The Challenges of SAP Relationship and User Recommendations

In mid-2006, San Jose, California (US)-based Callidus Software announced that its TrueComp version 5.1.3 software application had achieved Certified for NetWeaver status from SAPgood news for the over 30 percent of the companys customers that run SAP enterprise resource planning (ERP) and customer relationship management (CRM) systems. With the integration provided between TrueComp and the SAP NetWeaver platform, customers should benefit from a reduction in total cost of ownership (TCO) by being able to further leverage their existing investments in SAP and Callidus solutions via a common infrastructure. To achieve Certified for NetWeaver status from SAP, vendors must ensure their applications interface seamlessly with the SAP NetWeaver platform, and this integration is tested and certified by the SAP Integration & Certification Center. The SAP NetWeaver platform is the technology foundation that powers not only mySAP business applications and SAP xApps composite applications, but also Callidus's TrueComp solution and other partner solutions, as well as custom-built applications (see Multipurpose SAP NetWeaver).

Last part of the series Enterprise Incentive Management Leader Responds to Market Demands.

Soon after certification, in September of 2006 Callidus and SAP signed a cooperative development agreement under which terms that the two vendors will promote and market Callidus Software's TrueComp and TrueInformation products in the US and Canada (the market that comprises more than 85 percent of the world sales enterprise incentive management [EIM] market, according to Gartner, a technology research and consulting center). The alliance grants Callidus the right to access SAP NetWeaver technology, standards, and technical resources for facilitating knowledge transfers. It also allows SAPs sales force to refer Callidus to SAPs client base as one option for EIM software, and to undertake joint sales calls where appropriate. SAP and Callidus will jointly pursue prospects, but deals will be closed by Callidus. Callidus will also be responsible for delivering help desk support and maintenance services. In addition, Callidus Software announced that its TrueComp and TrueInformation software products achieved Powered by SAP NetWeaver status, meaning their applications can run seamlessly on the SAP NetWeaver platform, resulting in more potential sales opportunities.

As SAP NetWeaver provides the best way to integrate a medley of systems running either SAP or non-SAP software, Callidus is hoping that this certification and agreement will minimize objections from the information technology (IT) departments of companies already using SAP. In other words, although SAP's compensation management software may not be as good as Callidus's, if a user company has already spent a large amount of money, time, and effort to install SAP, adding Calliduss module (which, strange as it may sound, is likely to be cheaper than SAPs) is a viable option. Callidus believes that its value proposition will be reinforced in terms of its functional EIM solutions smooth integration with SAPs other enterprise applications.

At the very least, Callidus should benefit from the additional visibility and exposure to opportunities from North American user organizations interested in both SAP NetWeaver and EIM. However, the onus will be mainly on Callidus to generate a sustainable, significant revenue stream from the relationship. Specifically, it will require substantial investments in marketing (education programs, sales promotions, and marketing campaigns and events) to steadily create traction within SAPs sales force, customers, and prospects. As well, Callidus will largely be responsible for product development (such as porting to NetWeaver, product enhancements, and integration). Given SAPs large organization, and its many partners, and partner products (including its own EIM product), only time will tell how motivated the giant will be to actively promote the alliance.

For more information on Callidus and its offerings see: Enterprise Incentive Management Leader Responds to the Market Demands. The Enterprise Incentive Management Flagship Offering. Enterprise Incentive Management Leaders Challenges and Response.

Challenges

EIM companies similar to Callidus face the threat of many potential customers having already made a substantial investment in other third party or internally developed software designed to model, administer, analyze, and report on pay-for-performance programs. These companies may be reluctant to abandon those investments in favor of other software. In addition, the IT departments of potential customers may resist purchasing the EIM software solutions for a variety of other reasons, one of which is the potential displacement of their historical role in creating and running software, and another being the concern that packaged software products are not sufficiently customizable for their enterprises. Furthermore, given the trend towards extending performance and compensation management beyond sales forces, there is the threat from leading vendors in this area, notably Authoria (that recently acquired Advanced Information Management [AIM], a provider of compensation management systems), SuccessFactors, Halogen Software, Workscape (including recently acquired Performaworks), Perks.com, Kenexa, and, again, ERP giants SAP, Oracle, and Lawson Software.

User Recommendations

Large, established enterprises in the above market segments should evaluate and consider Callidus. This is especially true of companies with more than 500 employees on complex incentive compensation plans (for example, those managing changes affecting closed [or future] periods; changes effective mid-period; tricky credit calculations; custom territory definitions; non-standard management roll ups; business units on different calendars or pay periods, etc.) and if they are subject to regulatory compliance and scrutiny.

Existing Callidus customers should consider the vendors recently released products and services (including the on-demand versions) as potential value add-ons. Customers that also have the older SAP software portfolio and that are interested in more modern NetWeaver and mySAP Business Suite applications should investigate the potential benefits of replacing legacy interfaces with the prepackaged integrations that Callidus will release in the near future. SAP and Callidus customers already on the NetWeaver stack should have a more direct opportunity to avail themselves of EIM functionality such as plan creation, administration, reporting, and dispute resolution capabilities or analytics, although they should keep an eye on the products maturity and early adopters references.

Generally speaking, no automatic decisions should be made on the selection of add-on modules favoring incumbent ERP, CRM, sales force automation (SFA), or human capital management (HCM) providers. Rather, choices should be based on a defendable list of EIM requirements for each user enterprise that every competing vendor has to demonstrate. ERP providers are offering much deeper EIM functionality than ever before and should be given a serious look by both current and prospective customers, bearing in mind that some best-of-breed EIM vendors might still excel in their horizontal and vertical niches. Companies need to determine how complex their territories are, how much overlay is involved, how much double compensation exists, and so on, and choose a vendor based on that information.

In addition to the traditional on-premise perpetual license model, a host of providers offer per-module, per-employee, or per-month fees that can minimize up-front costs (and deployment times) and scale as needed. Customers should explore how such services integrate with their internal systems and with other outsourced services they may rely on. When it comes to sales incentive tools, there is always a high degree of integration required to such systems as SFA, ERP, HR/payroll, etc. Preference should be given to vendors and system integrators with the flexibility to add data sources and targets, efficient use of system resources, automatic system deployment and maintenance, secure application and data access, and the ability to leverage in-house technologies and expertise. Shared services, increasingly in a hosted mode, might be an especially effective strategy for businesses that vigorously pursue merger and acquisition opportunities.

It goes without saying that prospective customers should demand references from all EIM vendors under consideration with regards to their customer size and industry. Selected vendors should be willing to demonstrate their skills and offer training and support for knowledge transfer to staff at major system integration firms. EIM providers should be tested on their handling of the most complex compensation plans, possibly by using mock-up data (that closely resembles reality) from a prospective users systems. For general recommendations, see Enter Enterprise Incentive Management and Incentive Compensation Management.

SalesLogix and ACT! Officially Branded As Best Software

At the beginning of July, Best Software, one of the leading business management products and services providers for small and mid-size organizations, announced that Interact Commerce Corporation's popular ACT! contact management and SalesLogix customer relationship management (CRM) solutions will join Best Software thereby creating its CRM Division. The company believes the move should further strengthen its position as a leading provider of front-office/back-office business management solutions for small and mid-size businesses (SMBs). Interact Commerce Corporation and Best Software were operating as sister organizations in the US under their the UK-based parent company, The Sage Group plc (LSE: SGE.L), one of the leading worldwide suppliers of business management solutions and services for small and mid-sized enterprises (SMEs). The new division joins Best's four existing Mid-Market, Small Business, Specialty Products and Nonprofit/Government Divisions.

Interact Commerce Corporation was acquired by The Sage Group plc in May 2001 (see The Mid-Market Is Consolidating, Lo And Behold) to deliver its market-leading products, ACT! and SalesLogix , to Sage's installed base of nearly three million users worldwide and specifically to Best Software's over 1.6 million users in the U.S (excluding Interact). SalesLogix is one of the small business and mid-market CRM leading products with more than 4,000 customers and ACT! is possibly the best-selling contact manager with over four million individuals and 12,000 corporate accounts worldwide. Integration is currently available between SalesLogix and Best's MAS 90, MAS 200, and Best Enterprise Suite solutions, as well as between ACT! and Peachtree Accounting, MAS 90, and MAS 200. ACT! and SalesLogix will also continue to offer their customers back-office integration with other key enterprise applications providers.

In related news, Pat Sullivan, formerly CEO of Interact Commerce, will continue working with Best Software and Sage Group plc. in an advisory role as Vice Chairman offering insights on new technologies, trends, and the competitive landscape for the CRM marketplace. Management of Best's new CRM Division is shared by Greg Head and Tim Fargo, who will continue as general managers for ACT! and SalesLogix, respectively. Both will report directly to Best Software CEO Ron Verni.

This is Part One of a two-part Analysis of the impact of this announcement on Best Software and the CRM market. Part Two will discuss the challenges presented and make User Recommendations.

Market Impact

As the ongoing mid-market battle intensifies, Best Software seems to have decided to become a more vocal mid-market powerhouse, rather than a sort of a best-kept secret in the market. Given that Sage's global revenue level of more than $700 million comes close to the J.D. Edwards' revenue, and far exceeds those of Geac, Baan, Microsoft Great Plains and Lawson Software, and that the company has an impressive broad product portfolio, one is to wonder why Best Software's mind share has not been commensurate with its stature. Whatever the reasons might have been to date, going forward, the market should witness Best Software being one of the bigger hurdles the likes of Microsoft and SAP face in their conquest of the market segment.

SME customers continue to increasingly realize the importance of seamless integration between front-office and back-office applications, and to consequently look for one strategic vendor (i.e., one throat to choke') to fulfill and be solely accountable for the vast majority of their business application needs, particularly in the lower end of the segment. The formal addition of Interact's SalesLogix CRM package and its well-liked ACT! contact manager application to the Best's existing product array should indeed render Best Software an enterprise application vendor with a wide-range footprint covering, inter alia, ERP, CRM, HR/payroll, fixed asset management, manufacturing & distribution, time tracking, budgeting, project accounting, and general financials/accounting software packages.

Given Microsoft's impending Navision acquisition digestion and its own CRM product delivery work in progress including its very recent announcement that Crystal Decisions would provide reporting, analysis, and information delivery for Microsoft CRM (see Microsoft 'The Great' Poised To Conquer Mid-Market, Once and Again and Microsoft Throws .NET At SMEs, With CRM As Bait) as well as SAP's still ongoing value proposition creation for SMEs (see SAP Tries Another, Bifurcated Tack At A Small Guy), this announcement could possibly position Best as currently one of the rare vendors with this breadth of available functionality.

The formidable slew of products comes as a result of multiple years of the parent Sage Group's effort to rake up a pile of software products through a bevy of acquisitions, although many with a common thread. Companies such as Best Software, Interact Commerce and Peachtree Software, all had strong brand recognitions in their respective target niches and a market presence in the SME market in which Sage had long specialized as well. Other prudent recent acquisitions were Best Software Mid-Market Division's (a.k.a. Sage Software) purchase last year of ERP vendor Haitek Solutions, and the Sage Group's 1999 acquisition of Tetra, a UK-based mid-market ERP vendor. These deals have consequently resulted in different ERP products offered by different units of the Sage Group. After the Tetra acquisition, The Sage Group formed Sage Enterprise Solutions, based in the UK, which offered an ERP suite called Sage Enterprise targeted primarily for the UK market.

Best Software's Mid-Market division, based in Irvine, CA, offers enterprise systems for small-to-medium manufacturers and distributors. Sage's decision to group its plethora of enterprise-level applications in North America under the Best brand, although a virtue created out of necessity (due to the brand name conflict lawsuit's verdict), gets high marks given the company's potential to deliver highly-integrated components, many of them with almost best-of-breed credentials. Individually, Interact and Best have long respectively been delivering attractive front-office/back-office solutions for small and mid-size organizations. Offering all of these products now under the Best Software brand has a potential to provide customers with integrated CRM, accounting, and business management solutions they need to compete in today's ever-changing and competitive environment. For more than two decades, Best has strived to deliver easy-to-use, scalable and customizable applications through its portfolio of renowned brands, including Abra, MAS 90/200, FAS, Micro Information Products (MIP) NonProfit Series, Peachtree, Timeslips, Platinum for Windows, and, from now on, ACT! and SalesLogix, among many others.

Product and Service Scope

As for product and service scope, Best Enterprise Suite (formerly marketed as Acuity by Best's Mid-Market Division) is an integrated, SME-focused, international ERP package with multi-currency capabilities, targeted at companies above $25 million in annual revenue and with over 100 employees. It is web-enabled, with browser access to the entire functionality, via Terminal Services, business alerts, and workflow management. The package combines e-commerce, distribution, manufacturing, and accounting functions, and integrates with SalesLogix CRM. It features strong financials and project accounting functionality, and solid manufacturing (including a product configurator, engineering change management (ECM), materials requirement planning (MRP), and advanced planning & scheduling (APS)) and distribution (with robust inventory replenishment capabilities).

The company has recently bolstered the manufacturing capabilities of the solution. Among the recent enhancements is a visual, rule-based drag and drop' scheduling board that electronically simulates the magnetic white board (Gannt Chart) found in many production scheduling offices. Another is an alert system that tracks key activities and measurements, and notifies the responsible individuals via e-mail or pager when something needs their attention.

The next product release promises migration tools that facilitate moving data from the older system, and in particular tools to move data from MAS 90 and MAS 200. Moreover, Best Enterprise Suite blends its financial and accounting products with Abra HR/Payroll, FAS Fixed Asset Management and analytics offerings from Best's Specialty Products Division. Also, project accounting, a number of pre-built integration hooks to popular third-party applications, extensive drill down' and drill around' navigational capabilities, and authentic customization tools (particularly the intuitive screen customization tool, used by ordinary' users, and with the ability to track/preserve changes for seamless future product upgrades), represent another set of attractive features.

Supported platforms are Windows NT/2000/XP and Microsoft SQL Server databases. The product is being developed from the ground up for Microsoft SQL Server, and is also developed in Visual Basic for Applications (VBA), making the transition to .NET straightforward. Likewise many of its counterparts, Best Software is also envisioning Microsoft .NET technology as a means of achieving "connected business events across companies". A number of embedded Web services are already available to that end.

Best Software further offers multiple flavors of enterprise systems to accommodate varying needs across the range of company sizes. These include MAS 90, which is targeted at medium-sized companies with 10 to 500 employees, and features over 25 accounting, light manufacturing, distribution, and e-commerce modules. MAS 200 offers the same features as MAS 90, but handles higher transaction volumes, and supports multiple databases, including Microsoft SQL Server.

Smaller companies with up to 50 employees are covered by BusinessWorks, which, with 11 integrated modules and strong reporting tools, was devised to bridge the gap between entry-level products and MAS 90. Sage has long taken steps to adopt a migration strategy, as it has been offering its own life cycle path (i.e., Peachtree to MAS90/200 to the Best Enterprise suite); look for the similar migration path from ACT! contact management application to SalexLogix more comprehensive and customizable CRM suite. The company has also long opened its software to third-party developers to spur broader industry-oriented capabilities. It has also been integrating its desktop software and Web services (e.g., by offering e-mail invoicing and electronic bill payment).

Other stalwart HR/payroll products include Abra Suite for smaller organizations and Abra Enterprise for mid-market users, which together have a large user base of approximately 15,000 customers in different vertical markets. Its hosted/application service provider (ASP) version of Abra Enterprise, a scalable, web-native product first introduced as CustomHRMS in 1998 and relaunched as Abra Online in late 2002, does not target any one particular market although it has been entrenched in the services, higher education and high-tech manufacturing, sectors. Abra Suite consists of modules for training, attendance, recruiting, web-enabled employee self-service (ESS) and alerts, human resources (HR) administration, an organizational chart, and payroll. Both Abra Enterprise/Online are composed of HR management, payroll, and roles-based self-service functions.

Vertical Specialization

SYSPRO's endeavor at some vertical specialization, as seen in its MYS module, is also commendable, although we would like to see many more similar nitty-gritty initiatives specific to multiple other discrete manufacturing industries. The module is specifically designed for suppliers that sell custom-cut materials and that rely on the cutting of shapes and pieces from standard size materials, e.g., sheets, tubes and rods, as part of the manufacturing process. In particular, it is targeted at the Plastics, Metal, Rubber, Paper and Lumber industries that need to maximize yields, minimize waste and, where possible, return remnants to inventory. Rather than purchasing standard size items, customers would preferably order materials that are cut to specific measurements. However, custom cutting typically leads to the creation of remnants (off-cuts) during the cutting process, which many suppliers consider as waste, since they cannot justify the time and cumbersome effort necessary to physically measure, value and assign inventory numbers for their return to stock. The MYS module elegantly takes care of the above producers' conundrums.

Although not evident from its historically low-profile international marketing, SYSPRO has developed extended functionality for a number of specific industries in addition to the Plastics and Metal, including Equipment /Machinery, Food, Automotive, Electronics and Hi-tech, Medical devices, Pharmaceuticals, Consumer Packaged Goods and Wholesale Distribution.

Additionally, on a more general note, the SYSPRO product excels at plant-level APS functionality going beyond all-too-common Gantt charts/schedules into the ability to split jobs in two, or to split them between multiple work centers, all with the aim of optimally fulfilling the customer's order. Further, contrary to most peer vendors, which have largely started their ERP applications' expertise in the manufacturing space, SYSPRO has also concurrently established a strong presence and functionality in the distribution field. With its extensive financial and accounting functionality, fully integrated with its own manufacturing and distribution systems, Syspro provides a product that also fits the needs of wholesale distributors, industrial distributors, over-the-counter operations, and retailers.

While traditional accounting and/or ERP vendors have always afforded some degree of distribution functionality via their Order Entry, Inventory Control, and/or Purchase Order modules, not many can yet natively provide more advanced WMS capabilities such as radio frequency (RF) support for remote communication and bar coding, and the ability to track product as it wends its way from shop/warehouse floor to customer sites. Its timely focus on distribution/supply chain execution (SCE) has seemingly been fortuitous particularly these days, since it remains a fertile enterprise applications area where companies still have ample opportunity to improve the dreadful practices of warehouse employees scurrying around with clipboards and pick lists, while its deployments are at the same time less time-consuming and more oriented towards return on investment (ROI), particularly if its deployment does not require multiple rounds of training.

To illustrate some of its distribution capabilities, SYSPRO enables order-lines to be split into partial shipments to meet delivery schedules for just-in-time (JIT) customers, while the Return Material Authorization (RMA) module automatically creates repair work orders if necessary, calculates associated return charges (such as a restocking fee), and facilitates a replacement cross-shipment, even allowing for inter-warehouse transfers.

Further, the Return to Vendor (RTV) module enables a company to control the return and exchange of items purchased from suppliers with visibility and tracking through the conclusion of the transaction. The module also interfaces with the above RMA module to facilitate the return of parts from customers back to the original supplier, and it integrates with many other modules, including Accounts Payable, General Ledger, Inventory Control, and Purchase Order Management. The RTV module removes any items to be returned to a vendor from available stock and holds them in a review area pending negotiations for the return, and, in addition, the module allows for credit notes and replacement items. It also tracks the costs of items not replaced, handles stocked and non-stocked items and retains an unlimited history of all RTV transactions. Finally, the RTV module issues return documents and creates purchase orders for expected replacement items.

Moreover, the Goods in Transit module provides an audited, documented approach to tracking product in mid-shipment (i.e., still on the truck), while the USA Shipping System automates the entire shipping process, from the packing of items, to carrier selection, to transit times. The system menu is divided into key components that guide users in setting up a shipment. The Setup component provides options for carriers, shipping zones, rates and defaults, while the Processing component details various packing choices, carrier selections, including "best way," and freight calculations, and the Reports component lets the user define the format of the Bill of Lading document, including number of shipments and customers covered. Up to date shipping rates and electronic scale interface ensure the accuracy of shipping charges, enabling intelligent estimates to be provided customers during order entry.

Since the system automatically updates the sales order module with shipping charges and tracking numbers, data entry is reduced, and the chance for human error is lessened. In addition to providing the most current shipping rates from carriers such as FedEx, UPS or Airborne, the system also caters to manually-entered rates. Consequently, SYSPRO's native integration should allow a distributor to make sure the product is in stock before committing it to a 20-line-item sales order for, e.g., a kitting set. As a result, its offering would be in the same league with Lilly Software, IBS, Adonix, ACCPAC and Frontstep, with varying competitive edge in platform/middleware standards support, multi-national capabilities and/or geographic coverage, but often therefore making it often competitive even with the likes of Intentia, J.D. Edwards, SSA GT, Oracle, and SAP. The fact that SAP and Oracle have released some of the above functionalities only very recently should point out SYSPRO's head start in the area compared to its like brethren.

Intuitive User Interface

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, while events and triggers facilitate the tailoring of solutions without source code modifications. SYSPRO has also been technologically adequate for its target market, as it exhibits n-tier client/server architecture, is fully Windows 2000/NT/XP, Linux, Novell and UNIX operating systems compatible. Additionally, since the release of IMPACT Encore 5.0, Microsoft SQL Server (2000 or 7.0) has been an optional database.

SYSPRO has long been committed to the Microsoft technology and it has made significant progress turning its .NET vision of a year ago into a proof of concept reality. Still, the dichotomy of offering many OS platforms, but only on the SQL Server database and .NET platform (although many UNIX users in large enterprises might prefer possibly more scalable Oracle or IBM DB/2 databases and J2EE platform compliance) is somewhat confusing. To that end, SYSPRO might not be exactly a cross-platform provider, at least not to the degree Adonix or ACCPAC can claim. Further, if it attempts to target the upper mid-market enterprises, the company will also have to walk on the blurred balance borderline between functional depth across operating systems and ease of use, since an Oracle database is not available for the UNIX users.

Still, with its pervasive support of Component Object Model (COM) environments and XML integration capability, SYSPRO offers e-commerce applications tightly integrated to its back-office, as well as the interconnectivity to third-party products. The above-mentioned SYSPRO 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 also provides an extensive set of tools to assist third-party developers who wish to develop integrated add-ons that access, analyze and update the program's databases through protected business logic.

SYSPRO product functionality and its e.net technology umbrella should help manufacturers pursue a concept of immaculate order fulfillment, which SYSPRO formerly denoted under its Strategic (e)Fulfillment initiative, and which was envisioned to enable management to make better decisions since it provides visibility and control of all aspects of the supply chain (i.e., from cradle to grave of the product). Moreover, given its cross-departmental pervasiveness, it becomes the means by which these decisions can be executed in the most efficient manner.

SYSPRO - Awaiting Positive IMPACT From Its Brand Unification Part Two: Market Impact

Last fall, SYSPRO, a privately held global provider of enterprise software for small to medium enterprises (SMEs), with its US headquarters in Costa Mesa, CA (www.syspro.com), announced a new global brand, representing the culmination of more than 18 months of extensive internal market research and preparation. To optimize brand awareness and increase market penetration, the company, SYSPRO and its product, IMPACT Encore, has been branded under the unified SYSPRO name.

SYSPRO belongs to an esteemed group of Tier 2 vendors that have been making Tier 1 vendors' strides of intruding the mid-market not an easy task. At least, the presence of the likes of Syspro, which offer a breadth of products with functionality that is often equal to the upper range of products, but at a much lower cost and implementation effort levels, has forced the bigger brethren to abandon their initially non-flying strategy of selling merely watered-down versions of their flagships products, and to attempt different tacks like the acquisition of an akin product (see SAP Tries Another, Bifurcated Tack At A Small Guy).

While small and midsize manufacturing and distribution entities may indeed covet easier implementations and lower price applications, they will nonetheless settle for less functional software to run their businesses. Also, while mid-market companies incline toward effectively packaged applications that are easy to use, require less skilled resources, and are reasonably low priced, the idea that these companies should settle for a pure-vanilla product rendition has increasingly become a fallacy. Since many Tier 1 applications vendors have increasingly been targeting the same market segment one should expect the bar to be ever raised. Such could be the case of PeopleSoft, which has lately avoided a cookie cutter' implementation approach for SMEs, as each of its mid-market solutions is preconfigured to reduce cost and complexity, but also allows for available extensions based on each customer's need, given the vendor has also developed industry templates for each solution (see PeopleSoft Internationalizes Its Mid-Market Forays).

With its latest moves, SYSPRO seems to have braced itself well for the bigger brethren's onslaught. Although it has been present in the market since 1978, SYSPRO has not been a very vocal and marketing-savvy vendor internationally, but the latest brand unification move may prove that the company is also changing its marketing approach, starting with clearer worldwide prominence and unequivocal identity. Namely, after almost one quarter of century, the vendor has ditched the IMPACT Encore from its name, hoping to build more market recognition exclusively under the common SYSPRO brand This is in addition to extending the scope of its product line to provide a comprehensive extended enterprise and supply chain solution.

This is Part Two of a three-part note.

Part One detailed recent SYSPRO announcements.

Part Three will cover Challenges and make User Recommendations.

Strengths

Despite earlier dual monikers, SYSPRO product is one of the most widely used ERP solutions within the small-to-medium enterprises (SMEs), with over 6,000 customers, rendering it a serious incumbent in the SME discrete manufacturing and distribution market. The vendor has from its early days had a sole focus on the lower-end of the ERP discrete manufacturing and distribution market, which has pragmatic requirements of inexpensive but flexible products, fast and simple implementations, and good service and support. It has additionally achieved good coverage through its indirect channel, which is an important criterion for long-term success in the SME market segment. Not withstanding this, SYSPRO has sites across tier 1, tier 2 and tier 3 environments, enabling it to become a potential challenger in both larger and smaller organizations.

SYSPRO has worldwide operations and its software is marketed worldwide through offices in the US, Canada, Africa, Australia and the UK. As a result, its products have been installed in 50 countries, and it continues to offer its products and services through the reseller channel/value added resellers (VARs), which has also expanded during the last few years. The former flagship IMPACT Encore system, has traditionally covered the full spread of modules for single and multi-site manufactures and distributors, including accounting, order processing, inventory management, purchasing, materials requirement planning (MRP) including finite and infinite scheduling, shop floor control, data collection, and payroll (integrated with the ABRA payroll system), with the above-mentioned survey testimonies and common recognition for high levels of customer satisfaction. And, with the release of SYSPRO 6.0's new above-described capabilities in business analytics, workflow, CRM, and advanced planning & scheduling (APS) , the vendor boasts an expanded control beyond the four walls of the factory/warehouse.

SYSPRO functionality is equitably solid in accounting, manufacturing and distribution areas. Although its forte should lie within its manufacturing and distribution modules, by adhering to exacting standards like International Accounting Standards (IAS), Financial Accounting Standards Board (FASB), and eXtensible Business Reporting Language (XBRL), SYSPRO can often be competitive even for enterprises that would only need the core financial and accounting functionality. The above all-rounder trait often comes as advantageous compared to competitive products that are either mainly strong in accounting (e.g., Microsoft Business Solutions (MBS), Softline, BEST Software and ACCPAC) or conversely in manufacturing/distribution (e.g., Lilly Software, QAD, Glovia and ROI Systems).

Although SYSPRO is a comprehensive ERP solution for small- to mid-sized enterprises, the company has for some time been striving to also become a nearly total solution provider of extended-ERP applications. To this end, as mentioned earlier, it has expanded its solutions footprint with SYSPRO 6.0's latest enhancements and nearly 50 modules available (allowing customers to only purchase what they require) throughout the realms of ERP, APS, CRM, warehouse management system (WMS), Business Analytics and Collaborative Commerce, many customers' requirements could be addressed with this product suite.

With a slew of manufacturing capabilities including features for quotations & estimating; master scheduling; finite capacity planning & scheduling; order management; real-time shop floor control; work in progress (WIP), labor performance; cost accounting; lot, serial and warranty tracking; purchasing/receiving; engineering change control (ECC); backflushing; material verification; capacity and material requirements planning (CRP/MRP); returned goods management; vendor approvals; blanket sales orders and purchase orders; and so on, the software is fit to support both short and long production runs in various manufacturing environments. SYSPRO can, therefore, often offer one-stop-shop functionality for many versatile discrete manufacturing environments (i.e., from forecasts driven, repetitive make-to-stock (MTS), made-to-order (MTO), assemble-to-order (ATO), configure-to-order (CTO) to custom job shop, including mixed-mode/hybrid manufacturing), as well as batch process manufacturing in the low-end of the market.

Another important strength against most of its competitors SYSPRO would have is its international nature. Unlike Sage/Best Software, Softline, Exact Software, and Microsoft Business Solutions (MBS), SYSPRO is a single product line that operates on an international basis, whereas many others have multiple product lines through acquisitions, which they pasted together around the world but which, as a rule, are unable to work with one another. Moreover, its strong multi-site and multi-national product capabilities are stronger than those of many locally competitive products (e.g., Made2Manage, Lilly Software, ROI Systems, etc. in North America), which have also resulted in its much more evenly distributed revenue per geographic regions.

IFS Continues Its Reinvention Through Pruning Part One

Divestitures of non-core products and services, which have apparently worked well for vendors like Epicor Software Corporation or Ross Systems (see Way to Go, Ross Systems! and Latest Development on Epicor's Trying the Divestiture Tack), seem to be getting accepted by others too. Recently, Industrial and Financial Systems (IFS) (XSSE: IFS), a Swedish extended enterprise applications supplier with sales in 45 countries, over $330 million (USD) in revenues in 2003, and more than 350,000 users worldwide, announced the following:

* In early January that, following the agreement with Uniativa Ltda, which acquired the entire business and 100 percent of the stock in Industrial and Financial Systems do Brasil Ltda on December 31, 2004, partners will be solely responsible for the sale and distribution of IFS Applications in Brazil. In line with its strategy of operating to a greater extent via partners, IFS had previously transferred a substantial part of its business in Latin America to distributors. According to the vendor, within the near future, partners will hence operate all IFS' business in Latin America, while the vendor pledges to continue to fully support its 100 customers in the region. Moreover, it will provide its partners with localization support, methodology, tools, and specialists from its global industry teams. Otherwise, the transactions will have a negligible effect on IFS' cash flow and earnings.

* In mid December, IFS Sverige AB, IFS' Swedish subsidiary, announced that it has sold its payroll software to Personec, and the two companies have entered into a collaboration agreement. Personec, the largest supplier of human resource (HR) management and payroll administration software, consulting services, and outsourcing services in the Nordic region, is jointly owned by TietoEnator and Nordic Capital, and has more than 800 experts in Finland, Sweden, Norway, and Denmark, and 15,000 in the private and public sectors. The aim of the collaboration is to enable IFS and Personec to offer new and existing customers a better product. To that end, Personec will acquire the right of ownership of IFS' payroll software for the Swedish market and will assume responsibility for product development, consulting services, and support, while IFS Sverige will continue to sell the payroll component as part of IFS Applications.

* In November, IFS announced it would collaborate with Bentley Systems, Inc. (www.bentley.com), one of the world's leading providers of software for the lifecycle of the world's infrastructure, which offers a comprehensive portfolio for the building, plant, civil, and geospatial vertical markets like architecture, engineering, construction (AEC) and operations, and with 2003 revenues reaching $260 million (USD). Bentley, which has its headquarters in the US, will thereby acquire IFS' esoteric computer-aided design (CAD) applications for process, electrical, piping, and instrumentation design. As part of the acquisition, Bentley pledges to assume responsibility for IFS' maintenance and support services for more than 100 accounts, primarily in Sweden and Norway, which employ IFS' CAD applications. The agreement with Bentley is expected to have a positive impact on IFS' earnings totaling approximately 6 million SKr (approximately $800,000 USD) in 2004 and 2005.

This is Part One of a three-part note.

Part Two will present background information and cover challenges and response.

Part Three will discuss the market impact and make user recommendations.

Collaboration With Personec

The vendors believe the collaboration means that IFS customers, approximately 120, who are using IFS' payroll software will be given access to additional competence and a broader product offering for payroll and HR management. Most of these customers use the payroll component as part of a comprehensive enterprise application planning (ERP) solution from IFS, and IFS' annual revenue in the area has been approximately 40 million SKr (approximately $5.3 million USD). In connection with the acquisition, 45 of IFS staff will transfer to Personec.

As indicated earlier on, Personec has a leading position in HR management in the Nordic region, with approximately 27 percent of all employees in the region receiving their salaries via the company's payroll software. The acquisition of IFS' payroll component for the Swedish market is part of Personec's strategy of strong growth in the Nordic market, part of which includes collaborating with ERP vendors. The vendor believes the acquisition will increase its market share in the Nordic region to 29 percent. Further, according to the vendor, HR management and payroll management are extremely culture-specific, given that legislation, collective agreements, regulations, and traditions vary greatly between different countries and are in a constant state of change, which makes it too complex for any software company to conduct its own development. Therefore, this is a significant step in Personec's strategy of achieving growth by partnering with ERP vendors and offering expertise in payroll management.

The collaboration with Personec is expected to have a positive effect of 25 million SKr (approximately $3.3 million USD) on IFS earnings and of 42 million SKr ($5.6 million) on cash flow during 2004, while capitalized development expenditure totaling 18 million SKr (approximately $2.4 million) for IFS' payroll component has been written down in connection with the sale. The additional purchase price, based on sales, will reportedly be paid during 2005 and 2006.

Collaboration With Bentley Systems

Users of IFS' CAD applications operate mainly in the pulp & paper and power generation industries. The CAD applications are integrated with IFS Applications, which the users employ mainly for asset maintenance and spare parts logistics. IFS users will reportedly be offered the opportunity to change their existing CAD systems to solutions from Bentley while retaining the tight integration with IFS Applications. The agreement with IFS will provide Bentley with a large Swedish user base in these industries as a complement to its existing users in the region, among which is the Swedish National Rail Administration.

For IFS, on the other hand, the agreement means that it will collaborate with Bentley worldwide to market and sell IFS Applications to asset-intensive companies. With more than 22,000 accounts, Bentley has a strong market position in the design, engineering, construction, operation, service, and maintenance of capital-intensive operations, which include, among others, process plants and utilities, as well as water and waste treatment plants, railways, and airports. Because IFS also prioritizes these segments, the companies believe that they complement each other and can combine to offer users a more comprehensive solution.

On its side, Bentley recently launched the "You Deserve Better" upgrade program and Web site for potential disgruntled AutoCAD users facing forced retirement of their AutoCAD 2000i and AutoCAD LT 2000i software products by Bentley's archrival Autodesk (for more info on Autodesk, see Autodesk to Bring Microsoft Business Solutions Closer to PLM). As to benefit from its nemesis' predicament, Bentley has devised a survey on its Web site, and will use the survey responses to tailor its upgrade program, which will supposedly include special program pricing and services, to the needs of these AutoCAD users.

The upgrade program's product offerings are based on Bentley products including MicroStation-based product functionality, native support of DWG (a file extension for AutoCAD Drawing Database and Drafix Drawings), DGN (a file extension for MicroStation Graphics) and portable document file (PDF) file formats, and upgrade services. For example, PDF Composer lets users fairly easily package all of their AEC drawings, including MicroStation and AutoCAD files, into a single PDF document, whereby the interactive PDFs make it possible to quickly navigate through an AEC project using hyperlinks, bookmarks, and pages to access information.

After January 15, 2005, Autodesk reportedly states on its Web site that it will no longer sell upgrades or cross-grades from any AutoCAD 2000i-based products or Autodesk Inventor Series 6. Additionally, Autodesk will no longer provide technical support, apart from existing maintenance patches that are downloadable from www.autodesk.com.

On the IFS' side, on December 30, the vendor announced that structural changes, including cost containment actions, and divestments and changes in international subsidiaries and operations, are expected to charge IFS earnings with 98 million SKr (approximately $13 million), net, for the fourth quarter of 2004. Namely, provisions and write-downs are expected to amount to 130 million SKr (approximately $17.3 million), while the positive effects, primarily resulting from divesting payroll applications and CAD software for the Swedish market, will amount to 32 million SKr (approximately $4.3 million).

Market Impact and User Recommendations

Recently, Industrial and Financial Systems (IFS) (XSSE: IFS), a Swedish extended enterprise applications supplier with sales in 45 countries, over $330 million (USD) in revenues in 2003, and with more than 350,000 users worldwide, announced the following:

* In early January, following the agreement with Uniativa Ltda, which acquired the entire business and 100 percent of the stock in Industrial and Financial Systems do Brasil Ltda on December 31, 2004, that partners will be solely responsible for the sale and distribution of IFS Applications in Brazil.

* In mid December, IFS Sverige AB, IFS' Swedish subsidiary, announced that it sold its payroll software to Personec, and the two companies have entered into a collaboration agreement.

* In November, IFS announced it would collaborate with Bentley Systems, Inc. (www.bentley.com). Bentley, which has its headquarters in the US, will thereby acquire IFS' esoteric computer-aided design (CAD) applications for process, electrical, piping, and instrumentation design. As part of the acquisition, Bentley pledges to assume responsibility for IFS' maintenance and support services for more than 100 accounts, primarily in Sweden and Norway, which employ IFS' CAD applications. The agreement with Bentley is expected to have a positive impact on IFS' earnings totaling approximately 6 million SAK (approximately $800,000) in 2004 and 2005.

Further, the deals with Bentley and Personec, which are also in tune with the above inclination to leverage partners discussed in Part Two, would not be the first of a sort for IFS. Namely, the vendor initially expanded into the customer relationship management (CRM) arena by acquiring former Israel-based CRM vendor Exactium for its product configuration module in the late 1990s. The subsequent sell-off move to Pivotal in 2000 (see What is IFS Up To in the CRM Arena?!) represented IFS tacitly conceding that it had gone beyond its means with its too ambitious product scope and geographic expansion at the time.

Also in the late 1990s, IFS purchased a US-based enterprise resource management (ERP) vendor Effective Management Systems (EMS), hoping to convert its customer base from the maturing Time-Critical Manufacturing (TCM) product to its own enterprise applications, and consequently gain a quick US beachhead. However, customer satisfaction with TCM was very high and, therefore, customer loyalty made it difficult to move customers off TCM. With the majority of the TCM customers reluctant to transition, IFS then heavy-heartedly agreed to sell the TCM product line in November 2001. Thus, the current WorkWise organization was formed comprised of former EMS staff and has since been focused solely on the TCM product line and its customer base (for more information, see A User Centric WorkWise Customer Conference).

With the CAD and payroll applications too, after careful soul searching, IFS' management decided to stay focused on its core competencies, instead of extending painstaking efforts to develop peripheral applications for a small fraction of customers in Scandinavia, where the payback would be highly unlikely. By selling these applications, IFS may not only control potential damage but also "kill two birds with one stone" by 1) leveraging Bentley's and Personec's commitment to a true partnership and product integration to boost both parties' license sales, while streamlining its own operations; and 2) obtaining some equity, however little, as to improve its balance sheet.

For instance, although a differentiating trait might have been tempting (i.e., no other ERP vendor would ever have native CAD applications for piping design or so), the IFS' CAD customer base was too small for the vendor to justify developing own CAD applications in the long term, and it did not have enough specialists outside the Nordic region to effectively sell and support CAD applications globally. This would be possibly the best proof that IFS is getting rid of its erstwhile "not invented here" attitude.

Although through the IFS Plant Design set of CAD modules, once data is entered into the common database, it immediately becomes available to the other IFS Applications modules (whereby, e.g., as a result, information can be recycled, remain consistent and updated, and never has to be entered twice; also, the CAD modules provide designers with a drawing tool for process and instrumentation design, while predefined forms and convenient look-up functionality are further examples of features that benefit all design disciplines), the product has nonetheless had more of a distracting effect to IFS. Not to mention the confusion to prospective customers who could be intrigued by the CAD modules, but who could not exactly understand its functions and relations to other extended-ERP modules, only to hear from the IFS' staffers not to even consider it unless they are from the pulp and paper vertical in Scandinavia or so.

This is Part Three of a three-part note.

Part One presented the event summary.

Part Two covered IFS background information and discussed challenges and response.

Adjusting to a Mature Market

The above analysis of IFS' change of mindset brings us to the fact that the enterprise software is now a mature market where the grow-at-all-costs strategies of the ebullient 1990s simply do not work any longer. Namely, the stock market of the 1990s saw brand new accounts as a key metric when valuing application software companies, which drove these to a business model designed to win new accounts that were seen as the primary source of revenue by most. For both the investor and vendor, this "new accounts at all cost" was the right business model.

But times have drastically changed, as the market penetration is so high that only a few new account opportunities exist. Moreover, economic uncertainty has tightened the purse strings of most prospective user companies so that selling new systems is much more difficult. Therefore, more successful application vendors of late are focusing on their install base as their primary source of revenue while cutting cost to provide profitability. Many, like Bentley and Personec, are even vying for existing dissatisfied customers of competitors. The result is a drastic change in their business model. Namely, the old business model of "new accounts at all cost" must now morph in to a "love the customer" model, whereby the strategic goal remains focusing more resources on servicing existing customers than on attracting new ones. These have typically been made with three objectives in mind:

1) align the organizational structure with current characteristics of the market (i.e., produce a more tightly focused target market and results-based new account sales and marketing operations; and maintain emphasis solely in sensible product and services development while protecting existing technology investment);

2) improve stability of operations and the staying power of company (i.e., achieve profitable growth, financial strength, access to capital, and operational excellence; and maintain consistent profitability, and positive cash flow as a result), and

3) increase the focus on adding value primarily to existing customers (i.e. institute redefined product management and development priorities; focus on enriching software ownership experience rather than software buying experience; and continue with vertical and niche product enhancements, albeit with focus on quality rather than speed, product performance and stability, depth of functionality, and customer needs).

Nevertheless, many vendors are still focused and spending most of their resources on acquiring new customers instead of delivering real value to the customers they already have. As a result, the overall software industry has very low levels of customer satisfaction and financial performance. Nonetheless, most vendors will tout that they are both new account and customer oriented, and some might have struck this balance. But, the vast majority have still been worshipping at the former Wall Street ideal of new accounts for so long that the reality is, they still have a mostly "new accounts" business model. In this culture, sales, marketing, support and implementation teams are oriented towards selling and installing new accounts, whereas in a "love thy customer" culture, the same departments are required but the skill sets and attitudes can be very different.

Therefore, any willing vendor's change of the skill sets and attitudes is by no means easy; these two different strategies each require a different mentality. Further, if unsuccessful, the existing customer will likely suffer the consequences of less experienced, less knowledgeable people. For instance, in a "new accounts" culture, the majority of service personnel are trained and equipped to install new accounts, whereby they are very good at taking a customer from nothing (green-field) to being implemented. In an "existing customer" culture, however, the service personnel work to enhance the value of the software already installed. While some of the skills and knowledge are the same, the enhancing objective requires greater experience, and knowledge and people skills.

The identical (or similar at least) people issue exists within the vendor's sales team, and particularly within the support department. Namely, when a new account initially implements, the support staffers get lots of relatively easy calls for help. Once installed, the quantity of calls drops but the difficulty of the question increases. Thus, of all departments, software support may be the one that most needs in-depth product knowledge.

Business practices must change too, since installed customers are more interested in services than products. Installed customers have excellent knowledge of the pluses and minuses of being a customer and expect to interact with the vendor in a way that enhances the pluses and fixes the minuses. Therefore, they often want more flexibility, such as even an indefinite support of older releases (see Support for Old Releases-Good for the User but Is It Good for the Vendor?) and a plethora of options or "a la carte" support services.

In this down economy, one must also realize that in the enterprise applications business, people are an enormous cost. If the vendor wants to reduce expenses, one apparent way is to cut headcount, but it really muddles the management of two conflicting objectives—to change the mix of skill sets and the need to reduce headcount.

If one is to judge IFS by a number of its recent new account wins, increasingly through recently recruited resellers (some of which are former J.D. Edwards' defectors), it appears that IFS is still driven by new accounts. That remains an expensive business model, with an uncertain payback in the near term, whereby exploiting the existing install base of over 3,500 customers worldwide could have a more profound effect on both IFS' top and bottom line. That is to say, satisfied customers tend to be more amenable to many additional ways for the vendor to add value (which translates into new license and service and support revenues) to the customer in an effort to maintain the long-term relationship, such as enhancements, extensions, refresh or upgrade services, etc.

One could be reminded of SSA Global, Infor Global Solutions, MAPICS, Epicor, Sage/Best Software, Geac, etc., where the strategy of taking a deep breath and reflecting upon how to proactively better serve existing customers, and gradually building upon that with a combined organic growth and growth via acquisitions, seems to be a recipe for success these days. The enterprise applications market is indisputably a mature and fairly saturated field, and all players must accordingly adjust their investment strategies from those of the emerging and growing market in the 1990s. That means painstakingly finding a perfect balance between cultivating the install base versus the zeal for hitching brand new customers.

Success Keys for Proposal Automation

Writing proposals is about as much fun as having your teeth drilled. And reading them isn't a whole lot better. So why do customers ask for them?

One motivation is that the customer wants to compare offers from various vendors to make sure they buy the highest value solution based on your differentiators and value proposition. At a simpler level, they may just want to compare prices, clarify complex information, and gather information so that the "decision team" can review it. And let's face it, sometimes they just want to slow down the sales process and they figure that asking for a proposal will keep the sales rep busy for a few weeks.

Whatever the customer's motivation, the fact is that proposal writing has become a common requirement for closing business throughout the entire business world. Today, people who sell everything from waste collection services to complex information technology have to create client-centered, persuasive proposals.

What's the best solution, you may ask? Proposal automation software. By using proposal automation software, you create consistent, winning proposals in minutes.

Success Keys for Proposal Automation

If you're thinking about automating your proposal process, here are ten critical success keys that result in successful implementations. If you're not thinking about it ... well, maybe you should.

1. Must have an easy, intuitive user interface

Software that's hard to use becomes "shelfware." Nobody wants to use a tool that makes the job harder. And most sales people won't read the manual, either. So it has to be really easy to use. Software with different interfaces for different functions, such as document building, content editing, administration, and so on, is neither intuitive nor easy. Research indicates that a wizard-like design works best.

2. Must have at least a 7:1 value ratio

Barton Goldenberg, president of ISM, Inc., a customer relationship management (CRM) consulting firm, claims that as many as 50 percent of implementation failures are directly attributable to user resistance. Why would a user resist using new technology? Because there's not enough value. Goldenberg suggests that a sales person has to get back seven times more value than the effort put into using a tool, or that user will never use the tool again. A proposal automation system has to deliver an immediate return on investment (ROI) in terms of increased wins and time savings so that the rep will return to it with enthusiasm.

3. Must draw on the sales person's strength—knowledge of the client

Sales people understand their deals. If they have any experience at all, they know to uncover the customer's needs and determine what the customer's goals are. Great. Let the sales person use that knowledge to build a better proposal. Make it easy for them to put their customer insights into the executive summary and cover letter.

4. Must minimize the sales person's weakness—writing skills

Most sales people don't enjoy writing and a lot of them don't do it very well. A good proposal automation tool should eliminate as much writing as possible. Even in a proposal center, minimizing the labor-intensive task of searching and retrieving reusable content so that proposal specialists can spend more time editing and positioning the content will deliver a big win.

5. Must incorporate sound sales and marketing methodology in the proposal itself

Garbage in, garbage out. We've all heard that clich. It's certainly true with proposal automation software. If your current content is weak, automating the process just enables you to produce weak proposals a lot faster. A system that incorporates best practices or that links with your sales process will deliver better results.

6. Must produce a persuasive, customized proposal

Slamming together big chunks of boilerplate creates a generic, self-centered proposal. Some proposal automation systems have a chunk of text labeled "executive summary." Hello?! How can one executive summary fit every proposal? That's only possible if the executive summary focuses exclusively on us and our products, not the customers and their needs.

7. Must be easy to update and maintain

Hey, life goes on. Things change. That includes your business. So you need a proposal automation system that's easy to update and configure without using outside programming language, like Visual Basic. If it's hard to maintain, you probably won't do it, and that means within a few months you won't be using it, either.

8. Must facilitate team collaboration

On larger opportunities, especially when there's an request for proposal (RFP) involved, you need to work as a team. That means everybody pitching in, answering the questions, and contributing, all at the same time. (Can you think of any successful basketball, football, soccer, or baseball team that only send one player into the game at a time?) If the proposal automation system doesn't allow people to work together, it's not a tool, it's a toy.

9. Must integrate with a variety of applications you already own

Your proposal system should work with your standard word processing and presentation software, such as Microsoft Word and PowerPoint, and not require anything proprietary. It should also connect to your existing CRM system to retrieve the customer information and write a record of the proposal back to the history.

10. Must be configurable and scalable for enterprise use

You need a proposal automation system that can support your current sales and proposal methodology. It needs to be easily configurable to adapt to your business. It needs to support and manage security permissions for large groups of users. And it needs to be easily accessible via your corporate intranet.