SoftBrands to Institute Fourth Shift for SAP Business One Manufacturing Work-Plan Part One: Event Summary

At the National Manufacturing Week (NMW) event, held February 23-26, 2004 in Chicago, Illinois (US), SAP AG (NYSE: SAP), the leading provider of enterprise applications, announced the availability of new industry-specific solutions for small and midsize manufacturing companies with the aim of extending its leadership as a provider of solutions for an even broader range of companies from small enterprises via mid-market companies to the world's industry leaders.

SAP's two-tiered product offering for small and medium businesses (SMB)—SAP Business One and mySAP All-in-One solutionsaims at addressing the diverse IT and business requirements of manufacturing companies of varying sizes, resources, and complexity. Both solutions for SMBs are designed to be competitively affordable and easy-to-implement for adequate enterprises, and are delivered through SAP's partner network. While SAP Business One is designed for smaller companies with less complex business processes, SAP also offers its partners mySAP All-in-One turnkey solutions to meet the industry-specific needs of more sophisticated companies. Namely, this is for the "sophisticated" or the upper echelon SMBs with a high need for individualization and industry-specific functionality. SAP is globally expanding its existing strategy of offering industry-specific SMB solutions ranging from automotive supply to food processing. These are based on the flagship, top of the range mySAP Business Suite product and are tailored, configured, and complemented by SAP channel partners, and are also available on a fixed-price, fixed implementation time basis.

To that end, in 2003, SAP and its network of qualified business partners reportedly introduced 120 new manufacturing solutions, including such specialized offerings which range, for example from fabricated metals, construction equipment, and civil works to agro-products companies. SAP and its partners currently offer 180 mySAP All-in-One solutions for manufacturers globally, based on industry best practices from SAP's more than thirty years of experience serving the world's leading businesses. For example, to meet the needs of custom manufacturers, US-based N2 Consulting has leveraged its expertise as an SAP consultant to develop FastTrack, a pre-packaged, fixed-price and implementation timeline mySAP All-in-One solution that can be implemented in as few as sixteen weeks. Spanning the engineering, quality, sales and service, and finance functions for small and midsize companies, FastTrack is touted as an end-to-end, complex manufacturing solution to manage processes such as make-to-order (MTO) with product configurator, engineer-to-order (ETO), engineering change management (ECM), service management, and make-to-stock (MTS).

Other additional new mySAP All-in-One solutions would include BDO para Agroalimentos, offered by SAP partner BDO for agro-products companies in Mexico. The solution helps companies manage purchasing, production, bulk delivery, and sales administration processes specific to the manufacture of products for the agricultural industry. Last but not least, for high-tech and electronic manufacturers, South Korea-based BizTech Consulting Co., Ltd., has introduced the BizExpert solution, with industry-specific capabilities such as electronic manufacturing system management, bin management, and multiple planning scenarios.

As for the lower-end of the market, SAP has designed SAP Business One to meet the core management needs of dynamically growing small and midsize businesses, and is moving to better address the specific needs of small and mid-sized manufacturers through a planned strategic solution relationship with SoftBrands (www.softbrands.com), an established, privately-held, global leader in manufacturing management systems for SMBs, whereby the two vendors have initiated efforts to integrate SoftBrands' leading manufacturing software product Fourth Shift with SAP Business One. Fourth Shift is a renowned mid-market, web-based manufacturing management solution that has broad functionality and that facilitates many critical business functions including manufacturing, operations, financials, and customer and supplier relationship management (SRM).

The integration of Fourth Shift Manufacturing Edition with SAP Business One is scheduled to be released in two phases beginning in July 2004. It should give small manufacturers fairly comprehensive but easy-to-use capabilities for managing a variety of manufacturing processes to replace dated legacy systems and manual processes. The combined solution should enhance capabilities in SAP Business One to serve repetitive, batch, MTO, discrete, and mixed-mode manufacturers, as well as those that are on the path to lean or demand-driven operations. Namely, further down the track, the relationship with SoftBrands will also extend SAP Business One with Fourth Shift's DemandStream Lean Enterprise Automation integrated module, a specialized solution for managing lean manufacturing operations. The combined solution will be offered through SAP Business One partners worldwide, while SoftBrands will continue to support manufacturers in its key worldwide markets, including the US, Europe, Middle East, Africa, China, Asia Pacific, and India.

Prior to this announcement, in November, SAP announced the US launch of enhancements to SAP Business One that combine broader customer relationship management (CRM) capabilities and comprehensive business management tools in a single software solution. SAP Business One was originally launched in the United States in March 2003. The solution's award-winning Drag & Relate data navigation system, which encompasses good traits (i.e., "the best of both worlds") similar to both Microsoft Excel Pivot Tables and to typical report writers' querying capabilities, has since provided users with intuitive data access simply by highlighting and dragging pieces of information on the screen. Additionally, the product features strong integration with desktop applications, since users can drag information between different data sources and link them on the desktop. It also has integrated customer relationship management (CRM) system for pipeline tracking, opportunity management, strategic selling, and contact management, while other initial key functionalities also include comprehensive financial management, with multi-currency, budgeting, and bank reconciliation; a well-rounded inventory management system, with kitting and multilevel price lists; and a comprehensive reporting module that allows easy access to any data.

The solution initially supported only the Microsoft SQL Server database and the Microsoft Windows operating system, which was recently extended with the support for the Sybase database. Its open architecture has reportedly allowed integration with the flagship mySAP Business Suite giving companies the adaptability to scale their applications with the growth of their business. In addition to the US, SAP Business One has meanwhile become available in twenty-six countries and twenty-five languages as of first quarter 2004, and the product has nearly 3,000 customers and over 500 partners worldwide. The newest version of SAP Business One is available to SMBs in the US, through SAP AG's subsidiary SAP America, Inc. and its SAP Business One distribution partner channel.

CRM Functionality and More

With these most recent enhancements, SAP Business One has made CRM functionality an intrinsic and fundamental part of core business automation, as opposed to a discrete silo of customer information in the shape of a customary add-on module. This relieves small businesses of the need to purchase separate products; maintain costly, patch-work integrations; or utilize different user interfaces (UIs). The vendor believes it is important that small businesses view CRM not as a mere mechanism for increasing front-office data gathering but as a core part of their business system, targeted to immediately improve the company sales and service performance. To that end, the new version of SAP Business One provides built-in CRM functionality across the entire spectrum of business information. In other words, information from customers, the sales force, suppliers, and business managers is tied to other business information, so that chief financial officers and other managers can drill down into sales information; a sales person can avoid risks by exploring customers' debt; while buyers can plan purchasing according to real demand, based on the sales opportunities managed in the software.

Thus, within a single application, SAP Business One allows business managers to run their entire business from their desktop, viewing customer, partner, sales, and inventory information as they relate to other business activities and not merely as a freestanding silo of customer preferences.

Further, the new version of SAP Business One now offers service management capabilities that provide support for company service operations, including service contract management, service planning, tracking of customer service use, and support and management of service sales opportunities. In addition, new employee relationship management (ERM) capabilities should strengthen a company's ability to manage employees by providing efficient tools to track information about employees, their roles and activities. The ERM capabilities should also allow companies to organize information on service technicians, such as their labor rates, in order to support field service management activities.

Also, new contract management capabilities track customer equipment, service contract agreements, and customer use, since SAP Business One automatically updates customers' equipment records upon purchase so that users can track whether products are under warranty or special service contracts. Finally, the embedded knowledge management (KM) offering should help customer service representatives by recommending solutions to service call issues and greatly reduce the training and ramp-up time of new customer service personnel. These enhancements build on the solution's original CRM capabilities, which, as mentioned earlier, enable business managers to track sales opportunities, view pipeline opportunities, and follow customer activity.

With the above new features of SAP Business One, SAP believes small businesses can now address most of their business needs in one out-of-the-box solution. And for those businesses hoping to integrate SAP Business One with additional systems, or to add functionality to the system, SAP is now offering the SAP Business One Software Development Kit (SDK), which is touted as one of the most advanced development environments available in the SMB space that will allow SAP partners to facilitate SMB requests such as connecting to a third-party system, extending the capability of SAP Business One by integrating a very specific functionality or integrating to other company-specific software. The development environment of the SDK will supposedly allow partners to create custom solutions for customers in a timely and cost-effective way. The SDK supports all commonly used development languages, including Java and Microsoft .NET, allowing partners to migrate their solutions quickly to the SAP Business One environment.

SOURCE:http://www.technologyevaluation.com/research/articles/softbrands-to-institute-fourth-shift-for-sap-business-one-manufacturing-work-plan-part-one-event-summary-17269/

Solomon Stands the Test of Time Despite Changing Masters Part Three: Product Differentiators

Microsoft Business Solutions Solomon, formerly Solomon IV and Microsoft Great Plains Solomon IV, is a prominent business management and e-business suite of applications for small and mid-market companies. Most recently, in summer 2003, Microsoft Business Solutions (MBS) announced the availability of Microsoft Business Solutions Solomon 5.5, which includes several new features and enhancements in the product's Foundation Series, Financial Series, Project Series and Service Series of modules.

If not for a broad footprint, Solomon has been hailed for its flexibility and customizability, since its code was designed in a way that every new product release ensures that all customizations/modifications attributes (regardless whether new features have been introduced by MBS' developers or the users) are carried over.

Features can also be customized on either a temporary or permanent basis. As some examples, the product allows report customization, input screens and forms, and is customizable on different levels, while users can even start from a blank screen. To that end, the Customization Manager module allows the quick and easy modification of Solomon to fit a specific need, without changing the underlying source code. Solomon was one of the first mid-market accounting products that provided the ability to customize beyond basis screen "look and feel" features using Visual Basic programming, which is provided in the Basic Script Language (BSL) component of the Customization Manager module.

Further, the Solomon Object Model allows any application or programming tool that is capable of communicating to the Microsoft Component Object Model (COM) the ability to integrate with any screen in Solomon. Moreover, not only does it facilitate the integration with external applications, the model also provides the necessary architecture for Microsoft VBA, which is used within the above-mentioned Customization Manager. In other words, the object model provides a programmatic interface to the underlying functionality of Solomon, which enables any COM compliant tools (e.g., VBA within Microsoft Office applications, or any Microsoft VB and Visual C++ based tools) to communicate to objects (an item that can be programmed and controlled, such a text box or a drop-down menu on a particular screen) in any Solomon screen. This allows reuse of discrete pieces of the Solomon business functionality without rewriting desired functionality from scratch. At the same time, the object model is not data-centric and does not provide direct access to Solomon data structures, which leverages existing knowledge and involves non-programmers in the design decisions, inherits data validation and data entry constraints, and inherits database update rules.

Integrated Modules

Furthermore, as mentioned earlier, MBS Solomon offers several series or groups of integrated modules that address different business types and needs. This modularity has the advantage of allowing the prospects to start frugally with only necessary base modules (e.g., accounting) and to incrementally add more functionality as needs demand and budgets permit, without the complexities of switching accounting application vendors or converting databases.

Of all the MBS' products, Solomon is apparently the purest in terms of a standard Microsoft technology stack, and without any proprietary additions (such as Great Plains original Dexterity environment, Navision's proprietary integrated development environment C/SIDE, which includes a proprietary Navision Server database and a proprietary 4GL programming language; Navision strong analytical features using Sum Indexed Flow Technology (SIFT); and the proprietary MorphX graphical development suite for Axapta). It is also a single-code product, with the same look and feel for both small and midsize customers, which has long differentiated the product from its competitors and MBS siblings (e.g., MBS Great Plains vs. Dynamics, Epicor Vista vs. Vantage, Best Software Peachtree vs. MAS 200, etc.) that currently offer separate products for the lower and upper ends of the mid-market. MBS Solomon Standard, a lower-priced offering of the Solomon edition that addresses the needs of lower mid-market enterprises with smaller information technology (IT) budgets and less-complex business structures (e.g., fewer companies or fewer divisions) that have twenty-five to ninety-nine employees, annual revenues of $25 million (U.S.) or less, and up to ten licensed users.

Furthermore, its sharp focus solely on Microsoft technology from the ground up, coined in "the power of one" motto (one OS platform—Windows XP/NT/2000, one database platform—MS SQL Server, one development environment—MS Visual Basic, etc.), also presents an attractive, risk-adverse option for penny-pinching mid-market customers. Solomon IV has consequently been very competitive in speed of implementation (from only two weeks to four months duration), feasibility of customization, total cost of ownership (TCO), and price/performance ratio. The product architecture has been devised entirely from scratch within the Microsoft context, which provides for flexibility and ongoing agility.

While its former and current competitors, particularly Sage (Best Software's UK-based parent company) and Great Plains, may have a more extensive partner channel within the industry, Solomon's indirect channel is more nimble and focused. This is due to its single-code product portfolio that reduces the deployment and support requirements for its entire market segment. In addition the former Solomon had supplemented its over 500 VARs through its above-mentioned STC network, which would provide for global service consistency and additional leverage for the channel.

Financial Series

At the heart of MBS Solomon is the Financial Series, which is made up of typical accounting and financial applications such as General Ledger (GL), Accounts Payable (AP), Accounts Receivable (AR), Cash Manager, Currency Manager, Multi-Company, Financial Statement Translation (FST), FRx Reporting and Payroll/Direct Deposit. GL account and sub-account numbers can be up to thirty characters in length, whereby the main account number can be up to ten characters, and the remaining twenty characters can include up to eight user-defined segments. GL transactions can be entered using several types of transaction batches, including non-recurring, recurring, manual and one-sided adjustment, and GL account determines whether the transaction will operate in multi- or single-company mode. Transactions can be entered for any prior fiscal period or year as well as for future periods, which allows for things such as installments and prepayments to be managed at a single time, rather than month after month. The Financial Statement Translation module is compliant with Financial Accounting Standards Board (FASB) Statement 52, Foreign Currency Translation, and International Accounting Standard Board (IASB) Statement 125. The module supports translations from one set of books to another set of books, and supports multi-tier translations and consolidations.

A built-in version of the FRx Desktop and FRx Forecaster marquee financial planning, budgeting and reporting software integrates with Solomon for financial statement presentation, as it locates data from different accounting systems if necessary and puts all the information in a single report. Additionally, across all other Solomon series of modules, there is OEM embedded industry-accepted and familiar Crystal report writer, which can publish reports directly to the Web (using an embedded Crystal Reports Smart Viewer) or into Excel. This eliminates any need to learn proprietary and often pesky report writers, which has traditionally been the case with most peer products. Daniel, do not break the page here, keep the next two sub-head groups on this page

SOURCE:http://www.technologyevaluation.com/research/articles/solomon-stands-the-test-of-time-despite-changing-masters-part-three-product-differentiators-17051/

Support and Maintenance: No Longer the Software Industry's "Best Kept Secret"?

Support and Maintenance: No Longer the Software Industry's "Best Kept Secret"?

For the longest time, the traditional pricing strategies of software vendors have included a reliance on support and maintenance (S&M) contracts, which is where most vendors could be assured of meeting, if not surpassing, their margins. The sizable profit made from S&M contracts (with customers paying more over time) has been one of the software industry's best kept secrets. Furthermore, user enterprises have not had the option of turning—that is, not until recently. To learn more, please see part one of this series Will User Enterprises Ever Get onto an Easy (Support and Maintenance) Street?

To be fair, some vendors, such as Oracle, do not require customers that are purchasing license agreements to purchase software support as well. But, for any customer that is implementing a new software system, software support is similar to an insurance policy. Software support ensures that customers will have access to technical support, regular updates, and new releases of the vendor's purchased applications.

In the past, software buyers have been mostly focused on bargaining over the up front, one-time-only license fees, and have not been paying enough attention to how much they will be paying in software maintenance fees thereafter. This has prompted many vendors to offer ludicrous discounts during the final negotiations, if not even give away free software, knowing full well they will recoup any losses from these "freebies" through support and maintenance agreements.

Sure, a software support contract is usually charged as a percentage of the software's net price, meaning that if a vendor gives a 50 percent discount on the up front license fee, the customer gets an ongoing 50 percent discount on the price of the maintenance. Still, over the entire life cycle of the system, most customers ironically pay far more in maintenance fees than they ever pay in up front license fees.

Lately, however, feelings of "being had" (taken advantage of) are slowly but surely sinking in among user enterprises. Vendors are beginning to see that corporate buyers of enterprise software are taking a much closer look at what they are paying for their applications' S&M. In other words, while information technology (IT) managers have traditionally only moaned about the S&M tab, lately more and more IT managers are intent on finding ways around ever-increasing S&M costs.

Vendors will quickly cite that the bulk of software support fees is related to upgrade rights. Customers receiving S&M instantly acquire an appreciating asset, as they receive access to all future innovations at no additional costs. Furthermore, vendors will point out that this practice is common in other industries.

For example, Best Buy, the consumer goods retailer, offers two types of maintenance contracts: a service repair contract and a service replacement contract. The service repair contract promises only to fix the product the customer bought. The service replacement contract means that, for the life of contract, the consumer can bring in the product and have it replaced with a brand new one—no questions asked. This latter policy is logically much more expensive, and it costs about 1020 percent of the original price.

But this is where the similarity with enterprise applications ends. Everyone realizes that trading in an outdated enterprise application, or replacing one that is malfunctioning, is far too difficult and inconvenient (if even possible) for the customer than doing so with an appliance or a car.

In reference to the previous analogy of shopping for a new TV, appliance, or car (see Will User Enterprises Ever Get onto an Easy (Support and Maintenance) Street?), some vendors point out that a customer does not get a new and improved TV set, appliance, or car for free every year or two from the vendor that the customer purchased support programs from. If one could purchase a car at 3050 percent off the list price, and then pay 20 percent of that per year to get the latest, newest version of the car every year, then that would actually be a pretty good deal for the customer. Application technology is advancing at a far greater rate than automobile technology is. Therefore, upgrades should be seen as even more valuable, albeit only to the minority of customers that really need the "latest-and-greatest" technology, complete with all the "bells and whistles" (with every feature possible).

Vendors also cite that their research and development (R&D) costs are constantly going up as software becomes more complicated, and that any profit and loss (P&L) view of their support businesses has to include all costs for R&D, and should amortize the cost of the original sales effort. But again, it is the free market that should determine the fair price, as is the case in other industries (given that retail has been mentioned for comparison).

To be fair, many software customers radically alter the products they receive, making support for those products infinitely harder. Staying with the retail goods example in Will User Enterprises Ever Get onto an Easy (Support and Maintenance) Street?, when a consumer buys a TV set, the purchase agreement generally states that any tampering with the product itself (even opening the back panel for a peek inside and consequently breaking a security seal) negates any warranties, and automatically cancels any service contracts.

The question is, why then have software vendors not been that strict in enforcing such clauses? Perhaps the answer is that vendors are tacitly conceding that customers cannot wait for lengthy upgrade cycles, whereby often the needed improvements for some customers will not come in the next few product releases. Also, vendors realize that an enterprise system is a mission-critical infrastructure or platform for an entire business, as opposed to a mere appliance purchased for individual use.

In any case, vendors' "best kept secret" status (see Will User Enterprises Ever Get onto an Easy (Support and Maintenance) Street?) is no longer tenable, given many recent quantitative findings and analyses. One such finding from International Data Corporation (IDC) shows that, in US dollars, businesses will have paid nearly $100 billion in software maintenance fees in 2006, whereas maintenance fees accounted for $86 billion (or 41 percent) of the $210 billion in revenue collected by software vendors in 2005. These figures for software maintenance fees are expected to grow 9.6 percent per year, and reach $137 billion (USD) by 2010, accounting for nearly half of software vendors' revenues.

One should note, however, that the growth in software maintenance fees is due to a combination of license revenue growth (which in many cases includes software maintenance) and inflationary adjustment increases in support revenue fees. The expected increase in revenue of 9.6 percent annually is not totally due to increases in support fees. It is useful to note that as more software is sold each year, the installed base becomes larger, resulting in more customers receiving more software for free through upgrades. For instance, more Oracle customers will receive Siebel 8 for free (no additional charge beyond their support fees) than any prior release of Siebel Systems' software (as well as the new releases of PeopleSoft and Oracle E-Business Suite [EBS]).

This growth also reflects a consolidation of vendors and the widespread adoption of enterprise software among businesses. With more customers continuing to work with their existing vendors (that is, the installed base revenue taking a larger share of the pie), the revenue stream will shift from new revenues to recurring revenues. This is natural and does not necessarily reflect diminished value either for customers or vendors.

A bigger installed base, like Oracle's or Infor's, should also help vendors (and arguably, customers) by spreading development costs across a larger customer pool, and lead to quicker identification of best practices for many customers. As vendors support larger and larger installed infrastructures, their recurring bills will naturally increase, while at the same time, the relative spending on "new stuff" will decrease.

Certainly, while this state of affairs is great for vendors, it is definitely not so great for customers. To that end, a Business Technographics survey of 436 IT decision-makers in 2005 found that 70 percent in North America and 60 percent in Europe cited high software maintenance costs as their biggest challenge related to software licensing models.

Further, according to a recent Forrester Research survey, the current number one IT initiative is to reduce software costs in any way possible. S&M, which consumes one-third of all software costs, becomes a logical line item to consider when reducing costs. IT entitlement costs, such as enterprise software maintenance, have (at some companies) soared to a record average of 70 percent of total annual IT budgets.

Logically, as the maintenance costs become a larger percentage of spending, users want to look at how to reduce those costs. But many chief information officers (CIO) also know that the software bill he or she receives can be minor in comparison to the costs of running an internal IT department. This is particularly true within larger companies, where both items need to be thoroughly reviewed to make a real impact on the bottom line.

Oracle cites its attempts to take on a bigger role in helping to reduce overall costs for user enterprises. As an example, prior to the Siebel acquisition, customers needed to build and support customized integrations between Siebel and other Oracle applications. Now, as part of the Oracle Fusion integration strategy, the vendor is building engineered links between Siebel and key modules of Oracle EBS. This means that the vendor will assume the development and support duties for these integrations (thereby freeing the customer from investing in this effort) without increasing fees to the customer. While highly commendable, this effort on Oracle's part is certainly not a universally useful development for many other customers with many other applications in place that will not benefit from these ready-made links.

Nonetheless, it is still surprising to see most vendors continue to (oblivious to the general users' feelings or not) increase maintenance revenue in many ways, starting with increasing maintenance fees directly. A decade ago or so, an "upper teen" percentage of the nominal (price list-based) software license fee was a typical benchmark for maintenance fees, but this percentage has slowly but surely crept up into the "lower twenties," or even higher.

For those not yet dismayed by these figures, maybe the following notion will make some of them wince: in less than five years, user enterprises pay the amount of their entire license fees once again in maintenance. In other words, software customers effectively "re-buy" their applications every four to five years through maintenance fees, while enterprise software vendors continue to raise annual S&M fees year over year and well beyond the inflation or consumer price index (CPI) adjustments (which could be justified, at least).

Oracle, for instance, recently reported its highest revenues ever for software license update and product support, with corresponding profit margins of a whopping 90 percent. The estimate is that about 14,000 licensees of Siebel, PeopleSoft, and JD Edwards software combined are paying Oracle more than $1.5 billion (USD) in annual support and maintenance fees. With support margins running as high as 90 percent, what does this mean for the rest of Oracle's business?

To Oracle's credit, the greatest value of the vendor's annual software support fee (over 70 percent) is associated with the product development that leads to new releases of the customer's licensed software. The costs for R&D and "bug" fixes are not included within the above-mentioned 90-percent margins. Also, it is not too difficult to believe that the combined maintenance fees for all Siebel, PeopleSoft, and JD Edwards customers are $1.5 billion (USD), given that under these previously individual entities, that amount was even higher.

SOURCE:http://www.technologyevaluation.com/research/articles/support-and-maintenance-no-longer-the-software-industry-s-best-kept-secret-18937/

Manufacturing Environments and Integration with Other Functions

Design Factors Shaping System Usage in Manufacturing Environments

In addition to the factors mentioned in Part One for distribution environments, the major factors shaping system usage in manufacturing environments include the definition of product structure, variations in production strategy, and lean manufacturing practices.

Definition of Product Structure Information. Master bills and master routings define product and process design, with optional bill and routing versions. Their identifiers are assigned to relevant manufactured items and specified on production orders. Planned engineering changes are identified using date effectivity for each bill and routing version; date effectivity can also be identified for material components. The master bill and routing information provide the basis for costing and planning calculations. Routing information is optional, and some firms coordinate production activities without it.

The order-dependent bill and routing for a production order initially reflect the assigned master bill and routing, and can be manually maintained to identify a custom configuration. The system models a multilevel custom product configuration using order-dependent bills and multiple linked production orders tied to the sales order.

Variations in Production Strategy. Selling stocked product involves a make-to-stock production strategy, where sales forecasts typically drive end-item replenishment. A make-to-order production strategy often requires stocked components, where replenishment may be driven by component forecasts. The production order for a make-to-order product is typically linked to a sales order. A make-to-order product may have make-to-order components, so that multiple linked production orders are tied to the sales order. The linked production order(s) can be generated during sales order entry, by planning calculations, or by manual assignment.

Lean Manufacturing Practices. Lean manufacturers often require auto-deduction of material and resources, bin replenishment of floor stock material, order-less reporting of production, or constraint-based scheduling of manufacturing cells.

Integration with Warehouse Management

Integrated warehouse management functionality is already included, thereby avoiding the need for a supplemental application. It supports both order- and document-based approaches to warehouse management, and a natural growth path to more advanced functionality. For example, suggested put-aways can account for item characteristics (such as weight or cold storage requirements) as well as bin characteristics (such as weight limitations or cold storage capabilities).

Integration with E-commerce

E-commerce builds on the natural design of an ERP system since it provides electronic communication of basic transactions. Integrated e-commerce functionality is supported in several ways, including Biztalk transactions, reverse auctions, commerce portals, and user portals.

Biztalk Transactions for Sales and Purchasing. The symmetry of sales and purchasing functionality is reflected in Biztalk transactions, as shown in the following figure. For example, an outbound Biztalk sales quote and sales order confirmation can be sent to a customer. Conversely, an inbound Biztalk purchase quote and purchase order confirmation can be received from a vendor. Each inbound transaction can have an optional e-mail notification sent to the internally responsible person.

SOURCE:http://www.technologyevaluation.research/articles/manufacturing-environments-and-integration-with-other-functions-18044/

Important Sarbanes-Oxley Act Mandates and What They Mean for Supply Chain Management

SCM-related Mandates: Sections 404 and 401

More and more, enterprises are realizing the importance of adopting a holistic approach to their businesses from top down, and are beginning to harness an emerging strategic software category—governance, risk management, and compliance (GRC). To this end, their attention so far has been greatly focused on ensuring compliance with the US Sarbanes-Oxley Act (SOX). Chief financial officers (CFOs) and chief executive officers (CEOs) of publicly traded companies are now very much aware of the impact SOX has on their firms, as failure to comply with the law's strict standards and policies, even unknowingly, can essentially end the career of any executive, and often in a disgraceful manner. For a discussion on the relationship of SOX to other regulatory laws, see Thou Shalt Comply (and More, or Else).

Although the law included a number of new mandates, two sections have had clear implications for corporate information systems, while some are especially relevant to supply chain management (SCM). Namely, Section 404 (management assessment of internal controls) requires management to assess the effectiveness of its own internal controls and procedures for financial reporting each year. Section 409 (real time disclosure) requires companies to disclose material changes in their financial conditions or operations on a rapid and current basis. Section 404, which requires audit of internal controls, has made executives reexamine and sometimes replace operational systems that are not well integrated with their financial systems.

Section 401a (off-balance-sheet obligations disclosure) is an addition to the Securities Act of 1934. Section 401a requires disclosure of "material off-balance-sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the issuer [that is, the company itself, an issuer of securities] with other entities or persons" if these arrangements may have a current or future material effect on the firm's financial condition, operations, and so on.

This particularly affects service contracts, such as those typically written with ocean carriers and vendor managed inventory (VMI) arrangements undertaken to hedge risk and move assets off the balance sheet. Increasingly, businesses that adopt VMI practices to reduce current inventory assets may include some form of penalty clause in their contracts for failure to use materials or early cancellation of agreements, and Section 401a clearly requires time-phased listings of these potential obligations. Also, market conditions might change and cause firms to cancel long-term purchase agreements with suppliers, with cancellation penalties or restocking charges as a result. SOX requires enterprises to outline the precise details of these potential charges and penalties. Along similar lines, companies must report and document any early termination or cancellation fees in any lease agreements or letters of intent (which are sometimes used to aid with delivery schedules and manufacturing lead times for critical items).

While Section 401a has limited applicability to some supply chain contracts, Section 404 is broadly relevant to many SCM processes, including outsourcing arrangements. Outsourcing of processes and transactions comes under both Sections 401 and 404, whereby off-balance-sheet agreements with suppliers need to be reported (401) and subjected to effective internal controls (404). SOX is more demanding in this regard than traditional auditing standards. For instance, Section 404 directs the US Securities and Exchange Commission (SEC) to prescribe rules that require annual reports to include an internal control report. This internal control report must contain two elements: 1) it must state management's responsibility for establishing and maintaining controls (including policies, procedures, and processes) for financial reporting, and 2) it must contain an assessment of the effectiveness of these controls and procedures.

If the supply chain is to be truly controlled to the level required by SOX, then there must be a well-structured process that runs across multiple functions, and not merely a series of transactions pretending to be a process. CEOs will thus look to all leaders corporate-wide, including the SCM managers, to take a proactive and collaborative role in corporate governance, since everyone has to realize that passing audits is only one step to the improvement of corporate governance, and that auditors will never understand areas of the supply chain the same way SCM professionals do (and vice versa).

Firms that move aggressively in the direction mandated by Section 404 might even have a chance to improve the management of their supply chains (that is, achieve supply chain excellence), and to gain a competitive advantage on their rivals. This is particularly true given that other disclosure requirements (those instituted in the European Union [EU], for instance) can also support a more efficient and credible, competitive environment for businesses and their supply chains.

Control requires visibility across the process (from ordering components to delivering finished goods and services to customers), and information technology (IT) may be a necessary aid to achieving this total visibility. Yet IT alone is not sufficient to constitute SOX-level control. Meaning, the mere tracking of inventory cannot substitute for efficiency and effectiveness in all SCM activities. For example, with regards to inventory management and inventory write-offs, most enterprises still have the responsibility of controlling inventory and fixed assets. However, SOX implications would now instill the requirement that inventory values are correctly stated, whereby CFOs can no longer "defer" inventory write-downs to avoid write-off losses on quarterly income statements. In other words, SOX demands more accurate and timely accounting to ensure that the material is physically present, its condition is correctly stated, and inventory values are accurately recorded within the accounting system.

As for material transfers and poor inventory accuracy, most enterprises still have the responsibility for material control activities. In the past and all too often, material transfers and inventory transactions would not be processed in a timely manner, thereby creating a true inventory that is "out of kilter" with the expected-on-records situation. SOX, however, states that all movements of inventory or fixed assets must now be recorded in a timely fashion. In other words, all movements will have a definitive financial impact on the company, and the recording of accurate financial information is the foundation of SOX.

Further, an accounts payable (AP) system that does not systematically match purchase orders (POs) and receipts to vendor invoices prior to payment might be vulnerable to fraud, or even to a situation where someone creates fictitious employees or suppliers to then "pay" them, and pocket the money himself or herself. Traditionally, SCM departments within enterprises (for example, engineering departments) have accommodated "internal customers" to "sanitize" so-called "after the fact purchase order" commitments. Under SOX regulations, however, if policies and procedures specifically outline requisitioning and procurement authorities, and if these clearly state that SCM departments are not authorized to issue confirming commitments, then such actions by SCM departments would be an apparent SOX violation. The "charge" would be failure to adhere to internal controls with regards to commitment of company funds and in accordance with company policies and procedures.

All this accentuates the importance of instituting the so-called segregation-of-duties (SOD) for possible conflict-of-interest practices in the procure-to-pay processes, which include receiving, order placement, invoice processing, and establishing vendor (supplier) master data and setups. Section 404 is all about ensuring that companies have adequate approval processes and procedures in place to preempt fraud or theft, as well as making sure what controls and testing are performed to guarantee that these safeguards are working.

Other examples of good SOD practices are to not allow an engineering manager to both select and pay suppliers, because some of these suppliers could, for instance, be family members or best buddies of the manager. Software developers should not perform quality testing on their own applications. Also, an invoicing system that is not integrated with shipping might allow a manager to improperly recognize revenue that has not yet been earned. Many enterprises now also use numerous contemporary tools, such as procurement cards, e-procurement applications, and blanket order releases, to either assist or monitor execution of company expenditures. The aim of SOX is to ensure that businesses institute adequate controls to monitor expenditures and commitments to make certain that company assets are safeguarded and policies are complied with.

SOURCE:http://www.technologyevaluation.com/research/articles/important-sarbanes-oxley-act-mandates-and-what-they-mean-for-supply-chain-management-18906/

Project Portfolio Management for Service Organizations: Bridging the Gap between Project Management and Operations

In the last couple of years, the enterprise resource planning (ERP) industry has changed the landscape of the project portfolio management (PPM) marketplace. ERP vendors, such as SAP, Oracle, and Microsoft, have recognized the value of developing and delivering services to professional services organizations (PSO). Faced with this new reality, the best-of-breed vendors that once dominated the PPM marketplace must either shift their focus or defend their market share from the ERP giants now entering the market. As a result, the PPM industry is divided into two major camps:

Vendors servicing PSOs
Vendors servicing internal information technology (IT) departments
This article will examine PPM for PSOs and the vendors that service this market segment.

The Operations Side of PPM

The PPM industry's mixed messages are due in large part to the idiosyncrasies that separate PSOs from internal IT departments. Although most PPM vendors offer functionality for both types of organizations, most PPM solutions do not address both sets of needs in their entirety. Consequently, a number of vendors competent in portfolio management and project management have repackaged themselves for internal IT departments, while numerous vendors that originated in the billing and financials software market have focused their efforts on the billable services sector, where they can provide ERP functionality to meet the unique needs of PSOs.

PSOs want complete PPM solutions that address their business as a whole. For service organizations, efficiently capturing time, billing, and expense data is a key component to bridging projects and operations. Thus, PSOs look to PPM vendors to provide either complete solutions or niche applications that will manage and distribute data across the entire organization. In fact, Peoplesoft (acquired by Oracle) and Epicor have adopted the label "enterprise services automation (ESA)" to more accurately describe the technological needs of PSOs. ESA focuses on the operational needs of billable services organizations and on the management of the internal and external resources that deliver service contracts.

PPM Components for Service Organizations

Beyond the core components of managing portfolios, projects, and resources, PPM solutions for PSOs have extended functionality to manage the bid-to-bill cycle, external resources, and client demands. Major ERP players entering this space are swapping their manufacturing and distribution components for portfolio and project management functionality in order to stake their place in the PPM market. In response, the niche players that continue to service this PPM market segment target small and medium businesses (SMB) by proposing more affordable PPM solutions that tightly integrate with an organization's existing IT infrastructure (ERP, customer relationship management [CRM], human resource [HR], and financials systems). In either case, PSOs demand the following core components.

Portfolio management. This functionality allows service organizations to monitor the health and profitability of projects. For service firms, portfolio management is critical to maximizing revenue streams by leveraging the best resources for the most profitable projects. On the other hand, service organizations do not demand the same detailed level of analysis as internal IT departments, and can forego extensive risk management and earned value management capabilities.

Project management. This is the engine that runs a PSO. Service firms are project-centric by nature. The successful delivery of services is dependent on the project management methodologies and tools adopted. Key project management features include project scheduling, task management, and budget management. Bi-directional integration with Microsoft (MS) Project is also highly recommended, since approximately 80 percent of the project management world still uses it as the standard tool of choice.

Resource management. Resource management is another core component for services organizations. PSOs need to be able to manage internal resources and contractors across multiple projects and portfolios. Contractor management, recruitment management, and resource planning, scheduling, and utilization are key features of this component.

Time and expense tracking. This bridges project management and operations. It ensures that an end user's work details, captured by the time and expense module, will update the status of work completed in projects, as well as the billing information in accounting. For many service organizations, the ability to remotely submit time and expense details (via the Web, off-line, and wireless devices) is critical for efficiently capturing and accurately tracking the delivery and execution of services.

Project cost and billing. Service firms require flexible project cost and billing options. The tracking of billable and non-billable information, and the generation of customizable invoices are key features. Moreover, the integration of project costing and billing with accounting is necessary to provide the integrated solution that PSOs need.

CRM. This is extensively employed by professional services firms. Service organizations require complete customer support, demand management, and pipeline and opportunity management capabilities to capture and analyze client and contract details prior to a project engagement. CRM functionality also allows organizations to prioritize opportunities and to forecast pipelines.

Knowledge management. These capabilities serve as the hub of a PSO. Service firms demand collaboration and analysis of data by both internal parties (management and staff) and external parties (customers and partners). PSOs demand robust knowledge management capabilities that access all components of their business.
In addition to these core components, workflow capabilities and integration to back-office systems (HR and financials) are critical components of the complete PPM solution for PSOs.

Vendors: Best-of-breed versus Integrated Solutions

There are essentially two types of PPM vendor solutions for PSOs: best-of-breed solutions and integrated solutions (a more in-depth review of these solutions will be covered in future articles).

The majority of best-of-breed vendors offer hosted solutions to SMBs in the professional services sector. Small consulting firms can benefit from the quick deployment and affordable total cost of ownership proposed by these vendors. In addition, best-of-breed vendors provide strong out-of-the-box integrations with popular project management, accounting, HR, payroll, and CRM systems, thus easily adapting to an organization's current IT infrastructure. PSOs considering a best-of-breed solutions approach should bear in mind the PPM vendors below.

Compuware's Changepoint is a best-of-breed vendor that has competitive functionality for both professional services firms and internal IT departments. For service firms, Changepoint PSA offers a mature product that has been around since the early days of the professional services automation (PSA) market (referred to today as PPM). Since its acquisition by Compuware, Changepoint has shifted its focus to the IT governance market. Nevertheless, as a PPM vendor still catering to service firms, Changepoint provides a very mature best-of-breed solution with comprehensive CRM, engagement, and resource management features, as well as time, billing, expense, and invoice modules that tightly integrate with packages such as Great Plains, Oracle Financials, ADP Payroll, and MS Project.

Autotask provides a hosted option to SMB service organizations. Marketing itself as a PSA platform, it offers a modular solution that can be turned on and off according to an organization's business requirements. Specifically targeted to small organizations, Autotask provides a complete PPM solution including CRM, resource management, project management, and time and billing functionality for smaller organizations, along with basic integration with Quickbooks accounting.

Openair also provides a hosted solution. However, it positions itself as a middle-office (i.e., the group of employees in a company that manages risk, calculates profits and losses, and is generally in charge of IT) application that integrates front-office CRM with back-office functionalities. Currently, Openair offers out-of-the-box integrations with Salesforce.com and Quickbooks. Openair is a strong contender for small firms that demand wireless capabilities to remotely access data. The hosted option also ensures a quick deployment for smaller organizations with limited IT infrastructures.

Tenrox PPM solution for services organizations is built on Microsoft .NET technology. Targeting primarily the SMB sector, Tenrox offers complete time and billing functionality, and has developed solid out-of-the box integrations with Microsoft solutions, such as MS Project, MS Great Plains, and Sharepoint. In addition, Tenrox supports integrations with SAP, ACCPAC, and Quickbooks. For smaller service firms that do not necessarily want to host a solution, Tenrox also offers middle-office functionality supporting multiple databases and applications.

QuickArrow offers a hosted, on-demand PPM model specifically designed for billable services organizations. Positioned as a middle-office solution, QuickArrow provides out-of-the-box integration with Salesforce.com, MS Great Plains, and Quickbooks. QuickArrow delivers project planning, resource allocation, time tracking, and expense reporting functionalities, as well as billing functionality for multiple industry verticals offering billable services.

Unanet Technologies has carved out a niche in the government contractor sector. Unanet offers bi-directional integration with MS Project, as well as resource management, time and expense reporting, and workforce collaboration functionalities. Unanet also provides additional functionality for regulatory compliance. The areas of compliance covered include Defense Contracting Audit Agency (DCAA), Sarbanes-Oxley Act (SOX), Federal Deposit Insurance Corporation (FDIC), and Federal Drug Administration (FDA).

When it comes to integrated PPM solutions, many of them have emerged from the ERP space, providing the complete back-office systems (financials, HR, procurement, etc.) that many mid-sized and large PSOs prefer. PSOs looking at the integrated solution approach should consider the vendors below.

SOURCE:http://www.technologyevaluation.com/research/articles/project-portfolio-management-for-service-organizations-bridging-the-gap-between-project-management-and-operations-18340/

Lucrative but "Risky" Aftermarket Business—Service and Replacement Parts SCM

Growing pressure to improve customer responsiveness and profits has lately changed the traditional role of service management for spare and replacement parts. As competitive pressures push more products to a commodity-like business model, many manufacturing companies are increasingly relying on customer service to retain or establish a competitive advantage. Many manufacturers and distributors are also beginning to recognize that there are significant revenue stream and ways to increase customer satisfaction in the aftermarket once their product has been sold.

The aftermarket has traditionally been a lower priority, a sort of "necessary evil" for many, particularly manufacturers, who historically view themselves purely as product companies where their brand new or well established products are "cash cows" consistently generating revenue for the company. However, the singular focus of developing and selling products ignores the fact that maintenance costs can easily be several times greater than the purchasing cost of the product. As a result, this additional revenue has often been left to various third party companies, such as third party parts, service, and repair providers.

Lately, the aftermarket is becoming a major driving force for many original equipment manufacturers (OEM) as opportunities are created when original parts include additional and often heavy customizations designed to ameliorate the operation and care of products and services. The value of the aftermarket is highly dependent on the type of product and the industry. In industries that sell capital equipment such as medical devices, telecommunications, instrumentation, information technology (IT) hardware and other complex equipment, companies are starting to significantly increase their focus on services revenue. For some companies this is a strategic move to increase the top line, while others are looking to replace revenue from slower new product sales in the current economic conditions.

Immaculate service has also been directly correlated to improved customer satisfaction and loyalty. Many manufacturers are discovering that maintaining account control of their customers and differentiating themselves from intense, global competition, means offering enticing and creative service, maintenance, repair, and warranty programs. Managing spare parts is a critical part of accomplishing this. Some firms like third party service providers even offer to manage the spare parts inventories of their customers, often with a consignment payment or vendor managed inventory (VMI) arrangement. In such arrangements the customer does not own nor is invoiced for the part until it is used.

General Electric (GE) is an excellent example of a company that has focused on aftermarket opportunities, going so far as to call itself a "services" company as opposed to a "products" company. GE has proved the value of serving the product aftermarket. It has been widely reported that the company has significantly increased both its total revenue and profitability by focusing on service opportunities in addition to developing world-class products,

APICS Dictionary (the 11th Edition) defines service parts (synonymous with repair parts and spare parts) as those modules, components, and elements that are planned to be used, without modification, to replace an original part. They differ from replacement parts, which are parts that can be used in place of original parts, after some physical modification (e.g., boring, cutting, grinding, or drilling). Likewise, replacement parts differ from interchangeable service parts. In any case, both service and replacement parts are delivered to end users by a diverse network of partners including OEMs, distributors, retailers, third party logistics providers (3PL), and other third party service providers. Also, for asset-intensive industries, asset owners might deliver these parts to various locations.

Associated with these are service parts demand, which is the need or requirement for a component to be sold by itself, as opposed to being used in production to make higher level products or finished goods. To that end, service part planning requires dealing with a sparse and certainly uneven, volatile demand. For example, two units per year, may be requested. It also requires dealing with supply chains that are much more complex than those in new product manufacturing, wholesale distribution, and retail, because knowing in advance when, where, or what kind of equipment breakdown (or any other reason for a service part requirement) will take place, is difficult for anyone (other than clairvoyant fortunetellers). Estimating typically low, yet highly stochastic demand; exploiting multinode opportunities to determine optimal safety stocks within the supply chain; incorporating parts substitution (e.g., interchangeable and rotable parts) and assembly options; and integrating repair streams with replenishment require quite different supply chain management (SCM) methods.

The challenge is having the right number of spare parts to meet demand. This is a precise process, because having too many parts will unnecessarily increase and tie-up investment, overhead, and other inventory carrying costs; however, having too few parts will impede swift replacement and contractual service level agreements (SLA). Inventory carrying cost (synonymous with holding cost) is the cost of holding inventory, usually defined as a percentage of the dollar value of inventory, per unit of time (generally one year). Currently, the technology component within parts, such as programmable logic memory chips, has increased and has changed the parts cost structure. Namely, stock items with embedded expensive technology can each cost a thousand dollars or more. Consequently, associated inventory carrying costs have increased to the point where intelligently planning parts inventory has become a financial necessity for many enterprises.

Carrying cost depends mainly on the cost of the capital invested and of maintaining inventory. These include taxes, insurance, obsolescence, spoilage, and space occupied, and cost between 10 percent to 35 percent annually, depending on type of industry. Carrying cost is ultimately a policy variable reflecting the opportunity cost of alternative uses for funds invested in inventory. Storage costs is a subset of inventory carrying costs, including the cost of warehouse utilities, material handling personnel, equipment maintenance, building maintenance, and security personnel.

SOURCE:http://www.technologyevaluation.com/research/articles/lucrative-but-risky-aftermarket-business-service-and-replacement-parts-scm-18084/

SouthWare Excellence Series: Making Excellence Easier Part One: Company Background and Product Overview

The process of selecting mid-market accounting software usually starts with products that have achieved some name recognition, and that's fine as long as the search does not end there. SouthWare Innovations (www.southware.com) has created in its Excellence Series a worthy competitor serving a number of industries and offering users a surprising array of functionality, either directly as SouthWare applications or through one of their independent sales vendors (ISV).

Founded in 1984 and based in Auburn, Alabama (US), SouthWare is a relatively small company of very dedicated people (80 percent of its employees have at least twelve years seniority), which has created what may be one of the best examples of a true business management system, not just an accounting system. What may be even more important to companies of all sizes is that the Excellence Series operates on many platforms and databases, giving users the option to select the environment that best suits their technology requirements rather than forcing them to accept a single option.
Product Line Summary

The Excellence Series supports a significant number of applications, most of which complement its historical strengths in the distribution industry. However, users should not eliminate the Excellence Series simply because they are not in this single industry. In fact, the Excellence Series supports accounting, distribution, e-business, service management, rental management, and job costing out-of-the-box. Together with its third-party developers the Excellence Series also supports manufacturing and a whole host of other industry verticals.

Currently, SouthWare supports 6,000 sites in the US—it has no plans to expand internationally. The largest site supports 500 users—a cellular telephone company—with the next largest site supporting 300 users—high-end photographic equipment.

While we will discuss some of SouthWare's applications in more depth a little later, let's start by summarizing what's available out-of-the-box. I have elected to segregate this list into four categories

Business Management Functions
Accounting Applications
Productivity Tools
Technology Features
The Excellence Series, and every other business management system for that matter, is not all-powerful, but it does offer advanced functionality in several areas and outstanding business management support.

Business Management Functions

ExecuMate II is a powerful executive information system that presents to executives and managers user-defined summary data (expressed numerically and graphically) that allows them to take the company's pulse. If more detailed information is required, extensive drill-down is available. The system even posts alarm warnings for key financial areas (Note: These same alarms could also generate a standard alert in TaskWise, SouthWare's unified task, relationship management, and exception management system).

ExcelReport: This unique application helps users establish both subjective and financial goals and grades progress toward achieving them. We will discuss this in more detail later.

TaskWise: Combines into one application business processes such as task management, relationship management, exception management, and information sharing (collaboration). SouthWare has taken the concept of user-defined menus, which it supports, to the next logical level whereby the concept of a menu has been replaced by a completely integrated task management system that helps users carry out their jobs both more efficiently (do it cheaper) and effectively (do it better). This will be discussed in more detail later.

Collections Adapter: Full-featured collections management application. This will be discussed in more detail later.

AnswerReady is a tool that lets users set up a searchable database of topics, instructions, company policies, documents (e.g., employee handbooks), as well as questions and answers. The system has but one purpose and that is to help people do their jobs better by giving them ready access to the information they need. Users can create a table of contents to form the basic framework of the information management system, and add or modify topics (with appropriate access controls) as required.
Accounting Applications

General Ledger: Standard functionality.

Cash Flow Ledger: Bank reconciliation and powerful cash flow monitor. This will be discussed in more detail later.

Accounts Receivable: Standard functionality.

A/R Invoicing Adapter: Simplifies the invoicing process rather than using the more comprehensive order entry screens.

Accounts Payable: Payment processing that includes cash requirements reporting, invoice and vendor holds, and cash basis accounting. The application will support over 99 pay-to addresses per vendor. If there is any question about an invoice (questionable charges, total amount that exceeds a specified value, etc.), the invoice can be placed on hold automatically and handled by TaskWise, SouthWare's exception management application.

Purchasing: SouthWare has created a comprehensive purchasing system that is significantly more robust than other middle market accounting systems. This will be discussed in more detail later.

Order Entry: Standard functionality.

Inventory Control: Comprehensive inventory control including substitute items, vendor part numbers, RF receipts, and landed cost tracking. Although SouthWare provides significant functionality that relates to inventory management, these more comprehensive controls are contained in separate applications. If users require only basic inventory control, that's all they have to purchase or see.

Warehouse Tracking: SouthWare has adopted a unique approach to warehouse management by creating an application (November 2004 release) that offers sophisticated day-to-day controls that are actually outside the formal accounting process while at the same time maintaining full quantity and cost tracking. This will be discussed in more detail later.

Browser-based Handheld Processing: To complement its Warehouse Tracking application, SouthWare supports RF processing using handheld devices. This will be discussed in more detail later.

Item Group Matrix Adapter: Complete inventory matrix (row and column) support for clothing, lumber, landscape plants, and any other item that uses multiple units of measure per item. Users can assign their own part numbers or the system will automatically generate part numbers to fit the row and column combinations. The system will also generate different price multipliers per row or per column.

Marketing Catalogs: This feature allows users to group items into logical categories that can then be used to improve lookup speed, create logical ordering systems on web sites, or to improve inquiries. As an example, users can post items on web sites using multiple categories (e.g. coats / boys' coats / winter coats / long sleeve / blue) that make the ordering process for users far easier. This same feature is available on the buy side to improve lookup of required items. Finally, Marketing Catalogs can be combined with a tree view of stock items to vastly improve the search and inquiry capabilities of the system.

Point of Sale: Standard POS system plus a fast and efficient method by which sales transactions can be input without having to cope with the complexity of a more robust order entry application.

Assembly Work Orders: Rather than having to rely only on bills of material in a sophisticated distribution environment or conversely forcing users to purchase and contend with full-blown manufacturing suites, SouthWare provides users with a middle ground. Assembly Work Orders allows users to record a customer's order (standard or created on-the-fly), note any special instructions, calculate a final price if optional items or processes are added to a standard assembly, check availability of all components, and create applicable work orders for a simplified make-to-stock or make-to-order environment. Fixed and variable costs can be allocated to each work order and profitability checked against the price quoted.

Shipping Interface: Interface configurator for third-party shipping systems. Current integrations include StarShip and ClipperShip.

Delivery Scheduler Board: This utility allows users to examine daily and monthly views of scheduled deliveries.

Return Authorizations: Handles both customer and vendor returns, detailed warranty and problem descriptions, reimbursements due from vendors for labor charges, purchase orders (if required) for vendor returns, even vendor return label printing.

Rental Department: Supports all rental activities, including availability and scheduling conflicts, overdue contracts, serialized equipment tracking, delivery and pick up scheduling, and long term contracts with periodic billing. Rental and normal sales transactions can be included on the same invoice. The Rental Department integrates with SouthWare's Service Management applications to provide complete maintenance for all equipment available for rent.

Service Management Series: This is a complete service management system that is comprised of four specific applications to help companies manage service contracts, track service histories and required preventive maintenance for each piece of equipment under service contract, daily planning and dispatch, and service invoicing. This will be discussed in more detail later.

Payroll: Standard functionality.

Fixed Assets: Standard functionality.

Job Cost: Standard job costing including revenue recognition, master jobs for grouping of related jobs, AIA code set up and invoicing, certified payroll reports, and time sequencing for job shops.

International Transactions: Record, track and report multicurrency transactions. The Excellence Series is not fully multicurrency compliant in all applications, but it does support basic currency transactions.

SOURCE:http://www.technologyevaluation.com/research/articles/southware-excellence-series-making-excellence-easier-part-one-company-background-and-product-overview-17707/

How One Vendor Addresses Support and Maintenance Issues

SAP is one of the major enterprise resource planning (ERP) vendors that is addressing the concerns of its user base regarding support and maintenance (S&M) issues. These issues are detailed in a previous series on S&M: Will User Enterprises Ever Get Onto an Easy (Support and Maintenance) Street?, Support and Maintenance: No Longer the Software Industry's "Best Kept Secret"?, What Is the Value Proposition of Support and Maintenance?, What Are the Support and Maintenance Options?, and Alternative Software and Support Maintenance Options.

Among these issues are

High support costs—particularly for users of heavily customized, and thus highly functional, mature enterprise systems
Costly upgrade requirements—an issue for users not interested in new "nice to have" features added to their older, stable systems
Extended or lifetime vendor support programs—these programs can force customers to pay more over time for less service
Penalty fees—to be reinstated on the current stable release after a customer discontinues maintenance
To summarize: Customers need support, but the vendors are often not providing them with what they need. And if they are providing support, the price is often unjustifiable. For these customers, the "one-size-fits-all" vendor approach to S&M is unacceptable. At the same time, many customers realize it will take at least a decade for market battles to play out over system architectures, new middleware, and service-oriented architecture (SOA) technology standards, as experience teaches us, see Architecture Evolution: From Web-based to Service-oriented Architecture. Lastly, many customers are concerned that choosing one vendor will leave them with a potentially weak or unviable solution in the coming shake out.

Although existing enterprise systems' customers are a locked-up audience, they can be only to a point. If vendors continue playing hardball, the repercussions will likely be defections. Ultimately, enterprise software licensees should understand that they have a choice of software S&M providers. Options do exist for any company contemplating discontinuing the maintenance of an application product, and users should first talk to their vendors to review their options.

What Then Are SAP's Options?

In an effort to maintain the customer status quo, SAP's top S&M program, SAP MaxAttention, is offered to customers whose operations demand mission-critical customized support. The tailored program for each customer includes a permanent on-site support team, an executive sponsor, and SAP Safeguarding, consisting of a service portfolio that is able to manage the risks involved in complex implementation projects.

The SAP advisory personnel will have to exude deep industrial experience, business insight, and multidisciplinary skill sets. They will not only have to be well versed on the mix of SAP's functional and technical features and interdependencies, but they will also need to have similar knowledge of partner products. If possible, it would be ideal for the advisory personnel to have knowledge of the complete playing field, including the competitive offerings.

Early in 2006, SAP expanded its support services to meet customers' changing demands. SAP introduced SAP Premium Support to mitigate some of the above conventional S&M contractual pitfalls, and to underline its commitment to continual S&M evolution and growth. Premium Support provides a new option between SAP Standard Support, a fairly competitively priced basic support package, and SAP MaxAttention, the vendor's high-end support package, tailored to meet the very specific needs of large global enterprises. The Premium Support plan offers quick issues resolution, annual information technology (IT) assessments, and a designated support advisor who serves as a personal, day-to-day contact for support-related topics.

For users interested in "pick and choose" options, SAP is able to cover a subset of a landscape with its option Partial Landscape Coverage, while the components of the Premium Support offering remain intact. For more information, see No Yawn Intended: Enterprise Applications Giant Introduces a Mid-tier Support Choice

To mitigate the challenge of forced upgrades, early in December, SAP announced its first enhancement package for mySAP ERP, and disclosed further details of innovations being delivered under its evolved roadmap for the flagship product suite. This enhancement package is part of the license and maintenance agreement, and is now available to customers running mySAP ERP 2005. Customers are now able to use new enterprise services and functionality in an uninterrupted way. This allows the customers to direct business process innovation while maintaining the stability of their core ERP systems.

Further, SAP enhancement packages for mySAP ERP meet customer requirements for support innovation without disruption to day-to-day business operations. This makes it simpler and faster for SAP's clients to adopt new product functionality, industry-specific features, and enterprise services, while protecting them from the complexity of multiple upgrades.

Enhancements to mySAP ERP will be made available through 2010 as extensions to mySAP ERP 2005 in a series of optional enhancement packages. SAP hopes these enhancement packages will stabilize its planning cycle by cutting future migration costs for new releases and give customers the time to get used to enterprise SOA technology. The foundation must be laid by implementing mySAP ERP 2005. When this is accomplished, businesses will be able to leverage the next generation of ERP software and enterprise services architecture.

User enterprises will have to conduct a thorough analysis to decide whether to upgrade to this foundation product from their current platforms. However, this release cycle and strategy simplifies the implementation of new upgrades, and it matches the needs of customers that typically want to plan and perform an upgrade every five to seven years.

The optional enhancement packages enable customers to "switch on" only the new features and functionalities they want, and can be configured in a modular fashion. This should enable SAP clients, without the disruption of multiple major system upgrades, to easily take advantage of nonstop innovation. SAP's first upgrade package includes hundreds of enterprise services that enable functional enhancements for human capital management (HCM) and financials applications, as well as specific industry upgrades for retail and manufacturing industries.

SAP plans to provide two or three enhancement packages per year that will contain functional and technical upgrades as well as enterprise services for mySAP ERP. Each of these so-called value packs will focus primarily on addressing specific customer business requirements. The packages will concentrate on areas such as simplifying user interface (UI), helping companies effectively manage their enterprise talent pools, improving financial collaboration, and expanding on the broad, industry-specific capabilities in mySAP ERP.

The enhancement packages will also include enterprise services (software components) for particular business scenarios. The explanation of these services is included in the enterprise service repository. This repository includes not only the definitions of the services, but also composites where available, and all the information required for SAP clients to get up and running quickly.

This information is delivered via an interactive Wiki format. In addition, there is a variety of software tools to implement, manage, and upgrade the applications. SAP bundles the above software tools into SAP Solution Manager, while, in contrast, other vendors provide a variety of separate tools for upgrade management.

Depending on the extent of the tools provided, customers may use third-party tools for requirements such as change management and performance monitoring. Upgrade tools, however, may have limited (if any) value for customers that upgrade infrequently.

SOURCE:http://www.technologyevaluation.com/research/articles/how-one-vendor-addresses-support-and-maintenance-issues-18962/

Solomon Stands the Test of Time Despite Changing Masters Part Two: Market Impact

Microsoft Business Solutions Solomon, formerly Solomon IV and Microsoft Great Plains Solomon IV, is a prominent business management and e-business suite of applications for small and mid-market companies. Most recently, in summer 2003, Microsoft Business Solutions (MBS) announced the availability of Microsoft Business Solutions Solomon 5.5, which includes several new features and enhancements in the product's Foundation Series, Financial Series, Project Series, and Service Series of modules.

Clearly, the MBS Solomon product has had more than an interesting voyage since its inception. Its former proprietor, privately held Solomon Software, Inc., which was founded in 1980, with headquarters in Findlay, OH, had experienced a steady growth throughout the 1990s, with estimated revenues of $60 million and over 400 employees in its last fiscal year as an independent entity, 1999. Our estimate is that MBS Solomon nowadays also contributes over 10 percent of total MBS' revenues of ~$550 million.

From a founder-driven company of over 20 years ago, with a traditional focus on accounting software, former Solomon Software had evolved to a vendor run by professional corporate management and that eventually offered a much broader and deeper product portfolio prior to being acquired in 2000. Solomon designed, marketed, and supported its flagship product Solomon IV, a financial and business management system for small to medium enterprises (SMEs), which it introduced in 1994 as a suite of over fifty standard modules, running solely on Microsoft SQL Server and Windows NT/2000 platforms.

Focused on the low end of the mid-market (the enterprises with up to $250 million in revenues), Solomon had also achieved a worldwide base of more than 25,000 customers in 400 different industries in more than 100 countries exclusively through its extensive network of independent sales and support organizations—value added resellers (VARs). The company also had over twenty affiliate offices worldwide and derived approximately 25 percent of its revenue from the international market. Further, in 1998, Solomon opened four regional Solomon Technology Centers (STCs) in North America to support its distributors. These centers provided applications and installation support for its indirect channel in order to provide efficient service and support for customers and some economies of scale for distributors at the same time.

Especially during the last few years of its independent operation, Solomon had accelerated the release of new functionality and attempted to create a new market perception of not being only a best-of-breed accounting software provider. Since 1997, Solomon had also acquired a number of independent developers and launched partnerships with a number of ISVs, which today amount to close to 150 and which have significantly broadened its product line. During 1998 and 1999, the company released its distribution, manufacturing, service, project management, and e-business product components.

The last product release before the Great Plains acquisition, Solomon IV release 4.21 in 1999, introduced some landmark features, that have remained its differentiators till nowadays, such as Solomon Desktop (a portal application providing 100 percent Internet access anytime, anywhere), Service Series (featuring Field Service, Service Dispatch, Equipment Maintenance, Service Contracts and other modules), E-Commerce Gateway — EDI Edition, Advance Shipment Management, and Web Order (a B2B e-commerce component). As a result, the product now comprises the following series of modules: Foundation, Financial, Project, Service, Distribution, Manufacturing, and E-Business.

New Functionality Accelerated

Still, due to its quite belated expansion into the ERP world (let alone extended-ERP), the vendor had suffered the reputation of a best-of-breed accounting software provider only. While former Solomon had accelerated its delivery schedule of new functionality, it was also hard pressed with tight "time-to-market" constraints and limited resources at the time. The following intended functionality delivery schedule in 2000 would have been a tall order for even much more resource abundant competitors, given that some of these have seen the daylight only within the above-mentioned releases within Great Plains and MBS, well after 2000—repetitive build and MRP modules within the Manufacturing Series (yet to be released natively); replenishing, commissions, and shipments modules within the Distribution Series; employee utilization and time and billing within the Project Series; additional e-business functionality like eVoucher; and Solomon Object Model within the System Tools suite.

However, given that all is well that ends well, MBS Solomon, due to its distinct differentiators (e.g., project management, advanced distribution, and field service capabilities, the product flexibility, having integrated but modular applications, powerful reporting capabilities, multi-company accounting features, etc.) and weaknesses (e.g., rudimentary manufacturing functionality), has been blessed in disguise with possibly the most distinct niche and the least overlap (gray area) with the other MBS ERP products (i.e., MBS Great Plains, MBS Navision, and MBS Axapta). Indeed, MBS Solomon remains the choice for organizations that seek flexible financial systems, integrated with distribution, project, or service operations. The strongest customer base thus comes from construction—special trade contractors, wholesale distribution—durable goods, business services, engineering, accounting, research, and management service organizations.

SOURCE:http://www.technologyevaluation.com/research/articles/solomon-stands-the-test-of-time-despite-changing-masters-part-two-market-impact-17050/

Understanding the real world of service contracts

Many OEMs aggressively pursue signing multiyear service contracts at the time of equipment purchase by offering discounted service contracts for multiple year terms. One hospital was told that they would receive a 1 percent discount on the purchase price of their new CT scanner if they purchased a five year service contract at the same time. After further analysis it was determined that they were actually being charged 10-12 percent more for the cost of the CT than others nationally, by far negating the 1 percent savings that had been promised.

Long term service contracts are even harder to cancel and have steeper penalties. In fact, some companies have no out clauses in their long-term contracts. They don't allow for effective management control or cost reductions and greatly limit or eliminate options to reduce costs in the future.

Managing existing service contracts

Equipment under a service contract should be managed in the same way as equipment serviced by other means (in-house engineering, time and materials, under warranty, etc). You must actively manage your service contracts by monitoring the service you receive, the equipment's performance and preventive maintenance, or you may not receive what you paid for.

The following steps can help you manage service while under contract. First, implement a mandatory check-in and check-out procedure for vendors. Second, monitor the progress of the repairs closely. Third, make sure to ask questions. Find out what is being done, how long the repair will take and if there are delays find out what is causing them. If the vendor's service engineer requires additional service expertise from the service company, it should happen as soon as possible and at the vendor's expense.

Next, be aware of all updates, upgrades and modifications, and understand the impact it will have on your equipment. Get complete written service documentation on all activities. Remember, you have the fight to any information that pertains to your equipment's operation and/or maintenance. Many service reports will not give a detailed list of repairs that were completed, identify what went wrong or provide the number of hours spent on the repair, but if you request this information from the service provider, you will receive it. Finally, if you have work scheduled out side the terms of the contract, require authorization from the appropriate management and a new purchase order before you allow the vendor to proceed.

Make sure that the parts not included in the service contract are approved by you for quality and cost before they are installed. Also remember, it is almost always cheaper to repair instead of replacing components, so it is in your best interest to get a second opinion if a vendor recommends replacement of a part not covered by the service contract. For example, one facility was told that they would need to replace a damaged ultrasound transducer at a cost of more than $14,000. However, they discovered an ISO that provided a loaner and repaired the transducer for $850. MRI surface coils are another prime example, where yen dots offer savings of $3,000 to $20,000 over the OEM replacement prices by repairing the coil. Understanding repair-versus-replacement options will allow you to make the best decision for your facility. It's important to note that maintenance management programs from reputable firms like Thermo Asset Management Services do not--and should not--affect an existing warranty or service contract. In stead, the maintenance management program comes into play after the existing warranty or service contract expires, or the facility itself chooses to cancel its service contract. The key factor with managing service contracts is making sure the vendor knows you are monitoring and actively involved with managing the maintenance and service of your equipment.

SOURCE:http://findarticles.com/p/articles/mi_m0BPC/is_10_29/ai_n15685943/pg_2/?tag=content;col1