The Importance Of Online Payroll Systems

The payroll system is often the most reorganized aspect of the financial record for most businesses. Even small firms can cope with an excellent payroll system by hiring processing sites at this time. Here are a number of thoughts on the importance of online payroll services.

Most of the time, there are some alterations to the payroll because there are some employees being promoted, there are newly open jobs and there are even deductions to other employees. This is part of an economic record is always filled with many questions, such as base salary, benefits, medical, house rent and other benefits, deductions, workers compensation, not to mention the tax. Undersized businesses are often unable to find the time or capital to monitor the entire payroll, which leads directly to a lack of motivation. The answer to this problem takes the form of company services online payroll.

Online systems are remarkable for a lot of reasons, initially from the beginning. Your input is much more precise application of the law in different legal requirements that are often overlooked by record-keeping at home. This way of rationalizing the work done more efficiently and in a way or make both employees and the organization content.

Modernization, discovering and experience are not effortlessly replaced, but if you can include the similar level of reporting, since some fixed costs massive amount of cash on custom software, so there is no reason not to start using online payroll.

There are diverse structures that are often used for data entry; it is the same as any activity so your company can be to have the equal degree of accuracy in the payroll. Online payroll system is fully equipped with management alterations such as holiday calculations, deductions, where appropriate, and very useful to convert a registration to report in seconds.

There are often a case where the employee is on a new statute comes into force on different dates, then leave the whole file and adjust thereafter. This can be adjusted quite effectively with no trouble in the online payroll system.

Steps Required to Set Up a Small Business Payroll System

Setting up payroll when you run a small business does not have to be a complicated and frustrating task. If you break the larger process down into manageable steps it can run as smoothly as possible and can be as efficient as you need it to be. You want to ensure that every employee receives their paycheck and that your business will be ready when it comes time to file your taxes.

The first step is to get a federal identification number from the Internal Revenue Service as well as a state identification number from the state revenue department. You can obtain the former by going to the website. When you contact the state revenue department you need to get a hold of a copy of IRS Circular E, as well as Publication 15-A. You also need to obtain a payroll tax publication from the state your business is in.

The next step is to get your workers to fill out enrollment forms. Form W-4 must be filled out for federal taxes while there is another form for state taxes that also must be filled out.

The third step in setting up payroll in a small business is to figure out what the pay period will be for your employees. As the employer you can choose whatever pay schedule suits you best based on what is most productive and most profitable for your company. The most common models for pay periods include weekly, bi-weekly, semi-monthly or monthly.

Once you have decided which one of the pay schedules works best for you then you need to check with your state revenue department and the IRS for the appropriate rates and withholding tables. If you are thinking about paying your employees on a monthly basis then be aware that some states deem it a requirement to pay employees more often that that. When it doubt take the time to find out!

The next step you need to observe in setting up a payroll system are to figure out what the company policy will be in regards to vacation days and sick days. You then need to follow that up with a decision about overtime and bonuses. There are rules and regulations that govern the paying of overtime so make sure you check with your state before you make your employees aware of the policy regarding such.

The step you need to take after that is to decide what benefits you will offer to your employees. Examples of these include health insurance and a retirement plan. Benefits are an excellent way to entice new employees to your company. The benefits to your employees will be paid by way of payroll withholding.

You then need to calculate the withholding. You may wish to purchase a software program for this or to do to by hand using the printed tables from the state revenue department and the tables in IRS Circular E.

Making the required tax deposit is the next step which is imperative for the proper functioning of your business. All of the taxes and benefits that have been withheld from your workers then must be paid to both the government as well as the providers of those benefits. From there the final step is to prepare the tax returns for your payroll and file the taxes.

Benefits of Award Interpretation Software to a Payroll System

From manual to automated, payroll system, has been an integral part of any business throughout the years. Its purpose is not only to calculate the salary of every employee based from the timesheet and income taxes but also to give a quick overview of the company's productivity rate based from the employees' working hours.

Implementing a payroll system in your company is not that hard as you would think but it's a bit time consuming such as hardware configurations, network set-up, training of accountants and finally some discussions with the staff. There are also factors to consider aside from computation of income taxes, application of business pay rules such as bonuses, loadings, penalties and other specific rules that should be coupled with the timesheet. This is where award interpretation comes into the picture.

Award interpretation is a special feature of time and attendance software that translate the employees' working hours from an electronic time clock into a more intensive set of information applying the company's rules. If the company has already a payroll system, time and attendance system will simply generate export files that can be imported to the payroll system.

Although there are a lot of advantages an award interpretation can provide, it is generally not considered a significant business structure that you think. The internet has many valuable resources to offer that can help you with all application processes and allows you to make the best use of these resources and represents an ideal and cost effective payroll system.

And if you are one of those businessmen who are quite hesitant to consider a time and attendance software that provides award interpretation to the payroll system. These 3 main benefits might change your mind.

1. It provides accurate data. Accuracy is crucial to the payroll system; issues may surface up if computation of the employee's wage combined with the business rules is done manually. With the software's rigorous protocol, accuracy will never be a question however; it also allows user intervention whenever necessary.
2. It provides thorough process. This is where technicalities are put into action, time and attendance software is compatible with all kinds of payroll system as long as hardware components converse well with each other. Again, this is quite painstaking if done manually or with the payroll system protocol alone.
3. It's fast and easy to use. Gone are the days where it takes the payroll department the whole pay period to get the job done. Once award interpretation is implemented, it will work by itself with just a click of a button. Time and attendance software involves a lot of technicalities but its interface is simple and easy to understand. Less time consume, less headaches to the payroll department.

In business, time is everything literally and figuratively. The company's growth depends on time that's why proper management is very much important. And with this fast-paced world that directly affects the business industry; technology is your last stronghold for success. Remember, in today's world all you need for your business are in the tips of your fingers.

Payroll Software Review - PayWindow 2006 Payroll System

ZPay Systems has been creating payroll software for over 20 years starting with ZPAY, ZPAY 3 and now PayWindow 2006. This payroll software is easy to use especially if you don't have any experience in accounting.

It is loaded with all of the features you could possibly need whether you are a small, medium or large sized business. The reporting center is also feature rich with features such as: Check printing, check register, wage reports for Month, Quarter and Year to Date, Tax liability report, payroll history reports employee mailing labels, lists and pay envelope labels, Direct Deposit for all employees, Unlimited Payroll Employees, and accountants can have as many clients (company files) as your hard drive will hold. The software is good for both Macintosh and PC's.

It is full featured payroll software that can be up and running in minutes and you can finally stop paying for expensive annual upgrades to QuickPay (makers of QuickBooks). Even if you've never upgraded your Quicken to QuickBooks you can easily make two simple journal entries every month in Quicken; one for payroll and one for total payroll taxes.

The cost of the software is surprisingly low at $69.95. I was a little concerned when I first saw the price tag but it goes to show not EVERYTHING good has to come with a high price tag.

ZPay Systems has been given two industry awards for their payroll software and one people’s choice award. They offer several demo tours of the software that you can view before purchasing and they also offer a FREE 30-day trial. They offer excellent product support and have a wonderful tutorial section.

You can download the free trial here: [http://www.payroll-software-choices.com].

About the Author: Nancy McMillon evaluates payroll software. You can read more payroll software reviews at [http://www.payroll-software-choices.com].

Having a Separate Payroll System - Good Or Bad Idea?

If you're running a business chances are that you run it on a computerised accounting package such as MYOB, Quicken, Quickbooks or something similar. Now these particular software companies have been clever here because you may notice that the basic versions don't actually have a payroll module included, and you still have to pay your employees, right? So now you need to purchase a separate payroll module.

But, what happens when you decide to shop elsewhere and see what other payroll software can do? You might want a simple program "that just pays people" and you're not worried about anything else. Or, what you're looking for is a complete HR suite that tracks employee holiday / vacation time, staff training needs, provides details reporting etc.

If you have selected a third parties payroll software, you now have to quickly establish whether it's compatible with your current accounting software. If not, then you run the risk of having to do manual journal entries to bring the data across into your general ledger. This not only is time consuming, but increases the chance of human error resulting in inaccurate information in your financial reports. This is not an ideal situation, therefore you need to research each payroll product carefully and ask as many questions as you feel necessary so you can be sure that your systems will "talk to each other" without the need for human intervention.

When it comes to installing accounting systems, I've been there and done that and if I can pass any advice on to you, it's that the more research and preparation you can do early on the more likely the installation will run smoothly.

Outsourcing the Hosting of Your Payroll System - The Right Choice?

Whether you look at short-term economic trends or long term demographics, the payroll profession has rarely faced such a challenging environment.

Tightening economic conditions are putting pressure on organisations to maximise productivity. That's why businesses are now looking at creative ways to become more efficient and at the same time save money.

Outsourcing is an immotive subject, with arguments for and against. However outsourcing is becoming more and more accepted in most industries, whether it is the HR function, marketing and design or IT.

Due to increased demand and ever changing legislation, the outsourcing of Payroll and HR functions are ever-increasing. Paying your staff correctly and on time is vital to ensuring they remain productive and motivated. You can't afford to get it wrong!

Web-delivered software is becoming more and more popular and a clear choice if your organisation wants to outsource but keep control in-house. By using intuitive software, payroll departments can work with greater effectiveness and provide a better service to employees, both with minimal change to existing operating procedures.

Payroll software can bring significant time and cost efficiencies, allowing your business to focus its resources elsewhere. By using a fully integrated HR and Payroll software solution, the organisation can produce statistics and meaningful reports that can be used to improve the business.

Just recently, a new phenomenon known as a Hosted Bureau Service has entered the payroll industry. This solution gives companies the best of both worlds and is ideal for high-volume payroll processing. The Hosted Bureau Service enables companies to have full access to a payroll system without the costs of purchasing it. The supplier hosts the payroll system on a server and processes the payroll on behalf of the client. The client retains all the benefits of an in-house system, enabling them to still analyse data from their own office.

The Hosted Bureau Service is growing in popularity allowing Payroll departments to run reports and obtain real time data but with the added benefit of minimal set up and up front costs. Eradicating IT costs and internal IT support are good news for Managers who can inherit systems that they are not always familiar with.

Further savings can be made by outsourcing the processing of the payroll data to the supplier. Professional, qualified personnel, who are up-to-date with all the latest legislation, and who look after a number of clients, are able to offer this service at a reduced rate to the end user as well as providing fast turnaround times. Most payroll outsourcing organisations offer a personal working relationship with their clients, assigning a project manager who will provide guidance and reassurance every step of the way.

Other benefits from using such a service include disaster recovery and the knowledge that you will always have someone there attending to your payroll. This can provide peace of mind that this important business function is always covered even when in-house staff are absent due to sickness or annual leave.

HR Software - Is Your HR and Payroll System Really 'Integrated?'

Integrated HR and Payroll Software - Say Goodbye to Duplicate Entry of Data

If the time has come for your organisation to search for an HR and Payroll solution, and you are looking for a system that is fully integrated, make sure you fully understand what this really means. The word 'integrated' is very often confused with what should be termed as a 'single database' or a 'unitary database.'

The HR and Payroll software market is becoming more and more complex. It is therefore imperative for any organisation looking for a new HR and Payroll system to find out if what they are being offered is what they really want. For example if information must be immediately available throughout the whole product, subject to security constraints, an HR and Payroll software system with a single database is required. Be aware that sometimes 'integrated' is not always 'integrated!'

Some companies offer an 'integrated package' but this does not mean necessarily that it has a single database. What it usually means is that you then have to press a button to transfer the data to another system, it is not done automatically. The only way it will be done in real time is if you have a single database.

True integration involves the HR and Payroll department sharing a common database source, ensuring that there is a free flow of data between both sides of the system. The integrated system will give management greater control and much greater flexibility within their departments.

Real time data transfer means that it does not matter who enters the information and that it will be possible to view the data entered anywhere in the system. For example HR may enter a new member of staff, this can then be immediately picked up by the payroll department, and will be seen in real time. Only a true single database integrated system will be able to do this.

If you are in doubt that your chosen HR and Payroll system is operating off a single database, it is advisable to ask. If the supplier has a truly integrated solution with a single database then they should be able to demonstrate this to you. Make sure 'integrated' is what you are really going to get. It will pay off spending extra time checking that your new system is exactly what you need and that you are getting the best solution for your organisation.

Should Your Payroll System Software Be Outsourced?

Managing payroll is an essential component to any business. Because of the regulatory issues alone, many small businesses elect to outsource their payroll duties to other agencies. These companies do nothing but payroll services and can be a valuable service. However, this can be an expensive proposition but can be worth it if your organization is not large enough to warrant a full time individual to manage this for you.

If your organization screws up payroll, your employees can become disgruntled and disenchanted enough to cost your company dearly. In addition, there are governmental requirements that must be followed which can be a nightmare if not managed properly.

Whether large or small, your company relies on its employees to perform the operations needed to support the business. As an entrepreneur, your business needs your attention in other areas like sales, marketing or strategic partnerships. Having to worry about payroll issues like 401K plans, taxes and other regulatory issues can be more than you bargained for. Having a strong payroll and accounting application can help you manage these issues more effectively.

If deciding to keep this part of your organization, payroll software can help keep your books in compliance and help manage your payroll areas easier than trying to do it manually. When selecting a payroll application, ensure the software can calculate payroll tax deductions, allow you to setup different tax brackets with ease and that all necessary information regarding employee compensation are accounted for. If you do decide to manage this area internally, it may be in your best interest to hire an auditing service annually to ensure your payroll software is and associated deductions are being correctly calculated.

In summary, whether you decide to manage your payroll in house through a software application or outsource to a local agency, payroll can be a headache if not managed properly. There are many small business payroll software applications to choose from, but should be researched carefully to ensure they meet your business needs.

Other Sides of the Payroll System

When companies are purchasing a new payroll system you may also invite a consultant to perform an analysis of the organization. The consultant can be costly, but it recommends you a payroll system which is better for your organization. Companies before purchasing that type of the system contacts the vendors, visiting the websites and the search the ways and get information about the payroll system.

Invite the software vendors the vendors should directly check every issue on your organizations. The vendor also provides you the references from companies similar to your organization. It must meet the operation team and the programmers talk about the software. The ideal payroll system encompasses and fulfills the needs of the payroll department and must be sure that this system is ideal for you or not.

The mostly many payroll errors are appeared because of management bad training. The work of the payroll is to collect the information of the employee salary, etc.In certain cases the pay check is used issued by an employer to pay an employee for the services render.

Payroll taxes also are the important issue of the employer from the employee's wages. In most countries the payroll taxes are separate from the national income taxes. Many payroll taxes, which are deducted from the employer income such as state unemployment taxes, federal unemployment taxes, etc.

The payroll card is a plastic card which allows the employee to access their pay for service render. The payroll card account may be held as a single or personal account in the employer name because of the payroll cards the account holds the payroll funds of the all the employees, there are an also separate accounts which can be open for an individual employees by using the payroll card programs. These cards are more flexible to use.

Payroll System and Its Importance in an Organization

Payroll is a very vital department in any organization. This is a department which will highly be affecting the net income of the organization. One needs to concentrate on the payroll calculation. There are various factors of tax deduction involved in it. One needs to be extra careful while calculating the taxes and ESIS and EPF. You may consider going for applying software for doing the service. There is software available on the internet that can give an end to end solution for your problem related to payroll.

The software, once set with the deductions and calculations, can produce the Payroll in seconds for each employee. The software is to assist you with the job hence it needs to be programmed with the systems of your organizations. Using software is also cost worthy as you need to pay a single time for the installation and then need not pay on a regular basis for accountants. Someone with simple knowledge of a computer will be able to operate this system. Before buying any of the software, try to checkout the software feed back with the existing clients and make online surveys of a number of software available to see which one is for your system.

Payroll can be managed with an employing outsource company to produce the payment and pay slips for your organization. These companies are easily available on the internet. They offer you with end to end solution for your Payroll related problem. These companies are like the supporting hand in which once the details is given your need not to interfere and be present to make it work. You will see the pay slips being generated every time, flawlessly. Make sure to get in contract with a company which has more details than only an email id. Go for contacting a company which will help you in maintaining taxes also, and make sure they do not have any hidden charges involved.

Time Clocks And Your Payroll System

Time and attendance software is perhaps one of the least understood of the payroll family products. Sometimes known as award interpretation software it is the "glue" between your electronic time clock and your payroll and accounting software.

In a completely manual system, staff fill out time sheets. Payroll staff calculate payroll hours based on their knowledge of the award rules and they then key those payroll hours for each employee into a payroll system and job done.

In an automated system, employees clock in and out using a electronic time clock, that data is electronically usually via your network into award interpretation software which has been pre-configured with the award rules, the system automatically calculates the payroll hours and this can then be transferred into your payroll software and, again, job done but much more accurately and much faster

The misunderstanding in the general business community regarding this process is that electronic time clocks will be able to do the collection, interpretation and export to payroll steps which is exceptionally unlikely.

It is most likely that electronic time clock or bundy clock you own or purchase is unlikely to be able to perform any complex calculations. Some are reasonably clever and they may cope with simple rounding and overtime calculations but that's about their limit.

This is not surprising as the process of translating an employee's In and out clockings into the hours worked can get quite complex. It gets more complex when an electronic time clock is involved...take a look at these two examples and you will see why:

Example 1; The Time Sheet: Joe fills in a time sheet for the week. His shift starts at 7.30 am and finishes at 4:00pm. He gets 30 minutes for lunch. On Monday he worked back for 3 hours and wrote 7:00pm on the time sheet. Pretty simple calculations here. 8 hours normal time and 3 hours overtime.

Example 2: The Electronic Bundy Clock: Fred clocks in on the electronic bundy clock when he gets to work at 7:15 am. He clocks out at 7:07pm. The reports on the time clock calculate that he has been at work for 11 hours and 52 minutes. This is clearly not correct so there needs to be some manual intervention to "round" the in and out times to the start and the end of the shift. Lunch has to be deducted and the split of overtime categories must be taken into consideration.

This is a relatively simple example. A few electronic bundy clocks can cope with this however it gets quite a lot more complex. For example, these are some of the manual calculations done by payroll staff that will challenge the very best time clock.

Multiple rounding scenarios - Rounding to the shift start time when an employee clocks late or early while not rounding for timed lunch breaks and rounding to the nearest 15 minutes on clock out

Daily Balancing - Taking time from an overtime category and placing it into the normal time category if the normal hours are short of the nominal shift hours.

Payroll Balancing - As above but on a payroll period.

Automatic breaks - Auto deduct lunch breaks or not deduct taken breaks under a length

Leave entry - Become important when you want to export to payroll and save data entry time

Flextime Accrual - Bank time, flextime, rostered days off are all examples of the need to accrue special leave for time worked.

Again, these are common requirements when calculating payroll and they are, ostensibly, outside the capability of electronic bundy clocks.

The ultimate problem for most time clocks is they simply cannot interface with a payroll system and if they do,the information they send is likely to be an inaccurate calculation of payroll hours unless your awards or pay rules are very very simple.

Award interpretation software (time and attendance software)will almost certainly be required if you want to automated the accurate calculation of employee payroll hours and import that into your payroll system. If you are a small enterprise with less than 30 employees the required investment may not justify the time saving. However, if you have more than 30 employees the return on investment becomes more appealing.

What Is a Payroll System?

A payroll system is an important application that should be used by businesses of any size. These systems are a guaranteed way to make sure your payroll is done on time and in compliance with all taxing authorities. Tax laws and rates have continually changed in recent years, new tax credits, expiration of old credits and rate changes can all affect the outcome of your payroll.

If your company is not in compliance with all the new tax rates, either federal, state or local, you may face sever penalties from the taxing authority, or worse owe back taxes. Your employees may find that they underpaid their taxes and when filing time arrives they will owe a considerable sum they cannot afford. Employees can hold the company responsible for any misappropriations concerning their taxes, and no business owner wishes to face litigation.

Payroll systems are simple to use, easily affordable and compliant with all new tax laws. These systems can be programmed to calculate taxes and deductions to your specific area. Most systems have an internet database that can be accessed for updates to tax codes and changes in the law.

These systems also can help the business owner calculate the amount of taxes they owe the government at the end of each quarter. Failure to submit the correct taxes each quarter is the number one reason that business owners find themselves in trouble with the Internal Revenue Service.

Payroll services can also be performed offsite. Many companies specialize in providing payroll systems to other businesses. If you are not ready to install and use a system like this in your own company, you may consider going to this type of business to have the service performed.

Payroll systems are very simple to use. They can easily be incorporated into any business applications being used by the company. The use of this type of system in your company will help ensure that you remain up-to-date with the current tax laws and your obligations to the different taxing authorities.

A Traditional "Local Touch" Leader Espouses a More Global Vision

The response to our article series where we solicited vendors' input on a number of market trends has received much attention and reaction from readers and vendors alike. Infor and IFS were the first two to respond (see Two Stalwart Vendors Discuss Market Trends), followed by Progress Software (see Open Platform Provider Answers Questions about the State of the Market).

Now another prominent market player has joined the discussion: Sage, a world leader in accounting and midmarket ERP. The Sage Group, PLC (www.sage.com) is a $2.55 billion (USD) organization and arguably the third largest business software vendor worldwide. It is the leading supplier of business management software and services with over 5.8 million customers worldwide. Globally, Sage has over 14,500 employees and a global network of over 25,000 reseller partners and 40,000 accountants that recommend its products. The vendor handles over 36,000 customer support service calls daily and over 1.7 million support service contracts. Sage also represents a strong cash generating business, which has consistently delivered strong operating margins earnings before interest, taxes, depreciation and amortization (EBITDA) of 23 percent and organic growth of 6 percent (excluding Sage Healthcare Division) for the financial year ending September 30, 2008. For details go to http://www.investors.sage.com/reports_presentations/results_presentations/.

With North American operations located near Pittsburgh, Pennsylvania (US), Sage offers Sage ERP X3 (formerly Adonix X3, www.sageERPx3.us), an international enterprise resource planning (ERP) solution for midsized companies. The product targets midsized, competitive, and progressive companies that face the same business challenges as (and similar complexities to) Fortune 1000 ones, but that need more flexible and cost-effective, modern solutions to support their operations and growth. To that end, the Sage ERP X3 software suite integrates manufacturing, distribution, warehousing, customer relationship management (CRM), and finance functionality, while remaining competitive in terms of cost-effectiveness, implementation speed, and ease of use.

Espousing an International Offering

Sage ERP X3 is sold and implemented both directly by Sage and through a network of 150 value-added resellers (VARs). The product is also distributed by Sage branches and its international network of resellers throughout Europe, China, South East Asia, the Middle East, and Africa. With over 2,000 worldwide customers—ranging from 10 to more than 1,000 ERP users and representing over 5,000 sites—Sage ERP X3 has established itself as one of the fastest-growing enterprise systems for midsized companies.

The latest product's version was recently released by the Sage Group under the new brand name, Sage ERP X3, to better reflect its potentially unique position within the vast Sage portfolio of ERP products. Namely, while Sage has traditionally offered well-attuned local and regional products, Sage ERP X3 might be Sage's first notable foray in offering a globally available enterprise-level product. A multi-audit and regulatory compliant system, Sage ERP X3 meets multisite, multicompany, and multicountry business requirements. It is available in eight languages and legislations, including the United States (US), France, Spain, Portugal, Italy, Germany, United Kingdom (UK), and China.

In 2008, Sage issued a controlled-release Sage ERP X3, version, unveiling it in 35 countries across Europe, the Americas, Asia, Africa, and the Middle East. The system is represented in the US through Sage North America, a dedicated North American ERP mid-market player. Prior to version 5, Sage ERP X3 was distributed under different brand names depending on the country (Adonix X3 in the US, Canada, and Argentina; Diapason X in Italy; and Sage X3 Enterprise in other countries).

Sage has reportedly invested 20 percent of X3's product line annual revenues into research and development (R&D), ensuring customers benefit from an ongoing release schedule and assuring them a return on investment (ROI) over the life of their Sage ERP X3 implementations.

Zooming Into Sage ERP X3?

Sage ERP X3 is an extended-ERP software suite designed to meet mid-to-large companies' deep manufacturing and distribution functional requirements in a relatively simple and cost-effective manner. The system offers integrated functionality in the areas of finance, sales, CRM, inventory management, purchasing, and manufacturing. The typical customer for Sage ERP X3 is a company of 50 to 2,000 employees with $20 million to $500 million (USD) in revenue.

The versatile system comes in three configured offerings aimed at meeting the needs of 1) process manufacturers, 2) discrete manufacturers, and 3) wholesale distributors with a limited need for customization (due to a tight functional fit). In the US, Sage ERP X3's core industry targets include chemicals (see So What's the Big Deal with Chemicals?), food and beverage (see Food and Beverage "Delights"), life sciences, hard goods manufacturing, wholesale trade, and multichannel retail and direct marketing (see The Challenge of Fulfillment).

Sage ERP X3 complements the existing Sage ERP portfolio in North America by providing the upper mid-market with mid-range to high-end ERP software capable of meeting more elaborate business processes. Scaling up to more than 1,000 concurrent users, it also provides current Sage customers in the lower end of the market with a viable path for growth for the future, and provides an opening to global expansion. In other words, Sage is positioning Sage ERP X3 into the Sage ERP family, which excludes stand-alone CRM packages, such as SalesLogix (which is another globally available product by Sage).

Within that family, Sage ERP X3 tops the product line by targeting a worldwide upper mid-market, as the "high-end" Sage ERP solution (accommodating up to 1,500 users). Other ERP products in North America are Sage MAS 500 ERP, Sage MAS 200 ERP, Sage MAS 90 ERP, Sage PFW ERP, and Sage Accpac ERP, covering companies of 1 to 1,000 employees. Select Sage products can be found within the TEC Vendor Showcase. The full Sage ERP family—including Sage ERP X3—is listed on the Sage North American Web Site; www.sagenorthamerica.com.

In North America, Sage MAS 500 and Sage ERP X3 may overlap in some cases, although Sage ERP X3 should be viewed as an upper-market product. Whether a business should evaluate one or the other product depends several organization-specific elements:

prospective growth (X3 has high scalability);

activity worldwide (only X3 includes multi-audit functionality and may fit global business needs);

industry (X3 focuses on distribution and manufacturing in chemicals, life sciences, food and beverage, and hard goods); and

level of complexity and the agility of its business processes (X3 may be more easily customizable).

There are also similar, potential overlaps with Accpac ERP, which has a good presence in several English-speaking markets (see Will Sage Group Cement Its SME Leadership with ACCPAC and Softline Acquisitions?) Organizations considering Accpac ERP should also perform a similar exercise to help pinpoint their needs.

Asserting Technology Prowess

To put the things into perspective, prior to being acquired by Sage in 2005, the privately held French vendor Adonix, had a number of its own acquisitions (see Adonix Expands X3 and Its "French Connection"). These products (e.g., Prodstar, CGI, etc.) were first integrated with the Adonix V3 product, the predecessor of Adonix X3, and have been rewritten in a Java-like and Unicode-compliant engine. As a result, a modern Adonix X3 product was first launched in France in 1999, and later in the US in 2000.

First introduced in 2000 as Adonix X3, and now in its fifth major incarnation as Sage ERP X3, Sage ERP X3 was built on the Sage Application Framework for the Enterprise X3 platform (SAFE X3), a framework shared by a full set of Sage applications for mid-to-large enterprises (human resources [HR] and payroll, warehouse management system [WMS], etc.). This service oriented architecture (SOA)/Web-native platform provides users with collaboration capabilities in either client/server or Web mode, as well as an integrated business intelligence (BI) engine by Business Objects (an SAP company). It also provides a flexible second-generation workflow engine.

Early in 2008 Adonix announced the availability of the latest version of its enterprise software suite Sage ERP X3. The latest Sage ERP X3, release, v5, focuses on

new ergonomics, making complex operations simpler for users;

improved communication capabilities, leveraging the SOA and open architecture of the product; and

enriched functionality in the areas of finance, distribution, and manufacturing.

In addition to this BI engine, which provides users with "drag and drop" analytical capabilities and an enhanced view of key performance indicators (KPIs), new features include

in-depth integration with Microsoft Office, which enables ERP users to create and edit Office documents within the context of the ERP software operation (attaching a Word document to a customer entry, for example), storing any Office document in the ERP secured database, as part of the enterprise data

enhanced integration with Microsoft Outlook, which allows two-way synchronization of contacts, calendars, and tasks

improved traceability and security, and an extended workflow including a multilevel signature circuit, externalized management of recipients and absences, strong workbench management, signature automation by clicking inside an e-mail message, and batch workflow events creation;

new core engine and administration tools speeds up installation and parameterization, which simplifies extensible markup language (XML) import/export, and supports radio frequency (RF) terminals as standard ERP client.

The product also includes a Java-based fourth-generation language (4GL) development environment for custom vertical applications by VARs. Namely, Sage ERP X3 offers the possibility of integrating custom developments without altering the standard functions' ability to evolve. Realized through the aid of a development tool set, these developments can be integrated into the standard product and activated or deactivated at will. They are reusable and permanent, even when the software package version changes. The development tool set for customer or third-party developers preserves custom developments from standard system upgrades or updates, and is part of the core Sage ERP X3 offering.

The product's multi-tier architecture benchmarks up to 1,500 users and the system runs equally well on Microsoft Windows, Unix (IBM AIX), or Linux (Red Hat) operating systems with either Oracle 10g or Microsoft SQL Server 2005 databases.

Preamble

Before providing its answers, Sage wanted to set the stage by pointing out Sage ERP X3's customer value proposition: simplicity for users, and extended functionality. Given this, the vendor believes a mid-market software vendor must cope with the IT complexities of its customers, instead of the customer bearing this responsibility. SOA and more generally distributed software architectures and application integration (not to mention cloud computing) are complex. And Sage Adonix intends to tame this complexity via its products and services by offering simplicity and choice to its customers.

To this end, the vendor designed its SAFE X3 platform strategy to protect the investments of its partners and customers by remaining independent from fads and short term trends and by leveraging established standards to maximize interoperability with other applications and legacy applications at customers' sites. Sage wants to minimize the risks associated with software architecture choices and implementation for both its customers and partners.

The vendor also believes ERP's evolution earlier in this decade created extended-ERP solutions, encompassing supplier relationship management (SRM) and CRM for instance. ERP solutions are now evolving to user-centric solutions to accommodate more users in the enterprise. Through this, user-centric ERP solutions will embed SOA (and possibly even Web-oriented architecture [WOA]), and seamlessly integrate with Web 2.0 collaborative tools. Some of these types of solutions already embed Web 2.0 functionality through really simple syndication (RSS) feeds and portals. Doing so better embraces all potential users in the enterprise, far beyond pure transaction-based processes extending to extensive collaborative ones.

User experience is predominant in customer's choice, time to deployment, and actual user ERP appropriation. Thus, Sage Adonix is making a large investment for Sage ERP X3 in order to make it quick to implement, simple to use, and cost-effective.

TEC's Questions and Sage's Answers

Q1. Are SOA stack approaches (wars) converging to virtually the same thing or might there still be some differentiation?

A1 Sage: From an enterprise application vendors' point of view, neither stacks (Java or Microsoft .NET Framework) can be ignored, as we know that we will encounter customers [that have] one or the other deployed, [or] even both in the largest accounts. We do not believe one will "win" over the other, but rather that customers will impose or demand more interoperability between Java and .NET.

That being said, the overarching claim [is that] SOA stands for … functional interoperability. Our strategy is driven by customer benefits and freedom of choice. In the short term, for instance, the question for us is whether to support both REST (Representational State Transfer) and SOAP (Simple Object Access Protocol) as Web services interface protocol. SOAP prevails today, but REST is more efficient. To protect customers' independency towards these SOA architectures, Sage ERP X3 implements SOAP in the available release of our Sage ERP X3 and will add REST to the coming release, code name Beryl. We intend to offer, via our consulting practice and our partners' expertise, support to our customers in their software architecture decisions to their best interest (for example, low total cost of ownership [TCO], freedom of choice, and widest interoperability).

To the user, the issue is totally different. Our view is that the "Webtop" metaphor will prevail overtime versus the "Microsoft Desktop" metaphor. Users are now hugely comfortable with [the] Web-based applications they use at home and are expecting to find that kind of simplicity at work within mission-critical enterprise applications. Users are now expecting user interfaces (UI) to be open to extended customizations, beyond just menu entries and colors, combining mashups, widgets, and RSS feeds themselves as you would typically do in the iGoogle, my Yahoo, or Netvibes personalized portals (start pages) for instance.

Information will come to the user (Webtop) versus choosing which application to use to manipulate information (Desktop). Let's keep in mind as well that the Web [is going] mobile (over 1.2 billion Web-enabled mobile devices today versus 980 million PCs worldwide) and grows fast (5 million new Internet users worldwide, per week). To that end, and in order for chief information officers (CIOs) to keep the freedom of choice, Sage ERP X3 implements a Web 2.0 portal supporting RSS feeds and widgets and at the same time reinforces [seamless integration with] Microsoft Office.

Sage ERP X3's major differentiating factor lies in the comprehensive R&D effort we're putting behind ease of use and low TCO. As an example, we've introduced a breakthrough innovation in the available release with Sage Visual Processes ™ (see picture below), presenting the user with explicit and graphical business processes. This helps reduce user-training efforts, dramatically improves the ease of use, and effectively supports change management. We all know [that] training and user reluctance to widely use applications [account] for nearly 50 percent of an ERP system's operating expenses.

Exact Software--Working Diligently Towards the "One Exact" Synergy Part Three: Market Impact

Exact Software, a Dutch-based provider of integrated accounting, payroll, customer relationship management (CRM), enterprise resource planning (ERP), and business process management (BPM) software solutions, and a division of Exact Holding N.V. (EURONEXT: EXACT) continues to expand its products' footprints and operations worldwide, lately with a particular emphasis on the expansion in North America. Two thousand and three was indeed a busy and transitional year for the vendor, with the acquisitions of certain resellers, the consequential openings of new US offices, and a launch of new products to the market.

Though doing things more tacitly than its bigger archrivals Sage Group/Best Software and Microsoft Business Solutions (MBS), Exact Software would nonetheless be a textbook example of a vendor maintaining a steadfast course of product, revenue, and geographic expansion, while concurrently achieving enviable profit margins of over 20 percent, and while reaching an eighteen years stretch of profitability. Figures 1 and 2 depicts Exact's stable and predictable, cash-flow generating business. As a matter of fact, nowadays, Exact Software is quite a different company compared to what it was only a few years ago, although its market approach, conservative business management, and attention to profitability have not since changed.
Figure 1
Figure 2

Exact is definitely not a stranger to the business applications market—quite the contrary. Considering its relatively long incumbent status (since 1984); its focus on small and medium businesses; its broad and well-attuned product portfolio (mainly developed internally and through a small number of sensibly acquired solutions that address the needs of the market segment); its large customer base (over 160,000 users in over 100 countries worldwide); and its far-reaching distribution channel of over 60 offices and 2,000 partners, Exact (in addition to Sage/Best Software) is a significant force in the market to reckoned with the likes of Microsoft, Oracle, PeopleSoft, and SAP.

Indeed, Exact Software, with the global headquarters in Delft, the Netherlands, is a publicly traded company with over fifty subsidiaries and twenty distributors in over sixty countries worldwide, and, with 214 million in revenues for fiscal 2002, it can be placed among the leaders within its target market, trailing Sage and Microsoft, and fighting with soon to be merged Epicor and Scala for the top number three position in the small to medium enterprises (SME) market.

Still, after nearly two decades of prominence (mainly within the mid-market of financial and accounting, HRM, project management, and logistics administration solutions with its flagship Exact Globe 2000 back-office product), Exact begun making big strides in the early 2000s to extend its reach into North America and into the manufacturing segments. It turned into a full-fledged comprehensive e-business software provider for SMEs. The first major step in that direction was the 2001acquisition of former Macola Technologies Inc., which almost instantly made Exact a $200 million (USD) player in the mid-market enterprise applications segment. While not really a household name in North America before the Macola acquisition, Exact has always been a force to reckon with in the lower end of the ERP mid-market in Europe, and occasionally, to a degree, elsewhere in the world.

This is Part Three of a six-part note.

Parts One and Two detailed the event summary.

Parts Four and Five will continue the market impact.

Part Six will cover challenges and make user recommendations.

The Macola Acquistion

The acquisition, which seemed a good match at the time, has indeed proven a success so far. Similarities in the former independent parties' corporate cultures and product development philosophies has certainly played its part. Even before the acquisition, Macola was striving for an expanded global presence, and to that end, its product had featured the multicurrency and some multilingual capabilities of an international product. Both companies' products' open architectures, flexibility, and adoptions of the contemporary Microsoft technology stack have also made it easier for products to be blended and for customers or consultants to localize the products further. (For example, both Exact Globe 2000 and Macola Progression have separately gone through their DOS-based versions via Windows client/server versions towards the so-called One-X [standing for One Exact] architecture convergence, which will be discussed later in this series.) Moreover, the as separate companies, Macola and Exact had rarely competed with one another because each company's distribution channel focused on its own continent. Macola's former Progression Series and its subsequent Exact Macola ES have become the bread-winning products for the North American market and Exact Globe 2000 being the European ERP and accounting counterpart. Exact's new web-based product e-Synergy was the overarching umbrella for e-business front-to-back office processes.

At the time of the acquisition, Macola had 16,000 installation sites for the Progression Series (over several thousand customers) and a distribution channel with over 400 resellers. The sweet spot for the Macola Progression Series product have been small discrete manufacturers with annual revenue up to $50 million (USD) and up to 500 employees. The current Exact's product release, which is still being actively sold, but will eventually become a legacy product, Macola Progression Series 7.6 is a horizontal manufacturing application based around the Manufacturing Planning and Control (MPC) module, which includes bills of material (BOM), production order processing, master scheduling, and materials requirements planning (MRP) components. It has financial accounting, distribution, integrated payroll, and a number of third-party original equipment manufacturer (OEM) add-ons including data collection, HRM, CRM applications, and the C-WAY Advanced Planning & Scheduling (APS) engine. Beside the MPC set of modules, the product suite indeed brings a wide array of accounting (general ledger, bank book, accounts receivable, accounts payable, currency manager, and assets depreciation), enterprise manufacturing (quoting and estimating, standard product routing, shop floor control, labor performance, capacity requirements planning [CRP], manufacturing cost accounting, standard product costing, and BOMLink for AutoCAD), distribution (inventory management, order entry, purchase order and receiving, and bar code for distribution), advanced materials management (returned material authorization [RMA], advanced distribution, serial lot, warehouse management system [WMS], shipping automation by Starship, EDI bar code sub module, RF data collection for distribution, and request for quotation [RFQ]) and progression human resource and payroll modules. Additionally, the product suite offers a number of handy tools like integration and customization tools (designer, flexibility, and progression workflow explorer), system manager, exact forms, and business intelligence tools.

Particularly in the past, but to a lesser part nowadays, some functionality has been furnished via a partnership approach that had allowed former Macola to take advantage of software from third-party specialist vendors, given an ERP vendor of its stature could not have possibly developed all the bits and pieces of extended-ERP on its own. Recognizing also that the one-size-fits all approach to software has often had many limitations, the former company had forged some strong ties with other best-of-breed companies to provide integrated add-ons that can share data to enhance the functions provided by its own modules. For example, Progression Series provides a fully integrated payroll and HR module for up to fifty employees, but, for more complex needs, one can integrate with Best Software's Abra Suite, a leading HRM software suite that includes payroll, HR, attendance, organization charting, applicant tracking, and employee training modules.

The core Progression Series' modules launch from a self-explanatory tree-structure menu system called the Progression Workflow Explorer, while on the right side of the screen is a multi-tab work area that can be user-defined with shortcuts to commonly used functions. Like its current parent Exact Software, former Macola had always provided functional but simple products that users would easily absorb and utilize without a terribly painful training and adoption cycle. Exact too realizes nowadays that its target market is not looking for cutting-edge technology but has a need for a functional application set that allows them to take advantage of new technologies and business processes. Knowing the market and providing an easy-to-use, broad functional footprint, and at a reasonably low price tag with low maintenance product set has been Exact's value proposition, which builds on former Macola's one too. To that end, Progression Series features built-in screen design tools, which allow the software to adjust to the customer's workflows and business processes without the need for programming. Where some customization is required though, the Flexibility module, a programming, scripting, and configuration tool, which encompasses Microsoft Visual Basic for Applications (VBA), Enterprise Reporting System (ERS) 5.0., and the Progression Developer Tools, facilitates the creation of bolt-on applications without touching the underlying source code.

"Software You Will Never Outgrow"

Exact, as well as former Macola, refers to itself as "software you will never outgrow," since smaller customers desire high-speed but low-cost database, Progression has supported the Pervasive SQL database since 1989. From a user standpoint, there is no difference in the data input screens, reports or other program functionality, but Pervasive SQL is more economical and requires less overhead maintenance than Microsoft SQL Server, the other supported database for Progression Series modules since 2000. While both databases are ODBC (open database connectivity) compliant, SQL Server offers tighter integration with the Microsoft Windows NT/2000 operating systems, and it offers better performance, scalability, and security and reliability features. The Progression Series also includes various options for producing reports via third-party products given that native reports and forms have not been its strongest spot. For each module, fully integrated reports can be either previewed or printed, whereby each report has numerous sorting and filtering options. For customized reporting, Progression Series offers Crystal Reports, Integrated Crystal Reports, and Synex Systems' F9 financial reporting and consolidation product.

Internet integration of web-enabled functions for users to communicate and transact with customers and suppliers had been a priority for Macola during the last couple of years of its independent operation. To that end, in 2000, well before being purchased, Macola introduced Web.Orders, a module that provides on-line product configuration capabilities and order management. Other integrated e-commerce modules include Web.Views and electronic data interchange (EDI). Both Web.Orders and Web.Views provide self-service functions that are tied into the back-office system, with the view towards reducing the ordering cycle time and improving customer service. Web.Views is a collection of browser-based tools that can provide customers, sales people, and internal employees with secure access to look up account, pricing, and product availability information. Web.Orders is a storefront that allows customers to submit orders via the web, and integrates that information into the other applicable accounting and distribution modules. It uses the back-office integration to provide total order costs to the customer in real time and lets them track the shipment of an order.

Enterprises that are quick-turn and material intensive discrete or batch process manufacturers or consumer packaged goods (CPG) manufacturers or importers, which are also Food and Drug Administration (FDA) compliant should benefit the most the from Progression Series' manufacturing modules. These enterprises are also operation intensive, work in progress (WIP) environments where both material and labor contribute significantly to the cost of goods sold (COGS), given the product's notable emphasis on data collection, labor performance, and tracking capabilities. Distribution side is possibly even a more differentiating trait of Progression Series, given the product goes beyond order entry, purchase order or inventory management to include more "distribution-centric" functionality like bar coding, radio frequency (RF), and WMS. Again, most of these have been delivered in the OEM fashion with best-of-breed players like Radio Beacon (for a feature-rich WMS), South Coast Computers (for its TrakWear software that allocates orders based on size/color/style attributes for the apparel industry), or Integrated Planning Systems (for its Shipping Automation System that includes receiving, pack verification, bill of lading, and other germane

Business Intelligence Status Report: Recommendations

Vendors are retooling themselves to meeting the demand for accurate business intelligence (BI) solutions. Acquisitions and strategic partnerships appear to be the most popular way for vendors to jockey for the top position in this growing market. The following are the issues that customers should investigate if their enterprise applications vendor follows the strategy of partnering with a boutique vendor like Vanguard or Corporate Radar (see Boutique Vendors Can Bring Big Value?):

If scattered data from enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), spreadsheets, etc., must be included in the total BI solution, does the boutique vendor provide the tools and service skills required?

Do you feel comfortable with the financial viability and geographic coverage of boutique vendors, which are smaller due to their tight market focus?

As both the enterprise and BI products evolve, who is responsible for keeping the two in synch? And who is responsible for integration?

Are you able to provide the internal hardware and software support required? Or will that have to be the vendors' lookout?

Part Seven of the Business Intelligence Status Report series.

On the other hand, customers considering an enterprise application vendor that follows an alliance strategy with a renowned horizontal BI vendor, like Cognos or Business Objects, should consider the following:

BI vendors using strategic alliances tend to offer product suites that are broad and functional, but lack deep industry specific needs. Are your industry-specific needs provided by the solution? You should rigorously question industry specific issues and the responsibilities of the two vendors relative to the inevitable integration and future enhancements.

The horizontal BI vendor may have a large customer base, but may have a limited number of customers in your specific industry. Does this make a difference to you?

As both the enterprise and BI products evolve, who is responsible for keeping the two in synch? And who is responsible for the integration?

A solution based upon a BI product from a horizontal provider may be an overkill in terms of unneeded functions, support requirements, and cost. How will the vendor approach your needs?

The BI product will require internal support. Can you support the hardware and software required for a solution based upon a horizontal BI vendor?

This is Part Seven of a seven-part note.

Part One detailed the history and current status.

Part Two looked at contemporary BI tools.

Part Three described what is available.

Part Four presented the BI/CPM market landscape.

Part Five discussed Geac and point solution vendors.

Part Six compared direct access to a data warehouse for the mid-market.

Recommendations for Enterprise Application Vendors

Vendors without BI capabilities should consider a relationship with the likes of Vanguard, not merely as a technology partner, but rather as a BI solution alliance for certain industries. Vendors focused on the cost-sensitive mid-market should investigate Vanguard's direct access approach as a way to address their customer's cost concerns.

Those enterprise application vendors without a BI strategy or with an agnostic BI platform strategy should focus on the value of BI to their customer set. Their customers' needs are real and therefore BI might provide the vendor with a path to customer value and satisfaction, plus additional revenue. Vendors should be realistic in the investment required to build, maintain, and support BI applications. They should select a strategy that matches their ability and willingness to invest, time to market requirements, and alternative uses of the required resources. The strategy selected should reflect the realities of their existing and future customer base relative to industry needs, support requirements, terms and conditions, etc.

Recommendations for Industry Consolidators

Industry consolidators, such as Infor, should consider teaming with Vanguard to offer a single BI solution across all current and future products. Since Infor will soon own three products (Lilly, Agilisys, and MAPICS) with current Vanguard GPS integrations, it should find discussions with Vanguard of interest.

General Recommendations

On a more general note, as with all enterprise applications areas, the secret to successfully getting the most out of the IT investment lies not only within selecting the right technologies and tools, but also ensuring that proper business processes are in place to generate data that are meaningful, up-to-date, and accurate. One of the biggest mistakes users often make with BI is forgetting the big picture, the strategic goals of what they hope to accomplish by accessing this information, while breaking out of traditional silo-ed metrics. BI is not a panacea, and enterprises must organize and prioritize their business needs across regions, departments (even across non-official "political" boundaries), etc., before they can hope to usefully report on the business information.

The biggest challenge when building a dashboard or scorecard is getting the correct definition of key performance indicators (KPI) and linking them to a corporate strategy. For example, is the company hoping to increase sales by knowing the customer better or by discovering a new business opportunity? Or is it hoping to better control costs to provide a competitive advantage? Moreover, will it use BI to measure performance against which number of goals? These tools should also have an interactive ability to link these KPIs back to operational reality. For example, they should be able to explain why something is happening instead of only indicating it. Companies also need to filter out irrelevant metrics and reconcile conflicting metric definitions and unique metrics. Further, they need to consider groupings needed by some user groups where everyone has to agree on the definitions and on what has to be measured. Getting the right granularity of metrics and deploying it at the right business level is also critical.

The BI and corporate performance management (CPM) evaluations should involve the IT organization, finance, and operations. Furthermore, most firms should create a joint committee or task force to evaluate how automation can improve enterprise-wide performance management. Although CPM starts with strong financial management, it will eventually extend beyond financial planning to almost all areas of corporate activity. Therefore, organizations choosing BI suites should consider both their financial management tools and future integration with key business-area solutions such as product lifecycle management (PLM), CRM, SCM, etc. To increase the odds of success, end users should favor BI products and services firms that are focused on the application of BI in their specific industry or application areas.

The most important point for prospective buyers of CPM technology is to do a very thorough analysis of existing systems, where the corporation's business needs will be in the next few years, and how the systems will be integrated. Buyers should not forget that mapping data from one place to another is the most arduous, expensive, and time-consuming part of the whole process and one of the major reasons for BI project failure. This must be done before talking to any vendor. Be both open-eyed and open-minded, since it is tempting to create specialized data models and tactical data marts to support the quick deployment of a CPM portfolio, but this can lead to long-term inflexibility.

The best start for a CPM initiative towards building the entire corporate information factory (CIF) or something similar is to identify the most painful points and to try solving them by leveraging existing BI and analytics initiatives. As this is done, one must be aware of being inflexible and of automatically settling for an incumbent vendor if its products and plans do not match up well to strategic requirements. Also, one should not fall in the trap of "low-hanging fruit" and easily obtainable short-term return on investment (ROI) benefits at the expense of long-term strategic benefits that are either of a "soft" nature or of lower value in the short-term.

While the needs of employees, customers, and business partners will vary, successful integration tools will need to provide access to such applications as inventory control, ERP, CRM, data stores, packaged applications, legacy systems, and a myriad of other applications. The effort will be grueling, but the returns from an integrated information portal can be significant. As with any such purchase, users choosing point planning or BI products should consider the integration infrastructure and effort needed to combine these products versus the cost and functionality issues of choosing an integrated CPM product suite (if still possible to find). Mission-critical issues like scalability, reliability, manageability, and ease-of-use go without saying. For smaller enterprises that are more inclined to rely on their ERP vendor on extended functionality such as BI and portals, the route to the complete CPM might be more straightforward.

Though the promise of real-time, on-demand BI is enticing, there are some drawbacks, since, despite drops in hardware and memory prices, real-time architectures can still be expensive to build. The price largely comes from the processing power required to mass-produce analysis in close-to-real time. Also, keep in mind that performance degradation on both the network and application sides is a distinct possibility. If the accounting department, payroll department, or production planning department sees a slowdown in their respective GL/month-end, payroll, or material resource planning (MRP) transactions because the system is busy sending unnecessary information to a real-time BI system, something is not right. In some cases within the financial and manufacturing sectors, information has a definite shelf life, where seconds and minutes count. In most cases, however, the optimum solution is a combination of real-time and traditional BI, with each meeting different business needs.

The same would hold for enterprise information integration (EII) versus data warehousing (DW). Both will fail if they are not rooted in true business requirements. Once justified, a corporate-wide data warehouse is a better approach than a number of smaller data marts that would serve only isolated departments. Yet, a large data warehouse will often not be built at once, in which case one should look for an area of the business with a glaring need for a data warehouse and build one to accommodate it. At the same time, one should make sure that it could be gradually expanded in the future to meet the needs of other departments.

About the Authors

Syspro Hatches 'Encore' IMPACT On SME Manufacturers. Part 2: Market Impact

On September 7, the Syspro Group, a privately held Worldwide provider of enterprise software for small to medium enterprises (SMEs), with its US headquarters in Costa Mesa, CA (www.sysprousa.com ), was named a recipient of the START Magazine Vision Technology & Business Award for 2001 in the Manufacturing ($50 million to $200 million) category. In naming Syspro Group as the winner of the START Vision Award, the judges expressed admiration for the company's recent development of the Material Yield System, a software solution that enables manufacturers and distributors to maximize the use of scraps.

This is Part Two of a two-part note on Syspro. Part One detailed recent developments. This part discusses the Market Impact and makes User Recommendations.

Market Impact

Although it has been present in the market since 1978, Syspro has not been a very vocal vendor, however the latest blitz may prove that the company is changing its marketing approach. Syspro has recorded significant growth in its client base since 1997, which has led to the IMPACT product becoming one of the most widely used ERP solution in the small-to-medium enterprises (SMEs), with over 6,000 customers. That has promoted Syspro into a serious challenger in the SME discrete manufacturing market, since, with estimated revenues in 2000 at about $50 million, Syspro's revenues grew around 10% while many of its peers have seen corresponding decline.

Syspro has worldwide operations, as its products have been installed in 50 countries, and it continues to offer its products and services through the reseller channel/VARs, which has also expanded during the last year. The flagship IMPACT Encore system, has traditionally covered the full spread of modules, including accounting, order processing, inventory management, finite and infinite scheduling, shop floor control and payroll (the alliance with Best Software for ABRA system), with the indication of high levels of customer satisfaction.

IMPACT's functionality is equitably solid in accounting, manufacturing and distribution areas, which is advantageous compared to competitive products that are either mainly strong in accounting (e.g, Microsoft Great Plains and Navision) or in manufacturing/distribution (e.g., Lilly Software and ROI Systems).

Expanded Solutions

Although Syspro IMPACT Encore is a comprehensive ERP solution for small- to mid-sized enterprises, the company has recently been striving to also be known as a vendor that enables clients to excel through the use of extended-ERP applications. To this end, Syspro has expanded its solutions footprint with applications such as customer relationship management (CRM), warehouse management system (WMS), e-commerce, and advanced planning, scheduling and execution (ASP&E) software (a.k.a. Total Factory Planner). This functionality umbrella should help manufacturers pursue a concept Syspro denotes Strategic (e)Fulfillment, which is envisioned to enable management to make better decisions since it provides visibility and control of all aspects of the supply chain. Moreover, it becomes the means by which these decisions can be executed in the most efficient manner.

Syspro has from its early days had a sole focus on the lower-end of the ERP discrete manufacturing market. The company has long demonstrated a deep understanding of this market dynamics and its pragmatic requirements of inexpensive products, fast and simple implementations, and good service and support. It has also achieved good coverage with its indirect channel, which is an important criterion for long-term success in the SME market segment.

The above native ERP extensions and the product openness promote it as one of the first of the smaller ERP vendors with the ability to embrace customer and supplier activities tied to a core transactional back-office system. Syspro can, therefore, often offer one-stop-shop functionality for many versatile discrete manufacturing environments (from forecasts driven, repetitive make-to-stock (MTS) to custom job shop, including mixed-mode manufacturing) in the low-end of the market. Also positively impacting the sales of its flagship product suite, IMPACT Encore, are its strong multi-site and multi-national product capabilities, which are stronger than those of many more visible competitive products (e.g., Made2Manage, Lilly Software, Fourth Shift, ROI Systems, etc.).

End users of smaller enterprises have also been impressed with its intuitive user interface, which combines on-screen graphics with a functional flow for better visual orientation, and also provides consistently deployed keyboard shortcuts for heavy data entry. It also offers a wealth of administrative features like workflow & event management, querying tools and a built-in report writer.

IMPACT has also been technologically adequate for its target market, as it exhibits n-tier client/server architecture, is fully Windows 2000, Linux and UNIX compatible, and runs under SQL Server 7.0 database, although only starting with the release 5.0. Syspro has long been committed to the Microsoft technology and the product is on par with the latest commercially available technologies, which are well attuned for its target market.

With the support for XML and COM, Syspro offers e-commerce applications tightly integrated to IMPACT back-office, as well as the interconnectivity to third-party products. The above-mentioned e.net solutions architecture should provide a way of directly remotely accessing the functionality within the ERP system, and in such a way that does not compromise its business rules and security. The framework, which delivers the system's functionality as discrete objects of code, supports capabilities such as integrated e-commerce Web storefronts, access to ERP data via wireless devices, and integration with best-of-breed applications.

Syspro's endeavor at some vertical specialization, as seen in its new Material Yield module, is also commendable. The module targets manufacturers that cut sheets, tubes or rods of metal, wood, or plastic, and it takes into account all aspects of the cutting process, including cutting-blade thickness, so that users can better leverage raw materials inventories and maximize yields. Look for Syspro to develop ever-deeper functionality and based on the latest technology such as Microsoft .NET.

Challenges

Nevertheless, Syspro will have to overcome some significant challenges in order to continue to thrive in a highly competitive environment. Its market awareness is limited, and possibly aggravated by the non-cohesive marketing of its product and company brand names (IMPACT Encore and Syspro). Also, although Syspro has a worldwide presence, it has no local market leadership in any individual country owing to the fierce channel competition from more aggressive, better known and wealthier competitors like Microsoft Great Plains, Sage, Navision, Epicor, and Scala to name some.

Further, IMPACT's functionality across the board, although broad and well balanced, has not been recognized as a differentiator in the market as the company does not exhibit much of a vertical focus except for the above-mentioned specialized module. Some modules that are commonly offered by ERP systems, such as requests for quotation (RFQ), shipping, and engineering change control, are only slated for release later this year. Also, the company has been seemingly inactive in pronouncing its strategy for supporting MS .NET architecture framework, whereas some competitors like Made2Manage, Epicor, Navision and Microsoft Great Plains have been busy delivering the first software components based on that architecture.

Syspro also trails these competitors in its ASP/hosting, private trade exchange (PTX) and/or collaborative portal solutions strategy and delivery.

User Recommendations

Syspro's target market, general multi-site and multi-national discrete manufacturing companies and their divisions with up to $150 million-a-year revenue range and up to 100 concurrent users per site, should consider the company's value proposition, but avoid selecting it without looking at what the other vendors have to offer.

We generally recommend including Syspro in the long list of vendors considered for an enterprise application selection by the lower-end of mid-market companies. These companies generally are rapidly growing and agile, but have a limited IT budget/staff, a conservative IT strategy, and less complex discrete manufacturing, CRM and B2B e-commerce collaboration requirements.

The industries that would most likely benefit from using its products are those industries that need to maximize yields, minimize waste and, where possible, return remnants to inventory, the Material Yield System module of IMPACT Encore is designed to address the specific needs of manufacturers and distributors that rely on the cutting of shapes and pieces from standard size materials - sheets, tubes, and rods - as part of the manufacturing process. The industries targeted are plastics, steel, rubber, paper, and lumber. Existing users of earlier product releases that run on C-ISAM database may benefit from querying the company's future two-pronged product strategy, product migration path, service & support, and/or scalability strategy.

Navision Software a/s: Mid-market iNvasion

Navision Software is an international provider of financial and business management software solutions for the small-to-medium enterprises (SME) market. Founded in 1984, with headquarters in Vedbaek, Denmark, the Company is currently one of the fastest-growing enterprise applications vendors, with approximately $92 million in revenue in fiscal 1999 (136% revenue growth compared to 1998). Navision Software went public in 1999 and currently trades on the Copenhagen Stock Exchange.

Navision Software (originally Personal Computing & Consulting ApS) initially focused on leveraging the PC technology as a platform for financial and business management software solutions for small business. In 1985, it released its first product, a single user accounting system named PCPLUS, that it marketed through a network of dealers in Denmark and Norway.

In 1987, Navision released a new PC based multi-user application suite with financial management capabilities called NAVISION (originally called NAVIGATOR). That product exhibited a number of then new, innovative software technologies for the PC platform. Concepts like client/server, relational database, transaction management, version management, screen designer, and report writer were introduced with its proprietary technology called Sum Indexed Flow Technology (SIFT). This proprietary database technology provides the user with rapid online information in online analytical processing (OLAP) and remains one of Navision Software's key technology components.

In 1990, Navision's new product generation showed an open, object-oriented architecture along with integrated 4GL development tools that allowed customers and dealers to modify the functionality of the product. Furthermore, the object-oriented architecture of the product made it feasible to develop international country- and language-specific versions of the product with different local regulatory functionality for different geographical markets.

In 1993, Navision initiated a major development effort with the purpose of creating a new generation of its products with a highly customizable graphical user interface (GUI). In 1995, it released the first release of the latest generation of products developed specifically for Microsoft Windows 95 and NT called Navision Financials. The next version, Navision Financials 2.60, which was released on March 31, has received the Microsoft Windows 2000 Professional logo.

Vendor Trajectory and Strategy

Navision has been an important contender in the SME ERP market over recent years. Its modern solutions, competitive pricing, and simple no-fuss delivery model has allowed it to fend off competition from big vendors like J.D. Edwards, Oracle, and SAP better than most other mid-market vendors. Soon after its inception and success in the Danish market, Navision branched out into Western Europe in the early 1990s, and began selling in the U.S. and U.K. in 1994.

Navision Software's solutions today are sold exclusively through a worldwide network of over 900 partners called Navision Solution Centers (NSCs) and staffed with certified professionals dedicated to providing customized solutions, training, support and service. The company currently has local representation in 23 countries as well as more than 39,000 installations in 89 countries and derives 20% of its revenue from the international market outside of Europe.

At present, Navision looks set to continue its march into the ERP mid-market (companies with $5 million - $250 million in revenues), focusing on maintaining and enhancing existing functionality of its Navision Financials solution. Over the last two years, Navision has delivered a slew of new functionality so that its solution currently includes all of the normal ERP functions - Financials, Manufacturing, Distribution and so on - and is e-commerce enabled. We expect the company to continue expanding Internet deployment and CRM capabilities. It is very likely that Navision will start pursuing alliances with ASPs to further its penetration into this increasingly popular marketplace.

Navision is committed to the Microsoft platform and has recently collected all of the new badges associated with W2K, such as "Certified for Windows 2000 Server" and "Certified for Windows 2000 Professional". It has recently taken its relationship with Microsoft one step further by signing a global sales and distribution agreement allowing its Solution Centres to sell BackOffice products with Navision systems. This will enable the delivery of complete single source solutions to smaller companies.

We expect Navision to continue providing breadth of horizontal functionality in a price competitive integrated business application delivered through a strong indirect channel. We also expect the number of NSCs to grow worldwide. These centers will add additional value by developing geographical and vertical product extensions, allowing Navision to focus on core product functionality.

ANALYSIS:
Vendor Strengths

Navision Software has established strong branding and penetration within the Small-to-Medium Enterprises (SME) segment of the European and recently the U.S. ERP market, with a large customer base and a developed partner channel within the industry.

Concurrently with the componentization of its product suite, Navision has also developed a tightly integrated broad functional solution that matches the SMEs' needs. Navision Financials offers the Web Storefront, HR/Payroll, warehouse management system (WMS), and innate OLAP and data warehouse (DW) functionality, in addition to traditional ERP modules. Furthermore, the Company was one of the first vendors to achieve Euro compliance and has also developed 23 localized, country-specific product versions.

Navision is very competitive in speed of implementation, feasibility of customization, total cost of ownership (TCO), and price/performance ratio. The product architecture has been devised entirely from scratch in-house within the Microsoft context, which provides for flexibility and ongoing agility. End users of less complex smaller enterprises have been impressed with its intuitive user interface, ease of system navigation, and its drag-and-drop forms designer that allows less technically oriented users to perform cosmetic modifications.

Navision has exhibited a very strong long-term track record. The Company is currently one of the fastest-growing and most profitable ERP vendors:

Figure 1



Figure 2



Furthermore, its high market capitalization that is several times higher than its revenues, guards the Company against an unwanted acquisition and provides much needed capital for R&D and/or future acquisitions.

Vendor Challenges

Navision currently does not offer the following functionality: business-to-business (B2B) e-commerce, more comprehensive Customer Relationship Management (CRM) suite, and solutions for service industries. Moreover, the distribution and manufacturing modules are currently available only in 5 country-specific versions. This may result in a number of lost opportunities in the future, since certain customers prefer more complete solutions from a single vendor.

In addition to the above product functionality gap, Navision does not exhibit much of a vertical focus. Its distributors (NSCs) offer vertical solutions on an opportunity-by-opportunity basis only, which we believe is insufficient to satisfy the stringent requirements of a highly competitive market.

The company has low brand awareness and an undeveloped channel outside of the European market, particularly in Latin America and the Pacific Rim, which contribute only 2% of its revenues. While Navision has done a respectable job of establishing its U.S. network, it has been facing a fierce challenge from domestic competitors like Great Plains, Epicor Software, and Solomon Software. Moreover, it is going to be challenged with combining its country-specific variants of applications into a single-code, global product in order to be selected as a global strategic partner of a centrally run global organization.

Navision has long depended on its proprietary development (database and 4GL), which was a drawback for the following reasons: 1) a need for a special skill set (in spite of its user-friendliness) and 2) scalability and integration difficulties for the higher end of the mid-market. While its recently released MS SQL Server version of the product may mitigate the above concerns, it is likely to exhibit problems related to its product immaturity. Furthermore, Navision's two-pronged product database strategy, although creating more options for a customer, inevitably creates some duplication of Navision's R&D and Service & Support resources.

BOTTOM LINE
Vendor Predictions

Navision will achieve over 50% annual growth rate during the next two years (70% probability), based on the still largely untapped SME market and on the potential of mining its large existing customer base. This will enable the company to become one of the Top 3 vendors within the global SME market within the next three years (60% probability).

We believe that, within the next 12 months, the company will significantly enhance, by using its own resources, its customer relationship management (CRM), human resources, field service, B2B e-commerce, and supply chain management capabilities (60% probability).

Within the next 4 years, more than 30% of Navision's revenues will come from outside of the European market (60% probability), with the license revenue contributing more than 60% of its total revenue within the same period of time (70% probability). Within the same time span, more than 40% of its customers will run on the MS SQL Server.

Vendor Recommendations

Navision should promptly resolve any outstanding product interconnectivity issues with other vendors' products in order to attract the high end of the SME market. It should also expedite the availability of the 'thin client' product architecture and the uniform global availability of all product modules.

Navision should further fortify its strong position within the Small-to-Medium Enterprises (SME) market segment in the following ways:

Expand business in its existing customer base, by upgrading older versions of software and by offering new extended ERP modules and enterprise applications.

Further expand its global presence, both by opening new offices and developing new affiliate partnerships. Consider acquiring or partnering with affiliates of faltering competitors, e.g., SSA, Epicor, and Baan.

Deliver more focused and pre-configured vertical solutions and consider offering application outsourcing.

Navision must remain committed to new product features and expedite the introduction of additional enhancements (see Vendor Challenges). We also encourage the company to consider undertaking a more aggressive marketing campaign concurrently with these developments, particularly in the markets outside of Europe.

User Recommendations

We generally recommend including Navision in a long list of an enterprise application selection to lower-end of the mid-market companies (with $5M-$250M in revenue) and divisions of larger enterprises, which have limited IT budget and smaller community of users (less than 75), and have significant financial accounting, distribution, and discrete manufacturing requirements, while currently not needing complex CRM and B2B e-commerce functionality.

Global, centrally managed organizations that need a single-code product for all their international business units, companies with more than 80 users, enterprises in service-related industries, and companies looking for a broader functionality and a particular industry focus from a single vendor may benefit from evaluating other products at this stage.

Current and future users interested in running on the MS SQL Server database may want to inquire about Navision's strategy regarding the product's business intelligence and data warehousing capabilities, bearing in mind that those are innate within the proprietary Navision Server database.

Any organization evaluating Navision Software should consider existing functionality only, and, in the case of final selection, should negotiate incorporation of new applications components now at negotiated license fees, in expectation of Navision's future product introductions. Potential clients should also conduct a preliminary research on industry expertise and reference sites of a regional Navision Solution Center (NSC), particularly outside Europe and the United States.