Category Archives: SaaS

Software-as-a-Service and the Need for Speed

RSAG Research recently released their first annual “Software-as-a-Service and the Need for Speed” Benchmark Report 2007-2008 that found that retailers are feeling the “need for speed” when it comes to delivering new IT-enabled capabilities. This desire is driven from both internal and external pressures; customers are demanding better service from retailers (particularly for multi-channel customer order management), while the internal IT department is challenged to keep up with demands both from within and outside the company.

RSAG classifies retailers as winners, average, and also-rans. Whereas 34% of respondents “don’t know” what the value of SaaS is to their companies,

winners, defined as retailers with sales above the industry average sales growth of three percent, only 19% of winners are unsure what the value of SaaS is to their organization, and 41% of winners have “moderate” or “high” expectations from SaaS implementations over the next two years.

There are additional, subtle differences in how winners view SaaS as an option. Whereas average and laggard companies view SaaS as a “Fix”-It solution to do more, do it faster, and do it for less, winners view the SaaS delivery model as a way to accelerate value. Winners are also more influenced by their desire to meet the needs of their customers and trading partners then they are by IT’s capabilities or the cost of systems acquisition and integration.

It’s nice to see that at least in one industry, the majority of “winners” are starting to see the value of the SaaS delivery model and how it can enable an organization in weeks or days, and not the months or years it often takes to install behind-the-firewall enterprise-wide solutions.

In addition to a lot of great statistics, the report offers some good bootstrap recommendations for finding candidate SaaS applications for companies in general.

  • Examine the IT backlog and pick a target application with relatively low risk but demonstrable value to start, remember that
  • ROI wins, and be sure to
  • ensure top-executive support.

the doctor’s Guest Posts: The Year in Review

Over the past year, I’ve blogged a number of guest posts over on eSourcing Forum, including forty posts last summer as part of the weekend series. For new(er) readers to the blog, here is a list of all guest posts over on eSourcing Forum with direct links.

Weekend Series Posts on e-Sourcing Forum [WayBackMachine]

Purchasing Innovation I: An Introduction
Purchasing Innovation II: TRIZ
Purchasing Innovation III: The Verifier Approach
Purchasing Innovation IV: Innovation Continued
Purchasing Innovation V: Sourcing the New Organization
Purchasing Innovation VI: CrowdSourcing
Purchasing Innovation VII: The Road Ahead
Purchasing Innovation VIII: Transforming New Product Development
Purchasing Innovation IX: The Purchasing Evolution!

On Demand I: The Good
On Demand II: The Not-So-Bad
On Demand III: And the Coming Pretty …

Cost Reduction and Avoidance I: An Introduction
Cost Reduction and Avoidance II: Metrics
Cost Reduction and Avoidance III: Incentivize for Success!

Supply Risk Management I: An Introduction
Supply Risk Management II: Risks and the Need for Resilience
Supply Risk Management III: Managing Risk

Supplier Performance Management I: An Introduction
Supplier Performance Management II: The Road to Success
Supplier Performance Management III: Best Practices

Demand Driven Supply I: An Introduction
Demand Driven Supply II: Stages and Implications
Demand Driven Supply III: Challenges and Implementation

Center Led Procurement I: An Introduction
Center Led Procurement II: A Center of Excellence
Center Led Procurement III: Best Practices

Procurement Outsourcing I: Is it right for you?
Procurement Outsourcing II: Selecting a PSP
Procurement Outsourcing III: Getting the most out of your PSP

Optimization I: A Powerful Tool
Optimization II: Why it was Relegated to the Shadows
Optimization III: Why it’s time is finally here
Optimization IV: POE or BoB?

Six Sigma I: An Introduction
Six Sigma II: Innovative Quality
Six Sigma III: Value Based Strategic Sourcing

Weekend Series Wrap Up I: Process and Technology
Weekend Series Wrap Up II: Supply Chain Management
Weekend Series Wrap Up III: The Innovation Revolution

Miscellaneous Posts on e-Sourcing Forum [WayBackMachine]

* Lead Time Optimization: Groundbreaking New Technology or just Applied Total Value Management-based Decision Optimization in Disguise?
* Sustained Sourcing Success
* Are there any limits to procurement’s role?
* Outsourcing Gets Tough
* Design for Supply
* The Benefits of an End-to-End e-Sourcing Suite
* Accelerating Value with On-Demand: An Aberdeen Perspective
* Supplier Enablement Enables Savings

And just in case you missed it, here’s a link to the chaos-causing post on Emptoris’ optimization over on Spend Matters:
The Doc’s Perspective on Emptoris’ Optimization*

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

On Demand VI: The Future Will Not Be Boxed!

Recently, Knowledge@Wharton ran a great article on “Why Software Business Models of the Future Probably Won’t Come in a Box” that made some great points that are definitely worth repeating, despite the fact that the article is focussed primarily on Microsoft and the challenges that lie ahead for the lumbering behemoth.

The article begins by noting that the software business model that has made Microsoft so dominant for the last 20 years may begin to fade in the decade to come as new software business models — from open source to advertising supported software — gain increasing traction. (The article is being kind. I think it’s safe to say that this is not a “may”, but a “will”, and that the only unknowns are how soon?, and by how much?)

“Open-source“, which largely relies on voluntary programmers to build applications that are distributed freely; “enterprise open-source“, where a company builds a basic application and gives it away for free, making money on either services and support or on custom / extended versions; “ad supported” software which is free to consumers if they agree to accept advertisements; and “on-demand” software where

customers rent software applications when they need them and pay only for what they use are all gaining in popularity.

According to Kendall Whitehouse, a senior director of information technology at Wharton, there probably isn’t one model that will win out; instead you will have a blend of business models. Kartik Hosanagar, an operations and information management professor at Wharton, agrees that a hybrid model, consisting of all of the above contenders and some traditional licensing, will likely emerge in the software industry.

The article also points out a major advantage of on-demand and open-source applications: they can evolve more quickly. (For more advantages, see Part I on e-Sourcing Forum [WayBackMachine].) Furthermore, in the corporate setting, you don’t really own boxed software as much as you pay for access to it. By the time you factor in the cost of routine updates and maintenance, perpetual licensing costs a lot more than the up-front license fee. That’s probably why companies offering access to on-line subscription services are adding customers at a rapid clip – and why you should be looking primarily at on-demand or enterprise open-source solutions when you select your supply chain applications. It’s the future!

Is it the case that Spend Matters Most?

As per my Noteworthy last week, Iasta (acquired by Selectica, merged with b-Pack, renamed Determine, acquired by Corcentric) is about to release it’s new Spend Analysis platform SmartAnalytics, Emptoris (acquired by IBM, sunset in 2017) building on it’s acquisitions of Zeborg and diCarta, just released the new version of its enterprise suite with its new and improved Spend Analysis Solution, and earlier this year Procuri (acquired by Ariba, acquired by SAP) consumed TrueSource to offer TotalAnalytics – and Zycus is gaining ground everyday. It looks like the time has finally come for the big spend analysis vendors. And none too soon. After all, how can you identify your ripest targets for strategic sourcing without understanding your spend? And as Jason points out over on Spend Matters, spend visibility and analytics applications can become an invaluable solution for tactical everyday procurement activities as well as areas that are truly strategic on the board level. It’s definitely a growth area for the eSourcing vendors – especially the on-demand ones.

But is it ready for prime-time? Not only are some of these offerings new and relatively unproven in the field, but they also require a level of sophistication well beyond your simple RFXs and reverse auctions that are still the mainstay of many eSourcing users. And I know there are still many individuals that believe a centralized ERP will give you the spend visibility you need to do proper spend analysis – which is not the case, and you should check out Tim’s response in the comments to Jason’s post for a real world example as to why.

In most cases, I know the solutions are there. Zycus is one of the only remaining pure players and has a very attractive offering based on its success stories alone. Zycus has amassed numerous wins over its seven year history and Procuri has successfully integrated TotalAnalytics to amass some success stories of their own. As noted in Spend Matters, Consider the case of a pharmaceutical company — who will go unnamed — which has used TotalAnalytics to help quantify and accelerate procurement cost savings synergies in three multi-billion dollar acquisitions. This company has used the solution’s capabilities to define and track over 60 category management programs, enabling them to leverage spend and rationalize suppliers across acquired and existing divisions. This leaves us with Emptoris and Iasta.

Iasta’s solution makes the cut since they based it on one of the most powerful on-demand spend analysis engines available, integrated it into their platform, and extended the out of the box reporting capabilities available. I’ll have more to say after the formal release, which is forthcoming in the very near future.

Emptoris has also had some big wins, and has had their eSourcing suite with their initial spend analysis solution ranked #1 by Forrester in Q4 of 2005. So they are definitely a real player, but I’m a little concerned if their new solution is ready for prime time from a usability perspective. It is probably the most aggressive spend analysis offering on the marketplace today, with a new Spend Data Classifier, a new Real Time Spend Classifier, new import / export facilities, and a slew of add-ons for government watch list, credit score, and diversity rating integration, among other features. Now I know that Emptoris knows their stuff, it’s a challenge to find a question on an Emptoris product or capability that Kevin (Potts) cannot answer and Avner (Schneur) is absolutely correct when he says that with accurate and granular spend visibility, companies can gain greater control over and impact on their bottom line through improved sourcing and supply and contract management – and they have already delivered significant results. But when your average eSourcing user is still daunted by basic spend classification and decision optimization (just look at the recent Purchasing Survey), I wonder if they are going to be able to digest Emptoris’ new offering, especially considering Emptoris is still a traditional installed behind-the-firewall application where you only get maximum value from maximum deployment? I know it looks great in a power point presentation, but it can be hard to hide that much underlying complexity. If you’ve seen it in action, used it, or have your own take, please feel free to leave a comment.

Eight Figures for an ERP? Think again. Think Compiere.

ERP – Enterprise Resource Planning – the be-all and end-all of business software – all of your transactional data in one place – everything you need to run your business – only seven figures! That was the promise.

The reality is much different. Seven figures for the software license. Multiples of that for the installation. That much again for the annual maintenance contract. In the end, it was an eight figure system – that if you were lucky recorded the majority of your transactions, in such a way that you couldn’t derive any intelligence out of the system without buying expensive modules for each business domain that sat on top of the ERP to allow you to create your financials, run human resources, create your manufacturing plans, negotiate your contracts, etc.

And that’s if you were lucky – if you weren’t, you couldn’t afford a real ERP and had to settle for a smaller, imitation system that probably only contained some set of transactions for the business unit that maintained it, was only accessible by a few people, and didn’t even meet their needs – leading to home-grown ad-hoc systems created by mavericks in an effort to do their jobs.

Either way – you probably have a solution that does not meet your needs. A system that requires more modules or third party add-ons than you can afford to be truly effective or a system that does not have the core capabilities or third party support. But what can you do? If you haven’t fully depreciated your mainstream ERP, you can’t afford to rip-and-replace, and if you don’t have one, you just can’t afford one.

You can look to open-source! And no, I’m not stark raving mad. Once the exclusive domain of big international multi-billion dollar software vendors, even ERP is now available open source. Compiere is a fully functional open-source ERP with built-in CRM functionality that is being used today by hundreds of companies all over the world. In addition, Compiere has amassed almost 100 partners in countries all over the world – so local support is available. And because it’s open, anyone can build extension modules on top of it, and custom modules for various domains are already being offered by it’s partners. Furthermore, Compiere and some of its partners are already hosting instances on-demand. And no, I do not believe I’m insane.

If you’re not an IT company, why not host your ERP on-demand? If it’s not your core business, why maintain an expensive 24-hour IT operation with redundant power supply, internet connectivity, real-time failover, automated off-site backups, IT security experts, always available on-call tech support, etc? After all, with today’s encryption and security protocols, communication security is probably the least of your security concerns.

For those of you who are already open source converts, you might be a little disappointed that Compiere was built on Oracle, but fear not! Compiere just received a significant amount of funding, relocated to Santa Clara, is in the process of completing a Sybase port, and it’s a safe bet that a MySQL(X) port may occur in the future!  (MySQL(X) may not have the required functionality to support Compiere yet, but MySQL(X) improves every year!)

It’s a procurement professional’s dream come true. No huge up front spending for an ERP system that may or may not deliver. With Compiere on demand, you’re paying for the system and support that you use, when you use it, and you’re not locked in!

Furthermore, you just know that a complete open-source-based on-demand procurement system with Compiere at its base is around the corner. After all, Rearden Commerce is less than 30 miles away in its San Mateo offices and there are a number of e-Procurement companies, like Ketera (which was acquired by Deem in 2010) nearby.  If these three companies adapted their APIs to allow you to merge their solutions, it would not be long before you could manage 100% of your contracted materials and services procurement spend. Rearden excels at services, Ketera is good for indirect procurement, and ERP-based planning and forecasting systems are the foundation of your direct materials spending.

I know it’s just pure speculation, but if these three companies made it easy to integrate their solutions, you’d be able to run your entire procurement effort on-demand! Then you could run your entire sourcing and procurement operation on-demand! After all, with respect to a complete solution, we have only left out sourcing (remember, procurement is the acquisition phase, sourcing the predecessor negotiation phase) and visibility (since, at a high level the cycle is Source-Acquire-Monitor). But wait — companies like Iasta (acquired by Selectica, merged with b-Pack, renamed Determine, acquired by Corcentric) have been offering (complete end-to-end) sourcing suites on-demand for years and now we have companies like Apexon offering on-demand visibility solutions!

As a side note, Compiere is holding it’s annual Partner Conference next month in Santa Clara – October 20-21 at the Embassy Suites at 2885 Lakeside Drive in Santa Clara. Check out Compiere’s Events Calendar for more details.