Onyx/Pivotal Rivalry Through Thin Rather Than Thick

Background

The latest round in the rivalry between Onyx Software Corporation (NASDAQ: ONXS) and Pivotal Corporation (NASDAQ: PVTL; TSX: PVT) began with their inceptions in 1995 and 1994 (respectively) and focused on an attempt by Onyx to buy Pivotal. This rivalry reflects the current state of the customer relationship management (CRM) mid-market.

Overall the CRM software market remains a land of opportunity, but one with many treacherous patches of quicksand, install-base or product scope-wise, for those uncertain about the breadth of their footprints in the field. It is a no-brainer fact that the 2000s have been adverse years in the entire enterprise applications market. Following the whopping growth rates of the late 1990s, and the spending surge on sexy e-business-related technology in 2000, hard times worldwide in almost all sectors have subsequently morphed into harrowing times for enterprise systems providers alike. While the biggest and richest vendors have been able to hang onto flat new sales, modest declines, or in some cases, modest growth, only the lucky and most apt few with true differentiation in a selected number of markets (such as warehouse management or supply chain execution [SCE] or supplier relationship management [SRM]) have bucked the trend to show some enviable growth of late (see The Hidden Gems of the Enterprise Application Space).

It might be of further interest to analyze the recent years of the enterprise resource planning (ERP) and CRM markets to discern how fortunes may often fluctuate and go in different directions at certain phases of their life cycles. The term "ERP", though not necessarily coming back into fashion, certainly is no longer the bad, pass term of a few years ago when almost all vendors were distancing themselves from it like it was the plague because ERP was perceived as off-putting (i.e., intra-enterprise versus entire external supply chain and collaboration focus). At the same time, anything associated with customer or front-office interaction was all the rage, attracting both venture capitalists who poured their capital into new startup companies with brave ideas and customers (over)buying these applications because of the then buoyant economy and the apparent need to better manage seemingly mushrooming customer bases. For an extended discussion see Comparison of ERP and CRM Markets' Life Cycle Snapshots.

Similarities

Therefore, having also gathered a number of high-profile early adopters worldwide, and enticed by the then large market capitalizations, Onyx and Pivotal too had followed suit and go public during the late 1990s. Little did they know then about the upcoming dot-com implosion and the economic downturn that followed. Maybe, had they known then what they know today, they would not have repeatedly foregone profits to invest heavily in new product development and sales and marketing. Since their inceptions, both vendors have offered CRM application suites that have been well-attuned to the needs of mid-sized companies. These include much lower price tags, innovative pricing arrangement, and implementation timeframes of the counterpart alternatives for large enterprises (such as those of Siebel Systems). To that end, both vendors have also built their applications on the latest available Microsoft technology stack at the time, and both vendors also claimed the forefront of leveraging the Internet at the time (i.e., browser-based user interfaces [UI], with no need for software download on the client side).

Further, both vendors have (arguably) equally broad sets of operational functionality such as the Pivotal CRM software suite. This suite includes an application platform and capabilities in marketing, sales, service, contact centers, partner management, and interactive selling. Onyx, by and large, covers similar bases. The vendors are comparable on the architecture side too, but so far, few customers have migrated to Pivotal's latest web architecture, version 5.0, since its release in April 2003; however, Onyx did it mid-2002 with Onyx Enterprise 4.0 release, when it web-enabled even its legacy client/server product Onyx Customer Center. Meanwhile, I has released another version, Onyx Enterprise 4.5, and the solution also shares critical information among employees, customers, and partners through three role-specific, web services-based portals. This has resulted in approximately 60 percent of existing customers using Onyx's current release. Onyx groups its products around the primary interfaces that users employ, allowing for customer, partner, and employee interaction through separate portals. Underpinning that is an E-Business Engine backbone, where all CRM data is centralized.

The last few years have been harsh on most vendors in the CRM market segment; however, it has been particularly harsh on Onyx and Pivotal. The economic downturn and the standstill in IT spending have hit each company at a time when it was ramping-up product development and business expansion. Conversely, their primary, traditional nemesis, Siebel, has done a much better job maintain a commanding market lead through organic growth while maintaining healthy profit margins during the halcyon days til 2001. Then, after experiencing its share of difficulties (i.e., revenue drop and subsequent layoffs), Siebel has been maintained at least non-organic growth through acquisitions and still taking away market share from its smaller CRM competitors, if not from the ERP intruders.

Thus, other than their approach to the mid-market, both Onyx and Pivotal feature many common traits like limited customer base, limited market appeal, declining license revenue, and dwindling cash reserves. However, they also have some inevitable differentiating traits.

Pivotal

Pivotal remains interesting to mid-market companies with complex configuration and selling needs, and with the revenue range of $100 million to $2 billion (USD). More than 1,600 companies around the world have licensed Pivotal, whereas Onyx' install base is still less than 1,000. Also, Pivotal has long put as much emphasis on e-commerce enablement as on CRM, which was even reflected at some stage by referring to its main product line as a demand chain network (DCN) or business relationship management (BRM) solutions suite, rather than a CRM offering. The foundation for that has been an XML-based platform that manages relationships and business transactions between customers, partners and employees. On top of that would come the Pivotal's individual applications, which, for example provide capabilities for selling over the web (Pivotal Sales), or enable organizations to synchronize their marketing, sales and customer services over the Internet (Pivotal Marketing, Pivotal Interactive Selling, etc.).

Onyx

Nonetheless, Onyx seems to have a sharper industry focus by serving customers worldwide in a variety of industries, including financial services, healthcare, high technology and the public sector. To that end, Onyx has also long teamed up with Microsoft to jointly sell Windows NT-based CRM software to the financial services sector. On the other hand, as of the release 4.0, Onyx offers support for the Oracle database running either on the Sun Solaris and IBM AIX platforms, which expands the opportunity within the upper mid-market. A deal signed in early 2001 has also allowed the company to ship the Cognos' line of analytic software with its CRM products.

Thus, Onyx seems to have been the more tenacious of the two vendors, and it has also pulled ahead in the last two years, occasionally showing revenue growth and nearly satisfactory quarterly results. Still, one cannot help feeling that Onyx' potential have long been hampered by a loss-making aura, which seems difficult to shake off (see Onyx Software: CRM Vendor Battling for Viability). Still, due to its longstanding web-based architecture, Onyx has been an early adopter of solutions delivery via ASP (application service provider)/hosting option (see Onyx Thinks ASP Opportunities are a Gem), which has relatively recently resulted with the IBM's "e-business on demand" alliance and relationships with companies like Reuters and Metavante.

Moreover, Onyx has lately been demonstrating even more innovative software delivery strategies, by embedding its software into other systems in the form of composite applications. Onyx has been enticing its partners with a few approaches in embedding its technology:



SOURCE:
http://www.technologyevaluation.com/research/articles/onyx-pivotal-rivalry-through-thin-rather-than-thick-17175/

Surado! A Rising Mid-market CRM Provider

Event Summary

Surado, a Riverside, CA company, has been in operation since 1995 and thus far can be considered a deep-rooted mid-market solution provider. Surado CRM comes loaded with features that cover most SMB's CRM needs. The software is quite easy to install and to customize. Surado's Web self-service module based on Microsoft .NET technology and Surado Integration Module 2.0 provide the means to integrate third party back-office applications and give it an advantage over the more traditional stand-alone CRM applications. Surado's CRM solutions are recognized both nationally and internationally, and provide solutions to vertical markets such as financial services, healthcare, government, manufacturing, and high-tech. The CRM Evaluation Center www.crmevaluation.com scores Surado CRM high in many functional areas, against other mid-market software vendors such as Saratoga, Microsoft CRM, Epicor, and Commence Corporation.

Cheryl McCarthy, Surado's Executive Vice President claims that three major objectives in creating the product line were ease of use, quick implementation, and affordability. Beyond basic sales force and marketing automation functionality, Surado CRM provides an integration module they claim eases customization and connectivity with other back office systems, an automatic synchronization (Always-In-Sync) between mobile users and servers, and a module for synchronization with Microsoft Exchange.

Product Definition and Market Impact

Through the guided installation of Surado CRM, the user gets to answer a series of questions that define the basic customization, for example, importing all your contacts, tasks, and calendar appointments from MS Outlook. Users can start running the software in a matter of minutes. There is no need to be a programmer to go through a few simple steps to personalize the interface with custom fields and generate automated business rules.

Although they are insufficient to be considered as vertical modules, preset templates covering areas such as real estate, financial services, life insurance, and more could help facilitate vertical integration. If the user operates principally in the USA, an auto-completion feature can add the zip code to an address automatically. The marketing automation module features permission-based campaign management, across multiple channels including phone, direct mail, Web, wireless devices, e-mail, and direct sales. Leads generated from marketing campaigns can be assigned directly or through an automated workflow to sales teams accessible through the SFA module. Marketing campaigns can be created based on time periods, target audience, and channels.

The Analytics module, although it is more of a reporting tool rather than an on-line analytical processing (OLAP) engine, provides key indicators on campaigns' return on investment (ROI) and opportunities driven by each campaign source.

The Sales Automation module has all the bells and whistles an SFA tool can offer but through its integration with back office inventory and product databases, users are better empowered to create quotes. For mobile users, activities and to-dos can be synchronized with most popular PDAs.

Surado CRM also provides its Customer Service module for help desk and support environments. Both CSRs and Sales representatives can share customer details since there is a single repository for data. The workflow once again fulfills its role to allow rule-based escalation and notification. In addition, Surado's release of its computer telephony integration (CTI) module, based on Intel's NetMerge CT ADE, scheduled for 1st Quarter of 2004, with support for all major telephone switches, will allow a true automated support call center.

Some of the Customer Service module features are a referral tracking system, definitely a smart feature to set up relationships between contacts and to identify strategic alliances for cross selling and up selling; the user interface provides a hierarchical view (tree based model) of all companies with their contacts, and custom fields can be imported and exported from and to other applications. The learning curve to both manage and operate the application should be quite short and thus decrease the cost of ownership. On the down side, the user interface, built on a proprietary design, does not provide a context sensitive right mouse click, which would be much appreciated.

On the technology side, Surado has first confined its application to Microsoft .NET and SQL technology, certainly not an open source architecture. In the upper portion of the mid-market, many potential customers have UNIX based server platforms and carry IBM DB2 or Oracle database systems. Nevertheless, Surado confirms that development for IBM DB2 and Oracle 9 support is underway. Surado's move should open the door to more sales opportunities in the larger businesses.

Surado Strategy and User Recommendations

The Web Self-Service module is Surado's first step in moving toward a web-based application. In its current version, the module provides a web interface for users and customers to access their existing profiles and be able to modify data depending on the permissions granted. The web-based interface also allows users to submit trouble tickets and follow-up on the ticket resolutions or use a knowledge base to search for similar tickets and resolutions. The web server provides for real time submission of all changes to the CRM database.

The administrative view provides a means for setting up process rules, e-mail responses, and alerts. Tickets could thus be assigned to the proper individual with a load-balancing feature that routes tickets based on urgency.

The Self-Service module also allows customers to use the system as a secure login gateway to customer portal sites dedicated for their clients only.

Surado's Web Self-Service module extends the accessibility of the client/server version. Market demand though, is growing towards comprehensive e-CRM applications and portals. A fully web oriented application could represent the right path for Surado to take. Cheryl McCarthy seems to confirm this vision. Surado is also planning to enhance its customer service module and have it linked to telephony systems by including its CTI integration in a future release. The same approach applies to Surado's Analytics module that is poised to integrate predictive modeling and other analytical capabilities into future releases. In addition to a well-positioned pricing scheme, Surado could be considered in the near future as a serious mid-market competitor to bigger players such as Onyx, Epiphany, Amdocs/Clarify, and Pivotal.

Now the real question is: can the software vendor sustain its price and ease of use advantage as it continues to increase in sophistication like other upper market applications?

Surado's marketing module together with its enhanced Analytics module should promise the company a strong CRM positioning since there are huge untapped opportunities for business improvement, customer predictability, and increased niche marketing. Organizations are poised to better coordinate their marketing programs and campaigns thus creating demand for marketing automation suites that include analytics.



SOURCE:
http://www.technologyevaluation.com/research/articles/surado-a-rising-mid-market-crm-provider-17086/

EAI Vendor Active Software Activates Transactions M. Reed - June 1, 2000

Event Summary

Active Software, Inc. (Nasdaq: ASWX), a provider of enterprise application integration software products, today announced the ActiveWorks Application Transaction Coordinator (ATC) to ensure the transactional integrity of end-to end business processes.

A new component of the ActiveWorks Integration System, the ATC is said to provide guaranteed application-to-application transactional reliability and monitoring regardless of what different transaction models are used by each application. According to the company, "using Active Software's ATC, organizations can ensure that all business processes complete successfully, enabling customers to trust their most critical data to eBusiness integration." Active Software's ATC is already in use at multiple customer sites within the telecommunications, financial services, and high technology industries where transaction integrity is a critical issue.

"As a leading provider of Internet-based procurement systems, we have to be able to process hundreds of thousands of transactions very quickly while simultaneously ensuring that all transactions complete successfully across multiple application systems," said Rusty Frantz, vice president, engineering, Outpurchase.com. "Active Software's ATC guarantees that no critical data is lost, enabling us to reduce our risk and increase the speed of our online procurement solutions."

Active states "the ActiveWorks Integration System from Active Software automates end-to-end business processes both within the enterprise and with customers and business-to-business (B2B) trading partners across the Internet. With the ATC, organizations will be able to guarantee that each integration process completes successfully, providing end-to-end reliability between packaged applications both inside and outside the firewall. The ATC complements the guaranteed messaging provided by the ActiveWorks Information Broker by bridging independent applications' transaction systems that operate in isolation of transactions that extend beyond an individual application."

"Transactions are fundamental to eBusiness; however, in today's network economy, transactions typically involve a variety of different systems all working independently of each other," said Zack Urlocker, vice president, marketing, Active Software. "Until now, organizations that needed to ensure overall business process integrity were required to develop tremendous amounts of custom code to guarantee that these different systems were working together. Using Active Software's ATC, customers can now ensure complete end-to-end transactional integrity. This enables them to reap the benefits of a complete eBusiness infrastructure that can handle the complex, mission-critical transactions that often span multiple systems with complete confidence."

Market Impact

Active is making a huge claim as to the strength of this software. The components in the product include transactional integrity across applications, error notification, and log notification of business events. However, their claim of guaranteed transactional integrity across the business will be difficult to deliver. The fact that applications of this type typically span local area networks, wide area networks, routers and firewalls, makes "guaranteed transactional integrity" a serious challenge.



SOURCE:
http://www.technologyevaluation.com/research/articles/eai-vendor-active-software-activates-transactions-15821/

The ASP Decision

Introduction

About every eighteen to twenty-four months the technology industry identifies the latest in a long line of silver bullets that will simplify the delivery of technology's benefits to the business world. The ASP model has recently enjoyed that distinction and the accompanying hype. Unfortunately, wading through the hype to determine if this particular silver bullet can bring value to your business is an arduous task. This article provides some simple guidelines for determining if you should consider the ASP model along with thoughts on selecting an ASP.

Why an ASP?

If you believe the marketing hype, the ASP model will solve all the software development, delivery and maintenance problems that businesses have consistently struggled with. While that can't be the case, the ASP model does present an attractive option given the right situation.

The existence of the right situation depends on how well you have defined your business functionality need, the IT resource constraints you face, and the cost issues you must address. A few questions can help determine when that situation exists.

What is the nature of the business functionality you need to deliver?

1. Will it require significant customization to use an existing ASP offering?

2. Does the functionality need to be integrated with existing systems?

If you answer yes to these two questions, then the ASP option may not offer the best option. Although it is evolving, the ASP model is based on the economics of delivering similar functionality to multiple customers with minimal integration. As soon as you start discussing significant customization and integration you step out of the ASP model into the systems integrator model.

This is not to say that any customization or integration needs should prevent you from examining ASP options. Most ASPs can handle some customization, and their offerings may routinely support basic integration with enterprise systems. However, significant customization or integration usually means you are faced with a full-blown systems development and integration project.

If you are considering the ASP route for mission critical functionality, proceed with caution. This may be unavoidable with start-ups, but established companies should experiment with the model on less critical functionality until the market shakes out.

Does an ASP deliver functionality that you need but can't deliver alone due to resource constraints?

An ASP can help you address many of the issues those resource constraints present. Whether the issue is time to market pressure or skill constraints, an ASP may offer a feasible solution. That solution carries forward for ongoing maintenance. The ASP model minimizes the resource you will need to devote to the ongoing maintenance of the functionality.

The ASP option doesn't eliminate your need to manage the delivery of the functionality. Managing the delivery of the ASP service is a critical function that you can't skimp on.

Do you lack the capital to purchase and install the software required to deliver the functionality?

The ASP model is a rental model. It has lower entry costs than a purchase or build-your-own option. If you need the functionality, but can't afford the capital to purchase it, the ASP option will provide you access.

This does not mean that the ASP model guarantees the lowest total cost of ownership. Much of the ASP hype focuses on the cost savings picture, but that picture does not clearly show whether the ASP option will generate less cost over the life of the application.

Selecting an ASP

Selecting an ASP is no different from selecting any other type of service provider. Your selection criteria should be aimed at answering the following three questions:

1. Does the ASP's offering meet your business requirements?

2. Will the ASP be around as long as you expect to need it?

3. Can the ASP deliver the functionality at your required service levels?

The first question reflects the simplest and most important principle: clearly define your requirements before selecting a solution to meet them. If you don't, you can't adequately answer any of the questions. Also, when you are defining your requirements, think beyond your current needs. How might your business strategy impact your needs several years out? What's the minimum duration for which you need this relationship to last? If you can answer that question, then you only want to consider ASPs that will be around at least that long.

That brings us to question number two. However, given the maturity of the industry how do you evaluate the viability of the providers you consider?

Although the industry is immature, you still follow basic due diligence procedure. You deal with the immaturity factor by setting your risk tolerance requirements at a level that doesn't eliminate all the players. The due diligence questions aimed at answering question two should include the following:

* How long has the vendor been in business?

* How long has it been delivering the specific functionality that you are interested in?

* How strong is its financials-income statement & balance sheet?

* What are its funding sources?

* What is its market?

* What are its growth plans?

* How many customers does it have and how big are they?

* How many customers has it lost in the last year and why?

* What does it see as its competitive advantage?

* What portion of its infrastructure is internally provided and managed?

* What portion of its application portfolio is internally developed and managed?

* Describe its alliances/partners? How are they funded?

Question three addresses the key issue.

Can The ASP Deliver?

Can the ASP deliver the functionality at your required service levels? In order to answer that question you need to examine the operations of the ASP. Your examination should include the following major areas.

Infrastructure

1. What components of the delivery infrastructure do you directly provide? Indirectly?

2. For components provided indirectly:

* Who provides them?

* What is their customer base and how do you compare with other customers?

* What is your SLA with that provider?

3. For all infrastructure components regardless of who is delivering them:

* Examine the procedures, methodologies, and tools addressing:

o Systems Management
o Change Management
o Performance Measurement
o Security
o Disaster Recovery

* Describe the current infrastructure capacity and any growth plans.

Administration

1. Human resources

* What is the staffing by function within the ASP?

* What are its staffing growth plans?

2. Change Management
* What is the process for handling changes to service?

3. Customer service model

* Who will own servicing your account?

* What staff will be working on your account?

* What is the problem notification process?

* How are issues escalated?

The examination of the ASP's operations will help determine if it can meet your service levels. The formal Service Level Agreement (SLA) will then establish the framework for managing the service levels and the relationship with the ASP.

The Service Level Agreement

As you construct the SLA, you need to think about three major aspects: scope, mechanics, and remedies.

* Scope. Your SLA scope must be broad enough to address all the critical components of the ASP delivery model. A useful guideline is to include system, network, and application performance within the scope. This ensures coverage of the critical components, and provides a framework for end-to-end service levels regardless of whether the ASP directly provides all the delivery components.

* Mechanics. The SLA mechanics are crucial to the effective management of the service levels and the relationship. You must define specific and measurable performance metrics. The SLA should include both the metric definitions and measurement process. Any debate regarding the metrics and their measurement should end before you sign the contract. The SLA should also detail the change process and issue escalation mechanics. Define now the process for making any changes to your service in the future. Likewise, define and document the process for handling issues. If the first level of operational managers can't satisfactorily resolve an issue, how quickly does it escalate and to whom?

* Remedies. The final aspect of the SLA is the remedy. Unsatisfactory or untimely performance should trigger performance remedies. The purpose of discussing remedies is to first eliminate from consideration those ASPs that won't be able to deliver your required service levels and second to focus the selected ASP on meeting its guaranteed service levels.

The ASP model is not a silver bullet after all. It is another selection in the expanding menu of ways for businesses to access technology. The model brings with it the strengths and weaknesses inherent in any third party sourcing model. Organizations should look past the glitter, and seek to evaluate this model in a systematic fashion to minimize business risk.






SOURCE:
http://www.technologyevaluation.com/research/articles/the-asp-decision-16277/

iProcess.sct Enters Golden Gate Opportunity

Event Summary

On April 11, Golden Gate Capital, a San Francisco based investment firm, announced the signing of a definitive agreement with SCT Corporation (NASDAQ: SCTC), a global provider of leading technology and business solutions, to acquire the process manufacturing and distribution software business of SCT. Golden Gate Capital, which has appointed Jim Schaper, a 25-year software industry veteran, to be the CEO of the newly independent company, Agilisys (formerly called SCT GMDS), will retain the existing management team and division staff. Mr. Schaper was previously the president and CEO of Dun & Bradstreet Software and was most recently the chairman and CEO of Primis, a financial services company, which was sold to LandAmerica Financial Services Corp. (LFG). Mr. Schaper has also held senior management positions with Banyan Systems and Medaphis Corporation (now Per-se Technologies). Mr. Schaper, who first worked with Golden Gate Capital's managing directors in 1996 while at Dun & Bradstreet, has subsequently advised the partners on several buyout opportunities.

Joining Golden Gate Capital on this deal was Parallax Capital Partners, a private investment firm from Irvine, CA. The companies signed a definitive agreement for $13.2 million in cash, subject to adjustment based on the net book value of the assets at closing. SCT could receive up to an additional $3 million based upon the new company achieving specified revenue targets over the next three years. The consummation of the transaction is subject to customary closing conditions and required approvals. Upon closing the new company will be called Agilisys.

The company pledges to continue to build upon its integrated suite of software solutions that address the unique needs of the process manufacturing industry, including supply chain management (SCM), supply chain execution (SCE) and other ERP applications such as forecasting, inventory management, procurement, formula and process management, and customer order management. Customers of the company's "iProcess" business solution are leading manufacturers, including Godiva, Horizon Organic, Valvoline, Bristol-Myers Squibb/Mead Johnson, Coca Cola Fountain USA, Eastman Kodak, Miller Brewing Company, Molson, GlaxoSmithKline, The Kroger Company and Safeway.

On the other hand, the sale of the process manufacturing software division is just one in a series of actions that SCT has taken since January to improve profitability and predictability. This transaction reportedly conforms to SCT's practice of continually evaluating its business and focusing on areas that advance its long-term strategy. The divestiture of the process manufacturing software business positions SCT to focus on investments in its core markets and to concentrate on delivering solutions to those sectors, such as education, energy, and utilities.

"There is always pain in any transition. But in this case, it will be a short one because GMDS has already been running as a standalone business within SCT and has proven itself in the marketplace. The business now has its own destiny in its own hands - that means it has the ability to do what is best for its customers, partners and employees. The company has also added an experienced executive as its new CEO, Jim Schaper, which adds to my positive view of its future", said Olin Thompson, a principal of Process ERP Partners and a guru in the enterprise applications market for process industries.

Market Impact

Assuming Agilisys will have been provided with enough funding, the divestiture should, in a mid-to-long-term be beneficial for both the company and its customers. The favorably low purchase price for a fraction of SCT GMDS' estimated revenue will hopefully not make the new management complacent and they will continue to provide substantial future investment in the product. Agilisys should offer GMDS direct access to market capital and greater visibility in the marketplace.

SCT's process industry division has significantly repositioned and extended itself lately. When the company first entered the process manufacturing scene in 1995, it provided only Adage, its flagship ERP suite. Through 1998 acquisition of Fygir Logistic Information Systems B.V., it subsequently became involved in supply-chain management (SCM) applications, and most recently developed and introduced a number of e-business components. GMDS continues to execute well in the operational level-centric applications, unlike most of the other process ERP wannabes who are still mainly selling generic 'white collar' applications (e.g., HR, financial accounting, procurement) into the process industries.

Still, while some customers use the entire SCT product suite, many more use only portions, coexisting with other solutions. For example, SCT has shown success with integrating its SCM products with the SAP and PeopleSoft back-office. It is therefore important that the company continues to enhance its product offering footprint and interconnectivity both internally and via partnerships like it has done it until recently, in order to fill some product gaps (see Is SCT And Logistics.com Partnership A Dj vu?, SCT Extends Into Business Intelligence, and SCT Corporation Means (e)Business For Process Manufacturing).

The new company should have more resources available to grow unfettered by SCT's corporate direction and overhead, which has always been very different from the GMDS'. From now on, it can focus exclusively on the process manufacturing sector. The GMDS division of SCT Corporation was challenged to establish itself as a name brand in the process manufacturing segment owing to its late market entry and a small client base, primarily in North America. Its marketing efforts were both limited by and overshadowed by a traditionally conservative parent company that manages a plethora of other businesses within diverse industries with different market dynamics. SCT's user conferences have in the past pointed out a consistent problem with SCT's marketing. The conferences would combine all SCT divisions (education, government, utilities, plus process manufacturing) and therefore, the messages became very confusing. Under the SCT approach of lumping together all its business segments under one name, user conferences or so, each division would suffer in the competition for mind share within its individual target market. Another indicator of SCT's somewhat conservative approach towards GMDS was reliance upon a third-party proprietary development tool set (Computer Associates' OpenRoad) rather to develop its own development environment.

Challenges

Therefore, the divestiture should annul the above conundrums as long as the new owners grasp the challenges the company faces going forward. The enterprise applications market in general has not been very strong since the late 1990s. Although the process manufacturing and consumer packaged goods (CPG) target markets, comprised of more than 8,000 manufacturers, have long been under-served by traditional ERP vendors who primarily designed their products for discrete manufacturing, the situation has been rapidly changing recently.

The recent revival of its direct competitor Ross Systems, while hinting a strong opportunity, also reveals the challenges all the players might face (see Ross Systems - A Bright Spot On A Difficult Enterprise Application Landscape (article ID 85.2.15.2002.1585). Therefore, a pure process enterprise applications player like iProcess.sct (or whatever its future brand name might be) does need to be able to differentiate itself from increasing competition both from the larger players, particularly SAP, Oracle, J.D. Edwards, Intentia, IFS, Ramco Systems, Geac, SSA GT and QAD, which have recently made significant in-roads in the relevant sectors (e.g., CPG and chemical verticals) and from a growing number of process enterprise applications incumbents like Ross Systems, AspenTech, Baan/Invensys, ProcessPro, Infinium, MAI Systems (with its CIMPRO product), and eWorkplace (with its BatchMaster product).

The investors also need to understand the exacting requirements (e.g., regulatory compliance) of these verticals, as a deep domain knowledge should go a long way in creating opportunities (see Ross Systems' Focus Yields More Value For Process Manufacturers). Most of these markets live with the reality of very slim margins. To compete, these companies must continue to reduce costs while increasing the level of service to their customers. These companies, whose time-to-market is often constrained by the idiosyncrasy of handling natural resources (e.g. seasonality and perishability), the speed of communications promised by Internet has evolved into a new era of competitiveness that is not that typical within the discrete manufacturing sector.

As a summary, although the acquisition will inevitably cause some setbacks going forward, as the company will feel the impact of the change (e.g., a likely new brand name confusion, possible staff departures and competitors' negative propaganda), in six to twelve months, all the constituency will likely be glad this has happened.



SOURCE:
http://www.technologyevaluation.com/research/articles/iprocess-sct-enters-golden-gate-opportunity-16647/

Customer Life Cycle Solutions: Strategic Alliances, Challenges, & User Recommendations

Strategic Alliance with SAS

Communication enterprises are under intense competition to secure customer loyalty and build greater profitability. Amdocs, a global leader in billing systems, customer care, and support has shifted its strategy, creating a more integrated, customer-centric solution designed to give communication service providers (CSP) a greater competitive edge. Its reinvented portfolio is designed to create an "intentional customer experience," bringing a point of differentiation to the customer life cycle. Amdoc's new strategy involves consultancy services, a unified software platform, and partnerships with industry leaders and it has established a series of new relationships to provide billing and customer relationship management (CRM) solutions to telecommunication companies.

Part three of the Amdocs Overhauls Its Marketing series.

In addition to its new partnership with IBM, (See Part Two) in mid-February, Amdocs and SAS Institute, the world's leader in business intelligence (BI) software, announced that they have formed a global strategic alliance to deliver advanced marketing automation (MA) and decision-centric BI solutions to CSPs. Together, the two companies pledge to enable CSPs to better track and analyze valuable customer data and dynamically present the resulting intelligence via operational systems, such as billing, call center, and ordering.

User companies should thus benefit from advanced customer and market segmentation (a marketing strategy in which the total market is disaggregated into submarkets, or segments, sharing some measurable characteristic based on demographics, psychographics, lifestyle, geography, benefits, etc.), rapid deployment of one-to-one marketing campaigns (a marketing strategy for sending a particular message to a single customer, often assisted by a marketing database) and improved product lifecycle management (PLM) will possibly reduce operating costs, enhance customer loyalty and lifetime value, and increase profitability.

Through a suite of joint solutions, Amdocs' telecommunications industry expertise and established operational applications, coupled with SAS' predictive analytics and profitability software, customers should benefit from a combination of strong analytical software, business consulting, and implementation services, allowing them to unlock valuable intelligence from underlying operational systems.

This is Part Three of a three-part note.

Part One profiled the company.

Part Two discussed market strategy.

Benefits of Partnership

Available immediately, the first offering from Amdocs and SAS is the Customer Profitability and Segmentation solution, which should allow CSPs to understand the costs associated with doing business with their customers. It will enable them to gain vital insight into their customers' behavioral drivers, and to use that knowledge to make business decisions. Ultimately, this solutions aims to maximize customer profitability and create a highly personalized and differentiated customer experience. Other solutions, such as churn management and predictive modeling, will be rolled out in a foreseeable future.

The product marketing and development deal lets SAS take over the support of Amdocs' current marketing campaign management application, which is largely based on the technology acquired by Amdocs from its acquisition of Xchange. Consequently, Amdocs will encourage its few dozen campaign management customers to migrate to SAS' Marketing Automation 4 offering. Existing Amdocs customers of other modules that were built based on Xchange, including Amdocs Opportunity Advisor, will not benefit much from this partnership, although they will continue to be supported.

Bundled with that, these customers will also be offered access to the SAS Telecommunications Intelligence Solutions, the company's set of prepackaged applications tailored to meet the distinctive needs of carriers. Available since mid-2004, the latest suite release includes the ability to more accurately identify customer, product, channel, and tariff profitability. The application's functionality is based not only on SAS' vast implementation experience, but also on SAS' demonstrated activity-based management (ABM) technology, which is in a great part owing to the 2002 acquisition of the activity-based costing and management functionality of former ABC Technologies. These capabilities provide telecommunication companies with more granular views of cost and profitability throughout the organization, providing information that is essential to driving corporate revenue growth and profitability.

Telecommunications companies have historically allocated costs based on traditional accounting methods, which has often resulted in the inaccurate attribution of costs to products, customers, and channels. By using an activity based costing approach (ABC), carriers should be able to assign values to the actual drivers of these costs. ABC attempts to allocate overhead costs on a more realistic basis rather than focusing exclusively on direct labor or machine hours. It is a cost accounting system that accumulates costs based on activities performed. It then uses cost drivers to allocate the costs to products or other bases, such as customers, markets, or projects. SAS' implementation experience with carriers shows that 80 to 90 percent of profitability comes from 20 to 40 percent of customers. Building on this, the ABC strategy will provide CSPs with valuable information on customers, indicating who has the potential to turn into a revenue maker, who should be kept or let go. The solutions should also identify "who" and "what", and "when" they will be eligible for cross- and up-selling opportunities, of which this is a significant move towards near real-time data capture analysis and reaction.

There is a renewed imperative for CSPs to maximize customer profitability and build win-win relationships that inspire customer loyalty and confound competitors. Amdocs' customers face the common challenge of building stronger, more profitable relationships with their customers, which requires the ability to identify, keep, and grow relationships with their most valuable (meaning, profitable) customers.

Thus, the SAS alliance might be crucial for upgrading and leveraging Amdocs' capabilities through the use of valuable business information accumulated within its still diverse systems. This vital information has rarely been extracted before, although many Amdocs' systems are the only business lifeblood for straddled and struggling customer service operators. Namely, a great deal of business information flows through Amdocs' billing, CRM, orders management, mediation, and other systems, but, without the connection between these disparate data, they cannot be accessed, and are therefore unusable. Cooperation between Amdocs and SAS should make it possible to collect this business information from all these systems, cross-reference it, analyze the cross-referencing, and deliver the resulting conclusions to the relevant decision makers within a fairly short time span.

This valuable information should then be almost immediately converted into monetary rewards for the customer service operator and the company. For instance, among many things, analyzing this information should enable operators to know which services are more profitable versus those which are less profitable; what is the mood among users with regard to demand for new services; whether and how existing services should be changed; which users are on the brink of abandoning their operator, and how they can be kept; and what additional services should be offered to each user.

Further, data collected from the orders management system, should, for example, tell the operator, in almost real time, how many orders are still in the system, how many orders arrive every day, which products were ordered, the speed of the response to the order, when payment will arrive, etc. Collaboration between Amdocs and SAS, if truly committed to by both, should make it possible to collect and analyze information stored in these Amdocs' systems, and deliver the conclusions and recommendations to the operator's decision-makers in the form of graphs and practical reports.

Meeting CSP Requirements

This partnership is yet another and likely the final attempt by Amdocs to address the campaign management and customer analytics requirements of its CSP customers. Previously, in early 2003, Amdocs acquired some of the assets of Xchange including about one hundred customers; however, it has been remiss with a viable strategy to revive the product line, which will now be officially retired after 2005. Initially, over twenty companies expressed interest in buying Xchange's assets at the auction, and in maintaining its products and supporting its customers. Among these were Xchange's direct competitors, including Chordiant Software, DoubleClick, SAS, and Unica. While Unica was initially marked as a very likely buyer, at the last moment the vendor elected not to make a bid for the Xchange's assets. Rather, Unica has since announced a migration plan from Xchange's solutions to its Affinium platform, and has migrated approximately 20 percent of Xchange's customer base to Affinium.

Amdocs has since incorporated Xchange's functionality into an enhanced marketing automation system in ClarifyCRM 12.5, and migrated about one-third of these customers onto the product. Yet, despite the combination of Amdocs' preexisting campaign management system and its ClarifyCRM and Xchange suites, the vendor has not been able to build on the traction it had from call center customers in the telecommunications market, and extend it into the marketing automation (MA) field. At the same time, Amdocs has struggled to win new campaign management customers and convert the remaining Xchange customers to the Amdocs product line. Yet, given Xchange's high-profile customers and technologically strong product, one would have expected Amdocs to gain support for the software for a considerable length of time, gain entrance into several attractive industries, and offer an MA product that would be more functional compared to what larger suite vendors can provide. However, that has not happened. Moreover, the fact that Unica lacked interest in acquiring its former foe further indicates how difficult it is for any acquirer to continue to enhance Xchange's platform.

Amdocs has long been a strong leader in customer care and billing applications. With the Xchange acquisition (following its acquisition of Clarify), it could have theoretically positioned itself as an almost complete CRM solution in the communications arena. However, Xchange has turned out to be inadequate within Amdocs to offer the sort of support that CSPs require. As a result, most CSPs have been experimenting with data warehouses from Oracle, SAS, or Teradata, or have been using MA solutions from niche vendors such as Unica.

The partnership between Amdocs and SAS, however, may go well beyond mere public relations (PR) rhetoric, as there should be apparent benefits for each vendor. Namely, SAS should fortify its position in the telecommunications sector (currently with over 200 customers) and extend its CRM analytics functional footprint. At the same time Amdocs should clear up any remaining confusion about its MA strategy and gain the income from extra professional services resulting from the customization and implementation of the new SAS tools. By incorporating SAS' notable analytical CRM capabilities, Amdocs should now convey a stronger message for existing and prospective customers.

Indeed, one of the biggest issues facing Amdocs has been that most of its customers have begun questioning the value of its existing relationship, repeatedly asking about the value that Amdocs has above being a mere billing engine. Consequently, SAS brings a much needed value proposition for existing and prospective Amdocs customers by providing advanced customer analytics and marketing automation to complement Amdocs' more operationally focused products and services.

The two vendors also plan to co-develop BI and CRM products for customers in specific industries with similar needs, such as financial services or insurance—two areas where SAS has been a leader, and where Amdocs aspires to intrude. In particular, Amdocs has recently been exploring new, long-term revenue opportunities in other vertical markets, such as financial services, where it can leverage its well-known strengths in billing and CRM.

Challenges

While this is indeed a major step forward and a mindset change for Amdocs, we are still talking here only in terms of strategy and not tangible deliverables—i.e., a technological platform that integrates all of its systems. Namely, up until now, Amdocs has been an IT project, service-based company, rather than a provider of off-the-shelf solutions, since a solution that suits one customer does not necessarily suit another. Given that Amdocs has to adapt every system to an operator's network, it is likely that its new strategy will include the integration of solutions, although the solutions will, to a large extent, continue to be services-based..

The partnership's key to success will be Amdocs' true commitment to its newly minted Integrated Customer Management (ICM) strategy, which promise to provide the integration of comprehensive products and solutions, including billing, order management, mediation, and services for CSPs). Also necessary to the partnership's success is Amdocs' ability to integrate SAS' products with its own.






SOURCE:
http://www.technologyevaluation.com/research/articles/customer-life-cycle-solutions-strategic-alliances-challenges-user-recommendations-18096/

Hummingbird Smells Nectar In The Corporate Portal Market

Vendor Genesis

Fred Sorkin, Chairman & CEO, and Barry Litwin, President, founded Hummingbird Ltd. (NASDAQ: HUMC, TSE: HUM) in 1984. The company began selling a PC-to-Unix connectivity product named Exceed in 1990. Exceed, which currently holds over 70% global market share in the PC-to-Unix connectivity market, fueled Hummingbird's growth in the early to mid 1990s. In 1995, growth in this market began to subside and Hummingbird started acquiring software vendors to move into other markets. The company's major acquisitions include the following:

* June1999 - The company finalized its acquisition of PC DOCS to enter the Knowledge/Document Management market.

* March 1999 - Hummingbird acquired Leonard's Logic for its Genio product and moved into the ETL (Extract Transform Load) market. Hummingbird also acquired Financial Software Solution to expand its Business Intelligence offering to Financial Services clients.

* January 1998 - The company acquired Andyne Computing to enter the Business Intelligence market.

The vision to build a corporate portal product emerged in early 1999 when Hummingbird realized it could leverage its expertise in Business Intelligence, Knowledge Management, Document Management and ETL. In January of 2000 the company began shipping Hummingbird EIP (Enterprise Information Portal). Early sales were strong in smaller law and financial services firms, and sales to the Global 2000 steadily increased over the following seven months. By October 2000 Hummingbird closed 101 portal deals that represented 33,000 seats. The company will make the second generation of the product, Hummingbird EIP 4, generally available some time this month.

For TEC's high-level definition of a corporate portal please click here. Hummingbird EIP includes such typical corporate portal features as web-based access (no client installation), single log-on, secure access to internal data from outside the firewall, a unified search across all data sources and a personalized user-interface. Hummingbird develops XML-based APIs called e-Clips to integrate applications into the portal. e-Clips use a similar technology to Plumtree's Gadgets (see Plumtree Fuels Growth With New Corporate Portal Product for more information on Plumtree). There are currently over 200 e-Clips available through Hummingbird, the majority of which are designed for such content feeds as iSyndicate and Moreover.

The company does offer e-Clips pre-built to integrate Hummingbird Business Intelligence and Knowledge/Document Management products into the portal and e-Clips for Cognos applications are for sale through Hummingbird. Cognos is currently the only third party vendor for which there are e-Clips, but the company states that it is in the process of developing applications for six other undisclosed vendors. Hummingbird EIP also features group messaging and document sharing to enable collaboration. In addition to the portal product, Hummingbird recently launched EIPCentral.com, a website for portal developers to discuss portals, download e-Clips, and view product documentation.

Hummingbird's Competitive Position

The corporate portal market consists of vendors from primarily three segments. The first is mid-sized enterprise software vendors who have developed portal products. This includes such vendors as Hummingbird, Brio, Cognos, and Hyperion. The second is pure play portal vendors that only sell a portal product. Plumtree, InfoImage and Viador are vendors in this segment. The third segment is large technology vendors in which portal products make up a small percentage of their revenue. This segment is made up of Microsoft, Oracle, IBM and SAS.

Hummingbird's annual revenues are in the middle of the pack among vendors in the first segment. Note that Hummingbird does not break down total revenue into product revenue and service revenue. The company did state that product revenue has consistently been approximately 70% of total revenue while maintenance and services make up the remaining 30%. Figure 1 compares annual revenue among these vendors. Note that the fiscal year end of each competitor is not the same: Hummingbird - 9/31, Brio - 3/31, Cognos - 2/28, Hyperion - 3/31. Thus Hummingbird's revenue over the same calendar time period as the other three competitors is slightly higher than what appears in the graph due to the company's revenue growth.

Figure 1.

Hummingbird has had healthy annual revenue growth over the past three years. Figure 2 indicates that the company's annual revenue growth rate has been increasing over the past three years, while its competitors' growth rates have been flattening or declining.

Figure 2.

Vendor Strategy and Trajectory

During the late 1990s Hummingbird acquired vendors to incorporate new technology into its offerings. Now, part of Hummingbird's strategy is to acquire technology vendors to increase market share within the markets that it currently operates.

Hummingbird is focusing internal development on integrating its current portfolio of technologies. Future product development will focus on what the company calls "application collaboration" which will allow portal users to drag and drop any installed Hummingbird Business Intelligence or Knowledge/Document Management tools into the portal. This will allow business users to customize aspects of their portal that currently require an IT professional.

The company clearly sees its corporate portal product as a tool to cross-sell its Business Intelligence and Knowledge Management products because it can offer out-of-the-box integration with these products. Therefore current Business Intelligence or Knowledge Management customers can add a portal with limited additional cost and risk integrating existing Hummingbird products.

The company has invested reasonably in product development and sales and marketing over the past six quarters. Figure 3 shows product development and sales and marketing expenses as a percent of revenue have consistently been above 50%.

Figure 3.

Spending in these areas is partially why Hummingbird has operated around breakeven. Figure 4 illustrates the company's quarterly revenue and net income. Hummingbird posted losses in two of the previous six quarters. Net income has slowly increased over the past four quarters. The net profit margin for 4Q00 was 9.6%

Figure 4.

ANALYSIS

Vendor Strengths

Installed Base: One of Hummingbird's biggest strengths may lie in its installed base for Exceed. The company boasts a 70% market share and has sold products to 75% of the Fortune 500. Hummingbird can tap its proven success and customer contacts to sell its portal product.

Diverse Product Line: Hummingbird hopes to use its portal product to cross-sell existing applications. With over twenty products in Knowledge/Document Management, Business Intelligence/Analytics, and Data Integration there are plenty of opportunities to cross-sell existing products.

Owns Portal Technologies: Hummingbird owns the Business Intelligence, Knowledge/Document Management, and Data Integration technologies, which allow it to offer quick integration and "application collaboration." Pure play vendors will be challenged to provide that level of integration via co-development partnerships.

Reasonable Level of Resources to Commit to Portal Development: Although Hummingbird is much smaller than the likes of Microsoft, Oracle and IBM, and is not as big as competitors Cognos and Hyperion, the company is considerably larger than any of the pure play portal vendors. Thus if the portal market does explode, Hummingbird will likely have more resources to devote to portal development than any of the pure play competitors.

Vendor Challenges

Sustaining Profitability: Wall Street has recently put stringent expectations of profitability on business application vendors, yet to remain competitive in the market large amounts of cash need to be invested in sales and marketing and product development. It is a challenge for any vendor to invest sufficiently in these areas to support top line growth while at the same time generate net income. Figure 2 indicates that Hummingbird has had three consecutive quarters in the black, but short term actions could have been taken to produce a positive fourth quarter at the expense of the following first quarter. Hummingbird's next quarter results should help indicate if the company is on a true path to profitability.

Third Party e-Clip Development: Most portal products from Business Intelligence or Knowledge Management vendors currently support the vendors' own products, e-mail, and content feeds. Many vendors claim to have a truly horizontal portal that provides each employee with the right information at the right time. A truly horizontal portal should be able to provide the necessary functionality from any business application to the proper user at any time or place. TEC is unaware of any portal vendor that supports enough third party applications to truly provide this level of functionality. It is important for any corporate portal vendor to focus on supporting third party applications from Business Intelligence, ERP and CRM. Plumtree has significantly more third party development (i.e. Gadget development) than most portal vendors.




SOURCE:
http://www.technologyevaluation.com/research/articles/hummingbird-smells-nectar-in-the-corporate-portal-market-16291/

Technology Hardware Maintenance-Acquiring and Managing Cost Effective Service

Introduction

Who likes getting their car serviced? No one does, but the need for dependable transportation requires us to maintain our cars. A similar situation applies to maintaining a portfolio of technology hardware. The business depends on its reliability, so we must maintain it. This article focuses on how an organization acquires and manages that maintenance service cost-effectively.

Identify the Enterprise Portfolio

The first step in developing your maintenance options is to gather data on your existing hardware portfolio and how it is maintained. This should be done across the entire enterprise and include all the technology hardware.

A useful approach is to consider a simple framework for organizing your portfolio data. That framework can vary based on an organization's operations, but a generic framework is outlined below:

* Data Center Environment

* Distributed Environment

* Print Shop

* Telecommunications

Organizations often view their hardware maintenance picture in stovepipe fashion. Different managers may own the operations of the different environments, so maintenance views are often of just a specific environment. This presents two problems:

* No one in the organization gets a comprehensive picture of total maintenance costs.

* Opportunities to leverage or consolidate service providers are not considered.

An organization can avoid these problems by creating a high-level enterprise view of their hardware portfolio maintenance. That view consists of a simple table that presents several pieces of high level data that provide an effective summary of the maintenance picture.

Table 1.
Portfolio Data

Data Center

Distributed

Print Shop

Desktop

Telecom
Inventory
Maintenance Provider(s)
Tenure of Provider(s)
Annual Contract Value
Annual T & M Cost (if any)
Contract Term
Contract Exp. Date
Contract Terms & Conditions
Service Levels

Most of the table's data items are self explanatory, but a few warrant description.

The inventory data in this view would consist of some high level numbers such as the number of devices (e.g., # of PCs, # of RS6000s) or capacity (e.g., 2 terabytes of DASD). However, it is essential that detailed inventories exist behind those high level numbers. The operational manager of each environment should have a dynamic inventory that reflects the ongoing impact of procurements and retirements. A complete and accurate inventory will position the organization to get the best pricing from maintenance providers.

The contract terms and conditions data element appears on the table because the organization should document whether it has consistent terms and conditions across all of its maintenance service contracts. Best practices advise organizations to develop a standard maintenance service contract and use it as the basis for all maintenance service transactions. At a minimum, this data element should document whether the maintenance contracts reflect the use of the organization's standard contract or the use of a vendor contract.

Analyze the Enterprise Portfolio

The next step is to analyze your current maintenance portfolio. That analysis should occur at an enterprise level. That perspective should consider the following questions:

* How many maintenance providers do we currently have?

If an organization hasn't been reviewing its maintenance picture from an enterprise perspective, it tends to accumulate a variety of maintenance providers that rivals their variety of equipment. Several large maintenance providers will service a wide variety of equipment, and will offer more competitive pricing if presented with a larger portion of the total maintenance business.

You should also consider consolidating portions of your maintenance business under a single provider regardless of who actually delivers the maintenance service. In this scenario the single source provider manages the service delivery, but may source some service to third parties. The advantages to the organization are a single point of contact, consistent service delivery, and more competitive pricing due to the larger volume.

* Does the same maintenance provider service different portions of our portfolio?

The service provider market is very competitive. Consider putting your significant service contracts out to bid on a regular basis. In most cases, annual contract bidding on significant contracts is too disruptive to the operations of both the service provider and the client. However, bidding out contracts every two to three years ensures competition and keeps the organization abreast of changes in the marketplace.

Develop Service Strategies

Based on the analysis of its current maintenance picture, the organization should determine what strategies to pursue. The enterprise analysis could result in strategies that generate cost reductions that are realized within a short time frame. These strategies could include the following:

* Consolidation of separate maintenance service contracts into a single, larger contract.

* Revision of existing service levels.

* Removing non-critical equipment from contract maintenance.

Implement Service Strategies

As the organization develops service strategies it should also begin to outline an implementation plan. In most instances, the most significant implementation activity accompanies the consolidation strategy. The major part of this activity encompasses the process of identifying, evaluating and selecting a service provider.

That process consists of four major steps:

* Developing the Request for Proposal (RFP).

* Developing the Evaluation/Selection Decision Matrix.

* Executing the RFP process.

* Negotiating the transaction.

Developing the Request for Proposal (RFP)
Successful development of a hardware maintenance RFP depends on two major tasks: gathering a complete and accurate hardware inventory and clearly defining your required service levels. As stated earlier, the inventory positions service providers to provide their best pricing. Complete and accurate inventory data should minimize the contingency buffer the service providers build into their pricing.

Clearly defining your required service levels is an obvious step, but often poorly executed. The requirements should be presented in a clear, succinct fashion and the service providers should respond in a similar fashion. The best way to ensure this is to present your requirements in a tabular form and provide a small number of standard response choices. A three option choice (e.g., Fully Meet, Partially Meet, Can't Meet) usually will suffice. You should also include space for the respondent to provide a detailed response, but this format will usually limit those to the requirements with a 'Partially Meet' response. The objective is to avoid asking for and getting long narrative responses that may waste time and be unclear. The added benefit of this approach is that once you move to the contract negotiation stage, you can simply make this table a contract appendix item.

If your organization has a standard maintenance service contract, it is useful to include it in the RFP and require the respondents to provide a marked up contract with suggested changes. This will complete a step that you will otherwise have to execute in the negotiation phase.

Developing the Evaluation/Selection Decision Matrix
Prior to distributing the RFP, you should develop a decision matrix that will serve as the basis for evaluating and selecting your service provider. It is important that everyone with a stake in the selection agree with both the criteria and weighting reflected in the matrix. This will make the selection process run as smoothly as possible. Also, it is important to develop the matrix before distributing the RFP. Often times, development of the matrix may result in the rethinking of portions of the RFP.

Executing the RFP process
You should run the RFP process as a project with milestones and timelines established. Those milestones may vary depending on your specific situation, but as a general guide they should include:

* Due date for respondents to submit questions on the RFP.

* Date, time and place for respondents' conference where you answer all submitted questions.

* Due date for RFP submittals

* Date when you identify short list of service providers (two to three).

* Dates for negotiation sessions with service providers

* Date for final decision

Negotiating the Transaction
Once you've narrowed the field to a short list of service providers (probably two to three maximum) you need to schedule contract negotiations with each of them. Schedule those negotiations at your site, allow enough time to complete the deal (usually two to three days), and require that the service provider bring the appropriate decision-makers to the table.

The negotiation will be the first time the promises either become real or fade away. The results will drive your ability to effectively manage the service provider. Don't skimp on the time and effort you put into this step. Ensure that you have the resources and support you need to conduct the negotiation effectively.

Conclusion

Hardware maintenance can represent a significant information technology cost, but options for managing that cost exist. If you analyze hardware maintenance from an enterprise perspective, you will identify those options and ensure the cost-effective delivery of those services.





SOURCE:
http://www.technologyevaluation.com/research/articles/technology-hardware-maintenance-acquiring-and-managing-cost-effective-service-16177/

Applications Field

Analysis of SSA Global's Latest Acquisitions

Although its consolidation appetite is not diminishing by any means, SSA Global seems to be showing signs of more deliberation and even restraint, rather than jumping the gun to indiscriminately gain market share. Once seemingly insatiable, SSA Global now admits that growth by acquisition is no longer as straightforward and cheap as it used to be in the early 2000s, due to the increased costs of install base acquisition. Namely, while the vendor has paid on average $37,000 (USD) per customer for its 13,000 acquired customers, recently Oracle apparently paid about $2 million for each acquired Retek customer. Thus, while acquisitions at the right price will continue, SSA Global is shifting its focus towards providing extended solutions rather than acquiring peer enterprise resource planning (ERP) products.

This is Part Three of the six-part series The Enterprise Applications "Arms Race" To Be Number Three.

This article continues a comparative analysis of SSA Global and Infor, two contenders in the fierce ongoing competition to be number three (after SAP and Oracle) in the world of ERP vendors. See The Enterprise Applications "Arms Race" To Be Number Three for background information and a discussion of vendor similarities, along with Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field. The other leading contender is Lawson Software. For a detailed discussion of Lawson, see New' Lawson Software's Transatlantic Extended Enterprise Resource Planning Intentions.

By its own admission, until 2003, SSA Global was merely a collection of ERP products, with a desire to consolidate. At that time, its only established ERP product extensions were the embedded Cognos business intelligence (BI) nuggets, the acquired Warehouse BOSS solution, and a collection of disjointed third-party products (such as Applix for customer relationship management [CRM], Logility for supply chain planning [SCP], and Digital Union/Verticalnet for sourcing and procurement). Acquisitions were focused on ERP as well as on the associated research and development (R&D) investment. This state of affairs is in contrast to today's nearly complete SSA Global solution footprint and delivery of converged solutions having predictable and published product roadmaps. Also, the acquisitions have become rather more strategic, bundled as they are with balanced development investment, and deliveries on promises of continued support.

Although many might still consider SSA Global's acquisitions to be opportunistic, the vendor has long instituted a so-called "4M approach" underlying the evaluation of acquisition candidates:

* Motivation—is the candidate motivated?
* Money—will there be sufficient payback?
* Method—does the candidate have the right people?
* Match—does the acquisition fit SSA Global's "big picture"?

The vendor's goal is to ensure that it keeps customers for life. In order to do that, it must preserve the customers' investments while continuing to deliver a long-term product strategy of convergence, modernization, and vertical focus, all in a predictable and incremental manner. The short-term strategy, on the other hand, is to enhance the value of current applications in delivering the functionality (with a consistent tempo of releases) that customers have been asking for, by delivering integration to extension products like CRM and supply chain management (SCM), and by delivering first-rate support.

SSA Global' s three most recent acquisitions in particular, E.piphany, Boniva Software, and Provia Software, may indicate a new phase in the vendor's acquisition strategy and development cycle.

Epiphany—A Good Strategic Fit

In the fall of 2005, SSA Global completed the acquisition of E.piphany, Inc. (also known as Epiphany), an innovative but financially long-struggling global CRM solutions provider. As a result of the merger, Epiphany now operates as a wholly owned strategic CRM division of SSA Global; shares of Epiphany common stock have been delisted from NASDAQ, and deregistered with the Securities and Exchange Commission (SEC).

Unlike many earlier SSA Global acquisitions, Epiphany certainly cannot be categorized as providing an outdated product. In fact, the embattled CRM vendor, which now prefers to drop the dot from its official name, was famed for trying to put the e (the electronic business moniker) into CRM, and was a big name during the dot-com era. Its CRM analytics were (and arguably still are) an important part of e-commerce and e-business development. To a certain degree, it succeeded in building a business on applications related to marketing automation, call center management, real-time customer analytics, and real-time interaction. These applications (the Interaction Advisor, Insight Advisor, and Lead Advisor modules) peaked at $125 million (USD) in annual revenues in 2001, with Vodafone, Nestle, Gap Inc., Citibank, Virgin Holidays, HBOS, and Barclays all signing up as users. However, revenues have since fallen sharply, closer to the $70 million (USD) mark.

Epiphany's products have been widely implemented among business-to-consumer (B2C) companies that have large numbers of direct customers, such as wireless carriers, travel and transportation services, banks and other financial services firms, telecommunications, utilities, and retailers. The catch with these customers, however, is that they tend to spread their applications portfolios over multiple providers, making Epiphany's revenues much less impressive than its customer list. In fact, Epiphany has never shown a profit in any fiscal year since it went public in 1999. Thus, in August 2005, after 7 years of consecutive losses, including a whopping $2.6 billion (USD) hit in 2001, the innovative CRM provider fell into the arms of SSA Global, for a quite surprising $329 million (USD) in stock. This was all the more surprising given that the company had revenues of about $75 million (USD) and losses of $16 million (USD) in the previous 12 months (although a significant cash position of about $160 million [USD] would have been a good rationalization for SSA Global).

In justifying the merger, the two parties cited two major synergies between them. First of all, out of 450 Epiphany customers, there was reportedly a significant 20 percent of shared customers in the manufacturing, finance, and services industries, with certain cross-selling opportunities owing to the complementary nature of the products. Epiphany filled a major gap in the SSA portfolio, with respect to inbound and outbound marketing automation and analytics (see Why Are CRM and Analytics Intrinsically Connected?), sales force automation (SFA), online solutions, and e-commerce. Some marketing automation features are certainly top-notch, such as collaborative filtering (identifying cross-selling campaign opportunities based on past purchases), real-time data mining and decision-making (using static and dynamic customer attributes while the customer is browsing online), and predictive analytics capabilities (see Predictive Analytics; the Future of Business Intelligence). Although SSA Global had some CRM capabilities with Baan (via the acquisition of Aurum and subsequent in-house developments), these were inconsistent and lacked sophistication, so that the customer demand and mind share for the SSA CRM suite have always been very low. On the other hand, SSA CRM's native strengths lie in sales configuration, order management, and field service functionality, which are not areas that Epiphany covers. Once the integration is complete (some time in 2007 at the earliest), the SSA CRM offering should be more well-rounded and appealing than current native offerings for users of Baan or the Applix add-on on the business planning and control (BPCS) side.

However, concern remains that the two companies have thus far not had much of a common market focus. Namely, while SSA Global is oriented toward business-to-business (B2B) applications (primarily in the realm of manufacturing), Epiphany has largely focused on the aforementioned B2C markets in service industries. These install bases naturally have separate functional and support requirements, and only time will tell where additional outlets will arise once the immediate cross-selling opportunities are mined. SSA Global contends that manufacturers too should be interested in reaching customers directly via marketing campaigns (with the help of analytics), as shown by recent success of marketing automation specialists such as Unica and SAS (see Should Uniqueness Vouch For Marketing Automation Niche Players?). Also, since SSA Global had a considerable business in service industries even without Epiphany (for example, with KPN as a customer), there may actually be more of a common market focus than might appear at first glance. With Epiphany, 37 percent of the installed base is now in the services sector; conversely, a significant percentage of Epiphany's customer base was in the manufacturing sector.

But the second synergy—shared adoption of technology based on open standards and service-oriented architecture (SOA)—might be even more compelling. Namely, while Epiphany has long leveraged J2EE- and SOA-based technologies to rewrite its products, SSA Open Architecture explored in Part Two of this series remains in part a statement of direction, since many of its products will need much retooling to conform to the SOA vision (although fewer will need retooling as of the third release of the product in the spring of 2006).

The vendor will need developers experienced in these technologies, and by buying Epiphany, it has acquired a development organization which is already at the place SSA Global is aiming for. Apparently, the former Epiphany Customer Relationship Backbone (CRB) platform has already been rolled into SSA Open Architecture (6.0, the first release where CRB and Open Architecture converge, is due in the spring of 2006), and the SSA SCM team has been delivering new warehousing management capabilities while leveraging the savvy of its CRM colleagues.

In summary, existing Epiphany customers will breathe a sigh of relief owing to the strength of a global company behind the CRM products; this assures financial viability and continued R&D. Indeed, CRM is a strategic area of investment for SSA Global, and the Epiphany's team in San Mateo, California (US) has been supplemented by engineers in India, the Netherlands, Dallas (US), and Toronto (Canada). As they have done many times before, SSA Global will commit to continued support for all CRM products. On the other hand, existing SSA Global customers will eventually be exposed to a more complete sales force automation (SFA) and call center solution that enables sales (and service of customers) across multiple channels and lines of business (LOBs). Some customers may benefit from a comprehensive marketing automation solution both for B2C and B2B environments, but all solutions will be under a sole SSA CRM brand which includes all current capabilities on a modern J2EE platform, both for CRM solutions and all future development activity.

The go-to-market CRM strategy for SSA Global consists of maintaining and growing business in B2C verticals, where it plans to maintain a distinct sales structure to focus on traditional Epiphany market segments (such as the financial services and telecommunications sectors). Also, the vendor will try to widen cross-selling opportunities in its installed base by leveraging existing SSA Global sales teams and specific offerings targeted at the mid-market. The idea is also to expand sales into eastern Europe, Latin America, and the Asian Pacific (APAC), by leveraging a global sales organization and providing tier one language support. SSA Global will also try to leverage strategic alliances in some sectors, for example, with IBM (for financial services, retail, and manufacturing), with Capgemini (for telecommunications), and with some resellers such as Harte Hanks and Merkle (for the mid-market).

The combination of Epiphany and SSA Global may be a win-win situation for both camps of customers, as evidenced by recent increased momentum in the market place. Namely, again dispelling the perception of only milking installed ERP bases, SSA Global can still boast (although not to the degree of its supply chain execution [SCE] team) thirty new CRM customers in the last twelve months, and fourteen in the last four months alone (since the acquisition). Most of these customers came from the vertical segments, namely, financial services (for example, Charles Schwab, Banco De Brasil, Credit Social des Fonctionnaires [CSF], Golden 1 Credit Union, and American Express Merchant Services); insurance (Linea Directa, Hartford, Pacificare, Well Point, and Dahlberg Assurance Brokers); telecommunications and utilities (Essent Cablecom, Telefonica, and Energies De Portugal); retail (Specsavers Opticals, Family Christian Stores, Bombay Company, Etam, and Macys.com); and consumer electronics (Sony Computer Entertainment and Yodabashi Camera). Often, these new customers came at the expense of fierce and respected competitors such as Siebel/Oracle, Amdocs, Unica, and Sigma Dynamics.

The vendor pledges to continue to make significant investments in order to expand the SSA CRM solution suite, via in-house development, acquisition, and partnering. SSA Marketing Version 7.0, slated for 2006, will lead the market in terms of breadth and depth of marketing automation functionality, with its upcoming enhancements:






SOURCE:
http://www.technologyevaluation.com/research/articles/new-vendor-acquisition-strategies-in-the-enterprise-applications-field-18514/

Click Commerce Acquires Allegis

Event Summary

On March 24, Click Commerce, Inc. (NASDAQ: CKCM), a provider of partner relationship management (PRM) software for the Global 2000 companies, announced it reached an agreement in principle to acquire Allegis Corporation, a San Francisco-based privately held PRM company, founded in 1998. The vendor believes this move will reinforce its leadership position in the PRM market, extend its product offering, and broaden its reach into new vertical and geographic markets. Click Commerce provides configurable software solutions aimed at enabling global corporations to improve relationships and operational efficiencies within their distribution channels through online commerce, channel management, and partner relationship management. Corporations such as Black & Decker, Delphi, Emerson, Equistar, Kawasaki, Lubrizol, Mitsubishi, Motorola, and Volvo have reportedly transformed their channel relationships using the Click Commerce Partner Portal and Application Suite. Founded in 1996, Click Commerce leverages more than six years of channel management expertise to enable global enterprises to significantly increase brand loyalty, customer satisfaction and financial performance. Its software is used by corporations in more than 70 countries and in 15 languages.

Thus, Click Commerce believes the combination of the companies' complementary product strengths will result in a comprehensive solution for the PRM marketplace. Namely, it should bring together Click Commerce's renowned commerce and aftermarket service offering and Allegis' strengths in marketing and partner management. Through the acquisition, Click Commerce aspires to also extend its reach into the high technology and financial services markets and add industry-leading companies including Charles Schwab, Dow Corning, Lexmark, and Microsoft to its already strong manufacturing client roster of both the above-mentioned companies such as Delphi, Emerson, Kawasaki, and not mentioned Lincoln Electric and York.

Both companies moved very quickly from the agreement in principle on March 24 to a closed acquisition on March 28.

Market Impact

While many debates will still rage about PRM's relation to customer relationship management (CRM) (i.e., whether the first is only a cousin or a child of the latter) and about its stand-alone viability, it is certain that there has been a need and demand for PRM, albeit the area has been a moving target ever since its relatively recent advent. See Who Alleges The PRM Market Consolidation? for a discussion of PRM as it relates to CRM.

While even during the dot.com euphoria many were dreaming about disintermediation, i.e., reaching their customers directly (often even hoping it to be at the expense of their partners), the more realistic ones have always known the importance of the indirect channel, starting with some enterprise application vendors, whose entire success has always relied on their value-added resellers' (VARs) execution. Now that back-to-basic reality has indisputably triumphed, almost every company has been scrutinizing more closely their relationships with partners, and figuring out how best to reach and nurture them. Some pundits are predicting as much as 80% of business going through indirect sales channels in the next five years. Given ever-shorter product lifecycles and companies' ever-increasing reliance on third-party channel partners to drive sales and increase customer satisfaction, the need for some form of PRM should not be questioned.

Organizations that sell their products/services through complex networks of partners (e.g., dealers, affiliates, VARs, resellers) are indeed leveraging Web-based solutions to better service and sell via these channel partners, owing to the increased technophobia and aversion to the IT going downstream the channel, and to a consequent training simplicity imperative. Thus, a solid functional PRM system might have many of the features of a traditional CRM package, plus specific functions so that the most functional PRM systems could allow businesses to capture, analyze and optimize customer data and feed back new ideas and better information to the partners who have these direct customer relationships.

PRM software should allow companies to manage the amount of information that goes out to partners, as well as managing partners' contacts with customers more effectively, so that, for instance, a customer does not receive multiple calls from channel partners all pushing the same solution since channel partners should have leads or territories logically allocated to them.

Well, as many times seen before in the enterprise software market, many specialist start-up vendors have already jumped at the opportunity and have come up with by and large partial answers to the above market needs. A number of still existing pioneering vendors that first offered specific PRM offerings a few years ago would include Allegis, whose former Sales Partner module (now a part of much wider Allegis eBusiness Suite) featured a funds manager, business planner, program manager, and best practices mentor; ChannelWave, whose Partner Loyalty System product (now within ChannelWave 5) featured a range of partner functions, including pre- and post-sales support, marketing fund management, training and service management, lead management, sales forecasting, literature fulfillment management, opportunity management, and order/quote configuration capabilities; and Comergent Technologies, whose Distributed E-Business System featured an online selling process, letting partners offer co-branded sites, cross-selling, and order tracking capabilities. The list could contain many more candidates such as Webridge, iMediation that was purchased in 2002 by a like vendor Haht Commerce, very subsequently after it acquired arcadiaOne, and OnDemand, whose portal solution had long offered sales and marketing information, training and certification programs, and tracking and reporting functions, and which was also acquired in 2002 by Chordiant after itself acquired North Systems in 2001.

Beside the above vendors focusing more on partner relationship side of the business, companies like Comergent, InfoNow, Art Technology Group, Haht, Entigo and Click Commerce add a channel-centric e-commerce sell-side and/or aftermarket element to the mix, designed to keep track of transactions across multiple tiers of suppliers and to let manufacturers automatically route customers to the right partner and close a sale. Moreover, while specific PRM software solutions have for some time appeared on the market, CRM and ERP vendors have also been adding PRM modules to their own software suites. To achieve this, most enterprise applications suite vendors have launched portal initiatives that should tempt partners to share information about customers' demands in turn for deeper product knowledge and training and for more efficient ways of sharing leads.

In addition, CRM leaders like Siebel Systems, Pivotal and Onyx, are extending their suites with PRM functionality. Particularly Siebel's system goes far beyond lead management and pretty portals to include modules for managing market funds, lead management and distribution, delivering current product and pricing information, and generating quotes and orders, and offers a 360-degree review of the relationship between a company, its partners, and its end customers. This is accomplished through integration of the PRM system with its sales force automation (SFA), call center and other CRM modules, while various versions of the system target eight different vertical markets.

Click Commerce's acquisition of Allegis is a good defensive move, since it should combine the resources of two companies that would often face each other fighting for dwindling opportunities. They have quite complementary product offerings and industries of focus, while very similar approaches to embracing emerging technologies (i.e., Microsoft .NET platform commonality) and excellent customer references. As mentioned earlier, Click Commerce's legacy and core competence lies in the service side of the e-business including warranties, and streamlining disconnected, inefficient processes manufacturers have with service and support centers throughout their channels. Click Commerce has so far acquired a number of prominent customers in the following vertical market segments: Automotive, HVAC (heat, ventilation, and air-conditioning), Chemical, Pharmaceutical, and Industrial Products/Durable Goods

On the other hand, Allegis offers a number of non-commerce PRM functions for partner life cycle management (e.g., funds management, automating special pricing requests and tracking lead management and escalation strategies' direct impact on sales and forecasting), and analytics (e.g., as financial performance of channels and programs), but it has been exactly deficient in Click Commerce's capabilities like sales configuration and sell-side e-commerce.

Conversely, Click Commerce customers should leverage many Allegis' partner life cycle management functions (such as partner recruitment and certification) and lead management functions. To that end, Allegis Sales Partner allows the user to build up a profile of its partner companies, including size, location, product range, customer base and sales performance, giving the manufacturer or supplier a personalized view of each partners' performance. It also provides an automated lead management process, allowing sales to be passed on to the most appropriate channel partner.

The software includes recruitment and assessment features, making it easier to identify and recruit potential partners. End-user customers can also be provided with the ability to select potential suppliers from the partner database, according to which one meets their needs, judged on a range of criteria such as product set or skill base. Allegis has also so far exhibited the ease of use, integration, multi-national capabilities and administration that make it amenable to large, complex partner management networks and global requirements. It has also penetrated financial services and high-tech companies, industries in which Click Commerce has not achieved major presence.

Challenges

However, despite a good fit at first glance and improved cross-selling opportunity, some challenges and product gaps are yet to be overcome. One is to conduct inevitable products rationalization and integration, to orchestrate sales forces, and organize services strategies. Click Commerce has pledged to pick up all existing Allegis contracts, including those operating under the ASP (Application Service Provider) model. The caveat is that Click Commerce has never offered an ASP option for its products and one should observe how it will offer a future integrated product via an ASP option, as the vendor did not commit to firm time frames for this option either.

The company will also need to bolster its content management functionality, and provide flexibility of its product to accommodate the changing business practices, integration and IT standards. To meet more collaborative, diverse and dynamic relationship capabilities, the future product will have to support a distributed application architecture that enables business process flows based on intricate business logic and roles of participants and their trading organizations. Although both the Click Commerce product and the Allegis product offer distributed application architecture today, a serious product development rationalization will have to take place to keep this philosophy as the company moves forward.

As mentioned earlier, the combined company will have many large enterprise suite providers on its heels. Siebel's and Pivotal's growing footprint and authority in the PRM market will continue to promote a coexisting interoperable strategy for Click Commerce, as to remain competitive and with a valid value proposition, given PRM's intrinsic ties with supply chain management (SCM) and financials management applications. To that end, while Oracle, SAP, J.D. Edwards and PeopleSoft might have been remiss to deliver deep PRM applications, they have nonetheless been closing the gap with basic PRM functions, which may be enough to convince their existing customers to at least postpone decisions and wait for more capability from their principal enterprise applications provider.

Therefore, we believe that Click Commerce, and all his PRM peers alike, must continue to provide snazzy and functional portal user interfaces, connectors to ERP systems (e.g., portlets, applets, etc.) and Internet exchanges connectivity through partnerships and/or acquisitions. That might prove to be a tall order given Click Commerce's revenue declining more than 50% from ~$44 million in 2001 to ~$18 million in 2002 (mostly because of a significant decline in the number and average size of new-client contracts). One of the company's current investors currently with ~20% of ownership, Insight Venture Management, only a few weeks before Allegis acquisition, reportedly offered to buy the still outstanding piece of Click Commerce. One is to wonder how the Allegis acquisition might and affect Click Commerce's sale in the future.

Still, the sound cash position and revenue stream provided by Allegis' ASP customers should at least help provide a predictable revenue stream for Click for some time to come. Further, to PRM specialists' favor might go the fact that IT-wary resellers will not always be amenable to dealing with heavy-footprint large enterprise systems, and will prefer lighter and more agile point PRM solutions like Click Commerce.


SOURCE:
http://www.technologyevaluation.com/research/articles/click-commerce-acquires-allegis-16947/