accounts Receivable (AR), Accounts Payable (AP), Purchase Orders, Order Entry, Inventory Control, Payroll and, optionally, Job Cost, Customization Manager, Report Writer, and Serial Number and Lot Number Tracking. The Enterprise Edition includes all optional modules from the Small Business Edition, plus customizable source code, Warehouse Management and Multicurrency. A Manufacturing Edition is also available that offers Production Entry, Work Orders, Shop Control, Project Accounting, Customer Connect and Bills of Lading.

Likewise, the Advantage Series is available in four editions in descending order of complexity: Enterprise, Corporate, Small Business and Discovery. The above facts might point out the ACCPAC's ability to serve the smallest business with an economical but still functional package, while providing a seamless growth path without the need to change the product or even the software provider and/or to learn new unfamiliar screens.

Responding To Its Market

Thus, having a broad impeccably integrated horizontal offering with selected vertical enhancements, on top of nurturing resellers network, providing well-attuned pricing, as well as catering for evolving scalability & migration needs of customers through upward compatibility of products are all necessary tenets of the success in the market segment that ACCPAC will have grasped.

SME customers continue to increasingly realize the importance of seamless integration between front-office and back-office applications, and to consequently look for one strategic vendor (i.e., one throat to choke') to fulfill and be solely accountable for the vast majority of their business application needs, particularly in the lower end of the segment. Also, many of them have long outgrown their entry-level accounting solutions a la QuickBooks, DacEasy, Peachtree or Simply Accounting, and are looking to its original provider for functional expansion opportunities in contact management/sales force automation (SFA), CRM, HR/Payroll, EDI, WMS, all of which ACCPAC has tackled. Often in that quest, they turn to a trusted adviser (e.g., their accountant) for an advice, where ACCPAC has also been making strides to increase its clout and to entice the accountant referral program.

To the end of web-based access to important back-office data, for instance, ACCPAC eTransact is the web storefront solution that integrates with Advantage accounting modules. Information entered into the back office modules (i.e., Inventory Management) flows to the web store interface, while information entered through the web store (i.e., Order Entry), flows to the accounting modules like AP or AR.

Owing to the ability to expose its business logic, the company has been able to tightly integrate ACCPAC eCRM with Advantage Series — for example, the Order Entry screens from Advantage Series are invoked from within the eCRM interface, enabling telephone sales reps to e.g., both review customer sales prospecting information and order information from one point. The Order Entry screen has not had to be re-written, since it is called up as a functional object.

Moreover, contrary to its archrivals, ACCPAC has embraced the support for multiple platforms, touting it as a competitive strength rather than a weakness within truly an international market. While no one disputes Microsoft's dominance in the market segment, in Europe a notable percentage of servers already run on Linux, while IBM DB2 and Oracle database still have strength and appeal in many parts of the world. Thus, the vendor supports all the above platforms, and because of the Advantage system's architecture (i.e. separate business logic from database), it does not require an excruciating work to update drivers for ACCPAC to produce new platform supporting versions. Consequently, Both Pro and Advantage Series run on Windows and Linux, and both run on Microsoft SQL database. Differing however, Pro Series also runs on Microsoft FoxPro, while Advantage Series also runs on IBM DB2, Oracle, and Pervasive. This selection has yet to be seen from any other vendor within this tier of enterprise application providers.

True Global Nature Is A Competitve Advantage

Another important strength against most of its competitors ACCPAC would have is its true global nature. Unlike Sage/Best Software, Softline, and Microsoft Business Solutions (MBS), ACCPAC's Advantage Series is a single product line that operates on an international basis, whereas the others have multiple product lines through acquisitions, that they have attempted to paste together around the world but unable to work with one another.

Conversely, Intuit or NetLedger still largely operate within the North American market and have been recruiting their fledgling channel. Sage and MBS are not exactly uniformly global companies, as their product offerings differ for different markets. Also, these vendors are still in a quandary about which of their numerous ERP products to integrate to — SalesLogix or Microsoft CRM, respectively.

Not many customers can integrate the UK Sage product lines (e.g. Line 500) with the US Best Software counterparts (e.g., MAS 500), and the same would hold for MBS' Great Plains, Solomon, Axapta and Navision product lines. While these vendors could produce a spin that separate products in separate countries is a necessity to provide a best-of-breed localized approach, still, it might be perceived as a lame excuse for the result of a market share increase opportunity buying binge.

ACCPAC, on the other hand, has developed its Advantage Series from the ground up as an international product. To that end, a company in the UK can for instance have a subsidiary in the US, South Africa or Canada running on the same software due to a large number of currencies including the Euro, currency gains/losses, GL transactions, check writing and support of a Goods and Services Tax (GST) and Value Added Tax (VAT) available features. The users can also leverage ACCPAC eCRM and other non-core accounting business applications.

Like its competitors, ACCPAC has long made a conscious decision to go for product distribution solely through partners/value added resellers (VARs). This has often proven to be advantageous to the SME's for keeping costs down, and, as selling through partners requires a higher quality of product support, and accompanying documentation. Also, direct and indirect channel that have already been built in targeted countries has helped the company with product translation and localization issues, which has resulted with solid multi-national capabilities of the product.

As a good example, the company has become an undisputed leader in Canadian, South African and ASEAN (South East Asia) accounting markets, with high positions in many other both established and emerging markets. Again, regarding the Advantage Series product, the VAR channel is truly global, since international companies can easily find ACCPAC VARs capable of supporting their needs across multiple countries, contrary to competitors whose channels have expertise that typically focus on specific products by local region and offer limited cross product support.

To further bolster its channel's loyalty, during a time when almost everybody is cutting margins, ACCPAC's channel strategy has been to keep margins high, meaning the average VAR could earn up to 50% on products sold, and up to 55% if it achieves the Master-level status. Also, to help VARs that are new to the fold, the company guarantees margins for their first year, regardless of sales volume. It has also increased marketing efforts, providing hands-free marketing, telemarketing, advertising and direct-mail support to partners, while on the technology side, the vendors has put together a professional services group to help resellers implement its various product lines, and it has set up an online support center.

This concludes Part Three of a four-part note.

Parts One and Two detailed recent announcements.

Part Four will cover Challenges and make User Recommendations.



SOURCE:
http://www.technologyevaluation.com/research/articles/accpac-being-much-more-than-meets-the-eye-part-three-market-impact-16873/