Deltek Remains the Master of Its Selected Few Domains Part Four: Deltek's Differentiators

Event Summary

Deltek Systems, Inc. (www.deltek.com ), the leading provider of enterprise software and solutions for project-based businesses and professional services firms, remains committed to a potentially unique, high level of investment in product development as compared to other software companies. According to Kenneth E. deLaski, Deltek President and CEO, the average public software company only invests approximately 14.5 percent of its revenue in product development and, at 24 percent, Deltek customers should take this as a strong sign that the vendor is deeply committed to continued investment and improvement of each of its product suites for project businesses and professional services firms. Deltek also announced that, once again, it achieved strong profitability and cash flow for fiscal 2002, which reportedly marked the 18th consecutive year of profitability for the company. In addition, the company added more than 300 new customers during the year in a variety of industries including aerospace, construction, engineering, IT services, consulting, architecture, and project-based manufacturing.


This is Part Four of a six-part note.

Parts One and Two covered product announcements for 2003 and 2002.

Part Three provided the company background and discussed market strategy.

Part Five will discuss major Deltek's product lines.

Part Six will present challenges and make user recommendations.

Product Development Initiatives

Deltek aggressively pursued two major product development initiatives in 2001:

1. Web-based development of the Costpoint application suite for advanced project-oriented businesses

2. Development of a new, web-based PSA product suite for professional services firms

In addition, Deltek also developed and introduced several new application modules during 2001 and has since continued to strongly maintain and enhance its broad array of 125 existing products.

As a result, the company's product line has expanded from applications for managing the core back-office processes to the front-office and e-business of professional services and other project-based companies, many of which provide products and services under American Federal Government contracts. Deltek has also grown to nearly 700 employees in eight offices worldwide and nearly $100 million (USD) in revenues and has also contracted over 8,000 customers since its inception. Moreover, with its two decades of experience, expertise and an exceptional track record in designing, developing and providing project and financial accounting systems to professional services firms and other project-based organizations, Deltek touts a reputation for delivering functionality-rich applications and highly-responsive customer service and technical support, as seen with its 98 percent customer retention record.

Deltek Differentiators

As already mentioned, since its inception, Deltek has focused on addressing the unique business needs of project-oriented organizations, resulting in a competitive advantage relative to both larger ERP vendors that offer general-purpose enterprise software that requires heavy customization, and small off-the-shelf project-management solutions that are soon outgrown by the user company. Deltek solutions have always been very focused on fulfilling the needs of its chosen target customer—the project manager, who is responsible for sharing and tracking the revenue, expense, and profitability of a project. Conversely, most enterprise-wide business systems sold by other software vendors are general purpose in design and, without significant customization, do not address many of the unique requirements of businesses engaged primarily in providing products and services under project-specific contracts and engagements.

For a detailed comparison of project-oriented ERP vs. generic GL-oriented systems see "Project-Oriented ERP vs. Generic GL-Oriented ERP/Accounting Systems".

Project-oriented organizations have many project-specific business and accounting requirements including the need to track costs and profitability on a project-by-project basis; provide timely project information to managers and customers; and, submit accurate and detailed bills or invoices. Often this must all be done in compliance with complex industry-specific and regulatory requirements. As a result, Deltek rightfully says that all its applications have been made with projects rather than general ledger as their core.

Not many enterprise products will support the following project-based processes: job costing; managing the sub-contactor; financial reporting; managing the workforce; process time and expense; winning new business; purchasing goods and services; managing the project; and, build to order. If these high-level processes sound rudimentary, then breaking down their processes will reveal their true intricacies. The need for detail is seen in such processes as employee time, billing rates, budgeting, collections, or project proposals, all which are only supported by a few vendors besides Deltek. For example, the steps involved in the support for the build to order process reveals Deltek's solid core ERP materials management functionality: customer demand; bills of materials (BOM)/routings; engineering change notice (ECN); materials requirement planning (MRP); capacity planning; purchase requisition/order; receiving and quality assurance; fill inventory; issue manufacturing orders; final sub-assembly and finished goods; customer delivery and billing; revenue recognition, and PSR.

Furthermore, many project-oriented organizations provide products and services under government contracts, and project accounting often requires the use of sophisticated methodologies for allocating and computing project costs and revenues. There are many different types of contracts the American government uses and within each of those there are more than dozens of variations, whereby each variation will drive its own type of billings, revenue recognition and requirements for reporting back to the government customer. Because of an expected increase in defense and national security spending, Federal government contract spending and activity are also expected to increase in the next several years (see Fed Gives ERP A Shot In The Arm).

For the past two decades, Deltek has been a recognized leader in providing systems for firms that do business with the federal government. Its solutions allow customers to maintain their accounting records according to guidelines set by American government oversight bodies such as the Defense Contract Audit Agency (DCAA); Federal Accounting Regulations (FAR); and, Cost Account Standards (CAS). The government requires its contractors to collect and allocate costs in certain ways; for example, according to DCAA rules, labor costs must be recorded daily. Also, a contractor is required to keep track of several contracts simultaneously, to meet the rules for different types of contracts and to account for a number of indirect costs. Thus, of 8,000 Deltek customers, about 2,000 are federal contractors that account for more than 50 percent of the vendor's revenue. Nearly 4,000 additional customers are contractors working on state and local deals, while the remaining customers are from the commercial sector that Deltek has started to target quite later.

According to the Small Business Administration Pro-NET sourcing service database, there are tens of thousands of small and minority-owned companies doing business with the federal government. With the new emphasis on improving homeland security and expanding anti-terrorism operations around the world, many of these firms will likely experience a significantly greater demand for their services and rapid growth over the next several years.

Deltek in the PSA Market

Deltek's focus on projects also means it has the ability to provide a comprehensive offering for professional service automation (PSA), in a market which is still evolving and has fragmented offerings from a number of point solutions providers that are typically financially unsound. As a matter of fact, a vast majority of pure PSA vendors are start-up weaklings offering only some areas from the entire PSA (e.g., the bid-to-bill life cycle). These areas include opportunity and lead tracking/management; proposal automation; resource planning and forecasting; recruiting and partnering; CRM; project planning; budgeting and management; employee time and expense entry and processing; project and financial accounting; billing and receivables; HR management; document and knowledge management; BI/analytics; workflow management; collaboration management; partner relationship management (PRM); portfolio management; practice management; service sourcing; and, so on.

Thus, the likes of Deltek should benefit from the expanded use of project-oriented and professional service business application software systems due to economic trends. Service organizations traditionally have utilized project accounting more than manufacturing firms because they need to customize their services for each client and properly allocate the associated revenues and costs. Therefore, as the shift from a manufacturing-based economy to a service-based economy continues, the market for project-oriented organizations is expanding. Furthermore, the trend towards outsourcing an increasing range of activities broadens the market for project-oriented organizations as both customers and vendors need to track the costs associated with their projects.

Like other businesses, project-oriented and professional services organizations are also demanding solutions that allow them to combine their business software applications into a single integrated, enterprise-wide system. Deltek has long been providing the above-mentioned individual pieces of the PSA puzzle, which have recently been integrated into a much more cohesive whole.

For a detailed discuss of the PSA Market, see "PSA — Still An Evolving Market".

To that end, Deltek has developed a family of complementary products with a broad-based functionality that is usable in a variety of technology environments. These products are offered to larger, more sophisticated project-oriented organizations in the aforemented industries. Time is of essence for any business that bills for its services rather than sells a physical product, but it can be particularly tricky for design firms that may need to bill at different rates depending on things such as project phase, task, client type, or escalation clause. At the same time, the industry is quite fragmented with its legions of specialist contractors, and long tradition of technophobia. The vendor that can satisfy the requirements of the fastidious A/E/C sector stands the chance of selling its technology to other project-oriented businesses. The strong capabilities of the collection of project-based applications (such as the "project view" of opportunities within its CRM module, or over 15 overtime cost allocation options within its financial and project management module) have resulted in 70 percent of the 500 largest, most influential firms in the American architecture, engineering, construction (A/E/C) and design services industries to leverage Deltek's business software, solutions and consulting for automating essential front- and back-office business functions. Additionally, more than 40 percent of these firms use Deltek Front Office applications, and more than 55 percent using Deltek Back Office applications.

These companies, as well as accounting practices, law offices and other professional service firms can also benefit from an emerging CRM derivative known as client relationship management, which Deltek espouses within its marketing and proposal automation product. This derivative should help these firms track client relationships in a more sophisticated manner than referral or word-of-mouth, which were appropriate during their start-up phase





SOURCE:
http://www.technologyevaluation.com/research/articles/deltek-remains-the-master-of-its-selected-few-domains-part-four-deltek-s-differentiators-17153/

Performance Management Simplified by MSPs

ntroduction

IT infrastructure consisting of networks, servers, databases, and even parts of application systems forms a networked computing system (NCS) whose performance must be actively managed to ensure continual business support. But the skills and tools necessary to ensure that network and server systems provide adequate levels of services and performance are expensive and scarce.

Unfortunately, NCS performance management is frequently broken into a number of processes that are even more frequently well intentioned but nonetheless neglected. More often than not, an IT organization will have some form of network monitoring system, but few have network performance measurement tools. Similarly, relational database management systems (RDBMSs), server operating systems, and application system performance management is usually conducted as a part-time (often reactive) activity of the associated technology administrator. However, management service providers (MSPs) that specialize in performance management can apply expert personnel and 24/7 monitoring at a fraction of the cost required to staff the function internally.

Note: This note first appeared in a column by James F. Dowling in Mid-Range Computing. Look for other previously published Mid-Range Computing columns by Mr. Dowling at this site or visit Midrange Showcase at www.midrangecomputing.com/showcase/.

What's Involved?

A comprehensive networked computing performance management program encompasses the following:

* Architecture to establish a plan for how NCS components are interrelated

* Service level commitments to link NCS and business performance measures

* Availability measures to record uptime

* Activity measures to record resource consumption

* Performance measures to record quality of service

* Event management and response escalation to reduce downtime/poor performance time

* Fault isolation to pinpoint performance fault cause

* Capacity measures to record resource availability

* Capacity modeling to plan for resource expansion

* Data integration and reporting to bring various infrastructure component data into a cohesive, business-relevant picture of the NCS's historical, current, and future capacity to support business needs

NCS performance management systems are composed of knowledgeable technology administrators - who understand each of the NCS components well enough to prevent, identify, diagnose, and plan resource performance - and tools to assist them. Although performance measurement and event management tools are costly, the human resource costs make comprehensive programs prohibitive for many. This is not to say that such systems are not cost-effective. Rather, cost justification is extremely subjective, based on projected faults and business loss estimates. When coupled with high capital and human resource expenditures, such ROI presentations are not well received unless a recent catastrophe can be used as a case in point.

That's where the MSP comes into the picture. Entuity, InteQ Corporation, iSharp, Luminate, and Manage.Com are founding members of the MSP Association, a consortium of companies that will define and promote the emerging management service provider sector. Information on the MSP Association is available on the Web at www.mspassociation.org; from Association headquarters at 401 Edgewater Place, Suite 500, Wakefield, MA 01880; via telephone at 781-876-8830; or by sending email to info@mspassociation.org.

MSPs bring component expertise, measurement, event management, and reporting capabilities to bear on the networked computing systems of multiple companies through a single infrastructure investment. This allows MSPs to provide 24/7 monitoring and event management coverage with technology component experts for analysis and planning. Clearly, this is a program that every IT manager wants but one that most cannot afford. The principle advantage of the MSP approach is that a company has access to performance management experts and integrated monitoring at a fraction of the cost of in-house staffing.

Two Players' Approaches

The MSP approach is a new business model, and every situation presents unique challenges to designers of monitoring and measuring systems. However, two companies have made significant headway in this marketplace. I present their offerings here as representative examples of what is to come and what every IT manager must consider.

Luminate (www.luminate.com) takes SAP R/3 performance management from the level of drudgery and mysticism to that of fact-based decision-making. The company's operating model is simple. The client downloads and executes a free monitoring module for SAP R/3 and authorizes it to commence data collection and transfer to Luminate's Intelligence Center. From this point on, serious performance problems will be routed back to the client via email with appropriate response advice provided. For proactive reporting, capacity planning, and other analytical services, the client contracts an appropriate service package. Other monitoring modules are available that cover a broad spectrum of infrastructure components.

It is easy to discount the value of being told that everything is all right 99.999 percent of the time. But it is hard to overestimate the value of having trend data collected, analyzed, and reported without having to think about it or being able to reassign an SAP R/3 BASIS System Administrator to an activity with more apparent business value contribution without losing management continuity

InteQ (www.inteqnet.com) presents an operating model that mirrors Luminate's simplicity while broadening services. InteQ provides a complete outsourced infrastructure for monitoring, measurement, and event management of complex networked computing systems. Instrumentation, using commercially available tools such as Hewlett-Packard's OpenView, BMC Software's PATROL, and Remedy Corporation's ARS among others, is networked to InteQ's Network Operations Center, where it is monitored in accordance with predefined service level agreements. Inteq's consultants can deliver a full IT infrastructure life cycle from architecture design to monitoring and management in an effort to ensure that the infrastructure is well engineered, measured, and managed.

These two companies, along with their partners in the MSP Association, are making what has been possible yet virtually unobtainable for quite some time into a turnkey service that brings many IT managers' vision to reality.

This column will continue to explore the change/size paradox-big companies desiring speed and growing companies desiring stability. The author would appreciate feedback on material presented as well as suggestions for future study and reporting. The general theme is IT management and the goal is to make it easier to get clients what they want and what they need to succeed.




SOURCE:
http://www.technologyevaluation.com/research/articles/performance-management-simplified-by-msps-16293/

Cincom Sticks to CONTROL of ETO and MRO Part 2: Market Impact

Cincom Systems Background

Cincom Systems, Inc. (www.cincom.com), a privately held, Cincinnati, OH based provider of software solutions and services primarily to complex manufacturers has possibly been a schoolbook case of longevity in the software business. Since 1968, the company has developed tools for manufacturing, financial, and sales automation applications. Its software manages application development, customer support, database, call center, and manufacturing functions. Recently, in addition to core ERP software, Cincom developed, marketed, and supports software for customer relationship management (CRM), document management, and knowledge systems for sales.

Cincom Manufacturing Business Solution's latest product release covers many new bases, is architecturally adequate, and remains a well-attuned offering for ETO and MRO enterprises. While it is a competitive product that will create buzz in its markets, the road to success is by no means guaranteed.

This, Part 2 of a 3-part note examining Cincom, discusses the Market Impact of the announcements detailed in Part 1.

Part 3 will discuss the Challenges faced by Cincom and makes User Recommendations.

Response to Competition

To at least keep abreast of the competition, Cincom embarked a few years ago on technologically rejuvenating its product, while maintaining its customer base. More recently, the focus has also evolved to target collaborative e-Business and enhancements to the product centered around embedding workflow and messaging alerts (event management) to notify personnel based on defined business process parameters. To that end, the introduction of CONTROLTM, a Web-based ERP system provided a foundation for complex manufacturers to use the Internet as to embrace e-Business and collaboration. Also the system, which now runs under Windows NT and UNIX operating systems, is slated to run on the Windows 2000/XP platform some time in 2003. The database options remain Oracle and Cincom's own proprietary SUPRA™.

With CONTROL, Cincom has also built-in support for BizTalk, Microsoft's eXtensible Markup Language (XML) based integration software product, rendering the system from being a transaction-based environment to an event-enabled environment. These are necessary features, as complex manufacturers are conducting a great deal of collaboration during the phases of design, configuration management, program management, and engineering change management (ECM). Therefore, they are in need of a system, which allows them to publish events internally and externally to other systems and other users, to support this broader, workgroup-based range of collaborative commerce functions.

Today, Cincom addresses the needs of highly engineered, complex and project-based manufacturing and distribution enterprises with two ERP systems - Cincom's PriorityTM (formerly MANAGE:EnterpriseTM) for the small-to-medium (SME) sector, and CONTROL for the larger mid-market enterprises, with more than $50 million in revenues. The company has extended both flagship ERP systems considerably over the last couple of years, with significant R&D investment, to feature much more than conventional ERP functionality, such as CRM, advanced planning and scheduling (APS), and collaborative commerce tools, although some of these are being delivered through partnerships. Both products have the deep costing and procurement functionality that is a necessity for companies that sell complex, highly engineered sub-assemblies and/or products by major projects, or through government contracts.

CONTROL covers all the deep nitty-gritties of manufacturing and engineering (e.g., bills of material (BOM), engineering change control (ECC), revision control, document management, planning (MPS/MRP), shop floor control, project manufacturing control, business intelligence (BI), etc.). The system supports the needs of multi-national companies too through distributed multi-site implementation options, multiple currencies, and multiple languages.

Sales Cycle Support

Outside of the conventional realm of an ERP system, Cincom rounds out the solid CRM/SFA capability throughout the entire sales cycle including prospecting, estimating, product configuration, and proposals creation. The product configurator and interactive selling tool support customer acquisition, quotation, and ordering. Unlike most product configurators, Cincom's graphical knowledge modeling environment makes it easy for non-technical users to quickly develop solutions that assist in the analysis of customer needs, product selection, product configuration, pricing, quotations, and customer support.

This suite is either offered as part of the CONTROL system or as a stand-alone, third-party application, is an interactive selling system that enables complex manufacturers to capture and deliver critical knowledge for customer interaction wherever that may take place - on the road, via the Web, or the phone.

Additional Modules

In addition to the core functions of CONTROL:2002 that support ETO processes, the Enterprise Management suite offers six optional modules: Demand Management, Program Management, Quality Management, Financial Management, Aftermarket Management, and Collaboration Management. Financial Management functionality is delivered through a reseller agreement with CODA software, Quality Management comes from the reseller alliance with Pilgrim Software, whereas web-based Collaboration Management is developed in-house, leveraging Microsoft BizTalk. The CONTROL Quality Management module is available now, as well as the Collaboration Management (including e-business document exchange, advanced electronic data interchange (EDI), Internet EDI, and a full e-collaboration infrastructure), and in-depth CRM modules, all based on Microsoft BizTalk and Cincom's Event Enabled Environment (E3) software.

Figure 1:

An APS, constraint-based system that is well attuned to the needs of complex manufacturers has also been delivered via an alliance with Ortems S.A. The Ortems functionality is used both for planning and for real-time execution to balance the ever-changing availability status of equipment, personnel, and materials.

Overall, CONTROL:2002 handles many needed ETO processes from dynamic PLM-product lifecycle management (with strong information exchange and efficiently allocated resources) to configuration management (in which changes are immediately reflected throughout the enterprise and product lifecycle), and demand management for demand-driven manufacturing.

Demand Management Enhancements

A couple years ago, Cincom also introduced a demand management suite that supports flow manufacturing practices for complex product manufacturers. The suite's applications include demand scheduler, Kanban sizing and replenishment, flexible fence planning, and SOP. A key part of adapting the flow techniques to complex product manufacturing, often considered as opposing and conflicting practices, is to be able to gauge the effects of custom product configurations on flow lines. To that end, Cincom's Demand ManagerTM translates feature and option sets to equivalent units of the end item, which is then used in determining the time slot the order can be scheduled in the manufacturing flow line. Additional enhancements are slated for the second half of 2002 to Demand Management (flexible planning, Kanban management, supplier visibility, and sales and operations planning (SOP)).

Aftermarket Management

Cincom's Aftermarket Management, application suite manages aftermarket services, including the management of repair part depots and field service. In 1999, the company introduced the solution to help manage aftermarket operations for original equipment manufacturers (OEMs) on top of their existing UNIX-based ERP systems. Shrinking margins owing to increased competition and rising labor costs, have forced many companies to turn to the aftermarket service to bolster their profits. Consequently, they needed software specifically designed to manage this type of business effectively, by controlling concurrently both labor and material costs.

Aftermarket Management was built with strong tracking and accounting functionality, along with greatly enhanced flexibility in mind. For example, in telecommunications switching equipment, in almost every installation as a rule, there often is a mix of new parts, remanufactured parts, and existing parts, and the system must track all these. Since management accounting functionality should also make aftermarket services visible at the bottom line, Aftermarket Management provides detailed reporting to help managers understand the financial impact of aftermarket services, including field service maintenance; remanufacturing, repair and overhaul; depot maintenance, and service parts distribution.

Nevertheless, Cincom will have to address inevitable challenges in order to continue to thrive in this ruthless competitive environment with a limited opportunity and functionality that is not easily leverageable in many other diverse sectors.

Addressing Smaller Enterprises

On the other hand, Cincom's Priority covers many smaller enterprises' needs such as sales, engineering, MRP, inventory control, purchasing, production, project management, human resources (HR), costing and financial accounting, as well as CRM, factory modeling/routing, supply chain control, business intelligence (delivered via an alliance with Cognos) and integrated e-commerce. It also features built-in modification flexibility so that users are able to manage system changes and future upgrades (via a regression control).

A native APS component allows assemble-to-order (ATO) and MTO planning to be priority driven, as to enable users to change order priorities without having an impact on due dates, and to also enable them to examine the results before selecting the optimum workflow, all with a view to maintain low inventory costs, use machinery efficiently, and satisfy fluctuating customer demands.

ETO sector-specific additional functionality includes subcontract control, project management, supply chain control, vendor management, quotation management, cost management and analysis, and integrated e-commerce, with web storefront, customer service, e-procurement and remote field service management. Cincom's Priority is available either as client-server or web-based system on Windows 98, NT, 2000 clients, with an NT Server, while database is Oracle or MS SQL Server.

This concludes Part 2 of a 3-part note on Cincom Systems.



SOURCE:
http://www.technologyevaluation.com/research/articles/cincom-sticks-to-control-of-eto-and-mro-part-2-market-impact-16663/

Resilient Enterprise Solutions Vendor Displays Sociability and Pragmatic Product Development

Introduction

In a market noted for its turbulence, the ongoing turnaround success of IFS, a global enterprise applications supplier, has gone somewhat unnoticed. IFS was the fastest growing enterprise resource planning (ERP) supplier in the mid-to-late 1990s. But the early 2000s marked a severely painful period for the vendor, including losses peaking at about $85 million (USD) on revenues of about $313 million (USD) for 2002. The IFS turnaround is impressive, and its management attributes the success to its more focused sales strategy, increased organizational efficiencies, and continued emphasis on a selected, manageable number of vertical industries. For more information on IFS' background, see Enterprise Applications Vendor Reverses Fortunes—But Will Perseverance and Agility Be Enough?

Part Two of the series Enterprise Applications Vendor Reverses Fortunes—But Will Perseverance and Agility Be Enough?

In addition to focusing on profitability and positive cash flow, during its stabilization phase IFS started paying attention to balanced growth (through more reliance on market penetration and product enhancements via strategic partnerships), whereby the product development costs were tied to new sales. To that end, product marketing also started targeting global industry niches such as automotive importer and supplier management (as sub-segments of the much wider automotive vertical), rather than having each country or region pursuing its own target markets. More than half of product development has since been industry-specific, of which half was aimed at manufacturing, about one third at service industries, and the rest at asset-intensive industries.

The consolidation phase has thus brought about pragmatic product developments: the latest product release (IFS Applications 7), which was conceived during this phase (and launched on time in early 2006), required about a quarter of the development effort to "future proof" the product. Furthermore, at the IFS World Conference 2005, the vendor announced the seventh generation of its component-based application suite, which should bring industry focus and productivity to the next level by including innovations in application design, an intuitive graphical user interface (GUI), and information visualization. Based on the IFS SOCA mentioned in Part One of this series, the product aims at offering increased flexibility, enabling companies to continuously revise and improve processes as well as reshape applications as processes change.

A new role-based user interface has been rolled out across the product to enable hyperlinked and much easier navigation. One example of the new GUI use is within a new application in the IFS Applications 7 suite, MaxOEE (Maximum Overall Equipment Effectiveness), which features user productivity and usability, while also including vertical industry depth. Although comparable with other enterprise resource planning (ERP) suppliers' OEE offerings, the module will be even more impressive after being developed into a full-fledged corporate performance management (CPM) solution.

IFS Applications 7 continues to support a growing number of project-driven enterprises and their need for efficient processes, by introducing a broad range of new capabilities, such as contract lifecycle management, project-driven manufacturing, actual costs, revision control, and project supply chain management (SCM). Having designated this segment as one which will drive lots of new business opportunities (especially in the construction and utilities verticals), the IFS industry solution for project-oriented industry (EPCI) will standardize and support user processes in engineering, project management, purchasing, document management, financial management, SCM, human resources (HR), and after-sales activities. The solution also encompasses interfaces to computer-assisted design (CAD) software and planning systems, and includes Web-based solutions for engineering and documentation, where a multi-disciplined Norsk Sokkels Konkuranseposisjon (NORSOK)-based engineering register is integrated with purchasing and delivery (NORSOK being the body that oversees the competitive standing of the Norwegian offshore sector). In addition, the potential for extensive use of portals simplifies cooperation with suppliers in global delivery projects, since portals should allow fast access to information from the total industry solution. IFS has many years of experience as a partner to project-oriented companies, having more than 300 customers with project-based activities. For more on project-oriented requirements and software, see Project-oriented Software: Many Choices, Many Differences.

Supporting the company's focus on seven key vertical industries, IFS also announced a number of new vertical market solutions, including workforce planning and call center management within the service and facilities management industry, which has to manage service calls from issue to resolution. These new features in IFS Applications 7 aim at enabling more efficient service processes for both independent service providers and companies providing advanced after-sales service (manufacturers of complex products, and asset- and service-intensive businesses). To that end, IFS Applications 7 includes new functionality for call centers; enhanced resource allocation and planning software; and improved mobile field service, project connection, sales contract management, and application for payment. With shorter product lifecycles, more complex products, and tougher competition from developing countries, service management has become a high priority for most companies. Chief financial officers (CFOs), controllers, and financial managers should thus get visibility into the performance metrics of service processes using integrated service performance and financial analysis tools, while service personnel can also access sales and payment histories. Standard features of IFS Applications 7 also include collaborative customer self-service and service enterprise portals, which allow customers to enter cases and service requests, view the progress of the work, and perform follow-up activities themselves. For manufacturers that service what they sell, the suite offers support for product lifecycle management (PLM), enabling improved collaboration between design, engineering, production, and service personnel. IFS service management customers include Dalkia, Debut Services, First Engineering, Anticimex, Philips Business Communication, Munters, and Kalmar Industries.

To help companies reduce the increasing complexity of global supply chains and to increase customer responsiveness while maintaining cost efficiency, IFS Applications 7 also includes new solutions for multi-site supply chain planning (SCP), and collaboration in demand and supply networks. Many industries should benefit from a multi-site functionality which reduces risk for errors in planning, reduces lead time, and accelerates inventory turnaround. Product structures and planning from multiple site locations can be managed centrally to improve the efficiency of goods handling. However, supply chain execution (SCE) capabilities, particularly warehouse management, remain fairly basic, and allow preparation of shipment documents and packaging to go on in parallel with the manufacturing of the products, and reduces time from call-off to delivery due to more efficient internal handling.

Reinforcing the company's aforementioned position as the vendor committed to standards and technology co-existence, IFS Applications 7 includes support for the latest J2EE and Microsoft .NET-based technologies, such as IBM WebSphere 6, Oracle AS 10g, and JBoss 4.0. The Java portal standard (JSR 168) is also supported, allowing companies to access and use IFS Applications directly from within the IBM WebSphere Portal.

At the conference, IFS unveiled Project Attila, a collaborative effort with Microsoft to develop smart clients for faster and easier access of IFS business applications from within Microsoft Office products. This is an initiative to enable better-informed business decisions resembling Project Mendocino (recently commercially renamed into Duet) pioneered by Microsoft with SAP. See Major Vendors Adapting to User Requirements. Like Duet, Attila should increase efficiency for information workers who use Microsoft Office as their primary working environment, allowing them to browse and update enterprise data directly within Office programs. The initial release of Attila, which includes reporting, budgeting, and financial planning modules integrated in Microsoft Excel, is scheduled to be available for select customers in the second half of 2006.

Most companies use Microsoft Excel in their budgeting and financial planning processes. With Attila, department managers and other workers involved with budgeting and planning should be able to retrieve, review, and update budget data directly through the familiar Excel interface. While working in Excel, they will benefit from the centralized storage, distribution, and revision handling provided by IFS Applications. The reporting module will make all business data stored in IFS Applications instantly available for processing and analysis in Excel, with the full security and access control of IFS Applications. Subsequent releases of Attila will include modules that integrate Microsoft Outlook with the workforce management and document management components of IFS Applications.

Attila will leverage the openness of the IFS component-based architecture, Microsoft .NET, and the upcoming Microsoft Visual Studio 2005, to provide a completely standards-based integration between the two applications, which will supposedly not require any additional setup or management. IFS and Microsoft have a history of cooperation, since more than half of IFS customers run IFS Applications on Microsoft Windows, while many IFS customers use other Microsoft products, such as BizTalk Server and Exchange, integrated with IFS Applications.

Harnessing and Nurturing Partners and Customers

Incidentally, given the agnostic approach and partner-friendly nature of IFS, the vendor has in particular been more aggressively moving forward with a partnership strategy to further grow its business outside Europe (which is still its main breadwinning market, with the domestic Swedish market contributing about 15 percent of total revenues). To that end, while until only a few years ago IFS sold and implemented directly, in recent months partners have become responsible for one third of new license sales, with partners contributing 23 percent of total revenues in 2005. The main IFS hardware partners remain IBM and Hewlett-Packard (HP), while its main software platform and middleware partners are IBM, Oracle, Microsoft, and Sun Microsystems. As for software development and reselling, IFS partners fall into the following three categories:

* Industry partners, such as BAE Systems, General Dynamics, and Lockheed Martin in aerospace and defense (A&D), which have been useful resellers, after first being highly experienced users. To some customer-partners, such as BAE Systems, IFS has given board-level focus in co-developing the sharp vertical solution. Consequently, BAE now leverages its contacts and IFS expertise to dominate the UK government defense sector. Other high-profile partnerships include GE Engine Service for commercial aerospace.
* 2. Software resellers, such as NEC, which primarily covers channels in Japan, and provides assistance to the Chinese market as well, where many Japanese-owned companies have been setting up offshore operations. Early in 2004, IFS announced that NEC had even taken an equity position in IFS, and it now owns 10 percent or so of IFS stock, which should entice it to more directly invest in IFS functionality for the Asian market, and to expand IFS implementation capabilities therein.
* 3. Systems integrators, such as Accenture, IBM Global Services, and ATOS Origin for implementation services in opportunistic industry sub-verticals in selected countries.

Likewise, the vendor plans to repeat the model of developing global and local partnerships with well-known companies in niche industries in different countries (such as ABB, IBM, Det Norske Veritas, and so on) for expansion, while product development focuses on deepening its functionality to retain its position in its chosen markets, and also while broadening scope to capture some adjacent industries in the future. IFS also expects to offer more specialized best-of-breed solutions with the above partners, where appropriate. A perfect example is the alliance with ABB (also another equity partner) to deliver IFS Enterprise Asset Management (EAM) solutions, which could possibly make IFS a leading EAM player in the future.

Where is IFS Now?

Nowadays, IFS has around 2,200 customers and over 750,000 users, of which over 100,000 were added in the last 24 months. Existing customers appear confident in IFS, as 56 percent are on the last two product releases—IFS Applications 2003 and IFS Applications 2004 (with 26 and 30 percent respectively). Having seemingly turned the corner on its woes of the early 2000s, IFS has most recently embarked on a phase of sustainable growth, and to that end has appointed a new CEO, albeit this time from the UK ranks. Known for his sales and marketing execution savvy, Alastair Sorbie (who set up IFS in the UK in 1997, and who was subsequently in charge of the company's Europe, Middle East, and Africa [EMEA] operations), took over from Michael Halln (who has done a great job of setting a sound foundation) in early 2006. In EMEA, Sorbie presided over a string of successes, and had responsibility for 70 percent of IFS revenues and 40 percent of its staff, making it the company's largest division.

In addition to sticking to the strategy of the previous phase to continue the current focus on profitability through cost reduction and license growth with more partner business, IFS has also recently increased its investment in marketing to gain proper brand recognition and differentiation in its key industry verticals. These "IFS brand enhancers" are long overdue, given the vendor's protracted "industry's best-kept secret" status, and are needed to increase license revenue growth and make best use of shareholder value, while building on the vendor's rich history, identity, and employee pride. To the end of brand building, IFS has recently undertaken many new media campaigns (both in print and online—in the first half of 2006 it has already doubled media impressions over the whole of 2005) and significantly increased press release (PR) activities (both through dedicating its own staff and hiring the LEWIS PR agency for a consistent global message to the market).

For the future, the ongoing restructuring, which especially started in EMEA operations in 2005, will continue—transferring some responsibilities to other parts of the globe (in other words, back-office corporate functions like finance and administration and partner support will continue to be managed from Sweden, while front-office functions like sales and marketing are being increasingly moved to the UK and US), and readying the company for sustainable growth and support of its customers. IFS has announced organizational changes which will build on its SOA prowess—making its product development more agile and market-focused. Namely, IFS is merging the products organization and the industry and marketing teams under one leadership structure to increase agility in bringing the right products to market at the right time. Furthermore, IFS is creating a business development team to investigate innovative go-to-market strategies (with high-profile partners and customers to develop "fringe" functionality atop the IFS foundation layer and peddle the solutions afterwards) and business models, while internally IFS is also consolidating its corporate support functions.

After a few years of constant workforce shedding, IFS increased headcount in 2005 because it took control of subsidiaries in India (IFS recently bought its partner's share in India JV to turn it into a full subsidiary) and increased its direct presence in South Africa (with the focus on telecommunications and utilities), and it still has a strong interest in partnering (for example, with black empowerment concerns in South Africa such as Motswedi Technology Group). Emerging markets for IFS are China, India, Libya, Russia, Turkey, and Ukraine. While IFS Middle East has lately been the most profitable region, half of Asia-Pacific revenue is from China, where IFS is very strong in utility industries and has contracts with several top Chinese power plants, including Three Gorges. Another partnership in China is through a joint venture with Beijing IFS UFSoft. The vendor hopes to play a more important role in China, especially with local Chinese customers, and the product's flexibility should allow it to cope with the changing and demanding Chinese market.

The new CEO believes that different regions require different sales approaches and "personal touches" (whether sold directly or via a business partner network that currently has over forty distributors), and IFS thus emphasizes its global capabilities via a single-version global product. It also emphasizes its global implementation capabilities via its decent services and support network (with six support centers in China, Poland, Sri Lanka, Sweden, the UK, and the US, and with R&D centers including Germany, Norway, Poland, Sri Lanka, Sweden, the UK, and the US). Indeed, the structure of the business applications mid-market to date has been based on contesting vendors' ability to serve specific areas—whether geographical or vertical. Historically, customers have bought from renowned regional suppliers with the (often justified) belief that their software would be more attuned to local needs, and better supported locally. However, the globalization of the supply chain of even the most modest of these prospective customers (whereby they might design products in west Europe or in North America but manufacture them in the Far East, Africa, or eastern Europe and then distribute around the world) means that locally focused packages are becoming decreasingly relevant.

Moreover, IFS wants to keep a single product focus, as opposed to many of its ever-merging competitors that have to subsequently manage several product lines across multiple industries. Its users are distributed across seven key vertical sectors: A&D, automotive, high tech, industrial manufacturing, process industries, construction and facilities management, and utilities and telecommunications. The IFS Applications suite, available in twenty-three languages, provides extended ERP functionality, including SCM; EAM; maintenance, repair, and overhaul (MRO); PLM; customer relationship management (CRM); and CPM capabilities.

Nimble, Vertical, and Partner-Friendly

Based on its recent financial performance, it appears that the former ultra-high-growth vendor has now turned the corner on its troubles, and is now moving out of consolidation and into growth again, although this time in a much more moderate way. IFS is seeing the most growth in Europe, North America, and Asia (in most of the regions where it had been struggling), but the ongoing uptake is due to a back-to-basics sales campaign alongside better co-operation on international deals—both intra-company and with partners. Furthermore, while manufacturing broadly remains IFS' bread and butter, construction, defense, and the project markets are the company's key growth opportunities, as seen in the recent product enhancements.

For example, IFS Applications 7 was designed to give defense suppliers a competitive edge with enhanced capabilities for lean manufacturing, project management, and contract management:

* more accurate monitoring of contracts with advanced contract management created specifically for the complex needs of defense manufacturers
* better supplier management and traceability with project inventory, including full project pegging and borrow/payback features developed for the defense manufacturing environment
* improved costing of replacement inventories with loan/payback functionality
* flexible mixed-mode costing that enables defense manufacturers either to run their entire business on an actual cost basis, or to simultaneously run their commercial business on a standard cost basis while using actual costing on the government side
* improved financial capabilities, enabling defense manufacturers not only to progress bill their customers, but also to perform periodic revenue recognition on long-term projects in which project billing may not be occurring
* fully integrated material review board (MRB) and quality control functionality that provides a closed-loop system for quality control

The IFS strategy going forward is to gain leadership (or one of the top few positions) in selected industry verticals, such as A&D. As for success in this market, the vendor was almost a non-entity till 2002, but now has enterprise-wide agreements with the UK Ministry of Defense (MoD). IFS Defense now contributes one third of total UK revenue, while IFS has a nearly 30 percent market share in the European A&D industry. Some recent wins in the US also bode well, having followed the UK team's recipe for the US Department of Defense (DoD), and the vendor is pursuing defense across the Middle East, Far East, and Asia. IFS Applications includes functionality that meets the demanding requirements of the armed forces, such as fully integrated MRO, performance-based logistics (PBL), project management, fleet management, SCM, and other components that are devised to ensure asset visibility, sustainment, and availability—three key objectives in managing weapons systems for optimal combat readiness. IFS also provides an industry-specific solution for defense manufacturers that helps companies manage the design, manufacturing, and ongoing spare parts logistics and maintenance support of complex products throughout the product lifecycle. IFS customers within the A&D industry include the British and Norwegian defense organizations, as well as the Eurofighter consortium. Commercial MRO shops and operators include Finnair, Bristow Helicopters, Aero-Dienst GmbH, Hawker Pacific, and Jet Turbine Services. In addition, IFS provides solutions to original equipment manufacturers (OEMs) such as General Dynamics, Lockheed Martin, BAE Systems, Saab Aerosystems, and GE Aircraft Engines.

This is in a sharp contrast to its previous practice of letting its sales folks opportunistically chase almost any opportunity, owing to the well-rounded product's seemingly good fit for many potential industries. Nowadays, the intent is rather to continue to make deep industry partnerships which add industry value for customers, such as those with BAE Systems and NEC.





SOURCE:
http://www.technologyevaluation.com/research/articles/resilient-enterprise-solutions-vendor-displays-sociability-and-pragmatic-product-development-18666/

An ERP Vendor, with its Powerful Parent Backing, Tackles Software as a Service

Glovia International has created a software-as-a-service solution that is the first full-fledged, on-demand, enterprise resource planning application aimed specifically at small and medium businesses manufacturers.

A Veteran Enterprise Resource Planning Vendor Makes a SaaS-y Statement.

A Glimpse of glovia.com 9 Glovia International, a subsidiary of Fujitsu Limited (TSE:6702 [Tokyo Stock Exchange listing]), recently released glovia.com 9, an on-premise suite that attempts to solve some traditional usability drawbacks rather than deliver any new functional modules. Thus, Glovia is the first full-fledged and versatile manufacturing-oriented, on demand enterprise resource planning (ERP) vendor to offer a software-as-a-service (SaaS) solution. The foundation of this solution includes the acquisition of the intellectual property rights to Northgate's PRO-IV highly scalable development platform's kernel. The extension of this kernel's capabilities is such that the two development environments, PRO-IV and glovia.com 7, are no longer fully compatible.

For background information on SaaS, see SaaS-ing the Manufacturing Opportunity. For background information on Glovia, see A Veteran Enterprise Resource Planning Vendor Makes a SaaS-y Statement.

Hence, the new name for the application's development platform is Glovia VM (with VM standing for "virtual machine"), which is somewhat similar to the frameworks of Progress Software OpenEdge, IBM WebSphere, SAP NetWeaver, or Microsoft .NET. The vendor has used this opportunity to ensure that the product's source code never changes, while the migration or upgrade paths between virtually all product releases (and customers' customized instances) are preserved via metadata (which is in tune with the above depicted SaaS principles). This also creates more platform independence, since Glovia has long supported a wide range of platforms covering UNIX, Linux, and Microsoft Windows, but only supports the Oracle database, which is a possible downside (and becomes moot in the SaaS model).

The only third-party products that Glovia resells are those of Interstage, which is a Fujitsu infrastructure suite that provides a workflow management module, a high-volume application server, and other Internet technologies. Wisely, Glovia decided not to write the application itself. Fujitsu's Interstage Suite provides a collaborative business integration platform that enables user companies to share and exchange information relatively easily across disparate systems—whether internal or external. Fujitsu's Interstage Suite is one of the world's broadest families of application infrastructure software products for designing, developing, and managing scalable, customized, mission-critical applications. The application suite is used by more than 8,000 companies in over 83,000 installations worldwide. Other than that, Glovia resells Visual-ARMS from Edibar, Glovia's partner for automotive electronic document interchange (EDI) message processing. Cognos remains the only embedded business intelligence (BI) solution provider, since today Glovia has standardized on Cognos and has done all the data mapping to add value and speed up implementation for its customers.

However, on the downside, glovia.com has not traditionally been strong in distribution and transportation modules (that is, the "ship and deliver" business process), in enterprise asset management (EAM), or in so-called "white-collar" corporate functionality, such as global financial consolidation or human resources (HR). Its "not invented here" and do-it-yourself (DIY) attitude has to that end been both a blessing and a curse. Recently though, Glovia has begun to be more open to partnering and has added much-needed functionality in its above financial management module to help increase its win rate within enterprises with complex organization (that is, beyond its stronghold of the four walls of a single plant that has to collaborate with its sister plants or trading partners). Specifically, functionality has been increased in the areas of budgeting and financial reporting and consolidation (through Glovia's alliance with Cognos).

Glovia Mindset Change

This has been quite a mindset change for Glovia, who had until lately been a market follower in respect to product technology. The vendor has belatedly tackled delivery of support for Windows NT, Internet enablement, and product componentization of its core ERP system. Moreover, it had been remiss in opening the product and delivering application programming interfaces (APIs). Glovia has nonetheless lately realized that in order to attract customers outside of its limited ERP customer base, the back-office platform agnosticism of its e-business products should be its highest priority. Owing to its recently found flexibility through Java and extensible markup language (XML) enablement, glovia.com may now function well either as a corporate backbone system, or as a solution that executes operations and planning at the plant or unit level.

With regards to coexistence with other systems in the latter case, the vendor has lately begun to offer integration adapters to link with other enterprise or legacy systems. The best example of this is the glovia.com 9 product's openness via 105 total XML transactions (which are in turn 105 potential web services) and simple object access protocol (SOAP) connectivity via Microsoft BizTalk Server. Consequently, Glovia hopes to become a manufacturing service platform that will connect and integrate various business systems that a user company might currently use. Customers should hereby be able to get answers to "What? When? How many? How much? How to?" for demand throughout the supply chain via such optimized service platform engines.

While deeper analysis of glovia.com 9 deserves a separate research article (especially the new supply chain planning [SCP] engine or enhanced factory planner capabilities), the gist of the product's embellishments could be summarized in two aspects. The first is an aesthetically pleasing and easy to use graphical user interface (GUI) that is in tune with the Web 2.0 trends and that should bolster system use, acceptance, and the learning curve for all users. The new GUI metaphor significantly heightens the level of clarity, accelerates the speed of navigation, and controls the flow of information contextually.

The second functional aspect creates major advances in planning, scheduling, and near real time execution capabilities via improved granularity. Namely, lead times can now be expressed in days or hours, fixed lead times can be set in units as little as fifteen minutes, and variable lead times can be calculated and rounded to the quarter hour. All planning documents such as orders, quotes, and requisitions have time fields, thereby adding date and time granularity to planning dates. The item substitution (in lower-level bills of material [BOMs]), the ability to create more than one work order per part number per day, additional order status codes, and hours or minutes sequencing capabilities all vouch for users being able to provide much more accurate promises to their customers and execute plans based on those promises.

Still, both Fujitsu's and Glovia's big league aspirations are rather optimistic at this stage, as both continue to suffer from laid-back and stealth marketing (at least so far), and consequently low market visibility and brand recognition outside Japan and the Far East. The vendor has seemingly long been happy with shoring up the existing install base and expanding within its customers' new divisions. Thus, one cannot help feeling that Glovia's knowledge of its target market has always been deeper than its market visibility and share. Further, both companies' channels have been rather nascent. Glovia has not yet built a reliable and established indirect channel (Fujitsu is certainly its biggest reseller in emerging markets like China and Brazil), and, with around 1,000 customers, its client base remains significantly smaller compared to many ERP vendors.

While the Fujitsu-Glovia relationship has worked well in Japan (a difficult market for many other ERP vendors to penetrate for various cultural and business peculiarities due to established local sales, support organizations, and delivery of product enhancements that support Japanese manufacturing styles), it may prove to be quite a different case in other markets.

Glovia's Software as a Service: Details and Downsides

While Glovia will not become a globally dominant market player any time soon, the abundant finances, a new focus, and a revived spirit could grant a much better future to the vendor. To that end, the GSInnovate SaaS offering might serve a number of purposes. For one, Glovia hereby makes a "raise the bar" statement that should create some commotion in the market. It should at least make the bigger and more powerful competitors scramble to spin their own justifications as to why they do not offer such comprehensive, multi-tenant ERP products at this stage. On the other hand, the offering might be a sign of Glovia's more active pursuit of brand new customers from the lower end of the market, which is a departure from its mainly pursuing the expansion opportunities within its install base (including opportunistic new account pursuits) of midsize and upper midsize companies. Conversely, Glovia Services' primary target is new customers. However, smaller operating units of existing customers will still be considered, if appropriate.

Given that the product has an innate and historical vertical focus for high-tech and electronics (as well as automotive, owing to many similarities between the two), the expectation is that potential customers will use the hosted software "as is," especially since its on-premise "older sibling," the glovia.com product, has been proven to be a flexible software that can support many manufacturing styles at the same time. One should also anticipate that once GSInnovate customers begin to outgrow the offering, they will switch to the counterpart on-premise solution, thereby safeguarding all previous investment in training and knowledge. The vendor has analyzed the full glovia.com offering and has selected the functional set that it believes will best fit the target customer. This is not to say that the SaaS offering will stay as it is now; Glovia may decide to extend the functionality using other Glovia modules down the track.

GSInnovate was designed for small to medium business (SMB) manufacturers. It is a broad solution that supports the following essential manufacturing processes: inventory management; bill of material (BOM) and material requirements planning (MRP); order management; procurement; sourcing; and financial and accounting management. What should be appealing to small manufacturers is the solution's relatively low price tag—specifically a low cost of entry, packaged implementation pricing, month-to-month contracts, and low monthly fees. In addition, because the solution features multi-language and currency capabilities, manufacturers have the choice of operating from a single site, from multiple sites in one country, or from multiple sites in countries across the globe. The only disadvantage (and a relatively minor one at that) is that the solution is a comprehensive, functional suite, which means full deployment can take up to three months.

With regards to facilitating faster implementation, the GSInnovate solution offers a knowledge center that houses Glovia Services' extensive experience and processes to provide customers with complete services for implementation and support. The technology service infrastructure of GSInnovate is powered and serviced by two renowned brands in the global technology marketplace—Fujitsu and partner T-Systems, a sister company to T-Mobile and a division of parent company Deutsche Telekom. The solution is being offered at a monthly, per user subscription fee that includes access to the "all you can eat" available functionality. As an illustration, the list price for ten users is $6,500 (USD) a month, while for twenty users the cost is $9,000 (USD) a month. The GSInnovate solution includes a number of best practice templates that aim at a speedy setup and for a onetime setup fee of typically less than $75,000 (USD), although there may be extra charges for larger customers. The target market is manufacturers with up to $50 million [USD] in revenues.

What distinguishes GSInnovate is the solution's "direct sell-direct support" philosophy, which may have short-range benefits, as the business model and value proposition of Glovia's partners have yet to take their place in the market. Also, customers may see the value of a direct sales team that understands the manufacturing market as well as the types of problems specific to small businesses.

However, history has shown that value added resellers (VARs) are critical to penetrating the local markets with their regional touch and knowledge. See The Cha(lle)nging World of Value-added Resellers. Thus, Microsoft has opted for a hybrid subscription hosted model named Service Provider License Agreement (SPLA) program, which is a "monthly rental of ERP" in which Microsoft and its partners are increasing deployment options for customers. Namely, partner VARs and independent software vendors (ISVs) can provide Microsoft Dynamics ERP products (which will remain in a single-tenant architecture for the foreseeable future) as a service and as a monthly fee, with the on-premise switch option if necessary. Time will only tell whether this customer choice will be more important to customers than the above mentioned potential benefits of true multi-tenant SaaS deployments.




SOURCE:
http://www.technologyevaluation.com/research/articles/an-erp-vendor-with-its-powerful-parent-backing-tackles-software-as-a-service-18880/

IFS Continues to Blossom

Event Summary

On February 14, Industrial & Financial Systems (IFS AB) announced an increase in net revenue for 1999 to Swedish Kroner (SEK) 1,948 M compared to SEK 1,238 M in 1998, an increase of 57% compared with the previous year. License revenue rose by 49% to SEK 552 M as compared to SEK 371 M in 1998. IFS reported a loss after net financial items of SEK 147 M as compared to SEK 10 M in 1998.

IFS has been the fastest-growing vendor among the world's largest suppliers of enterprise applications over the past two years. Bengt Nilsson, president of IFS, commented: "IFS reports continued strong growth in revenue compared with our competitors. This can be attributed to major new sales of IFS' enterprise applications, among other things. The third generation of our component-based enterprise applications - IFS Applications - was shipped in September and has been well received by the market. Moreover, interest in IFS' e-business solutions increased significantly during the end of 1999. During the last quarter, IFS license revenue increased by no less than 70%, which is proof of the increasing demand for our advanced component-based enterprise applications and eBusiness modules."

"Market sales on the whole were considerably lower than expected during the latter part of the year due to customers' wait-and-see attitude toward the new millennium," continued Bengt Nilsson. "The lower growth rate in consulting revenue reported in the third quarter continued into the fourth, resulting in excess capacity among IFS consultants during the second half of the year. We expect our capacity to be fully utilized during the first half of 2000."

During the fall, IFS has further enhanced IFS Applications with an increased number of components for e-business. The 2000 generation of IFS Applications, because of its component-based architecture and rich array of Internet functions, is particularly suited to projects within e-business. Bengt Nilsson explained: "Today, a significant part of our sales to both new and existing customers encompasses e-business. A large number of IFS' 3000-strong customer base will need various types of e-business solutions, and IFS has developed systems to help them find the right solution."

IFS made major investments in the USA during the year through the acquisition of the US Manufacturing Execution Systems (MES) vendor, EMS, Inc. During the last quarter, 12 new contracts were signed, and net revenue in the USA for the fourth quarter rose by 283%. Bengt Nilsson commented: "Integration of EMS has gone well. IFS is now well positioned in the USA, which represents 40% of the world market. In the coming years, US operations will significantly increase their share of the Group's overall net revenue."

In November, IFS started its outsourcing unit, @IFS, which operates and maintains enterprise applications and e-business operations for IFS customers. The first customers were signed in November. In the middle of February, @IFS had nine new customers. "This operation has got off to a flying start. Customers hire us to do what we are best at, which allows them to concentrate on what they do best. We started in the Nordic region, and the USA is next in line," continued Bengt Nilsson.

The market for enterprise applications is expected to improve successively during 2000, reaching a growth rate of 20-35%. Bengt Nilsson adds: " In our assessment, IFS will continue to grow faster than the market. Moreover, operating margins in several of IFS' established markets are expected to increase as demand can be met with only a limited need for new recruitment." IFS had 3,226 employees at the end of the year, an increase of 67%.

Market Impact

We believe that IFS is in the driver's seat. It was one of the first ERP vendors to incorporate concepts of component technology, Internet and e-Commerce, and a high-level of integration with both its own and other vendors' components; all providing for flexibility, modularity, ongoing post-implementation system agility, and incremental deployment.

Concurrently with componentization of its suite, IFS has also developed the functionality depth and breath of its product. IFS Applications encompasses Front Office, Supply Chain Management, and E-Commerce functionality, in addition to conventional ERP modules. Moreover, the future incorporation of EMS's MES functionality may provide the Company with an almost "one-stop shop" functionality.

IFS also faces notable challenges. In order to maintain its strong growth, particularly in its global service and support execution, the Company will have to continue with service provider acquisitions. This may lead to both financial indigestion and poor management effectiveness.

Low profit margins in fiscal 1998 and a hefty loss in 1999 (See Figures 1 & 2) will not be looked upon favorably by discerning non-European investors. This could be an impediment to providing equity for the channel acquisitions needed to continue strong growth and increase its currently developing global market presence.

Furthermore, IFS's product portfolio, assembled through a number of recent acquisitions may see delays and costs resulting from resolving integration issues. Some modules, like Payroll, and more comprehensive Customer Relationship Management and Business Intelligence modules, are also not available at this stage and require an interface to 3rd-party software.





SOURCE:
http://www.technologyevaluation.com/research/articles/ifs-continues-to-blossom-15500/

Software as a Service for Customer Relationship Management and Sales

Major Vendors Brace for SaaS

The emergence of independent software as a service (SaaS) providers has created a major competitive challenge for most of the established independent software vendors (ISV). The Wall Street Journal (WSJ) released a series of excerpts from a Microsoft internal memo, where Chairman Bill Gates warned his top executives of the SaaS threat. In these excerpts, Gates called on Microsoft to jump toward the trend of SaaS over the Internet. Some are comparing the memo to his call in the 1990s for Microsoft to embrace the Internet and in the early 2000s to embrace Web services. These calls led to the ubiquitous Microsoft Internet Explorer (IE) browser and Microsoft Service Network (MSN) on-line services, and Microsoft's .NET framework, respectively. Gates also demonstrated a type of "SaaS clairvoyance" in 1998, when he sent a fourteen page internal memo outlining a future, which included what he called a MegaServer, a gigantic server connected to the Internet that would allow on-demand delivery of any type of information to a user from any computer, television set-top box, palm-size personal computer (PC), or other device. A revealing e-mail from Microsoft's chief technical officer, Ray Ozzie, is also about software services, and is especially relevant in light of Bill Gates' memos (http://www.scripting.com/disruption/ozzie/TheInternetServicesDisruptio.htm).

This is Part Three of the four-part Software as Service Is Gaining Ground series.

Now Microsoft includes everything in its SaaS vision, from add-ons to future versions of Microsoft Office, to hosted Microsoft Exchange, to next-generation MSN services. Still, Microsoft's most recent unveiling of Microsoft Windows Live and Office Live ironically did not have much to do with offering Windows or Office as services, and consequently was received merely as a re-branding of MSN consumer services that are already available or under development. In addition to using the Microsoft SharePoint portal technology to support Office Live, Microsoft might tout its experience running enterprise-class services, including Office Live Meeting for Web conferencing and FrontBridge, a managed service focused around e-mail cleanliness. But because those services were obtained through acquisitions, the behemoth cannot point to native expertise in developing enterprise services.

In early 2006, Microsoft plans to release business services linked to internal deployments of Office, targeted at companies with ten or fewer employees. But, it is still unclear how it plans to turn its enterprise-class software into corporate services or how it will offer hosted services for its current collection of Windows Server System and Office System products. At least, the giant has indicated its intentions to bring Microsoft Dynamics CRM (formerly Microsoft CRM) and other business applications into the services fold to combat companies such as Salesforce.com, RightNow, NetSuite, and Salesnet.

However, many other larger vendors initially dismissed SaaS, application service providers (ASP), and other hosted arrangements as lightweight and unsuitable to enterprise-class customers. But they are gradually "reversing course". For instance, Siebel (soon to be part of Oracle) has already offered Siebel CRM OnDemand, which should come in handy for Oracle in terms of its hybrid on-premise/on-demand offering. Additionally, SAP has taken notice of vendors, like Salesforce.com, that are making notable headway in the SaaS market.

SAP's Pragmatic On-demand Approach

Until very recently SAP's SAP Hosting division was not competing directly in this area, since it did not provide a subscription-type service. Instead, it preferred to give cash strapped customers a lower entry cost, giving them the chance to spread out the software cost over a few years through SAP Financing programs. Moreover, SAP Hosting was positioned to provide more complete SAP-centric solutions including operation, application, and infrastructure management.

However, in early February, after nearly a year of flirting with the idea, and in line with its commitment to provide enterprise customers with solutions that meet both current and future business needs, SAP announced it was expanding its on-premise mySAP Customer Relationship Management (mySAP CRM) solution to include an on-demand option. The SAP CRM on-demand solution is designed to allow large and midsize organizations to manage sales, service, and marketing with an easy-to-use solution that is delivered directly via the Internet and is offered through a subscription-based licensing model.

In making the announcement, SAP unveiled its first on-demand product, the SAP Sales on-demand solution, which is designed to help organizations manage their customers, contacts, and sales pipelines with affordable, simple-to-use, and easy-to-configure tools. Available immediately, the on-demand sales solution will be followed by additional on-demand customer relationship management (CRM) offerings, including marketing and service products, intended for release in 2006 in quarterly waves. The SAP Sales on-demand solution is offered to customers on a $75 (USD) per user, per month pricing program based on pre-defined scope. The solution is available globally, with initial language options in English and German. Additional language-specific versions, including French, Japanese, Portuguese, Spanish, and Chinese versions, will be rolled out over the next three months or so.

The SAP Sales on-demand solution enables customers to rapidly meet traditional sales force automation (SFA) business needs, such as account and contact management, activity management, opportunity and pipeline management, calendar and task management, and sales analytics, to help companies better manage new and existing business opportunities, lead generation, sales execution, and client engagement. As expected, these core CRM features are served through a new user interface (UI) tailor-made for sales and marketing users, offering a variety of shortcuts and navigation aids and integration with desktop productivity applications for sales collaboration.

While somewhat late to the SaaS party, and only with basic SFA functionality for the time being, SAP claims to have at least created the first hybrid CRM solution that transcends the on-demand (i.e., immediate deployment, immediate business impact, and fast user adoption) versus on-premise (i.e., strongly customized solutions for differentiation, cross-functional data, analytics, and business processes, with a 360 degree view of the customer) debate, while integrating with core enterprise solutions in both deployment models.

To facilitate this hybrid approach, SAP has introduced the isolated tenancy model, which by having an additional database architectural layer, combines the high availability and low risk of a single-tenancy approach with the efficiencies and deployment speed of multi-tenancy architecture. SAP claims to have thus bridged the gap between single tenancy and multi-tenancy environments, bringing together the best of both worlds to meet the real requirements of enterprise customers today. The vendor acknowledges that customers appreciate the efficiencies of a SaaS model as found in today's niche, pure-play offerings, including speed of deployment, automatic software updates, and central management to help keep costs low. At the same time, customers are seeking the high availability, security, and low risk that come from the isolated and dedicated resources found in traditional hosting or single-tenancy environments. For enterprise customers, the knowledge that their systems' performance and continuous operations do not depend on the overall usage by other customers at any level, including the database level, is particularly important. With its new isolated tenancy approach, SAP hopes to give customers the benefits of centrally-served software, while delivering a level of independence, along with dedicated technology and resources that assure a safe environment.

Thus, though many observers have noticed a lack of functionality even when it comes to SFA (e.g., sales forecasting, lead routing, quotation management, workflow management, price calculation, other formulaic fields, etc.), SAP touts itself as the only provider whose on-premise and on-demand solutions are based on a common architecture, data model, and common UI. This should provide for a transition that is easy to manage, ensure continuity of data and processes, and minimize change management costs.

Another trait that might differentiate SAP is its flexibility, in that, unlike other vendors, SAP will not lock customers into long-term contracts for its on-demand offering. Furthermore, as one would expect (given SAP's larger on-premise install base), the solution was designed from the ground up to integrate (albeit with some tweaking) with enterprise systems, such as enterprise resource planning (ERP) and supply chain management (SCM) solutions, in order to deliver wider business process execution and improve the transparency of customer interaction. The idea behind this is to enable a seamless transition to on-premise deployment when the business is ready for more robust and strategic CRM capabilities. This continuity in customer relationships and adoption should be possible owing to the same data model, consistent user and administration data, consistent customizing and configuration, consistent functionality, and the fact that the UI and database structure are the same between SAP's on-demand and on-premise solutions, which is something that not many competitors can brag about. For instance, the likes of Salesforce.com do have application programming interfaces (API) that support Web services and are simple object access protocol (SOAP) and extensible markup language (XML) compliant, but, given the lack of, for example, an item master in these applications, there are many decisions to be made before truly integrating an order management process into these on-demand CRM applications.

SAP also announced that it has extended its long and proven strategic alliance with IBM in order to provide on-demand application hosting services for the SAP CRM on-demand solution. IBM will supply expertise in helping customers innovate, for example, in how they reap the benefits of their CRM deployments. IBM will also provide safe, secure, reliable, and highly-available hosting services—based on proven IBM eServers and DB2 database technology. The SAP solution will be powered by IBM's Applications On Demand Platform, which automates application hosting and management to provide a scalable and efficient platform for running business applications.


SOURCE:
http://www.technologyevaluation.com/research/articles/software-as-a-service-for-customer-relationship-management-and-sales-18456/

A Supply Chain Applications Vendor Expands Beyond Its Roots

P.J. Jakovljevic

Click Commerce is a thriving provider of on-demand supply chain management (SCM) solutions for a variety of worldwide industries. The vendor has evolved beyond its roots, into a provider of much more comprehensive on-demand supply and demand chain management software, consulting, hosting, and related services that should enable users throughout the world to collaborate (that is, to work jointly with others), in near real time, and conduct commerce (exchange ideas, opinions, sentiments, products, etc.) with business partners across an extended enterprise.

Part Two of the series Will a Tool Manufacturer and a Supply Chain Software Vendor "Click" in Matrimony?

For example, Click Commerce Supply Chain Management (SCM) solutions were acquired in February 2005 via Optum, a former warehouse management systems (WMS) vendor (which in 2004 had acquired V3 Systems and WorldChain, providers of software for supplier management and vendor managed inventory [VMI], respectively). These solutions provide supply chain execution (SCE) and WMS solutions for multi-tiered supply chains, and include a radio frequency identification (RFID)-ready demand fulfillment solution. These solutions also enable supply network communications, coordinate business processes and services, and optimize supply chain functions (see Who Needs Warehousing Management and How Much Thereof?).

With this technology, Click Commerce clients can receive orders and other information from customers who have implemented RFID initiatives, and can run their warehouse and fulfillment operations using the same RFID information that their customers use in their retail operations. The solutions are designed to function independently of one another, or in tandem for tailored enterprise network environments, although each solution includes Click Commerce's integration platform, best business practice methods, and a supply chain intelligence dashboard. Supported supply chain business processes include supplier enablement; fulfillment coordination; service logistics; shipment execution; and warehouse management.

In May 2006, Click Commerce released MOVE version 8.1 of its WMS software, which aims at enabling user companies to offer more value-added services, and provides support for RFID- and voice-enabled operations in the warehouse. MOVE 8.1's value-added services allow companies to offer such services as customer personalization, complex final assembly and light manufacturing operations, and support for reverse logistics requirements in the service supply chain. The release also provides RFID capabilities integrated with basic warehouse operations, such as receiving, put-away, picking, and shipping. In partnership with Vue Technology, the leading provider of item-level RFID, the RFID-integrated solution should increase productivity and inventory accuracy in the warehouse. It should also provide the ability to pull inventory through the supply chain network based on real-time demand to avoid stock-outs, and thus likely deliver increased customer service levels and lower supply chain costs (see RFID—A New Technology Set to Explode?).

In addition, the release further enhances MOVE's voice functionality, which creates a dialogue between warehouse employees and the WMS. MOVE 8.1 uses a voice-directed interface that allows warehouse employees to use a headset to communicate vital warehouse information about inventory operations, rather than inputting the information into a cumbersome handheld device. The solution, which includes technology from Vocollect, should result in increased labor productivity, improved inventory accuracy, and better safety for the company's warehouse workers.

The new release integrates with the Click Commerce Enterprise Service Bus (ESB), which enables extensible markup language (XML), electronic data interchange (EDI), or flat file communications between the WMS and external systems, as opposed to requiring a costly middleware provider. With the Click Commerce ESB, companies can integrate MOVE 8.1 with other applications, since the solution is based on open standards and uses service-oriented architecture (SOA), enabling composite applications to be tailored to users' business processes, instead of having to work in a predefined framework. The ESB integrates Click Commerce applications to work as a suite of products by leveraging Web services and business process execution language (BPEL) to orchestrate the flow of information between disparate applications (see Understanding SOA, Web Services, BPM, and BPEL).

More Acquisition-based Expansions

The Click Commerce Service Parts Planning and Optimization (SPP&O) solutions, which were acquired in May 2005 via former Xelus, are designed to improve the performance of customers' service and repair activities, and their investments in spare parts inventories. These solutions are particularly important for companies in the aerospace and defense (A&D), automotive, and high-technology industries, where maintaining and repairing complex equipment is critical (see Lucrative but 'Risky' Aftermarket Business—Service and Replacement Parts SCM). These products are designed to help optimize the procurement and distribution of spare parts inventories, the deployment of parts to optimal stocking locations, and the flow and disposition of inventory through the repair loop (and back into usable stock).

The SPP&O applications have a broad view of the service network, and provide strong planning capabilities coupled with an integrated tool for bridging the information gaps between partners. Embedded algorithms identify and address issues related to a user company's service parts supply chain, and help companies determine disposition and routing at each step: return, receipt, repair, and restock. Owing to Xelus' forays in leveraging RFID in tracking and analyzing service parts, Click Commerce has broadened its footprint with the service parts planning and reverse logistics expertise of Xelus. This should help them to eventually manage the entire gamut from ordering, moving, and fulfillment of parts (in other words, from raw materials), to subassemblies and finished goods, to aftermarket spare parts. Supported service supply chain business processes include parts planning optimization; product acquisition; reverse logistics; inspection and testing; reconditioning and repair; and distribution and sales.

To further expand its portfolio, in November 2005, Click Commerce acquired Requisite Technology, Inc., which enhanced Click Commerce's catalog offering by adding a master data management (MDM) capability that enables collaborative commerce and RFID programs (see Customer Data Integration: A Primer and SAP Bolsters NetWeaver's MDM Capabilities). Requisite's MDM software, which transforms disorganized plant, material, and finished product data into consistent information repositories, is currently embedded in some of the world's largest enterprise resource planning (ERP) provider's solutions, with approximately 400 of these customers actively using elements of the Requisite solution. The solution had already been in use on a software as a service (SaaS) basis (see What Is Software as a Service?), with various leading business process outsourcing (BPO) providers using the applications to support their procurement operations. Also, Requisite had delivered infrastructure and services (directly and through its global service partners, including Atos Origin) that made manufacturers' MDM and related cost reduction projects successful.

In addition to providing MDM capabilities, the acquisition added patented technology and increased Click Commerce's presence in Europe with additional sales and support staff in key markets. This provided the vendor with additional opportunities to deliver its demand, supply, and service chain collaborative commerce solutions (see Will a Tool Manufacturer and a Supply Chain Software Vendor "Click" in Matrimony? for more information). The acquisition also broadened Click Commerce's solutions portfolio to include Requisite's Bugseye patented search engine, Content Workstation content cleansing, alignment and validation tools, and eMerge content aggregation and workflow management tools. It also provided a framework for using data across many different levels (industries, regions, companies, and departments). Requisite provided software to many different industries and end users, including the A&D, commercial aviation, consumer goods, contract repair, high-tech, telecommunications, petrochemical, and transportation industries. Some of Requisite's leading customers include BASF, Eastman Kodak, Graybar, Marathon Ashland Petroleum, and Union Bank of California.

Mastering Data Management and Synchronization

These Click Commerce solutions enable companies to manage information about any type of item, including finished goods for resale; direct materials used in manufacturing; and indirect materials used in maintenance, repair, and overhaul (MRO) operations. These solutions also enable companies to create, collect, align, and enhance data to provide a uniform version of information, regardless of catalog needs. The search capabilities allow users to search aggregated information to find relevant results, and to have access to item details and images. Consequently, the solution suite, re-branded as Click Commerce Master Data Management (MDM), now consolidates and manages widely distributed master product data within an enterprise. Its solutions provide a single, consolidated version of this information, which should improve the accuracy of dependent systems, and reduce errors arising from data duplication and inaccuracy.

The product suite is intended to address problems caused when a user company maintains its master data in raw or "native" form in multiple, disconnected ERP and other enterprise systems, while lacking the detailed descriptions, product attributes, and classification structures which permit corporate-wide analysis and visibility into cost and performance. Customers thus use MDM solutions to deliver core services and infrastructure to turn raw master data into more readily available product information that can be acted upon to cut costs, deliver products faster, and boost competitiveness. Supported MDM business processes include cleansing and normalizing existing data; organizing and mapping data to internal structures; integrating to MDM or ERP legacy systems; and conducting master data maintenance. The Click Commerce MDM solution does not replace enterprise applications or the data contained therein, but rather enhances the existing ERP system, thereby helping to reduce customer costs by integrating its solution with tools and processes already deployed throughout an organization.

The strategic intent behind these numerous acquisitions might be best shown by the fact that Click Commerce's global data synchronization (GDS) and secure communications solutions (acquired in 2004 via bTrade) complement its MDM capabilities by allowing companies to communicate normalized master data with their trading partner community via the Internet. Data synchronization is an industry-wide retail initiative that requires manufacturers and suppliers to "sync" product information with their retailer customers, and Click Commerce has identified GDS as one of the building blocks for an RFID-enabled supply chain. Conveniently, bTrade was one of the top five solution providers in data synchronization (along with UCCNet and other major standard-setting bodies). UCCNet had previously selected bTrade software to handle communications with the trading partners, and retail supplier on-boarding in North America. Today, this software handles communications for the global registry for the worldwide retailer industry. Furthermore, bTrade had early relationships with leading retailers like Wal-Mart, SUPERVALU, and Home Depot, and was well on its way to establishing itself as one of only ten data pools in the world.

Service Contract Management

Additionally, in February 2006 Click Commerce acquired substantially all of the operating assets of Elance, Inc., based in Mountain View, California (US). This provided on-demand e-commerce solutions for contractor management services business, with capabilities enabling companies to find, evaluate, purchase, manage, and pay contractors and third party service providers. After the sale of the services and contractor management business, Elance concentrated on its Internet business and the growth of its online service for small business outsourcing.

As manufacturing companies outsource more and more of their operations, buying and managing third party services and service providers becomes a real challenge. Click Commerce believes the addition of services and contractor management capabilities creates significant cross-selling opportunities in the A&D and contract manufacturing verticals, as well as in its core markets of high-tech, financial services, and institutional research. Click Commerce has continued to offer Elance outsourcing management software as a service to many other industries, including the energy, manufacturing, transportation, and utilities industries. Elance reportedly estimated that in 2005 its customers used its solutions to manage over $7 billion (USD) of their services and contractor spending on information technology (IT), contingent labor, operations, management consulting, marketing, print, and other service projects. The customers of this Elance business include a number of existing Click Commerce customers, such as FedEx and Motorola, as well as other well-known companies, like American Express and British Petroleum (BP). The acquisition also included two foreign Elance subsidiaries, which expanded Click Commerce internationally by increasing its European presence with additional sales and support staff in the UK, and by adding a small software development facility in India.

In 2006, Click Commerce expects the acquired Elance business to recognize approximately $7.5 million (USD) in recurring revenues from its customers' purchasing maintenance, hosting, and services. The majority of employees from this Elance business unit have become Click Commerce employees since the transaction. Consequently, the on-demand e-commerce solutions for service businesses (re-branded into Click Commerce Contract and Service Management products) should enable customers to manage their services and contractor management life cycles. To that end, customers can use these solutions to find, evaluate, purchase, manage, and pay for a wide variety of outsourcing and professional services, and other services. The solutions handle multiple types of services contracts and payment structures, such as time and materials, retained relationships, milestones, blanket orders, service level-based payments, and volume-based contracts. With these solutions, the customers might also realize the benefits of compliance with key policies, laws, and controls for corporate reporting, including the US Sarbanes-Oxley Act (SOX). The solution can also help them manage labor and staffing, and provide visibility into spend volumes, supplier performance, and efficiency.




SOURCE:
http://www.technologyevaluation.com/research/articles/a-supply-chain-applications-vendor-expands-beyond-its-roots-18806/