Financial Services

Onyx/Pivotal Rivalry Through Thin Rather Than Thick

2010-08-18T23:32:00.001-07:00

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

2010-08-18T23:31:00.002-07:00

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

2010-08-18T23:31:00.001-07:00

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

2010-08-18T23:30:00.000-07:00

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

2010-08-18T23:29:00.002-07:00

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

2010-08-18T23:29:00.001-07:00

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

2010-08-18T23:28:00.002-07:00

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

2010-08-18T23:28:00.001-07:00

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

2010-08-18T23:27:00.001-07:00

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

2010-08-18T23:26:00.000-07:00

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/

SCM in a New Flavor: Real Time and Demand Driven

2010-08-18T23:25:00.000-07:00

Introduction

The current market is becoming more demand-driven and the need for real time decision support capabilities in the supply chain is inevitable. As a result, service oriented vendors are emerging. They are developing solutions through next generation applications with customization, workflow, extensible markup language (XML), and third-party integrated software that is embedded in their applications. These vendors have a greater, real time, demand-driven scope, and can better meet the new demands in the market.

The market is currently driven by service oriented architecture (SOA), which provides a methodology enabling developers to orchestrate and document an enterprise's capability to support the integration of different modules. SOA is believed to help businesses respond more efficiently and effectively in the changing environments and conditions organizations face.

The main benefit of a SOA is how it defines and delivers services. A service can be seen as a function that is defined and does not depend on the context or state of other services. SOA can be used in Web services with languages like XML, a standard format that is used to share data over the Internet.

Traditional supply chain management (SCM) solutions that do not use SOA can be problematic because implementations may take a lot of time, and because "out of the box" solutions need a lot of attention, customization, and modification to meet the client's needs. With the SOA approach, vendors can adapt to the functional requirements of organizations a lot faster.

Apptricity

Apptricity is one such company that uses SOA in its solutions. It was founded in 1999 in response to a growing concern among corporations over the costs and inefficiencies of enterprise software deployments. It offers off-the-shelf solutions with dynamic adaptability for the SCM market. Solutions include Supply Chain Apptricity for SCM, Supplier Apptricity for supplier relationship management (SRM), and Employee Apptricity, to manage workforce assets. The company has several offices in the US, and is headquartered in Irving, Texas (US) and its solutions are being used in several different industries, including energy, financial services, health care, manufacturing, and transportation and logistics.

Enterprise Apptricity for Energy automates supply chain transactions to increase visibility and communication between departments, either internally or externally. The Financial Services Module automates the service, product, or solution offering and its associated transaction flow cycle, from setting up a new account to the authorization and approval phase. The Health Care Module automates resources scheduling and processes to optimize the use of facilities and personnel, and control procurement expenditures. The Transportation And Logistics Module reduces the time spent on employee data entry, scheduling, price, and quantity reconciliation by automating the shipment cycle and the associated transaction flow.

The vendor focuses on value chain and human capital management applications to drive strategic transactions both outside and within a company and specializes in workforce component of SCM, SRM, and employee expense management. Its framework has modules that can be build on top of its narrow point application. The peripheral areas within Apptricity's SCM solution are schedule management and asset management and in the manufacturing industry, Apptricity focuses on automating the procure-to-pay and order-to-cash cycle to shorten the transaction time and increases internal control.

Apptricity's Technology

Apptricity seeks to differentiate itself from traditional vendors by using SOA, which allows it to leverage object-oriented architecture in an advanced framework. SOA creates an open, scalable, and flexible solution that adapts dynamically to complement and extend any legacy mainframe infrastructure or contemporary ERP suite. By using a SOA oriented solution, the time to implement and integrate with legacy systems will be reduces which results in a lower cost to implement and a faster Return On Investment (ROI). Traditional ERP vendors have long depended on their large professional services organizations and system integrator partners to configure and often re-develop and reinvent their solutions on a customer by customer basis only to reinforce the customers pain. Coining the software as "Dynamic Adaptability," the vendor claims to eliminates the cyclical reinvestment in professional services cost which is associated with upgrades and new purchases from the traditional ERP vendors.

For more information see SOA-based Applications and Infrastructure—The Next Frontier?

Apptricity has developed a platform, called Advanced Framework, which gives a company the ability to adapt any module within an organization's current structure, using the organization's best practices or business rules. Advanced Framework uses integrated customization, rule building, and workflow tools to conform to the organization's business requirements. Java classes are automatically compiled, based on the changes that are made. Additionally, all applications operate with an engine that leverages XML, which streamlines and enhances interface connectivity. This provides a fast integration with different interfaces and legacy and third-party systems. Its framework supports the most current security measures, operating systems, database, application servers, browsers, and hardware platforms. It also includes a built-in interface repository of a wide variety of ERP and payroll systems. All the modules are Web-based, and use the concept of hosted applications.

Apptricity and TXU Corporation

One of Apptricity's main modules is the spend management module. It has been successfully implemented at several client sites, including TXU Corporation (TXU). TXU is a Dallas-based (US) energy company, that manages a portfolio of competitive regulated and unregulated energy businesses primarily in Texas, but also throughout North America. For the company's unregulated business, TXU Energy provides electricity and related services to more than 2.4 million competitive electricity customers in Texas, more customers than any other retail electric provider in the region.

In order to accommodate its aggressive growth objectives during the deregulation of the energy sector, TXU moved to a shared services model with the goal of consolidating procurement practices company-wide, and to improve the management of its supplier relationships.

Streamlining business processes related to vendor invoicing and employee spend was paramount to TXU. TXU's vision for creating cost-saving efficiency was similar for both internal and external transactions. It wanted to eliminate the manual, paper-based process for submitting, processing and reconciling procurement transactions through web-based automation and enable a unified approach for automating spend transaction for vendors and employees, whether the purchases are product or service oriented.

According to TXU, it was able to leverage Apptricity's solutions to process approximately $1 billion (USD) non-capital procurement transactions in the first year. The implementation also resulted in process improvements such as improved process compliance, faster procure-to-pay turnaround, and maximized use of personnel time. TXU was able to replace several of its in-house applications with a Web services based solution and implement a common front-end interface and back-end integration for its financial services, and it now has a system that can facilitate Sarbanes-Oxley compliance.

Apptricity's Future

Currently Apptricity's does not have all the functionality in place to make it a full SCM suite. As it stands, Apptricity is currently floating between the ERP and SCM industry, and does not offer a full suite on either side. However, needs to focus on the analysis functionality and asset management. Apptricity's CEO, Tim Garcia, plans to forge ahead with its current roadmap: "We have built dynamic adaptability into our architectural framework so customers can continue to invest in building its best practice and competitive advantage, rather than spend time and dollars feeding the traditional ERP vendors consulting practices."

For organizations that are currently looking for SCM functionality that is easy to implement, and based on an open concept with a smooth integration to several legacy systems, an SOA-based solution like Apptricity's may be an option. Make sure you take into consideration any future ERP and SCM functionality that might be of importance to you and that this functionality is also available. This will ensure that you have an integrated solution.

SOURCE:
http://www.technologyevaluation.com/research/articles/scm-in-a-new-flavor-real-time-and-demand-driven-18219/

Global Trade Management Software Vendors Under-Perform, But Were Predictions Overly Optimistic?

2010-08-18T23:24:00.002-07:00

Background

The Internet has enabled a networked world. Communication infrastructures and emerging applications, coupled with global sourcing alternatives have dramatically opened the door for international trade. Unfortunately, as a direct result of the 9/11 terrorist attacks on the World Trade Center in New York (US), scrutiny and security, not e-commerce, have become the main themes for global trade today. By late 2001, customs officials made it clear that as far as cross-border trade was concerned, it would not be business as usual. As a result of increased security measures, compliance and risk management has become paramount to safeguard national interests, and the need for flexible systems and processes characterized by change management that can react to global trade regulations, has grown (See Fighting Terrorism with Global Trade Management for more information).

Consequently, within the months following the 9/11 attacks, stock in global trade management (GTM) companies rose, and analysts predicted that GTM growth would be double or triple the revenue from that of previous years, likely hitting 35% compounded annual growth rate (CAGR). Because of the terrorist attacks, GTM vendors were viewed as potential gainers from its fallout, as shippers needed software and technology that would provide them with tighter control of their trade operations. But while total global trade has expanded since 9/11, the revenues of GTM vendors has only modestly risen, and profits are virtually non-existent. So why has this disconnect between the analyst community's exuberance toward GTM vendor growth and the post 9/11 reality emerged?
Major hurdles facing GTM vendors prior to 9/11 are still daunting, and some hurdles have actually been compounded by the attacks.

GTM vendors were facing many challenges in selling their software and services before 9/11. Competition was fierce among vendors, startup costs for GTM software infrastructure were high for enterprises, and justifications based on return on investment (ROI) from compliance and other potential cost reductions were still an "evangelical sell" made by vendors. Moreover, vendors still face ever-changing laws, trade regulations, rules, and requirements hampered shippers. These issues continue to stall global trade creating inefficient processes and complexity, delaying the widespread use of GTM software.

Additionally, cross-border trade logistics throughput is also now hindered by a shortage of port infrastructure resources; this also overshadows the potential gains of GTM software. Shipment containers delayed at major ports like Long Beach, California or New Orleans, Louisiana (US) due to horrific weather, and expanded security, are not issues that GTM can resolve alone. Similarly, US federal security processes at the borders are not helping to alleviate delays, and in many cases may exasperate them.
Existing e-business applications still fall short in supporting automated GTM.

Now is the time for major shipping entities to automate and streamline their internal systems and processes for global trade. Unfortunately, few of today's packaged applications really offer multi-enterprise services and software that automates the transportation and e-logistics management needs of a global trading network because they do not meet cross-border requirements. Web-based buy- and sell-side applications fall short of providing automated GTM ,and partnering with a traditional international trade logistics (ITL) vendor is only a stop-gap measure because further software support and integration is still required.

Today's commercial applications fail to adequately address automated GTM, and this is true of a whole spectrum of software, be it enterprise resource planning (ERP) software from vendors like SAP and Oracle; buy- and sell-side software from vendors like Ariba and Commerce One; or software from logistics exchanges espousing global capabilities like DesCartes' Global Logistic Network (GLN) . Moreover, though e-commerce, international trade, and e-logistics software are converging through mergers and acquisitions that may potentially extend the GTM footprint, it will take time for them to be properly integrated and develop synergy.

Given these issues, currently there is no "silver bullet" that can tackle the many nuances of global trade. Existing software is only tactical in nature, and needs to evolve toward a full service oriented application (SOA) model.
E-commerce, international trade, and logistics software are converging though mergers and acquisitions to extend their GTM footprint.

All solutions should be striving for the "holy grail" in e-logistics: the global visibility of trade activities across all modes, on a real time basis, throughout the supply chain, regardless of the service provider involved. However, there are barriers to achieving this:

* In the world of ITL, content is king, with compliance and trade documentation being major services.

* Logistics requires shippers and carriers to communicate and collaborate, and today it is based mostly on long standing person-to-person relationships, not technology.

* Financial services and settlement for global trade has been a backroom activity in finance organizations and financial institutions (FI) that lack the direct global logistics data and act as yet another service.

* Most e-logistics applications alone cannot meet the requirements of global trade, because they require compliance, regulatory, and security controls from another source.

* Global trade requires logistics execution capabilities as well as real time supply chain visibility in order to meet the anticipated needs of user in the Internet Age.

* These functions lack convergence and will take considerable time in order to offer an effective, thoroughly extended, and collaborative supply chain..

Recent Market Convergence Not the Answer

Acquisitions by JP Morgan Chase Bank, North America of Vastera, a leading GTM player; TradeBeam Holdings Inc. of Qiva and Open Harbor; and Oracle's acquisition of G-Log have created good fodder for the analyst community touting the rapid growth of the GTM market; but, in reality, acquisitions have done little for the growth and profitability of the market overall. (For more information see Merging Global Trade Management with Global Finance; and TradeBeam Keeps Rounding Out Its GTM Set). However, while, recent merger and acquisition activity has not been the stimuli for growth, it has brought some synergy and has converged functionality that will benefit GTM software and encourage future sales. For now, services revenue still outshines licenses revenue in the GTM arena. Ultimately, the analyst community's high, initial expectations of the GTM vendor market was unfounded, but eventually the market will likely grow. Perhaps a 35 year timeframe is a more realistic when setting expectations about the growth and profitability of the GTM market, as federal and enterprise mandates for global trade push technology forward to meet security and regulatory compliance.

SOURCE:
http://www.technologyevaluation.com/research/articles/global-trade-management-software-vendors-under-perform-but-were-predictions-overly-optimistic-18261/

Infinium Returns To Its Core Competencies To Succeed Part 2: Challenges and User Recommendations

2010-08-18T23:24:00.001-07:00

Strategic Focus

Incidentally, a sharp vertical focus founded on strong horizontal applications has long been Infinium's modus operandi. However, given its past financial difficulties and the confinement to the iServer platform have made the company revise and rationalize its traditional industries of focus. Although Infinium customers represent a variety of industries including: manufacturing, hospitality and gaming, healthcare, transportation, retail, financial services and transportation/distribution, going forward, the company will focus on gaining mind share and delivering total solution offering for the following three industries: hospitality and gaming, healthcare, and process manufacturing. The other industries will be pursued only opportunistically until the economical climate and buying patterns significantly change. For example, the transportations industry's current low spending behavior and the financial services low acceptance of iSeries platform do not justify the need for further vertical-specific investment from Infinium at this stage, although the company can boast a notable customers in both industries.

The focus on hospitality and gaming is a no-brainer given the above-mentioned customer base statistics and the lion market share. It is the mother of all Infinium's vertical solutions. The disastrous immediate impact that the events from September 11 have had in this industry also contributed to Infinium's dismal results in 2001. (See Part 1 of this article for the Financial Information)

However, the revival seems to be on its way, and Infinium is likely far ahead of its competitors in providing a nearly 'one-stop-shop' to its prospects, given its early-to-market advantage and over 20 years of relevant experience. An excellent example of a module that its competitors will have a tall order to produce would be Infinium's analytic suite tailored for hospitality services called Daily Operating Reporting (DOR), where hotel and casino managers are able to discern some arcane facts such as turnover vs. meteorological report correlation, or profitability per business (lodging vs. games) or even deeper (e.g., per game type), and all these per day in a week or per time period of the day.

This is Part 2 of a 2-part note on Infinium.

Part 1 detailed recent announcements and detailed Infininum's strengths.

Partnerships

Still, even a company with market leadership needs a number of necessary partnerships to fulfill the esoteric needs of the industry. No vendor can provide for all customers' needs. However, Infinium is again ahead of the competition, given an early start in partnering with the following companies:

* Stratton Warren, a part of PurchasePro - for its MMS400 hospitality-endemic enterprise material management system that manages procurement of 'consumable' materials like salsa and lettuce,

* Inter-American Data - for Lodging Management System (LMS) and credit card processing software that are crucial for hotel operations,

* TALX Corporation - for employment income verification services of HR referrals,

* Advanced Casino Systems Corporation (ACSC) - for its slot management business system,

* eLabor.com - for its advanced recruiting system, and

* Cognos - for its Impromptu custom reporting system.

Contrary to hospitality, the other two industries of focus are yet to be cracked in earnest. In the healthcare industry, Infinium has in excess of 100 customers, mainly general hospitals and pediatrics clinics, which is still a far cry from thousands that likes of Lawson Software and PeopleSoft can tout. Still, having 30% of its service, support and sales staff with direct experience in the market and a healthcare customer retention rate of over 95% are compelling reasons for Infinium to pursue the market segment. Also, having provided its own ERP modules (financials, HR/Payroll, material management) for healthcare organizations operations, bundled with a close partnership with McKesson for Hospital Information Systems (Insurance/Workflow, and Medical Practice) and for Clinical Information Systems, have often given other contenders a run for their money in the past. We would not be terribly surprised to see the two companies elevating their co-operation on a higher strategic level, some time in the future.

The company will likely have most of its work cut out to gain significant market recognition within the process manufacturing segment, where the competition may be fierce, given strong recovery of pure-process ERP vendors (see Ross Systems' Focus Yields More Value For Process Manufacturers and iProcess.sct Enters Golden Gate Opportunity) and high aspirations of the likes of SAP, Oracle, J.D. Edwards and Baan Process Solutions.

As mentioned in the Part 1, the Infinium Process Manufacturing ERP product seems to be a good fit for certain areas within process manufacturing, which entails small-to-medium sized enterprises that run in the batch (vs. continuous) manufacturing mode. It features strengths in formula/recipe management and hazardous material control and regulatory compliance (e.g., material safety data sheet (MSDS), Superfund Amendments and Reauthorization Act (SARA) Title III environmental regulations, and laboratory inspection management system (LIMS)) functions that make it a good solution particularly for some food and chemical industries (e.g., paints and coatings).

The company has indicated intended delivery of functionality that is often required for food & beverage industry (e.g., 'catch weights' and potency) in the foreseeable future. The offering, however, lacks strong natively provided forecasting, supplier relationship management (SRM), and supply chain management (SCM) including finite scheduling, warehouse management system (WMS) and transportation management. It appears that the company has been in a pursuit of a partnership that would cater for all or most of the above functional gaps, and the market should watch for an official announcement in that regard. Nevertheless, the still relatively lower penetration and the smaller number of competitors in the process manufacturing market (compared to the discrete manufacturing) remain the company's opportunity, and it may have a fair shot at pursuing it given over 350 existing process manufacturing customers.

Also, despite its fair global presence, which has somewhat diminished lately owing to some offices closure, Infinium remains largely established North American vendor, with over 80% revenues coming from this market. Consequently, very few practitioners are aware that, for example, Infinium financial and HR/Payroll modules often can go head to head against the likes of SAP, Oracle, PeopleSoft, J.D. Edwards and Lawson, with an additional benefit of flexibility and ease of use.

Therefore, Infinium's recent determination to execute a comprehensive marketing campaign into the three key verticals is commendable as it might help its low mind share, brand awareness and visibility. For example; the process marketing activities for this quarter include advertising and sponsorships on various process industries relevant web sites and/or publications (e.g., www.foodprocessing.com and www.chemicalprocessing.com), series of direct mail and emails to several dozens of thousand contacts, and virtual seminars promoting benefits of CRM to manufacturing enterprises co-sponsored by IBM. Similar plans are being executed for the healthcare organizations as to make headway on creating visibility in these markets. The message in the campaigns focuses on Infinium's value proposition for the above industries including its products' integration, ease of use, low TCO, and industry expertise. The company should also articulate in a more perspicacious manner its commitment to further invest in its healthcare and process manufacturing solution. Strategic partnership agreements with leading industry solution providers should also be expedited and broadcast to the market.

User Recommendations

Infinium's potential and current customers should certainly take note of the company's new product strategy and forthcoming offerings, but avoid selecting it without looking at what the other vendors have to offer. As for the newly added and/or anticipated functionality through product alliances, users are advised to ask for firm assurances on the availability and future upgrades timeframes, and more detailed scope of combined product functionality.

We generally recommend including Infinium in a short list of an enterprise application selection for mid-market and low-end Tier 1 companies (with $50 million -- $2 billion in revenue) as well as for divisions of Fortune 1000 companies within its announced industries of focus. Infinium should still be included on any package selection long list within the transportation, retail, and financial services where financial, human resources/payroll, and basic material management are the main pillars of an enterprise application. If an enterprise is seeking a back-office system that handles variations, exceptions and different options while keeping track of a large number of employees, Infinium might be a good choice.

While the hospitality and gaming product strategy remains crystal clear, the other two industries' strategies have some more impending tuning up. Therefore, potential Infinium healthcare and process manufacturing users our advice would be:

* Evaluate Infiinum if you are a small to medium, batch process manufacturing company or healthcare organization,

* Bear in mind that if the non-process manufacturing items (e.g., HR/payroll, financial management, CRM, and analytics) are also critical to you, then Infinium brings added value to the table, although the integration should be validated during the technical review sessions as a part of a thorough selection process.

* During the selection process, question the company's executives about the positioning and delivery timelines of healthcare and process manufacturing offering within the total business strategy of Infinium.

* Talk to or visit existing users to access their confidence in the future of Infinium's healthcare and process manufacturing products and its track record relative to meeting these industries needs.

SOURCE:
http://www.technologyevaluation.com/research/articles/infinium-returns-to-its-core-competencies-to-succeed-part-2-challenges-and-user-recommendations-16666/

Market Leaders of Global Trade Management

2010-08-18T23:23:00.004-07:00

Enter the Leaders of GTM

While many eyes are still on the consolidation of the mainstream enterprise resource planning (ERP) market, the end of 2004 and the beginning of 2005 also have seen the acquisition moves of two prominent players in the global trade management (GTM) market to streamline the entire life cycle of a global trade and make cross-border transactions more efficient. Providing solutions that integrate the physical and financial supply chains by more holistically optimizing the "procure-to-pay" and "order-to-cash" cycles for global corporations appears to no longer be mere buzzwords and concepts.

Two of these acquisitions are JPMorgan Chase Bank, N.A. (NYSE: JPM) and Vastera (NASDAQ: VAST) ; and TradeBeam Holdings, Inc., and Open Harbor.

Part four of the Will 2005 Validate the Realm of GTM—Unifying Financial and Physical Supply Chains? series

JPMorgan Chase Bank Acquires Vastera

On January 7, JPMorgan Chase Bank, N.A.(NYSE:JPM), a leading global financial services firm with assets of $1.1 trillion (USD) and operations in more than 50 countries signed an Agreement and Plan of Merger with Vastera (NASDAQ: VAST), the only publicly traded software company that focuses on global trade. With services including software, managed services, global trade content, education, and high-end consulting services, Vastera was deemed a desirable complement to the Logistics and Trade Services business of JPMorgan Chase's Treasury unit.

The Treasury Services unit is a top-ranked, full-service provider that meets the needs of corporations, financial services institutions, middle market companies, small businesses, governments and municipalities worldwide. Its services include innovative payment, collection, liquidity and investment management, trade finance, commercial card, and information solutions. With more than 50,000 clients and a presence in 36 countries, it is the world's largest provider of treasury management services. Under the Agreement and Plan of Merger, Vastera shareholders will receive $3.00 (USD) for each outstanding share of Vastera common stock they own, for a total transaction value of approximately $129 million (USD), about 50 percent premium over the annual revenue of Vastera.

Vastera's solutions automate the required trade management processes associated with the physical movement of goods internationally. The acquisition should further provide JPMorgan Chase clients with a "one-stop shop" service that addresses the increasing challenges and risks associated with international trade. The JPMorgan Chase solution currently facilitates the seamless management of information and processes to support the movement of physical goods and financial settlement of the complete global trade process. With the services of Vastera, JPMorgan Chase boasts it will be the first global financial institution to offer a complete, integrated cash, trade, and logistics solution across the physical and financial supply chains in a way that would maximize benefits to its clients.

Previous to the acquisition, Vastera had an extensive working relationship with JPMorgan Chase by providing GTM solutions. Now the two tout to be able to build on that relationship as part of the same firm, in a broader GTM infrastructure, to bring tangible benefits to clients of both formerly independent companies. This acquisition should give current JPMorgan Chase's clients the benefits of broader GTM solutions. In turn Vastera's clients will receive the benefits of JPMorgan Chase's comprehensive financial services platform and product set. Vastera will continue to independently market its software and services, but much more growth opportunity is expected from bundling Vastera's software and services with JPMorgan Chase's offerings.

This is Part Four of a six-part note.

Part One defined GTM.

Part Two discussed the tradeoffs.

Part Three addressed managing global trade flows.

Part Five will cover dealing with GTM complexity.

Part Six will present challenges and make user recommendations.

Completion of the merger is subject to Vastera shareholder, various banking, and other regulatory approvals. The transaction was approved by Vastera's board of directors recommending that Vastera shareholders vote in favor of the transaction. Two major shareholders representing approximately 28 percent of outstanding Vastera shares, Ford Motor Company and Technology Crossover Ventures, have reportedly committed to vote in favor of the transaction pursuant to voting agreements.

With approximately 650 professionals in 14 countries and with over 400 clients throughout the world, Vastera is the worldwide leader of GTM solutions. It serves an international client base, including companies such as Alcatel, Dell, Ford, General Electric (GE), Lucent, Fonterra, Goodyear, Nortel Networks, and Seagate. Vastera's clients use its solutions and services to manage their trade, worldwide by managing the information flows associated with the cross-border components of importing and exporting goods. The vendor's solutions and services enable clients to manage the complexities and inefficiencies inherent in global trading in a manner that allows them to capitalize on the large, highly fragmented, and rapidly growing opportunity that exist in the international market. These clients reportedly realize significant reductions in costs to manage their global trade operations while improving compliance with government regulations and service levels.

Vastera touts its trade experts to be the company's most valuable asset and they were certainly a key factor in JPMorgan Chase's acquisition decision. There appears to be a strong, global demand for trade consultants, because companies want to understand the impact of ever-changing regulations on their business strategy, network design, operations, and financial performance. Consequently, Vastera sells its products and services through its offices in the US and through subsidiaries and branch entities in the UK, Europe, Mexico, Canada, Brazil, and Japan. Its key strengths include comprehensive regulatory content, blue-chip clients, and its ability to merge technology with managed services. It has a strong presence in the automotive and high-tech industries, has in-depth expertise in Brazil, Canada and Mexico, and is currently targeting China. As the only GTM vendor with dedicated personnel and facilities in fourteen countries, Vastera continues to be recognized for its superior management systems and B2B best practices around the world, resulting in service that emphasizes compliance, efficiency, and effectiveness.

For additional information see Merging Global Trade Management with Global Finance.

Vastera Certifications

At the end of 2004, Vastera announced that its eleven managed services operations in Mexico and its site in Bydgoszcz, Poland were certified in compliance with the International Organization for Standardization (ISO) 9001:2000 standard, and ISO 9001:2001, respectively. Founded in 1947, ISO facilitates the international coordination and unification of industrial standards. It has a network of national standards institutes from 148 countries, working in partnership with international organizations, governments, industry, and consumer representatives. ISO 9001:2000 and 9001:2001 certified organizations enhance customer satisfaction by not only meeting customer and regulatory requirements, but also by continually working to improve performance. The certification process includes a rigorous review of business processes, documents, work practices, data, and records by an independent third-party auditor. Thus, such certification indicates that these sites have an exemplary quality management system in place. In addition to participating in such reviews, Vastera employees were interviewed and on-site observations were held at its Mexico and Poland facilities. To date, Vastera has received ISO certification for fourteen managed services operations, including those in Mexico, Poland, US, and Canada.

In addition to being ISO 9001:2000 and ISO 9001:2001-certified, Vastera is

* Customs-Trade Partnership Against Terrorism (C-TPAT) certified, enabling expedited clearance through and reduced physical examinations at US Customs' checkpoints. The C-TPAT program was designed to ensure that proper security procedures are in place to protect the flow of global trade entering the US.

* Partners in Protection (PIP) certified in Canada, recognizing Vastera's dedication to enhanced border security in North America. Mid-2004, Vastera announced that it has been accepted as a member of the Canadian government's PIP program, a joint government-business initiative designed to enhance border security, combat terrorism and organized crime, increase awareness of compliance issues, and detect and prevent smuggling. Available to importers, carriers, brokers, warehouse operators and associations who work in international trade, the PIP program teams private industry with the Canadian Border Services Agency (CBSA). To be admitted to the program, eligible companies must complete a memorandum of understanding, conduct a thorough self-assessment of their supply chain security procedures, and meet periodically with CBSA representatives to exchange information and participate in awareness sessions that help detect illegal activities. In working with the CBSA, Vastera is building a working relationship with the Canadian government in relation to protecting the health, safety, and economic prosperity of Canadians. In return for acceptance into PIP, Vastera will offer support to its own clients throughout the application process. Once approved under the PIP program, Vastera clients can then consider participation in the Free and Secure Trade Program (FAST), a joint US-Canada cross-border program under which pre-approved carriers, importers, and drivers can leverage expedited clearance into either country, transforming the compliance obligation into an opportunity to streamline the supply chain. Additionally, Vastera is a certified customs broker, and an approved software provider of the Customs Self Assessment Electronic Data Interchange (CSA EDI).

* Simpler Trade Procedures (SITPRO) certified in the UK, whereby Vastera is an approved document supplier. It can produce and supply nearly seventy SITPRO standard documents for its customers operating in the UK and Europe.

* Wewntrzny System Kontroli (WSK) certified in Poland, recognizing Vastera's exemplary quality and compliance management systems. WSK is the Polish internal control system certification. Vastera's Managed Services operations in Poland received WSK certification from the Polish Center for Testing and Certification. The vendor is also IQNet certified in Poland recognizing that its Managed Services operations have implemented and are maintaining a management system which fulfills the requirements of the ISO 9001:2001 standard.

In addition to these certifications, at the end of January, Vastera announced that it is expanding its trade management consulting practice to the European Union (EU). Its management consulting practice complements the software and outsourced trade management solutions already offered by Vastera in Europe. Among the trade management consulting services being offered in the EU are import/export compliance program assessments, process design and implementation consulting, and consulting in areas such as global supply chain management (SCM), and trade lane redesign. Vastera hopes to leverage its strong in-country presence as it pursues new consulting opportunities in Europe, where it currently provides trade management operational solutions and software to companies such as Dell, Ford, Logica, Lucent, Nestle, Nortel Networks, Schenectady International, and Seagate Technology.

Thus, JPMorgan hopes to leverage all of Vastera's certification and prominence in international trade. However, one should note, that though Vastera is impressive, and JPMorgan has notable reach, Vastera, focuses more on the rules and regulations imposed by the many governmental bodies required in cross-border trade (such as product harmonization coding, customs clearance, duties, tariffs, and taxes). Ultimately, the acquisition agreement with JPMorgan will not compensate for what Vastera has always lacked—the technology to automate and manage global logistics tracking, goods movement, and the visibility part of the physical supply chain. JPMorgan Chase will thus have to continue its pursuit of solutions to round out a complete GTM product portfolio, as to reach a "breeze" to navigate international trading channels to place orders, send, and receive shipments and settle bills anywhere in the world.

TradeBeam Keeps on Rounding Out Its GTM Set

Combined, JPMorgan and Vastera promise to deliver a holistic approach to global trade management; however, it may not be the one and only option for international traders. TradeBeam Holding Inc. is also vying to create an integrated physical and financial supply chain. Its solutions aim to streamline global trading processes for enterprises and their partners, including import and export compliance and global trade finance solutions, like open account and letters of credit (LC) management. It also offers solutions for inventory management, shipment tracking, and supply chain electronic management (SCEM), and has over 3,000 customers, and users in over 100 countries worldwide. At the end of 2004, TradeBeam announced that it acquired the assets of Open Harbor, a leading provider of international trade logistics solutions (ITL).The terms of the deal were not disclosed.

Founded in 1999, Open Harbor possessed deep expertise in trade compliance, including a comprehensive centralized repository of global trade content. This harmonization engine contains millions of trade rules from more than sixties countries, in a one-to-one relationship. The company was also considered a leading player in the landed cost management arena, and customers have leveraged its technology and experience to gain crucial accurate pricing for international orders based on an aggregate of product cost, shipping costs, and fees charged by the exporting and importing countries. However, based on its solution sets and market demand, Open Harbor has not seen the level of success that is should have. Its failure was primarily caused by poor management

Conversely, TradeBeam has focused more on the application side of trade management, such as creating shipment tracking, insurance, event management, and other applications central to the actual movement of goods. Because of the market demand for experts in trade regulations interpretation and application, Open Harbor became a logical acquisition choice for TradeBeam, thus the acquisition bid was made and accepted.

TradeBeam believes that Open Harbor will bring a logical extension to its current offering, since customers will now have enhanced access to the latest global trade content for more than 60 countries and to landed cost management. The move is a continuation of TradeBeams' strategic expansion of its product footprint, which covers the entire life cycle of global trade across order, logistics, and financial settlement activities. There should also be a complimentary vertical focus, since Open Harbor had developed solutions and attracted clients in the hi-tech and automotive markets.

For additional information on TradeBeam see TradeBeam Keeps Rounding Out Its GTM Set.

Other Potential GTM Vendors

Since many importing/exporting manufacturers rely on the shipper to handle the hassle compliance and regulation, logistics service providers, like airfreight leaders FedEx and DHL, are providing similar services and are providing the broader market access to technology and trade experts. FedEx, for example, has recognized that many customers simply wanted to rid themselves of the burdensome compliance chore, and in 2002 it formed a specialized division, FedEx Trade Networks, to do just that, thus becoming possibly the largest customs brokerage in the US. Some of its compliance services are free, or more accurately, are available from its Web site as part of its overall shipping service. Other services, such as the Harmonized Tariff Schedule (HTS), is available electronically for a fee. The company also offers the services of its consultants, which are trained in dealing with trade and compliance ambiguities, to categorize a manufacturer's entire inventory. To that end, FedEx acquired former content provider WorldTariff a few years ago, which covers the tariffs, taxes, duties, and preferential trade programs of nearly 120 countries.

Even smaller shippers can now leverage import/export software through third parties. Specialized software and managed service providers are now working behind the scenes make it possible for carriers and freight forwarders to offer selected services to their customers, such as landed-cost calculators, product classification, and document preparation, often on a fee-per-transaction basis. To that end, DHL has in the past partnered with Open Harbor, and FedEx Trade Networks has partnered with NextLinx, whose database carries nearly 20,000 HTS product classifications and more than 40 landed cost components for 100 countries and accounts for about 95 percent of the entire world's trade.

In addition to FedEx and DHL, other companies offer compliance services. For example, the sea freight company APL, and the global logistics software specialist G-Log offer such services. In the trade compliance space, there may even be a distinction between content-specific vendors and process-specific vendors, whereby FedEx and G-Log are examples of process-centric vendors, while content-specific vendors, which compile, maintain, and sell access to the data on tariffs, embargoes, and denied parties, include the likes of Vastera, NextLinx, and Open Harbor.

Also entering the global trade realm is the enterprise applications giant SAP. In February, SAP introduced an updated global trade solution that should help companies more easily conduct business under the North American Free Trade Agreement (NAFTA) and EU trade agreements with lower costs and easier regulatory compliance. Important new trade preference processing capabilities have been added to the latest version of SAP Global Trade Services (SAP GTS), a packaged composite application that enables businesses to standardize and streamline import and export processes to speed their global supply chains. Over 125 companies, including Advanced Micro Devices (AMD), a leading designer and producer of innovative microprocessors; ASML, a semiconductor manufacturer; and Teekanne Group, a tea trading company, are reportedly achieving new trade efficiencies and legislative compliance with SAP GTS.

SOURCE:
http://www.technologyevaluation.com/research/articles/market-leaders-of-global-trade-management-18008/

SAS: Striving to Sustain Leadership

2010-08-18T23:23:00.003-07:00

SAS' Profile

SAS Institute is a privately-owned Cary, North Carolina-based (US) provider of business analytics, which operates through 200 offices across 100 countries in North America, Europe, Asia Pacific, Latin America, and Africa. It employs nearly 10,000 people and has recorded revenues of over $1.5 billion (USD) in 2004, which was an increase of about 14 percent over 2003.

SAS believes it is uniquely positioned to provide companies with a suite of software products that, when integrated, provide more complete business insight from both a historical and a forecasting view. Specifically, SAS can provide companies with easy access to any data source, enabling it to more efficiently process the data and generate reports—both historical and predictive—in the format that the user wants.

SAS is the market leader in providing a new generation of business intelligence (BI) software and services that create enterprise intelligence. Its data warehousing (DW), extract, transform and load (ETL), and data mining software gather, manage, and analyze enormous amounts of corporate information to find patterns in customer data, manage resources, or target new business. SAS solutions are used at more than 40,000 sites—including 96 of the top 100 companies on the Fortune Global 500, and is used in almost every major US government agency . It has enabled companies to develop more profitable relationships with customers and suppliers and to execute better, more accurate, and informed decisions.

Having been a leader in deep-dive analytics since the mainframe era, SAS has lately focused on sustaining its technology leadership, in part through a number of well thought-out acquisitions and by expanding its entrenched presence in some vertical markets. To that end, the vendor offers a range of products, solutions, and services for a number of different industries, including automotive, banking, energy, utility, financial services, government, education, healthcare, insurance, life sciences, manufacturing, media, entertainment, retail, and telecommunication.

SAS has made notable in roads into the enterprise realm and can no longer be described as a mere BI vendor. Its product portfolio now spans more than one hundred products (some grouped and integrated, while others remain as standalones), and extends far beyond data mining tools, embracing a gamut of applications, from geographical and statistical visualization to fraud detection and DW administration tools. Products include CRM, financial intelligence, human capital management (HCM), IT management, patent intelligence, performance management, process intelligence, risk management, scorecarding, supplier relationship management (SRM), supply chain intelligence, value chain analysis, warranty analysis, and Web analytics. SAS also provides services like consulting, technical support, and training and it has a number of subsidiaries, including DataFlux, which provides software for data management, and Marketmax, which offers products for advanced retail planning and analytics.

In addition to the Fortune 500 and many other large, multibillion US enterprises, which have historically been its stronghold, SAS has also been focusing on selling its products into midsize enterprises. The vendor has already saturated the mainframe-based portion of the global 2000 marketplace, where the sales of upgrade products is limited by the tendency of very large organizations to customize their data analysis programs. To enrich its coffers, SAS is departing from its traditional scientific and analytical applications, and the high-end of the market, to become more attentive to low-end analytics through a simplified Web-based query-and-reporting tool.

This is Part one of a multi-part note.

Part Two will discuss alliances, partnerships, and acquisitions.

Part Three will present a marketing analysis and make user recommendations.

SAS 9—The First-Time Unified Enterprise Intelligence Platform

In fact, SAS might still be the only vendor that completely integrates data warehousing, analytics, and traditional BI applications to create intelligence from massive amounts of data. For nearly three decades, since its founding in 1976 , SAS has been giving customers around the world its trademark "The Power to Know" mantra. Similar to Amdocs' delivery of a unified platform, SAS delivered the united SAS 9 platform much earlier, in 2004. The SAS 9 platform has enhanced analytics and refined user interfaces (UI) that provide fresh insights for solving business problems and driving competitive advantage. SAS touts this software as the most significant release in its long history, reportedly being faster, more efficient, and easier to use than its predecessors. More importantly, SAS9 marks the company's move from point technology solutions to enterprise-wide technology solutions. The new platform connects all SAS applications so that they work together transparently. It also communicates with other data sources and programs.

The platform also boasts enhancement of what may possibly be the most tightly integrated optimization and predictive analytics capabilities available, making it even easier to answer complex questions that cannot be addressed by traditional BI tools. Enhanced analytics in SAS 9 include a comprehensive set of capabilities like predictive and descriptive modeling, forecasting, simulation, optimization, and design of experiments. The platform takes advantage of analytical advances, equipping users with additional and enhanced predictive modeling capabilities, predictive modeling markup language (PMML) scoring code to ease deployment on analytics. It also provides a Web-based model repository to enable reusability. Now with new Java interfaces, SAS Enterprise Miner, and SAS Text Miner, these analytics tools should enable forward-thinking organizations to analyze both structured data and unstructured text more easily.

To refresh our memory, data mining is a class of database applications that look for hidden patterns in a group of data that can be used to predict future behavior. For example, it can help retail companies find customers with common interests. True data mining software does not just change the data presentation, but actually discovers previously unknown relationships among the data. This knowledge is then applied to achieving specific business goals.

These tools are used to replace or enhance human intelligence by scanning through massive storehouses of data to discover meaningful new correlations, patterns, and trends by using pattern recognition technologies and statistics. Hence, it is popular in the science and mathematical fields but it is also increasingly being used by marketers trying to glean useful consumer data from their Web sites. Going one step further, predictive analytics is data mining that uses pattern recognition, statistical, and mathematical techniques on large amounts of data to support decision-making by forecasting the outcomes of different scenarios. SAS has been the leader in this area, with its software's ability to learn from the past, manage the present, and predict the future. It then makes that intelligence available to all constituencies within the organization.

Its rich suite of integrated data mining algorithms is now enhanced with a rather easy-to-use Java interface, allowing business analysts, IT specialists, and quantitative experts to extract business knowledge from vast data stores and then create results that can be integrated within operational systems. SAS Enterprise Miner is ideal for analytical CRM and financial decision-support initiatives, monitoring compliance, detecting fraud and money laundering, and for quality improvement in manufacturing environments. On the other hand, SAS Text Miner discovers and extracts knowledge from text documents, and is used to analyze a myriad of data, including information from call centers, customer or employee surveys, competitive intelligence, and patents. SAS Text Miner can also help detect emerging product issues. SAS 9 also supports several additional languages, expanding its usefulness globally.

SAS Enterprise Intelligence Platform

These impressive analytics also include a diverse set of predictive, descriptive, and statistical analytics software to help decision makers anticipate how their actions will impact the future, and it turns almost every employee into a knowledge worker. SAS 9 also includes the SAS Enterprise Intelligence Platform as a foundation for future SAS horizontal and vertical BI solutions. Other main strands include a broad set of integrated software for data integration through the SAS Enterprise ETL Server; data warehousing through the SAS Intelligence Storage; and portal capabilities, and query, and reporting through the SAS Enterprise BI Server. These offer several UIs the opportunity to improve usability throughout all levels of the enterprise. SAS 9 data integration includes data quality and a common metadata repository for ensuring reliability of information across computing systems. SAS Enterprise ETL Server cleanses and integrates data into a common, usable data store that offers an available, consistent, and verifiable set of answers across the enterprise. In other words, the power behind the SAS 9 platform is tight integration, data quality, common metadata, and centralized management.

At the same time, SAS also announced plans to deliver seven software solutions that will take advantage of the SAS 9 Enterprise Intelligence Platform, to provide organizations with an integrated suite of solutions that addresses many key business challenges. Each of these solutions aims at helping user organizations go beyond BI as they know it, and ensure that more and more people within those companies—from the factory floor to the boardroom—can use the predictive analytics and data management capabilities of SAS. With SAS 9 and its new UIs and capabilities, SAS believes the group of potential users will expand so much that even more than 80 percent of the people in an organization will have access to BI solutions. The seven SAS solutions on the SAS 9 Enterprise Intelligence Platform are

SOURCE:
http://www.technologyevaluation.com/research/articles/sas-striving-to-sustain-leadership-18104/

Emptoris "Procures" Zeborg's Spend Management Expertise Part one: Event Summary

2010-08-18T23:23:00.001-07:00

Event Summary

The evolving supplier relationship management (SRM) market and its ever-evolving or emerging constituent parts like e-procurement, strategic sourcing, spend analysis and so on have lately shown great opportunities to the pure-play SRM vendors with genuine value prepositions. These have been seen in increased user awareness and adoption, certain venture capital investments in these days of scarce capital outside the trendy biotechnology sector, which then prompted geographic expansion and sporadic mergers of incumbents with complementary offerings.

Such an example would be Emptoris, Inc., a privately-held provider of e-sourcing solutions that support the strategic sourcing needs of global 5000 companies, which early in 2003 announced the completion of financing from new and existing investors totaling $20.5 million. Menlo Ventures led the third funding round, with participation from new investor HarbourVest Partners and all existing investors, including NETinvest, from previous two funding rounds. Emptoris then pledged to use the funds to finance further expansion of the company in a number of areas, including sales, marketing, product development, and penetration into new global markets.

Since its founding in 1999, Emptoris has quickly become one of the leading e-sourcing software vendors with sound technology that is used by numerous global 5000 companies across a wide range of industries, which include electronics, pharmaceutical, metals and mining, aerospace and defense (A&D), and financial services.

In September, Emptoris announced the acquisition of Zeborg, one of the world's leading spend analytics firms. As a result of the acquisition, Emptoris, with more than 50 global 5000 customers, and notable sourcing applications and services, believes it is now positioned as the leading strategic sourcing software provider in the procurement and sourcing applications market. In addition to acquiring Zeborg's software and services offerings, Emptoris will inherit the company's sales team as well as global 1000 clients from a wide range of industries, including seven of the world's largest banking and financial services companies. Zeborg's customers include American Express, Cigna, Fleet Boston Financial Corporation, KeySpan, and Owens Corning. Zeborg has reportedly processed over $480 billion in corporate spend data and over 350 million transactions from over 100 data systems. On the other hand, Emptoris customers include Boeing, GlaxoSmithKline, Motorola, and Samsung America.

Specifically, Emptoris believes it will benefit from the Zeborg acquisition in the following ways:

* It should position Emptoris as the largest company dedicated to the strategic sourcing software market.

* A broader market opportunity, a larger sales organization, and significant cross-selling opportunities to global 1000 customers means the company is well positioned to achieve over 50 percent revenue growth in 2004.

* The addition of several marquee financial customers makes Emptoris the leading provider of e-sourcing solutions for the financial services industry.

More importantly, Emptoris believes its existing customers will also benefit greatly for the following reasons:

* Tight product integration, expected to be completed over the next few months, will enable Emptoris customers to achieve additional cost savings by providing the ability, through one application, to identify and prioritize sourcing savings opportunities, develop best practice strategies to capture the savings, quickly execute sourcing activities designed to reduce the total cost of ownership (TCO) of goods and services sourced, and track compliancy to ensure savings are captured in accordance with corporate sourcing goals and policies.

* Expanded sourcing domain expertise will enable Emptoris customers to achieve quicker return on investment (ROI) with turnkey sourcing solutions.

* New technologies and an expanded development group will enable the company to maintain a functional leadership position and set new industry benchmarks that will drive incremental customer value.

The move comes after Emptoris announced in August that it had opened an office in Germany to support existing customers and offer its strategic sourcing solutions to companies throughout the country as well as surrounding countries in the region. The office will be fully staffed with sales, marketing and technical personnel and will be based in Berlin. Prior to that, Emptoris opened its European headquarters in the UK in 2002. According to Avner Schneur, President and CEO of Emptoris, the vendor has experienced tremendous growth in Europe over the last year through a number of customers wins with large European companies. In fact, today Europe represents 35 percent of the company's total revenue, which we estimate is in the range of $10 million.

This is Part One of three-part note.

Part Two will discuss the market impact.

Part Three will cover challenges and make user recommendations.

Emptoris Background

Prior to its new funding, Emptoris has done an impressive job of delivering sourcing applications in-house. Namely, at the end of 2002 it announced the availability of version 4.0 of Emptoris Sourcing Portfolio (formerly ePASS, which stood for Electronic Procurement Application for Strategic Sourcing), the company's web-based e-sourcing software suite. The Emptoris Sourcing Portfolio has been renowned for its event management, supplier enablement, and optimization-based decision support aimed at providing significantly shorter sourcing cycles and substantial bottom-line savings. Version 4.0 of the Emptoris Sourcing Portfolio, however, provided deeper and more flexible functionality through new software modules, including contract management, project management and supplier assessment.

By providing a solution that helps users manage the interplay between ongoing sourcing activities and contractual relationships, the Emptoris Contract Management module allows enterprises to:

* Easily build complex multi-item, multi-term supply contracts with intuitive forms, menus, and instructional wizards.

* Manage complex pricing arrangements, monitor supplier compliance, and leverage negotiated agreements to identify additional savings.

* Decrease the time spent finding contracts, gain greater visibility into upcoming contract activities, and speed contract renewal and renegotiation.

The Emptoris Project Management module provides value-added task management for multiple parties during multi-stage sourcing by enabling users to define multi-step projects, define teams and assign roles, manage tasks through completion and save project-related information as templates. Key touted benefits of the project management module include:

* Improved process repeatability and knowledge capture

* Better management of the overall sourcing project schedule

* Centralized control of all sourcing programs

* Real-time data visibility

The Emptoris Supplier Assessment Module was designed to help category and supply managers assess the supply base and create performance scorecard data for use throughout the sourcing process. The module helps companies to:

* Conduct better, quicker, and more cost effective supplier assessments

* Assess supplier capabilities to meet ISO 9000 and lean manufacturing standards

* Audit more of the supply base without increasing resource requirements

In addition, version 4.0 introduced the Smart Data Framework, a new technology that provides enhanced control and decision-making accuracy. It is a flexible technology infrastructure for defining all elements in the Sourcing Portfolio. Where other systems "hard-code" data for items or supplier bid forms, the Emptoris Smart Data Framework allows users to create their own definitions and forms "on the fly." Key touted benefits include:

* More flexibility in defining goods and services

* Greater ability to identify and compare supplier cost drivers and capabilities

* Enhanced bid analysis by incorporating item and bid attributes into optimization constraints

In version 4.0 of the Sourcing Portfolio, Emptoris has also made substantial enhancements to existing modules, such as:

* New buyer-side consoles with intelligent data display and alerts put critical real time information in front of buyers when they need it.

* Enhancements to Emptoris' Decision Support Module, the industry's reportedly first bid analysis engine based on true optimization. Users can now leverage the smart data framework and offer advanced formula and reasoning capabilities, which makes it possible for customers to identify and realize even more savings.

* The Executive Dashboard now includes context-relevant reporting, user-guided report creation, additional report templates, and improved scalability. The module is fully integrated within all modules of the Emptoris Sourcing Portfolio to offer complete data visibility and better decision-making.

* Workflow and usability enhancements have been made to all bidding, negotiation, and decision-making modules to improve ease of use and navigation for both buyers and suppliers.

Partnership with Cap Gemini Ernst & Young

Not stopping short at delivering astute sourcing functionality, in March 2003, Emptoris also announced that it has partnered with Cap Gemini Ernst & Young U.S., LLC (CGE&Y), one of the world's largest management and IT consulting firms, to deliver Best Practice Packs that should enable companies to jump start their e-sourcing programs. A collaborative effort between Emptoris and CGE&Y, Emptoris' Best Practice Packs provide process, content and service support for sourcing specific commodity categories. By seamlessly integrating CGE&Y sourcing practice experience and services with Emptoris' best-of-breed sourcing software, the Best Practice Packs should provide the following benefits:

SOURCE:
http://www.technologyevaluation.com/research/articles/emptoris-procures-zeborg-s-spend-management-expertise-part-one-event-summary-17112/

Infinium Putting its Cards on the Table

2010-08-18T23:22:00.003-07:00

Event Summary

On April 20, Infinium Software, a provider of Web-based enterprise solutions and services, announced that it introduced many significant new offerings - including Web applications, application service provider (ASP) offerings, customer relationship management (CRM) and e-business solutions - at Infinium World 2000, its 15th annual customer conference. More than 1,300 customers and 650 Infinium employees from around the world attended Infinium World 2000, held at the MGM Grand Resort in Las Vegas.

Arte Nathan, Vice President of Human Resources for Bellagio, a premier Las Vegas hotel and casino, was a keynote speaker at Infinium's Annual Technology Presentation, co-presenting with Infinium CEO Bob Pemberton. Nathan's presentation focused on the importance of leveraging the Web to improve customer relationships, not only with external customers, but also with internal customers, HR managers, and associate employees.

Nathan demonstrated Bellagio's innovative Web-based use of Infinium's Human Resource and Payroll solutions, and explained how Bellagio implemented a fully-automated, online employee hiring solution that processed over 83,000 employment applications, leading to 10,000 interviews completed in 10 weeks, resulting in the hiring of Bellagio's entire 9,300 person workforce.

Marc Planquart, Chief Technology Officer of Infinium, and Keith Phillips, Vice President and General Manager of Infinium e-Business, presented Infinium's new e-business solutions and Web-based enterprise applications. Infinium's e-business solutions include end-to-end tailored solutions that integrate business operations, e-commerce solutions, and industry and organization-specific content-driven portals. Planquart demonstrated several key components of the new e-business solutions, including Infinium's Web-based e-procurement solution, Infinium's Web-based benefits enrollment and modeling self-service solution, and Infinium's business intelligence analytic solution. Planquart also presented Infinium enterprise business solutions on a wireless device communicating to the applications via Infinium ASP.

Terry Joint, Vice President and General Manager of Infinium CRM, previewed Infinium's new customer relationship management solution, Infinium CRM, and announced that it would be generally available in North America in May 2000. Joint highlighted the benefits of Infinium CRM, stressing the importance of integration with a variety of ERP systems, tailored, industry-specific functionality, and solution flexibility required by all companies implementing CRM systems. Infinium CRM is currently installed and in-use at more than 130 customer sites in Europe, including Heineken, whose Managing Director, F.P.H. Bot, demonstrated how his organization had successfully utilized Infinium CRM to optimize customer relationships.

Maria Burud, Senior Vice President of Infinium ASP, presented Infinium's application service provider offerings, Infinium ASP. Burud talked about the myriad of information technology and business challenges that are currently driving organizations to evaluate ASP offerings, and the specific benefits that Infinium ASP provides to customers including Rehabilitation Hospital of the Pacific; Hard Rock Hotel and Casino; and Viking Freight, a wholly-owned subsidiary of FedEx Corp.

Market Impact

Infinium Software (formerly Software 2000), until recently a somewhat quiet vendor from Hyannis, MA, has decided to create noise and much bigger recognition in the enterprise applications market. It therefore decided to bring to this event, for the first time, all of its employees without exceptions (a virtual support center was set up in the MGM Grand Hotel in Las Vegas so that customer service & support remained fully operational) in addition to the usual number of users and distributors (over 1,300). This conference, with a motto 'Play to win', was used for an initial training of business partners on upcoming new products and technologies, in addition to the informative and mingling nature of this kind of event.

The company has traditionally delivered solid financial, human resources, materials management, and process manufacturing software applications, predominantly for users of the IBM AS/400 platform. It targets mid-sized companies and divisions of larger organizations within the following industries: hospitality & gaming, transportation, healthcare, retail, process manufacturing, and financial services. It is indisputably the leader within the hospitality & gaming industry (over 70% market share), thereby unofficially branding Las Vegas as the capital city of its business.

We favorably regard the company's most recent moves, which are in sync with the market trends (e.g., shift to CRM applications, ASP offering, Web-enablement and self-service capabilities, business intelligence capabilities, vertical focus, etc.). However, Infinium experienced a significant downturn in license revenue during 1999, and it badly needs an extended ERP offering in order to mine its large customer base and potential new users.

Its acquisition of Dutch CRM vendor Dexon Information Systems earlier this year should result in a true synergy for a number of reasons. First, Dexon had a renowned market presence and customers within the European market, which supplements Infinium's North American strong presence and adds to its top line. Second, there is platform compatibility, since both products are AS/400 based, which should mitigate the integration effort to a degree. Third, in addition to a very comprehensive CRM product suite, Dexon offers interfaces to SAP, J.D. Edwards, SSA, and JBA, which create additional selling opportunities.

Nevertheless, the company faces the challenge of delivering its very ambitious undertakings as planned. While Infinium's financial situation is stable at present, any hiccups and delays in its product development execution, possibly bundled with continued poor sales execution, may put significant strain on its cash resources. Any product integration requires a painstaking effort, and most of it is still in various stages of progress throughout the Infinium product suite. Mitigating factors in this regard, however, are the focus on the AS/400 platform and the proven interconnectivity of Infinium's products in the past.

Furthermore, the return to its hefty investment in the ASP part of the business remains uncertain in the immediate future, despite Infinium's initial success in attracting a few customers. While many CIOs make outsourcing software a serious consideration for any future IT plans, few are willing to jump on the bandwagon just yet.

We believe that the idea of buying software services "across the wire" instead of in-house implementations will not become the predominant model in the next 3 years. However, Infinium's early entry strategy may play well into this acceptance lag. Also, its readiness to accommodate some degree of customization of its outsourced applications may reduce customers' initial reticence to venture into the uncertain land of ASP. In addition, Infinium will continue to offer customers the choice of buying software the conventional way.

Infinium has not yet officially announced its plans regarding e-commerce and vertical marketplaces. During our attendance of Infinium World we were made aware that some alliance negotiations are in progress, and the market should expect related press releases in the near future.

SOURCE:
http://www.technologyevaluation.com/research/articles/infinium-putting-its-cards-on-the-table-15743/

Should Uniqueness Vouch For Marketing Automation Niche Players?

2010-08-18T23:22:00.001-07:00

Event Summary

The debate about the future of the marketing automation and management market, as a stand-alone sub segment of the entire customer relationship management (CRM) market, continues, partly owing to mixed signals coming from relevant point solutions providers. On one hand, recent demise and buyout of Xchange by Amdocs (see Xchange Adds To The List Of CRM Point Solutions' Casualties) was the last in the array of less-fortunate point players. At the time prior to Xchange's assets auction, allegedly over 20 companies expressed interest in buying Xchange's assets, and in maintaining its products and supporting its customers, including much better-performing direct competitors Chordiant Software, DoubleClick, SAS and especially Unica Corporation. While the upbeat marketing management software vendor Unica (www.unicacorp.com) was initially marked as a very likely buyer of Xchange, the vendor however slightly surprisingly 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, given it has already migrated approximately 15% of Xchange's customer base to Affinium, and the vendor touts that regardless of which company has taken ultimate ownership of Xchange's remaining assets, converting to Affinium will be the most attractive solution for Xchange customers.

Incidentally, on May 16, Unica, now a globally-present provider of solutions it refers to as Enterprise Marketing Management (EMM), announced it instead acquired Marketic, one of leading providers of campaign management software in Europe and a subsidiary of Groupe DDB in France, the second largest global communications group. As a result of the acquisition, Unica believes it has secured the leadership position in the French and Southern European markets as well as in some new industries like automotive. In addition, the deal should expand Unica's worldwide customer base to over 300, making it possibly the largest provider of marketing software globally.

Through the acquisition of Marketic, Unica also expects to bolster its strong position in sectors such as financial services, retail and telecommunications, since Marketic's customers include Disneyland Paris, Orange, Crdit Lyonnais, Groupe Cofinoga and Peugeot. In turn, Unica's respected customers include Lands' End, Medco Health Solutions, Bank of Montreal, Nordstrom, ABN AMRO, Cintas, Club Med, SNCF, EDF, Scotiabank, Choice Hotels International and AIG. Further, combined with its strong base of existing customers such as Marks & Spencer Financial Services, ARG Equation, Halifax Bank of Scotland (HBOS) and Vodafone, Unica now claims an installed customer base in 10 European countries. Building on its two-year presence in the UK and now in France, Unica also expects to benefit from Marketic's strong presence in the Benelux countries (i.e., Belgium, Netherlands, Luxembourg) and Spain. From this strong base, Unica plans to further expand across Europe.

Unica pledges to continue to sell Marketic solutions, which include software for campaign management and loyalty marketing. In addition, Marketic's customers should benefit from the added capabilities available in Unica's Affinium Suite, such as predictive analysis, data mining, multi-channel campaign optimization, real-time event triggers and marketing content management. Based on an open, scalable architecture, Unica's Affinium Suite aims at enabling marketers to gather and analyze knowledge from multiple data sources; identify customer wants and needs; plan, execute and manage tailored programs for interactions through multiple touch points; and measure and optimize marketing effectiveness. The Affinium Suite is also fully internationalized with Unicode support and will reportedly be available in a localized version for the French market starting in June 2003.

A few days later, on May 19, Unica announced the addition of two new consulting services -- Affinium Operational Services (AOS) and Affinium Innovation Services (AIS) -- to its Unica Consulting Services portfolio. Introduced at Unica's Global Customer Conference 2003, these two new programs aim at enabling customers to maximize their Affinium investment through innovative strategies, techniques and recommendations, since they will be delivered by experienced and skilled Unica consultants and partners with deep product knowledge and extensive cross-industry marketing experience. For customers currently using Affinium, AOS offers both the services and resources to expand their use of Affinium within their organization. To that end, AOS programs include:

* Advanced Techniques Workshop to offer expertise, tips and techniques on how to use the advanced customer-focused strategies and features of Affinium for specific business environments and to increase user productivity and marketing return on investment (ROI);
* Performance Optimization to pinpoint opportunities to enhance performance and scalability to optimize and streamline campaigns;
* Post-Production Support to provide staffing support, ranging from a few weeks to several months, to cover staffing or skill gaps and ensure the timely and successful completion of key projects.

With AIS, Affinium customers will be supported through each stage of the marketing life cycle. The four key programs include:

1. Enterprise Marketing Assessment to identify where marketing processes can be optimized for greater efficiency and to help develop specific strategies to meet marketing objectives;
2. Incorporating Predictive Modeling to use companies' current data to show how to create models, interpret the results, and then act on the information yielding positive, profitable and differentiated outcomes;
3. Enterprise Marketing Planning to establish an optimal marketing planning process that provides real insight into the business and enhances decision-making; and
4. E-Marketing Review to provide recommendations and a route map to assist companies in successfully addressing the issues surrounding online and real-time marketing.

In addition to providing the above services directly to customers, the AOS and AIS programs complement Unica's alliance partner program, given the vendor can deliver AOS and AIS to customers in cooperation with alliance partner teams and offers training to alliance partners on delivering these services.

Affinium 5

The above moves follow on recent major product releases' delivery and impressive annual financial results. At the end of 2002, Unica announced the general availability of Affinium 5, only a half year after the release of Affinium 4 , which somewhat resembles the time apart between the recent Matrix Reloaded and Matrix Revolutions movie trilogy parts' releases. The Affinium 5 release aimed at delivering a marketing solution that provides one of the richest and most intuitive functionalities for managing and deriving increased value from the entire marketing process -- from strategic planning and budgeting to predictive analysis and cross-channel relationship optimization to campaign execution, resource management and closed-loop analytic reporting.

Featuring significant enhancements to its campaign management, e-marketing, resource management and optimization capabilities, Affinium aims at facilitating efficient cross-organization collaboration, workflow and the accessibility of marketing technology, while increasing organizational agility and customer-focused marketing aptitude. Additionally, Affinium is modular, so organizations can choose the functionality they need now and add capabilities over time. New functionality includes sophisticated relationship optimization; marketing content management; advanced real-time e-mail marketing capabilities; and new rapid start templates for planning and managing marketing initiatives such as marketing events and cross-channel acquisition campaigns.

With the shipment of Affinium 5 at the start of its new fiscal year, Unica believes to be well positioned to build on the strong momentum it has sustained over the past five years. In 2002, Unica reportedly grew by 27% and achieved record revenue, profitability and cash flow from operations. Unica closed the year with more than 250 customers in the financial services, retail, hospitality, health care, pharmaceutical, insurance, telecommunications, publishing and business-to-business services industries, many of which are Fortune 100 companies. Unica also continued its international expansion into Europe, Middle East, Africa (EMEA) and Asia-Pacific markets and entered into agreements with a number of technology and professional services partners worldwide including Epsilon, Harte-Hanks, Headstrong Japan, IBM Global Services, Premier Technologies and Sophron Partners.

Market Impact

Hats off to Unica for being a shining example of a successful privately-held niche vendor, in spite of difficult economic environment and despite belonging to arguably prosperous market segment. The CRM market as well as its marketing automation sub-segment remains both the land of opportunity albeit with many sinister patches of quicksand traps for those with small footprint breadth in the field. While the biggest and/or the richest packaged suite CRM/ERP providers have been able to hang onto flat new sales, possibly modest declines, or in more rare cases possibly modest growth, only a lucky and/or more probably the most apt few with a true differentiation in a selected number of markets have even bucked the trend and have shown some enviable growth. Unica seems to be defending the pride of the bittersweet marketing automation segment with its protractedly good performance against the odds.

Every business cycle begins with the attraction of the customer through sales and marketing. This hopefully results in an order management and fulfillment process and ends with a customer service, which can involve anything from field installations through to enquiry and complaint management. All of these steps have to be executed well without exception, since otherwise, the customer will end up on a competitor's list of customers. The 64,000-dollar question is how all business processes work together. In the electronic world, the degree of flexibility and efficiency of collaborative processes relating to the customer lifecycle, product lifecycle, and service lifecycle, to name but a few, will be a big determinant of losers and winners. To that end, there seems to be a dichotomy between the marketing automation promise of benefits enterprise-wide and the way it has often been misused. For a discussion of marketing automation, see "Marketing Automation: Coming of Age Slowly".

However, despite cited benefits of the applications, many marketing automation specialists have, for many reasons, been a cry far from a success or, at least, not had an easy time. Most of pure-play providers have been either acquired or bust during the past few years including Xchange, Prime Response, BroadBase, Protagona and MarketFirst, and those that remain independent (such as Aprimo, SAS, NCR Teradata, Blue Martini Software, DoubleClick, and Unica) are apparently creating broader marketing suites to cover all the above-mentioned bases.

One reason thereof is the phenomenon of large packaged ERP and/or CRM suite providers to slow or even stall enterprise applications buying decisions even well before their serious market entry. As a result, the niche vendors have to battle to maintain their market dominance despite strong solutions, while the large vendors are still developing astute solutions and market credibility, and attempting to sell these based primarily on the integration of their limited functionality with the rest of their suites and a promise of deeper and complete functionality some time in the future. This category would include the likes Siebel Systems, Chordiant Software, Pivotal, E.piphany, Kana, Onyx, Amdocs, PeopleSoft, SAP and Oracle.

Incidentally, Applix, with its recent exit from the CRM market (see Will A Big Fish's Splash Cause Minnows' Flush Out Of The CRM Pond?), may exemplify the dark side of the CRM medal nowadays, as droves of smaller pure-play CRM vendors have been hard pressed to survive owing to the combined effect of CRM users' disenchantment with the products' hardly ever materialized benefits, compounded with the tight IT budgets due to the worldwide economic recovery delay and with Microsoft's entry into already crowded place. Although many mid-market pure-CRM solutions have been maturing and improving, they must continue to facilitate integration with back-end systems, given the increasing awareness of this need for full-fledged benefits of CRM. Further, they must also provide the differentiation through verifiable ROI metrics, and indispensable features and functions germane to selected industry verticals.

Larger CRM vendors have, on their hand, been weathering the storm by relying on cross-selling broader CRM application suites to their existing and potential customers, involving also components such as Sales Force Automation (SFA), employee relationship management (ERM) or call centers. Marketing automation point solution providers have also fallen prey to pessimistic investors and diminishing global corporations' appetites for technology. They have taken the impact of the slowdown because of a more budding market yet to create the market awareness of its true value proposition, and because of the slower adoption of information technology (IT) in marketing departments (i.e., there is still cultural resistance to software automation, which is perceived as restrictive to the art of marketing, with an oversight that automation might actually eliminate the low-value activity to relax more time for true creative work.

Yet, these applications will have also often been perceived either as luxury (a nice to have' but not show-stopping) applications in these days of anyone hardly having any customers at all, or, in cases of customers valuing the proposition, they might be much more inclined to obtain it only as a part of a broader CRM suite (if not even from an ERP provider) rather than as a point solution. Thus, the need for providing a full, comprehensive CRM suite rather than an individual solution or a bundle of point solutions for each distinct CRM area remains firm, and will urge further CRM (and overall enterprise applications for that matter) market consolidation.

The gravity of these narrow product footprint vendors' predicament might be well illustrated by the Applix' exit, given the vendor had a solid CRM product breadth and technology foundation, a good implementation track record with nearly 1,000 satisfied customers, and some notable endorsements from ERP vendors that have been remiss in delivering their own CRM (i.e., SSA GT and Geac Computers Corporation). Many pure-play CRM players that cannot even come close to the above traits should do their own math and analyze the justification of their independent existence within the CRM battleground. Not surprisingly, marketing automation-only providers have long been falling away to the extent of only a few possibly also endangered remaining providers like Unica, Aprimo, MarketSwitch, and MarketSoft. PeopleSoft's acquisition of Annuncio (see PeopleSoft Annuncio-es Continuation Of Its Shopping Spree), Kana and Broadbase merger (see The Mid-Market Is Consolidating, Lo And Behold), Pivotal's recent acquisition of MarketFirst, DoubleClick's acquisition of Protagona, S1 Corporation's acquisition of Point Information Systems, Vignette Corporation's acquisition of DataSage, SAS' acquisition of Intrinsic and Verbind, and Chordiant's acquisition of Prime Response all should indicate diminishing life expectancy of independent CRM point solutions providers.

The good news nevertheless is that there are huge untapped opportunities for business improvement, given marketing has a unique vantage point in any enterprise to understand the customer needs, buying behavior, and value perception. Increasingly, marketing automation solutions are being adopted by large enterprises with multilevel, multi-LOB marketing departments. Those organizations need to coordinate their marketing programs and campaigns and are creating increased demand for holistic marketing-automation suites that include marketing operations, analytics and management functionality. Thus, we expect to see more marketing-automation suites that offer marketing analytics and campaign management in a single product offering. However, the large packaged enterprise suite vendors still have it as a mere afterthought to the product blueprint rather than a strategic enhancement to their product offering.

What Is So Unique About Unica?

Conversely, Unica's focus on marketing automation and management per se rather than treating it only as a mere component of CRM has apparently been paying off. The vendor has to that end long embarked on tackling the pieces of an Enterprise Marketing Management (EMM) suite that should eventually support all core processes in marketing from planning and budgeting, activity management, knowledge and content management, to supplier management, and customer needs management. As Unica cites, EMM solutions should give marketers the tools to develop deeper customer understanding while delivering more personal and compelling marketing throughout the customer life-cycle. The concept of EMM should improve an organization's ability to acquire, retain and grow customer value, establish the corporate value proposition and brand as well as efficiently manage the strategic planning process and marketing resources including people, time, inventory, and content.

Unica's key success factors have so far been a broad multi-faceted and functional marketing solution (with varied and sophisticated analytical tools for marketing analytics, as well as campaign management and design), adept marketing and execution (even if benefiting from its peers' plight by poaching their perturbed customers), open and adaptable product architecture (i.e., its ability to read from any available database should appeal to enterprises that are loath to other vendors' need for proprietary technology such as data marts), widespread global presence and well-developed distribution channel, and, last but not least, quick implementation, scalability and flexibility afterwards.

A comprehensive, integrated and open marketing application suite like Affinium that offers such features as planning, predictive analysis, campaign management, workflow, real-time queuing (i.e., the ability of software to communicate with other systems based on events), marketing content management and reporting should go a long way towards enabling enterprises to respond quickly to market fluctuations and to successfully execute on marketing strategies. Unica even includes a feature in its marketing automation suite that ensures an organization has sufficient resources available to respond to many events, such as checking to see if there is enough inventory available to satisfy an event-driven customer offer.

With the Marketic acquisition, Unica continues to broaden its suite with Marketic's marketing operations functionality, and it greatly strengthens its customer base and geographic coverage in Europe especially in France, given Marketic's renowned customers including many leading French banking, insurance, telecommunications, utility, automotive and retail enterprises. Unica should now have possibly the largest customer base for marketing automation in Europe, going neck-to-neck with Chordiant in many markets worldwide.

Still, while the deal strengthens Unica's local capabilities in Europe, the acquisition might, in a short term, distract the vendor's laser-sharp focus. Namely, while Unica has a sharp focus on marketing automation and on large enterprises, Marketic has broadened the product range into call center CRM applications and has also targeted the mid-market in southern Europe. Also, Unica pledges to continue to support and develop Marketic's products for the French market, but it also intends to soon introduce its own Affinium product, localized for France. This might give an opportunity to rivals such as Chordiant, E.piphany, DataDistilleries and NCR Teradata to prey on current Marketic clients made anxious by Unica's takeover, e.g., for still uncertain upcoming Unica's pricing, licensing agreements and product support levels.

SOURCE:
http://www.technologyevaluation.com/research/articles/should-uniqueness-vouch-for-marketing-automation-niche-players-16995/

IBM is Not Enough; Ariba Announces Strong Partnership with Amex

2010-08-18T23:21:00.002-07:00

Event Summary

American Express (NYSE: AXP) and Ariba (NASDAQ: ARBA will cooperate on the development of advanced B2B E-payment services to be deployed over the Ariba Network. The first such service, expected in 60 to 90 days, will support payment upon shipment, with charges to Amex-issues purchase cards. Future services will include most of Amex' financial offerings, from trade financing to business loans.

The two companies will offer enhanced support services to joint customers, facilitating joint development efforts, and will recommend joint solutions to their individual prospects. Ariba's Network and Amex' own Internet-based B2B financial services network, still in a pilot stage, will interoperate fully and openly.

Finally, Amex will use Ariba's software solutions on a worldwide basis for "most of its annual procurement spending."

Market Impact

The most immediate impact is that Amex will be leading its 50,000 business customers right up to membership in the Ariba Network; although they will not have to join, the benefits and easy entre will be powerful inducements - and powerful increments to Ariba's bottom line.

While credit card companies will see threat in this announcement, Amex stated that they intend to create relationships with Visa and MasterCard in the future, as well as to deploy their payment solutions on other (unnamed) networks. We expect that executives from Concur will begin flying to Amex headquarters real soon now, even though such additional deployments are far in the future, because of the instant legitimacy partnering with Amex would add. Note that Commerce One recently entered a similar pact with CitiGroup.

SOURCE:
http://www.technologyevaluation.com/research/articles/ibm-is-not-enough-ariba-announces-strong-partnership-with-amex-15609/

Lawson Software Expands Vertically As Well

2010-08-18T23:21:00.001-07:00

Event Summary

On October 12, Lawson Software, a provider of Internet-enabled business applications, announced the formation of its sixth vertical market initiative. This one is for the telecommunications industry, and joins Lawson's established vertical markets in healthcare, retail, professional services, public sector and financial services.

Lawson plans to bring to the telecommunications market the full suite of its lawson.insight Web-enabled extended-ERP Applications, including Human Resources, Financials, Procurement, Distribution, Analytics and Enterprise Relationship Management. As part of the new market initiative, Lawson has extended its alliance with partner EYT, formerly Ernst & Young Technologies. EYT will provide knowledge transfer and design services, enabling Lawson to extend its core product line to incorporate new functionality required by the telecommunications industry. Additionally, the partners will jointly develop interfaces to industry-standard billing and service/activation management systems using industry-standard middleware engines.

Additional capability being designed into the product will be embodied in the analytic extensions, where telecommunications-related key performance indicators integrate data from lawson.insight with data from other billing and provisioning systems to present a real-time view of strategic operational metrics. The relationship with EYT offers additional value, since the company also is a LawsonTone ASP partner with extensive telecommunications expertise.

"Telecommunications is not a new industry for Lawson," said Bob North, vice president of Lawson's telecommunications field operations. "We've had rapid growth in this market segment over the last three years. However, the strategic partnership with EYT extends the value of our products well beyond traditional back-office e-business solutions and will allow us to offer an end-to-end solution to the telco market."

On October 9, Lawson Software announced "the best quarter of contracting activity in the company's 25-year history". Lawson reported total revenues of $84.2 million in the first quarter of fiscal year 2001, ended August 31, 2000. The company reported license fee revenue growth of 36% over the same quarter last year in its key target markets of healthcare, retail, professional services, financial services, public sector and telecommunications. Lawson's total contracting activity rose 78% over fiscal year 2000 first quarter figures. Contracting activity from the emerging lawson.community strategy - a slew of e-business solutions powered by Lawson and delivered via the Internet - rose 173% over the same quarter last year.

"This is an incredible time for Lawson Software," said Bob Barbieri, CFO, Lawson Software. "These figures prove that our strategies are working, our employees are meeting the challenges of our industry and customers are finding the solutions to their business challenges through Lawson applications. And as positive as the recognized revenue numbers are, our contracting activity gives us cause for even more optimism."

Market Impact

While we abstain from using bombastic words like "incredible times" to depict Lawson's current situation, we definitely believe that the company is in a very good shape. Lawson continues to reap rewards and to establish itself as a leader in the mid-market for financial accounting and HR applications by continually betting on the following three pillars of wisdom for the new Internet economy:

* Early delivery of innovative, Web-enabled and componentized products, often in advance of much larger and more visible publicly traded competitors

* Very tight industry focus in the above-mentioned selected markets

* Early involvement in ASP deployment

The recent announcement of a vertically focused partnership with EYT further speaks to Lawson's achievements. The company believes that it can support companies ranging in size from only a few million to $1 billion or more. It will be concentrating its internal sales efforts on its traditional vertical markets for now and relying on partners to bring other leads. The recent partnership with EYT as well as one with Siebel Systems earlier in the year might be the sign that the company has started to address its partnerships more strategically rather than opportunistically, which has been the case in the past. Also, this partnership could provide for a readily available toolkit for making deeper functional adjustments and customizations, which the company has not traditionally had available.

Lawson has made an all-out effort to establish itself as a force in e-business. To that end, it was one of the first vendors to deliver Web-enabled Self-Evident Applications (SEA) in 1996. It latest application suite, lawson.insight 8, delivered earlier in the year, is an e-business management system which also contains Lawson's traditional ERP software functionality. Lawson.insight products are grouped and named as engines, Self-Evident Applications (SEA), or extensions.

* Engines comprise core ERP modules such as financials, human resources, procurement and distribution management, and some extended ERP functions such as CRM (through an OEM agreement with Siebel).

* SEA refers to Lawson's long-standing initiative to tremendously simplify the learning curve required by users; it features intuitive Web user interfaces and navigational tools.

* Extensions are customizable applications for areas that include workflow, e-commerce, and analytics.

Lawson has also built an impressive mind share in the ASP market, which is becoming increasingly attractive to its target market. Lawson's product offering consists mainly of financial, procurement, and human resource transaction systems, the ERP components that customers are generally eager to outsource. With more than 40 ASP partners and close to 400 ASP sites already signed up, Lawson is ahead of a number of much larger and, therefore, noisier ASP proponents.

The market should see Lawson expand into at least another vertical market (e.g., utilities) within the next 18 months (60% probability). Further, the recent appointment of Robert Barbieri as CFO and the introduction of quarterly reporting practice might be signs that the company is preparing the ground for going public in the foreseeable future.

SOURCE:
http://www.technologyevaluation.com/research/articles/lawson-software-expands-vertically-as-well-16202/

Lawson Software: Self-Evidently Thriving on Innovations

2010-08-18T23:20:00.001-07:00

Vendor Genesis

Lawson Software provides Web-based, client/server enterprise resource planning (ERP) software for companies in the mid- to high-end markets (the Fortune 2000 companies). Its customers are concentrated in the financial services, healthcare, professional services, public sector, retail, manufacturing, and wholesale distribution industries.

Founded in 1975, and with headquarters in Minneapolis, MN and London, UK, Lawson Software has experienced outstanding (over 35%) growth over the last four years. It is a privately held company and the ninth-ranked ERP vendor with revenues of $270 million in fiscal 1999 and more than 1,800 employees in 20 offices worldwide. Lawson, founded by Bill and Richard Lawson and John Cerullo, initially provided custom mainframe software for Burroughs and IBM installations.

The company has continually recognized and anticipated new computing trends by broadening its platform support and adding products for the IBM System/38 in 1981, IBM AS/400 in 1988, UNIX in 1990, and Microsoft Windows NT in 1998. The company fully embraced open systems technology in 1985 by moving all development to a UNIX-based CASE tool.

In 1993, Lawson was one of the first software application vendors to shift its market focus by delivering client/server applications. Lawson's cross-platform, open-database, component technology is incorporated into its flagship product --the LAWSON (formerly LAWSON INSIGHT II) Business Management System. The company was one of the first to Web-enable its product in 1996. It commercially deployed Web Self-Service and role-based "Self-Evident Applications" in 1997, and in 1998 delivered a pre-packaged performance measurement product.

In 1999, the company acquired ijob of Edmond, OK, a maker of Web-based HR software, which automates employee training and benefits tracking.

The LAWSON Business Management System is comprised of six integrated process suites. These suites support and facilitate the execution of the following business processes: Human Resources, Financials, Procurement, Supply Chain, Collaborative Commerce, and Enterprise Budgeting.

In addition, Lawson offers Value Management Solutions products including the Analytic Suite and Financial Performance Management. These value-adding solutions bring together real-time financial and non-financial metrics into a picture of organizational performance. The Analytic Suite is integrated into an Enterprise Analytic Warehouse, which gives key decision-makers visibility of the business and financial processes. The Performance Indicator Suite anticipates the most commonly asked a business question for each targeted executive role, then uses OLAP and algorithms to provide the answers and pre-populate the role-based data marts.

The underpinning of Lawson's technologies is its Self-Evident Applications (SEA), the concept of delivering application functionality to light-client, browser-based desktops. The main idea behind the SEA concept is to simplify the use of software so that most people within an organization can use the product, rather than a select few. While conventional client/server applications are forms- or transaction-driven, the Self-Evident Applications are information based, which means that users can view them on dynamic and personalized Web pages, with minimal training requirements.

Another recently released product component, LAWSON Open Component Solutions, allows users to access, view and interact with enterprise information using one of the following technologies: Java, Microsoft Active-X, Lotus Domino, or Javascript/HTML.

Lawson Software serves its worldwide base of more than 2,800 customers through direct sales, support and affiliate locations in North America, South America, Europe, and Africa. The company derives approximately 15% of its revenues outside of the North American market.

We expect Lawson Software to continue to expand on its commitment to assist businesses in cost control and strategic planning. In addition, Lawson will continue to evolve its vertical strategy in the financial services, healthcare, professional services, public sector, retail and wholesale distribution industries and to strengthen its position as a leading provider of Internet/intranet solutions.

Vendor Strengths

*

Lawson has continually invested significant R&D dollars (~18% of total revenue) in order to deliver innovative products, often in advance of much larger competitors. The company was one of the first to Web-enable its product in 1996, commercially deploy Web Self-Service and role-based "Self-Evident Applications" in 1997, and deliver a pre-packaged performance measurement product in 1998. Furthermore, LAWSON Business Management System runs on a broad set of the most popular platforms and databases.

* Lawson has demonstrated very tight industry focus (LAWSON is regarded as one of the Top 3 ERP systems for Healthcare, Retail, and Professional Industries). Being privately held and independent of Wall Street pressures has allowed the company to direct its investments for developing its desired core competencies (e.g., over 200 employees, a number unrivaled by much larger ERP players, are dedicated to developing the product for the healthcare industry).

*

Lawson has displayed a focus on product quality and customer satisfaction in its mission statement: 'to get one client (at a time) and keep it forever'. The company achieved an enviable customer retention rate of 96% (its very first customer from 25 years ago is still on its customers' list). Lawson is generally competitive in speed of implementation, total cost of ownership (TCO), and user interface functionality (the "Drill Around" tool for cross-applications data access, and role-based "Self-Evident Applications" on the Web).

* While we cannot disclose more detailed financial data because it is a privately held company, we can state that Lawson Software has been a viable company and has exhibited a very strong long-term financial track record.

Vendor Challenges

*

Lawson currently does not offer a manufacturing product suite, although approximately 19% of its customers are manufacturing companies. This may result in a number of lost opportunities in the future, since certain customers prefer more complete solutions from a single vendor. Moreover, the company has only recently released its first CRM modules and plans to develop the remaining CRM functionality in house. We consider this at least 12 months late-to-market.

* Lawson has achieved very low brand awareness and has an undeveloped channel outside of the North American market. This is further aggravated by the fact that the healthcare sector is not well developed in those markets. Moreover, less litigation-aggressive European stockholders may not fully appreciate and readily accept its Strategic Ledger and Financial Performance Management suites.

*

Remaining privately held deprives the company of the significant capitalization for marketing, R&D, and acquisitions, available to its publicly traded competitors. Furthermore, more conservative CFOs will cast a wary eye on Lawson's immunity from financial statement disclosure, given that corporate viability increasingly gains in importance for software selection procedures.

Vendor Predictions

*

Despite a highly competitive environment, we predict that Lawson Software will reach $500 million in revenues within the next 3 years (65% probability), based on its expertise and stronghold in relatively untapped industries (See Vendor Strengths).

*

Due to increasing competition from larger vendors with significant resources, we believe that the company will have to decide to go public within the next 12 months (75% probability). Failing to do so will put Lawson behind at least two other vendors in healthcare and retail markets respectively by 2003 (70% probability).

*

Within the next 3 years, 25% of total Lawson revenues will come from outside of the North American market (60% probability). During the same time, more than 40% of its total revenue will come from license revenue (60% probability).

* We believe that, within the next three years, the Company will have to either acquire (35% probability) or partner with (40% probability) a vendor whose products would significantly enhance its manufacturing capabilities. The potential candidates could be Symix Systems, SSA, or QAD. The least likely scenario (25% probability) is that Lawson will develop the product internally.

Vendor Recommendations

*

Lawson should put the wheels into motion to becoming a publicly traded company without any further delay. The company is by far the largest privately held ERP vendor, and we believe that the independence of Wall Street volatility has played its purpose.

*

Lawson should further penetrate the Small-to-Medium Enterprises (SME) market segment in the following ways:

Expand business in its existing customer base, by upgrading older versions of software and by offering new extended ERP modules and enterprise applications.

Further expand its global presence, both by opening new offices and developing new affiliate partnerships. Lawson should capitalize on its alliance with IBM and seek licenses from native sources in markets outside of North America.

Deliver more new, focused and pre-configured vertical solutions, and offer application outsourcing to make Lawson attractive to smaller, resource constrained smaller enterprises.

*

Remain committed to new product features and the introduction of additional enhancements (See Vendor Challenges) and to enhancing offerings for manufacturing, possibly through strategic product alliances with competitors. While we respect the company's intent to deliver a fully integrated in-house developed CRM product suite, we believe that the company should seriously consider an appropriate partnership or acquisition, in order to preempt significant product release delays. The example of SAP resorting to that route is a case in point.

SOURCE:
http://www.technologyevaluation.com/research/articles/lawson-software-self-evidently-thriving-on-innovations-15226/

Business Engine: Driving Project Portfolio Management for IT Departments in the Enterprise Market

2010-08-18T23:19:00.002-07:00

Introduction

Today's global economy places high demands on an organization's technology strategy. At one time, businesses were at the mercy of the technology they employed. In today's marketplace, economic success depends on the alignment of an organization's business strategy and the technology driving it. In light of this reality, IT governance has moved to the top of the chief information officer (CIO) agenda. In addition, the explosion of the Internet age and web technology during the last ten years has made project portfolio management (PPM) an effective methodology for aligning IT with business goals. The cumbersome pre-Internet process of consolidating silos of information from disparate IT projects for analysis has evolved to today's PPM solution of providing real-time access to multiple sets of project information from a central repository. In response to the demand for IT governance, Business Engine launched the Business Engine Network (BEN), its web-based PPM solution, in 2000.

Originally selling its program management solution to the aerospace and defense sector, Business Engine has a twenty-year history in the software industry. Entering the enterprise project management space in 1995 with the first client/server version of its solution, today's Business Engine Network solution provides a competitive PPM offering to organizations in the financial services, health care, government, manufacturing, telecommunications, pharmaceuticals and retail vertical markets. Business Engine has its strongest presence in financial services, with approximately 30 percent of its customer base in this vertical market. In terms of horizontal markets, Business Engine focuses primarily on internal IT departments and is making inroads in the new product development market as well. In addition to its core product, it has developed strategic technology partnerships with Microsoft Project and Cognos, leveraging their project management and business intelligence capabilities, respectively.

Although a mid-market offering is available, Business Engine's typical clients are internal IT departments in the enterprise market, servicing clients such as Deutsche Bank, Siemens, Merrill Lynch, Pfizer and Tesco. With respect to market strategy, Business Engine aims to remain a pure play PPM vendor and does not plan to move into the professional services automation (PSA) space. In addition to its primary market strategy of bringing financial governance to project-driven organizations, Business Engine plans to intensify its presence in the product portfolio management arena, offering unique workflow and phase review functionality.

Business Engine Components

BEN provides clients with a PPM solution focused on IT investments and financial governance. The solution is comprised of the following components:

BEN Method Engine allows organizations to configure customizable workflow or phase review processes to facilitate implementation of an IT governance framework, such as CoBit or Prince2 (to learn more about IT governance, please refer to the article IT Governance: Maximizing the Business Investment). Furthermore, organizations can also set up phase review methodologies (such as Stage-Gate) for new product development portfolios. In terms of workflow capabilities, Business Engine provides above-average functionality. In fact, Business Engine is unique in developing a separate module solely dedicated to business process management and workflow creation that can be configured to provide critical phase review functionality for organizations seeking product portfolio management solutions for new product development.

BEN Alignment Engine allows an organization to define IT portfolios and associated scoring models. This module provides management with the ability to assign weighting capabilities and measurements to ideas and portfolios for strategic IT decision-making. An embedded scoring model and easy-to-use analytics allow for the creation and evaluation of alternative portfolio scenarios against risk, return on investment and strategic contribution. The alignment engine allows portfolio managers to evaluate and gauge the risk of portfolios, and integrates with BEN workflows for IT governance. The alignment engine is diverse in its application and strong in the area of financial governance.

BEN Financial Engine allows organizations to track budgets against projects and portfolios. All budget information, such as expenses, billable and non-billable details, is monitored in the financial engine. In addition, the engine has rate management capabilities and can integrate with third-party general ledger (GL) systems. The financial engine allows for the configuration of financial dashboards to align the financials of IT and business with anticipated expenditures and to validate actual spending. The BEN financial engine provides competitive functionality in tracking financial and budget data.

BEN Delivery Engine provides an organization with a single record of portfolio and project details. This module provides resource management, issue management, risk management, portfolio management, and project management functionality. Furthermore, an above-average bi-directional integration with Microsoft Project and Microsoft Project Server provides end users with complete PPM functionality for internal IT departments.

BEN Business Intelligence leverages Cognos to provide more in-depth analysis for portfolio management with both ad hoc and professional reporting capabilities. Cognos' technology also allows for complex custom reporting, and for meeting the unique compliance and reporting demands of different organizations. Business Engine's original equipment manufacturer OEM relationship with Cognos provides dashboard capabilities enhancing those of the core product.

BEN Platform provides knowledge management and workflow functionality to its users. Unique in the PPM space, Business Engine provides complete document management capabilities with version control, templates and check-in/check-out functionality. The BEN platform also provides role-based user support allowing for the configuration of multiple levels of access to application components, based on defined user roles.

Business Engine Architecture

Business Engine has adopted a Microsoft.NET technology road map and an open architecture allowing the integration and customization of solutions. Although it does not provide a software development kit as a part of its offering, its support of extensible markup language (XML) allows for integration with alternate systems. Furthermore, its multitiered architecture ensures scalability and supports both Oracle and Microsoft SQL databases.

To enhance its offering, Business Engine has also built strategic technology partnerships with Microsoft Project and Cognos. Using Query Studio for ad hoc reporting and Report Studio for customized reports, BEN Business Intelligence allows organizations to access Cognos' complete business intelligence functionality and provides stronger dashboard capabilities for strategic decision making. In terms of its integration with Microsoft Project, Business Engine offers above-average capabilities with extensive field mapping and bi-directional transfer of data between both applications. Furthermore, Microsoft Project Server is fully embedded in the Business Engine solution for additional resource-planning capabilities.

Product Strengths

Business Engine Network's Method Engine and Alignment Engine offer flexibility to IT organizations in incorporating numerous best practice methodologies and customizable scoring models relevant to an organization's needs. Consequently, for organizations seeking highly configurable capabilities for portfolio definition, scoring, and workflows, Business Engine is worth exploring. In addition, for organizations that heavily rely on Microsoft Project as their project management tool of choice, Business Engine's comprehensive integration with Microsoft Project and Project Server sets it apart from its competition.

For organizations seeking strong knowledge management capabilities, Business Engine also provides complete document management functionality as part of its offering. In addition, Business Engine's recent technology partnership with Cognos, dating from December 2005, allows its clients to have the option of leveraging leading industry business intelligence capabilities.

SOURCE:
http://www.technologyevaluation.com/research/articles/business-engine-driving-project-portfolio-management-for-it-departments-in-the-enterprise-market-18468/

Professional Services Are Catching-up With CRM

2010-08-18T23:19:00.001-07:00

Event Summary

The CRM market is shifting. Instead of looking for an all-purpose and horizontal oriented CRM application, customers are seeking a more specialized and industry specific tool. From the larger organization to the smallest customers, CRM buyers are expecting their applications to follow their business model with limited need for customization. As the overall services market is projected to grow significantly by 2006, vendors have a propensity to cater this niche more than ever.

Illinois-based Interface Software, one of the few CRM application providers that have strongly focused on the professional services market, faces challenges inherent in going for a niche market. The challenge for a niche player versus broader range providers is not only to determine that its niche market will embrace its technology but also that the overall potential is large enough to sustain future development.

Since 1996 the Oak Brook, Illinois-based Interface Software, Inc. has been an important player in Relationship Intelligence solutions for the $500 Billion professional services industry. Interface Software addresses the CRM needs of professional service firms such as accounting, financial services, management consulting and legal. Specifically, these firms leverage experience, expertise and relationships to market services. During a recent interview with Rick Klau Vice-President vertical market and John Lipsey Director of communications, TEC was able to assess Interface's market strategy and InterAction 5, the latest version of the company's market-leading CRM solution for professional services organizations. InterAction is internet-enabled, allowing professionals to view information however they choose. For more information please visit Interface Software's website at: www.interfacesoftware.com

Product Definition & Market Impact

The idea of customer relationship or relationship marketing is not new, but some professions have considered it to be more or less related to the nature of their business. Accordingly, traditional fortune 500 companies including banks, Telco's, retailers and manufacturers were among the first lucky organizations to attract the attention of the CRM vendors. With the exception of financial services, the interest of CRM vendors is shifting and the service market is becoming their new center of attention. Worldwide CRM services are expected to grow by nearly 18% and reach close to $45 billion by 2006. The services market is crowded, competition is fierce. Professional services now understand the need for CRM philosophy and applications.

But not long ago, professions such as lawyers and doctors didn't see themselves as selling entities - they were professionals and clients came to them. Those professionals have viewed their profession as above the commercial melee of trade and they promote values such as public service, service on the basis of need rather than ability to pay and citizenship.

Increasingly they are finding it tougher to win new clients and keep existing ones through increased competition and many other factors. Now the perception is shifting and even vendors are seriously targeting the market of professional services together with many new verticals. It is not yet clear whether this change in service environment and the growing enthusiasm for CRM is the result of a maturing CRM market or the fact that vendors are increasingly marketing to those new territories. Nonetheless, the outcome has turned to be rather positive to the benefit of their customers.

The need for CRM in Law Firms is now well established and systems have emerged to help them keep track of existing and forthcoming clients, market to them, and track the activity against business won. As the culture of the market changes and the potential for changing competition increases, the need to understand the criteria by which clients choose their professional services and assess their satisfaction with the service product becomes imperative.

In principal there are 3 main issues professionals like lawyers have to deal with:

* How can we keep our existing customers satisfied and avoid attrition?

* How can we increase the potential for cross-selling opportunities?

* How can we attract new customers?

CRM can help Law firms analyze their past trends and how they can cross sell services. In conjunction with the Practice Management Systems it can also help lawyers balance the portfolio of services they offer.

There are certainly loads of CRM vendors that are eager to serve the professional and law firm market but only a handful have strongly focused on catering to this market. Many vertical offerings however, are considered to be flavors rather than perfect fits.

Interface Software is among those specialized CRM vendors that have gone out of their way to understand professional services business processes and their specific needs. For law firms, Interface Software provides features that match the way lawyers share their information and serve their clients.

Interface Software is a forerunner in the professional services CRM space with vertical functionality targeted to financial services, legal, management consulting, accounting and other relationship-based industries.

Functional and Technical Specifics

InterAction 5 dissociates itself from the traditional, sales-force-automation- and call center-based CRM solutions designed for the manufacturing economy. InterAction 5 goes beyond Customer Relationship Management and into the realm of Relationship Intelligence, which is designed to track and manage the complex relationships that are critical to revenue generation at professional services firms.

Relationship Intelligence empowers professionals to leverage their contacts by tapping into the wealth of connections and cardinalities that exist between people, companies, relationships, experience, and expertise. Relationship Intelligence enables professionals to generate new revenue streams and alleviates their collaborative tasks.

Rick Klau explains that the company has spent a considerable amount of time interviewing professionals and gathering insights into the way relationships are established within those circles to find out the importance of both instant information awareness and privacy issues. Another important discovery was the professional's hesitation in adopting unknown environments.

InterAction 5 is fully integrated to the Microsoft outlook interface which professionals are seemingly familiar with. Users would navigate smoothly between Outlook Contact manager to the fully HTML, zero footprint Interaction GUI (graphical user interface) either to complete a task or to access a 360 view of their client. InterAction provides a centralized repository for storing client and prospect information. Users can create fields, classifications and otherwise customize the system to their unique environments.

The system integrates with other enterprise applications and the user's email, fax and phone systems to facilitate easy communication with clients and prospects. But beyond those basic CRM functionalities, InterAction is a system that is set to leverage relationships in professional environments where information is scattered between people and companies. To achieve such capability, InterAction relies on 4 functionality pillars:

* Relationship Discovery allows users to collect contact information from a firm's existing systems and to present it in a way that would reduce the need for the consultant to enter contact and relationship information into the system.

* Relationship Management provides a unique interface where client contact information and all his or her relationships are stored, shared and managed. Like a knowledge base it empowers professionals to search on existing expertise and hierarchy links between internal resources and clients. InterAction offers sophisticated database management functionality that minimizes the likelihood of duplicates and facilitates a single instance of any contact within the centralized database.

* Client Service Automation is a toolset that allows professionals and other internal resources to serve the client's inbound and outbound communications for the purpose of the client's relationship management or business developments, including Contact Management, Client Management, Opportunity Management, Deal Profiling and Tracking, Referral Tracking, Skills/Experience Tracking and reporting.

* Knowledge Delivery uses an XML-based application server to distribute the Relationship Intelligence content to the consultant's platform of choice including Web browsers, intranets, portals, wireless devices, Outlook, Notes and GroupWise.

SOURCE:
http://www.technologyevaluation.com/research/articles/professional-services-are-catching-up-with-crm-16967/

Lawson Software Marches Over $300M Milestone

2010-08-18T23:18:00.002-07:00

Event Summary

According to a press release from August 3, Lawson Software, a provider of Internet-enabled business applications, announced it has won a major e-business contract with HCA, owner and operator of more than 200 hospitals and other facilities in 24 US states, England and Switzerland. HCA, the nation's leading healthcare provider, licensed the full lawson.insight financials, human resources and procurement solution suites, as well as analytics, e-commerce and open component solution extensions. HCA also licensed Lawson's Employee and Manager, Financial Information and Vendor Information Web Self Service Centers. The contract represents the largest single sale in Lawson's 25-year history.

Lawson won the contract following a comprehensive evaluation that included several bidders. HCA officials cited Lawson's robust functionality, advanced workflow, Web Deployability, full integration and ease of implementation and customization among the technological reasons for selecting Lawson.

"Lawson's technological strength, including its scalability, was very impressive," said Terrie Tidwell, vice president, Financial Systems, HCA. "But Lawson clearly stood out in its strong healthcare experience, reputation and dedication. Lawson and HCA share a dedication to organizational excellence and customer service, so our corporate cultures are a very good match as well."

HCA will strive to leverage its Lawson e-business solutions to consolidate and streamline financial and payroll processes throughout the enterprise, replacing its legacy system infrastructure. Lawson's Web self-service solutions will empower HCA's employees with real-time access and control of the information they need to achieve their corporate mission.

Earlier, on July 20, Lawson Software announced financial results and its year-over-year growth statistics for the year ended May 31, 2000. The company reported revenues of $306 million for the year, yielding an overall revenue growth rate of 15.7%. Lawson's international revenue increased 41.5%. Lawson experienced 36.6% growth in contracting activity for target vertical markets, including healthcare, retail, professional services, financial services, public sector and telecommunications.

Three of Lawson's new vertical markets - professional services, financial services and telecommunications - experienced triple-digit growth in contracting activity, compared to the same markets without a vertical focus in their prior fiscal year. Lawson continued its expansion in the retail sector with license fee growth of 33.3%. Lawson continues to execute on activities to generate revenue from lawson.community - e-business solutions and e-services powered by Lawson and delivered via the Internet. Lawson reported growth of more than 300% in new lawson.community commitments during fiscal year 2000.

"In a fiscal year that bridged Y2K, Lawson moved into a new corporate headquarters building, underwent an internal restructuring, and launched four new vertical market initiatives plus a new corporate strategy of powering e-services for e-business," said Jay Coughlan, president and chief operating officer, Lawson Software. "At the same time, Lawson maintained solid revenue growth while building a significant amount of deferred and subscription backlog revenue, which is helping us operate and forecast much more like a publicly-traded company. Through our lawson.community strategy, we've established new sales channels and a source of steady, recurring income. That strategy already is paying off, and we are very optimistic about our position in the market and the future of the company."

Market Impact

Lawson continues to reap rewards from continually investing significant R&D dollars in order to deliver innovative products, often in advance of much larger competitors (and much more tacitly, without generating much of a hype). The recent announcement like the incorporation of vertically focused business intelligence (analytical) capabilities speaks for it. Furthermore, Lawson has demonstrated a very tight industry focus and is regarded as one of the Top 3 ERP systems for Healthcare, Retail, and Professional Industries. Being privately held and independent of Wall Street pressures has allowed the company to direct its investments for development of its desired core competencies.

The company believes that they can support companies ranging in size from only a few $ million to $1 billion or more. It will be concentrating its internal sales efforts on its traditional vertical markets for now and relying on partners to bring them other leads. Lawson has made an all-out effort to establish itself as a force in e-business. To that end, it has been building its products and services around three main pillars: Lawson.community, Lawson.insight, and Lawson.consulting.

Lawson.community is a work-in-progress of its strategy to possibly satisfy all the needs of the Internet users of its Web-based e-services. It currently comprises: iJob, a real-time candidate registration; Workforce Analytics, a Lawson hosted e-service designed to assist HR professionals measure and manage their human capital; Lawson Digital Depot, an Internet procurement portal; and Lawson Tone that delivers Lawson business applications via the Internet by partnering with applications service providers (ASPs).

Lawson.insight is an e-business management system, which contains Lawson's traditional ERP software functionality. Lawson.insight products are grouped as engines, Self-Evident Applications (SEA), or extensions. The engines comprise core ERP modules such as financials, human resources, procurement and distribution management, and some extended ERP functions such as CRM (through an OEM agreement with Siebel). Lawson has long been promoting its SEA initiative, with the idea to tremendously simplify the learning curve required by users, featuring Web user interfaces and navigational tools. The extensions, on the other hand, are customizable applications for areas that include workflow, e-commerce, and analytics.

Lawson.consulting includes training, implementation, and support services. It offers ImpleMentor, an online project management tool for the installation process. Training is available through Lawson Software University (LSU) via either traditional classroom or through Internet distance learning.

Lawson, by adopting XML as its internal standard and providing appropriate interfaces, claims to be able to integrate with other e-commerce systems either on the front end or on the back end so that its customers' systems can communicate smoothly with other vendors, whether via the Web, e-mail, or even Fax, EDI, and spreadsheets. This, bundled with the fact that its product will run on almost any platform or database, prompts us to believe that its competitors, particularly mid-market ERP vendors, will be enormously pressured to replicate Lawson's value proposition.

Lawson has also built an impressive mind share in the ASP market. Lawson's main customer base is within the healthcare, financial, and professional services space, with many smaller firms that are generally more attracted to the notion of turning over their applications to someone else to run, while they focus solely on their core competencies. Moreover, Lawson's software consists mainly of financial, procurement, and human resource transaction systems, the ERP components that customers are generally more eager to outsource. With close to 400 ASP sites already signed up, Lawson is ahead of a number of much larger and, therefore, noisier ASP proponents, some of them already usurping the title of an ASP market leader.

While we believe that Lawson's product strategy against its major competitors is on track, one should not discount fierce competition from much larger vendors, like SAP, Oracle, PeopleSoft, and J.D. Edwards. These vendors, while possibly inferior regarding healthcare or retail industry focus, will try to influence customers purchase decisions by offering their more comprehensive product portfolios (including CRM modules) or instilling FUD (fear, uncertainty, doubt) in more conservative CFOs who may cast a wary eye on Lawson's immunity from financial statement disclosure due to its (surprising) determination to remain a privately held company.

Touting a CRM module would be an attempt to capitalize on Lawson's recent difficulties with a CRM strategy. Lawson's CRM strategy, which had initially floundered, became solid only recently with a global distribution agreement in which Lawson will integrate and sell its enterprise applications with Siebel Systems' CRM suite.

As for the FUD facts, is the recent appointment of Robert Barbieri (who has 22 years of financial management experience with publicly-traded and multinational companies) as CFO the sign of any strategic shift in that regard?

SOURCE:
http://www.technologyevaluation.com/research/articles/lawson-software-marches-over-300m-milestone-16063/

Merging Global Trade Management with Global Finance

2010-08-18T23:18:00.001-07:00

Vastera Acquired by JPMorgan Chase Bank

On January 7, JPMorgan Chase Bank, N.A. (NYSE: JPM), a leading global financial services firm with assets of $1.1 trillion (USD) and operations in more than 50 countries announced an Agreement and Plan of Merger with Vastera (NASDAQ: VAST). What is significant about this merger, is that JPMorgan is a leader in investment banking and financial services and Vastera is the only publicly traded software company focused exclusively on global trade. Vastera's services includes global trade management (GTM) software, managed services, global trade content, education and high-end consulting services. Under the agreement, Vastera will be acquired by and combined with the Logistics and Trade Services businesses of JPMorgan Chase's Treasury Services unit.

With more than 50,000 clients and a presence in 36 countries, the Treasury Services business of JPMorgan Chase is the world's largest provider of treasury management services. Its full-services include innovative payment; collection; liquidity and investment management; trade finance; commercial card; and information solutions for corporations; financial services institutions; middle market companies; small businesses; governments; and municipalities worldwide. Under the planned merger agreement, Vastera shareholders will receive $3.00 for each of their outstanding shares of Vastera common stock. The total transaction value will be approximately $129 million (USD), about 50 percent premium over the annual revenue of Vastera.

Vastera's solutions automate the required trade management processes associated with the physical movement of goods internationally. The acquisition should further provide JPMorgan Chase clients with a "one-stop-shop" service that addresses the increasing challenges and risks associated with moving goods internationally. The JPMorgan Chase solution currently facilitates the seamless management of information and processes in support of the movement of physical goods movement and the financial settlements when the trade process is completed. Through this combination, JPMorgan Chase is believed to be the first global financial institution to offer a complete, integrated cash, trade, and logistics solution across the physical and financial supply chains in a way that maximizes benefits to its clients.

Vastera already had an extensive working relationship with JPMorgan Chase by providing it with GTM solutions. Now the two tout they will be able to build on that relationship as part of the same firm offering a broader GTM infrastructure to bring tangible benefits to their clients. Namely, this acquisition should give current JPMorgan Chase's clients the benefits of broader GTM solutions. In turn Vastera's clients will receive the benefits of JPMorgan Chase's comprehensive financial services platform and product set. Vastera will continue to independently market its software and services and manage complex export-import paperwork. However, much more growth opportunity is expected from bundling Vastera's software and services with JPMorgan Chase's offering, which will supposedly track trade goods and the payments needed at each step of the process.

The merger, which was subject to the approval of Vastera shareholders, and the approval of various banking and other, customary regulations, took place in April. The transaction was previously approved by Vastera's board of directors who recommended that shareholders vote in favor of the transaction at a subsequent shareholder meeting. Two major shareholders, Ford Motor Company and Technology Crossover Ventures, representing approximately 28 percent of the Vastera shares outstanding have reportedly committed to vote their shares in favor of the transaction pursuant to voting agreements entered into with JPMorgan Chase.

With approximately 650 professionals in 14 countries and with over 400 clients throughout the world, Vastera is the worldwide leader in providing solutions for GTM and serves an international client base, including companies such as Alcatel, Dell, Ford, General Electric (GE), Lucent, Fonterra, Goodyear, Nortel Networks, and Seagate. Clients use Vastera's solutions and services to manage information flows associated with the cross-border components of importing and exporting goods. As a result, they can navigate the complexities and inefficiencies inherent in global trading in a manner that allows them to capitalize on the large, highly fragmented, and rapidly growing opportunity that exist in the international market. These clients reportedly realize significant cost reductions when managing their global trade operations, while improving compliance with government regulations and service levels to end customers.

This is Part One of a three-part note. Part Two will cover Vastera.

Part Three will discuss the merger rationale.

Vastera Background

Dulles, Virginia-based (US) Vastera began life in 1991 as a software vendor assisting companies with the complex world of global trade with software to guide manufacturers through logistics planning and customs regulations. The applications kept up with duty rates, regulations, licensing requirements, and value added tax (VAT) rates, to focus mainly on country-specific trade regulations and compliance. Vastera's initial solutions consisted almost exclusively of software solutions and implementation services associated with the installation of the software products.

In July 2000, the company undertook a fundamental shift in its product and services offerings when it acquired Ford Motor Company's global customs import operations, including a number of Ford's employees. The acquisition has enabled Vastera to significantly broaden its solutions offerings allowing it to provide trade management BPO services to its clients in the form of its managed services provider (MSP) offering. By striking a sound ten year deal with Ford, Vastera has leveraged its global trade systems and deep content knowledge into an MSP model. In turn, Ford can focus on its core competencies of designing and building cars and trucks while gaining the collaborative advantages of Vastera's business-to-business (B2B) GTM offerings.

Thus, in recent years, as trade becomes even more complex with "smart ports" and twenty-four hour advanced notice requirements, manufacturers have increasingly been seeking outsourced global trade services. An astute software vendor should do this more efficiently than a manufacturer, since it is a non-core aspect of the manufacturer's operation. As a result of this arrangement with Ford, which currently owns 20 percent of Vastera and accounts for 30 percent of its revenues, Vastera became one of the first software firms to use its core content knowledge in customs and import/export documentation and in compliance application development to become a business service provider (BSP).

Both parties benefited. Ford remained staffed on-site with its former employees, with Vastera maintaining the systems and keeping content updated daily. Vastera gained a long-term customer and the chance to replicate its BSP model and extend its knowledge beyond Ford to other Vastera customers. Additionally, Ford has lent its stability to Vastera and allowed it to build a deep database of automotive and truck industry parts, HTS classifications and duties, and to gain country-specific knowledge where Ford has supplier relationships.

GTM Background

Most supply chain management (SCM), not to mention enterprise resource planning (ERP) vendors typically lack strong international trade logistics (ITL) and GTM capabilities. Specifically, while technology may be rendering the world smaller, the word has also become a lot more complicated. Many barriers to conducting international business over the Internet inevitably exist and most businesses are still not prepared for these challenges.

The Internet has enabled a networked world by providing a communication infrastructure and enterprise applications, and this has opened the door for international trade, but not many applications really offer multi-enterprise services and software to automate the complex, multimodal transportation and Internet-based logistics management needs of a global trading network. Simply put, most modern Web-based buy- and sell-side applications fall well-short of providing automated global trade management and a traditional international trade logistics.

As described in more detail in International Trade or ITL Adoption, ITL and GTM are execution systems specifically designed to automate the import/export business process. Their basic functional components are trade documentation generation and transmission, and regulatory compliance validation. They exchange complex information between multiple entities, including suppliers, carriers, freight forwarders, customs brokers, banking institutions, and other third party transportation and storage providers. A true ITL/GTM system is, in effect, an inter-enterprise resource management system, and requires a data model that takes into account the breadth and depth of information exchanged between the multiplicity of interrelated entities. Thus, ITL/GTM systems should support export and import border-crossing processes, documentation, compliance (which are incomprehensible to ordinary mortals), accounting, and financial reporting in a multicurrency, multilingual, and multi-units of measure (UOM) environment.

When people talk about the risks of globalization, many are usually referring to the threat of domestic jobs moving overseas. The global trade compliance aspect is rarely discussed, even though it poses a risk that affects almost every manufacturer that either imports or exports. Namely, getting these goods and parts shipped from one country to another is a daunting task and needs the support of a GTM software and service provider. This must be combined with global trade domain knowledge, proven processes, and international trade best practices in order to be successful.

Each of the nearly 200 countries in the world has individual governmental requirements for importing and exporting goods. One has to account for factors like tariffs and duties, country-to-country preferences and anti-dumping laws, and there is the danger of incurring hidden costs at every step. If that is not complex enough, the events of September 11, 2001 have increased the scrutiny countries place on global trade and can impact costs adversely. According to the Brookings Institute, the cost of slowing the delivery of imported goods by one day because of additional security checks could amount to $7 billion (USD) per year. Stringent new documentation and homeland security requirements are placing serious legal and financial consequences on importers and exporters violating these constantly changing trade regulations. Moreover, the burden is on the importer/exporter to know exactly what the regulations are and how to comply with them.

Although global trade requires multimodal transportation of shipping goods across borders, many international shippers do not yet have e-logistics software to provides the necessary visibility and flexibility to e-businesses wanting to automate their global supply chains. They also do not have e-procurement software that can analyze the total landed cost, which are the cost of sourcing and shipping a product internationally, including customs management, tariffs, transportation, cost of goods, etc. While there have been a number of Internet-based logistics tools that are helping companies analyze and reduce costs by automating the processes of booking shipments, keeping customers informed, and making sure goods arrive on time (for more information, see Understanding the True Cost of Sourcing), these companies still lack the software. Now, savvy customers are increasingly asking for help in researching the costs for importing from different countries. By using software to check duties, taxes, and trade regulations in the potential countries of origin, GTM experts should be able to create what-if scenarios that will help importers make the right decision

SOURCE:
http://www.technologyevaluation.com/research/articles/merging-global-trade-management-with-global-finance-17937/

The Evolution of Enterprise Resource Planning Includes Service Industries

2010-08-18T23:17:00.003-07:00

The Evolution of Enterprise Resource Planning Includes Service Industries
- April 9, 2007
Originally published - December 6, 2006

Since the late nineties, the enterprise resource planning (ERP) vendors that originally targeted the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries as well. By 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors such as SAP and Oracle had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, including health care, government, higher education, banking, insurance, and other service-based businesses.

Today, ERP vendors are aggressively marketing industry-specific and project-oriented functionality to service industries. Unlike best-of breed solutions, these systems provide a fully integrated, mature back-office system originally developed for manufacturing industries. Consequently, this raises the question: Is ERP for services a new category? Or is it "ERP less manufacturing?"

From a vendor's point of view, the answers to these questions vary according to which side of the ERP fence you stand on. On one hand, ERP vendors claim that ERP for services is a well-developed software category customized for the service industries they serve. On the other hand, best-of-breed vendors for service verticals (such as professional services, health care, government, and financial services) push their industry expertise and vertical solutions built from the ground up for those respective service industries. Consequently, organizations in service industries are faced with the challenge of determining which vendors best fit their functional requirements.

Defining ERP for Services

The main difference in functionality between best-of breed service applications and ERP for services is the back-office component. ERP for services applications provide complete functionality for both the transactional (or operational) components, and the project-oriented components of service organizations. However, best-of breed service applications typically refer only to industry-specific functionality. Some vendors may include a back-office piece, and others may only deliver vertical functionality that communicates with other ERP systems or financial packages. As a result, there are two categories of vendors for service organizations:

1. Best-of-breed service vendors: Vendor solutions such as Compuware's Changepoint and OpenAir PSA focus primarily on professional services organizations, and are typically marketed to the small to medium business (SMB) market. These offerings vary in breadth and depth, and the vendors tend to target a few key vertical markets. Depending on the vendor, their business models are diverse and can deliver software as a service (SaaS) and license models to their clients.

2.
ERP for services: These vendors are typically traditional ERP vendors that provide a fully integrated solution with complete back-office functionality. Since they provide their clients with complete operational and transactional functionality, their offerings tend to be broader in application. In addition to project-oriented functionality that vendors such as Epicor and Deltek deliver for professional services organizations, ERP for services vendors provide fully integrated, operational functionality for non-project organizations, such as Lawson in the health care sector, and Unit 4 Agresso for the public sector.

ERP for Services
Back Office Service Industries
Human resources Health care components
Procurement Distribution components
Financials Government components
Customer relationship management Higher education components
Business intelligence Financial services components
Knowledge management Hospitality component
Nonprofit components
Professional services components

ERP for Services Strategy

When evaluating solutions for service organizations, organizations should identify their particular business strategy. Smaller service organizations tend to prefer best-of-breed solutions due to their affordable price points (usually delivered through an application service provider [ASP] model) and their ability to easily integrate with the existing IT infrastructures. Typically, smaller service organizations have a financial package from vendors such as Microsoft or Sage that serves as the back-office component, and they will seek an industry-specific solution that provides the missing functionality to completely automate their business processes. Although under this option the initial investment can be lower, the level of integration between these systems will vary from application to application (including the level of field mapping, real-time processing use, and batch processing use). Furthermore, the out-of-the-box integration offered by vendors is typically limited to a number of financial systems, customer relationship management (CRM) packages, and project management tools. Consequently, users need to be extra diligent in identifying the solution that will best fit their needs.

For organizations seeking an integrated solution, ERP vendors have extended their offerings to include project-centric and industry-specific functionality coupled with mature back-office capabilities. However, the challenge remains for the large ERP vendors to deliver the best industry-specific capabilities, since many of these offerings were developed at a later date (and in many cases bolted onto the ERP architecture they built for the manufacturing industry). Although these integrated systems tend to have fewer integration issues, many of these vendors will likely not provide the same depth and breadth of functionality as their best-of-breed competitors. Nevertheless, ERP vendors are generally stronger in delivering financial and accounting capabilities, and have more experience at servicing the mid-market and the enterprise market.

ERP for Services: Moving beyond Manufacturing

ERP for service organizations can be divided into two categories: project-oriented organizations, and transactional or operational organizations.

Project-oriented organizations fall under the professional services automation (PSA) umbrella, and demand the typical business components offered by PSA solutions, such as capabilities for extensive time management, expense reporting, resource planning, portfolio management, and project management. Vendors targeting professional service organizations include Oracle and SAP in the enterprise market; Epicor, Deltek, and Compuware in the mid-market; and QuickArrow and OpenAir in the hosted SMB market.

However, ERP for service organizations require functionality for purely operational or transactional purposes. Vertical markets, such as health care, higher education, government, financial services, hospitality, and nonprofit, all fall within the ERP for services category by virtue of delivering primarily transactional or operational services (although these industries may at times demand project-oriented functionality). These markets demand standard, back-office functionality (such as human resources [HR] and financials modules) to interface with their industry-specific needs. Consequently, numerous ERP vendors have developed integrated systems that offer end-to-end solutions to various vertical markets. There are several good examples of growing service industries that the large ERP vendors are pursuing:

1. Health care: Vendors are offering industry-specific functionality in patient management, health care portals, and clinical or medical document management. Vendors such as SAP, Oracle, and Lawson offer solutions specific to health care.

2. Public sector: Numerous ERP vendors are offering industry-specific functionality in property management, asset management, utility or building management, and citizen relationship management. The government vertical market has attracted major ERP vendors such as SAP and Oracle, as well as smaller vendors like Hansen, Unit 4 Agresso, and CGI Momentum.

3. Financial Services: Vendors are offering banking and insurance front-office systems, human capital management (HCM), and procurement. Vendors such as Epicor, Apptricity, and Oracle offer solutions in this vertical market.

SOURCE:
http://www.technologyevaluation.com/research/articles/the-evolution-of-enterprise-resource-planning-includes-service-industries-18943/

We Shall Be Giant

2010-08-18T23:17:00.001-07:00

Event Summary

Oracle Corp. (NASDAQ: ORCL) has followed the lead of Ariba and Commerce One in tying its B2B future to a large financial institution. Citigroup (NYSE: C) has agreed to use Oracle's technology for its internal procurement and to market Oracle's exchange services worldwide through a co-branded web site.

Citibank has the potential to bring the message about the partnership to 100 million customers. The message will surely paint a picture in which a company can participate in a global exchange that will save money for buyers and reduce costs of sale for vendors, and provide all parties with one click access to loans, lines of credit, factoring, and all the other financial services of the global economy.

The news brought a welcome bump to Oracle's share price, which rose 13 percent. The stock had been flagging due to concerns about future database revenues and the rapidity with which customers can convert to new Oracle applications.

Market Impact

A move of this nature was inevitable for both companies. Ariba has linked itself to Amex (see IBM is Not Enough; Ariba Announces Strong Partnership with Amex) and Commerce One has string ties to a number of strong regional financial institutions, including Canada's TD Bank Financial Group and Latin America's Grupo Financiero Banamex-Accival ("Banacci") (see Commerce One Goes High, Wide and PeopleSoft). Offering financial services through a B2B exchange is generally accepted as necessary for both partners; it is not however sufficient, given that Concur's arrangements with Amex (see Concur Aims To Be Single Point Of (Purchasing) Access) did not prevent it from dropping its e-procurement initiatives rather dramatically.

Oracle obviously believes that it must have a piece of the B2B exchange world, and nobody is arguing. In less than eighteen months the direction of B2B exchanges has almost completely changed from enabling the purchase of indirect supplies to becoming vital components in integrated supply and distribution chains. That same progression will likely be replicated at the level of individual companies, individual exchanges, and the industry as a whole. For Oracle, that makes a customer's decision to participate in an exchange the opening to sell them, over time, a full suite of back-end software products. For Citigroup it is obvious that such exchanges must be lubricated by a vast flow of cash, and why shouldn't the bank get its fair share of the fees?

It is hard to think of a move like this, so clearly foreseeable for both sides, as having a major effect on the existing market - which in any case is not nearly mature enough to see the effects. It does solidify Oracle's claim to a leading position in e-procurement, and with Commerce One and Ariba sharing those lead honors it isn't easy to see where a challenger might come from - GE's Global eXchange Services is one contender worth watching, but they don't yet show signs of relishing a head-to-head confrontation.

On the other hand, there are many more huge banks than there are e-procurement software companies of any size, even when a generalist like Oracle is included. Those financial giants are not going to sit idly by while Amex, Citigroup and a few others carve up the world. With nearly no other software leader to partner with - and if there were, the competition for its favors would be truly intense - we won't be surprised to see a large bank, or a consortium of first and second-tier banks, attempt to grow an e-procurement giant from an existing weaker company with a plausible track record. Clarus Corp. (NASDAQ: CLRS) comes to mind as an inviting target.

SOURCE:
http://www.technologyevaluation.com/research/articles/we-shall-be-giant-16229/

Can Brick & Mortar Leaders Be Brick & Click Leaders?

2010-08-18T23:16:00.002-07:00

IT Management Issue

Size matters. To be in the hunt, financial services firms need to function in a single global capital market tied into many local markets. Financial services continue to build momentum towards global growth, continuing the migration from what had been a predominantly local/national business focus. This growth is being fueled by:

* Loosening regulations

* Increased savings and investments in the developed world

* A continuing pattern of investment banking/commercial
banking convergence and consolidation (sometimes burdening companies with duplicate capabilities which slows momentum)

* The impact of the Internet and technology on both the financial markets and business operations in global financial services

Financial service firms are also feeling pressure to deliver sustained and predictable profitability over an extended horizon in an increasingly volatile business environment. This volatility can be linked to many factors, including the increased commoditization of products (current pressure from e-commerce), the rapid pace at which products and services can be copied by competitors, and the soaring costs and risks associated with information technology decisions.

There is also a trend towards "all in one" service offerings, where customers, with access to vast amounts of information, are now more knowledgeable and mobile and have access to the full range of investment banking products and services. Financial service firms must compete in all of these areas if they plan to maintain long-term client relationships.

Business Implications

To help illustrate the issue, consider Zurich Financial Services, a global leader in the financial services industry specializing in financial protection and asset accumulation. Zurich Financial is moving fast on many fronts; concentrating on reorganizing its many subsidiaries (e.g., reorganization of Property groups), combining operations, selling non-strategic businesses, and making acquisitions. Perhaps the most significant business implication is their move from bricks to clicks. Zurich Financial is partnering with technology companies to fill holes on the e-commerce front and launching projects from within. Several recent initiatives include:

* A major addition of fund and asset management business and the launch of a virtual bank in Switzerland (Zurich Invest).

* Zurich Commercial is designing financial packages to meet individual needs by using Cognos web solutions to access and analyze customer profile data; rendering older static, costly, and time consuming monthly reports obsolete.

* Creation of an e-commence hub (portal through which brokers have access to all Zurich Financial products and possible third party products).

What is in store for companies like Zurich Financial?

Information Technology Management Implications

Statistics show that close to 80% of the IT projects initiated by financial services companies without a business case and clear business objectives are considered failures by executive management.

The customers of financial institutions expect integrated services. They do not want to have to identify themselves repeatedly and carry multiple pin numbers to gain access to multiple accounts.

The changes that the online revolution is bringing to financial services are daunting. Below we document a series of IT and operational issues that companies face:

E-commerce

* Maintaining a global view and providing one face to the customer.

* Keeping back-end systems such as financial accounting up with the pace of the front-end systems such as web banking and investing.

* Impact of the web on agents and brokers; including how to handle channel conflicts.

* The user interface for direct to consumer transactions must be responsive, intuitive, and integrated. For example, is it obvious how a consumer would sign on once and change his/her address for all accounts with your institutions? and its affiliates?

Data Warehousing (data integration, data sharing, data provisioning)

* Do multiple systems appear as one to the customer? to the company?

* Is data extraction synchronized across systems?

* Do data provisioning systems respond to requests for new data items fast enough?

Messaging

* Is the company's electronic messaging system an enabler for effectiveness, efficiency, and agility?

* As the company continues to acquire, are the e-mail systems tied together seamlessly (i.e., not only communicate with each other but facilitate calendaring, information sharing, centralized directories, etc.)?

Security

* Is the company and customer data private, trustworthy and legally compliant?

* Does the company have a firewall(s) protecting its confidential and high-risk data & assets from external attack? - From internal attacks?

* Does the company have an Intrusion Detection System deployed on its network?

Business & IT Management Response

As the hectic pace and nature of change in the Financial Services industry continues to magnify complexity, cost, and risk issues, IT and business leaders must work together sooner and be bi-lingual; speaking in the language of IT and business. To do that business and IT leaders must reassess critical leadership competencies. According to Results-Based Leadership, a TEC partner and recognized expert in leadership alignment systems, the move from bricks to clicks will require a new emphasis on competencies such as:

* Taking a strategic perspective - the ability to take a broad, long-term view of the business and its future and developing a distinctive focus and direction for the organization so that it will be able to outperform the competition and attract and excite employees and investors.

* Turning vision into action - communicating a consistent and compelling understanding of the organization's vision and translating it into defined plans tactics so that employees throughout the organization understand what they need to do to make it a reality and are committed to being part of it.

* Aligning the organization - acting to ensure that the organization's internal enabling systems (e.g., structure, systems, and processes) are aligned so that it can more effectively execute its strategy (e.g., how to handle channel conflict).

* Speed and agility - supporting and enhancing the ability of the organization to act quickly and decisively so that it can adapt sooner and more effectively than the competition to changes in the unpredictable, uncontrollable business environment.

* Building customer commitment and intimacy - keeping in close touch with the needs of targeted customers and building their commitment and loyalty to the organization so that firm equity is created and sustained (e.g., tailoring a company's approach and products to the subtleties of local overseas markets).

* Supporting collaboration - fostering a spirit of trust, cooperation, and collaboration in working relationships throughout the organization so that the boundaries that often detract from organizational effectiveness are broken down and expertise flows to where it is needed in a timely manner (e.g., broker automation that allows real time access to company data and new roles for brokers).

The combination of clearly articulated organizational capabilities and the clear definition of the leadership attributes required to build them will help to:

* Accelerate the speed with which financial services firms deploy high quality globally integrated services

* Reduce the risks caused by 'internet speed"

* Deliver distinctive products to global customers

* Design for, and build to, efficient global service delivery

SOURCE:
http://www.technologyevaluation.com/research/articles/can-brick-mortar-leaders-be-brick-click-leaders-15649/

How Is Business Process Management Applicable to Financial Services?

2010-08-18T23:16:00.001-07:00

Introduction

Business Process Management (BPM) is increasingly being used by organizations to improve internal processes in order to make them more efficient. But which processes are appropriate for BPM? Which industry, if any, has successfully deployed BPM?

BPM in Vertical Markets

BPM is already used in a variety of markets, from financial services and government to healthcare and manufacturing. In fact, vendors have different forms and workflows for each industry that companies can use as the basis for their BPM solution and that they can customize to their specific needs or structure in order to optimize their processes.

This customization is, in fact, fairly simple as BPM solutions are designed in such a way that business analysts are capable of doing most of the process development, thereby limiting the need for programming skills. BPM solutions enable analysts to design work flows, process flows, forms, and maps using the process designer.

Despite this, many organizations have focused on implementing vertical solutions, such as enterprise resource planning (ERP) and customer relationship management (CRM). BPM, in contrast, spans the entire enterprise. Nonetheless, despite BPM's seemingly horizontal applicability across industries and enterprises, many organizations might benefit from industry-specific, or vertical, BPM solutions. This article focuses on such solutions within the financial services (FS) industry.

Core BPM Components

BPM is made up of a wide range of components. Most of these components are industry-independent and can integrate with different legacy systems. The core components include the process designer, the actual process engine, and the interface component.

The process designer component is where the process developers or business analysts design business processes. Every process for which the BPM solution is used, and every form within these processes, will be designed using this component. In addition, the process designer can often facilitate integration with other components and systems that integrate within the scope of the process and workflow, as well as towards any business rules associated with the process.

The process engine component is used to authenticate and authorize users. In order to do so, it either stores the information in its own database or is able to connect to external applications or directories where user information is being stored. If organizations are already using other authentication and authorization tools, the process engine can duplicate and synchronize the authentication and authorization process to make it more efficient and to reduce the risk of failures.

Finally, the interface component enables users to access the BPM solution through a variety of applications and interfaces, such as browsers, portals, e-mail, etc.

Besides these core components, BPM can have components that contain industry-specific information, such as rules builders, form builders, and analyses.

The FS Industry

The FS industry is one of the industries that are focusing on BPM solutions, and BPM vendors have responded by providing industry-specific functionality.

Within FS, we can talk about banking, insurance, credit card companies, securities, etc. These organizations are under intense competitive pressure and, thus, are constantly trying to improve their operations and to respond to dynamic market demands. FS organizations have implemented several enterprise solutions over the last few years and encountered mixed results. These solutions include customer relationship management (CRM), the year 2000 (Y2K) problem, and anti-fraud initiative solutions, as well as business improvement and competitive advantage applications.

One problem that keeps arising is that applications often are not integrated with each other or are not being used on an enterprise-wide basis. This makes it hard for companies to streamline business processes that are specific to the organization's changing needs. FS companies must be able to design the processes so as to increase productivity within the organization. To do this, it must be possible to adjust processes so that they match an organization's needs as they evolve in an ever-changing environment. For FS companies, these needs may include complying with regulations such as the 2002 Sarbanes-Oxley Act (SOX), acquiring new customers faster, improving efficiency, integrating processes with legacy systems, automating manual processes, analyzing processes for risk management, improving exception handling, and decreasing the number of bottlenecks.

BPM vendors play to these industry requirements. Vendors allow companies to design processes within their solution in order to manage their resources in a structured manner. Through the BPM solutions that they offer, vendors also help FS organizations achieve compliance, reduce risks, keep or acquire new customers, and link different vertical applications together to become more efficient.

FS organizations can use BPM solutions to their advantage in the following areas.

* Claims management
* Loan management
* Client intakes
* Conflict processing
* Compliance regulations
* Credit issuances
* Credit processing

The Influence of SOX on FS

Within the FS industry, compliance regulations are becoming extremely important, if not critical. Many North American organizations must comply with SOX. Under SOX, executives must sign off on all financial statements, which have to comply with strict regulations and be monitored with a process control.

There are several key indicators organizations have to take into consideration when aiming for SOX success. These indicators are collaboration, security, control, iteration, adaptation, and measurability.

Collaboration involves employees across departments or offices, as well as external people, working together to collect data, consolidate data, put together financial reporting, and provide accurate financial statements.

Various levels of security must allow or restrict users' access to data, such that only management has the ability to sign off on tasks within a workflow. The security can be either user- or role-defined.

Controls that are mandatory under SOX are established, in part, through the afore-mentioned security system. A BPM solution, however, can contribute to these controls through its capability of showing a user only the information necessary for that user's authorization level in a particular workflow step.

Because financial statements must be audited, the ability to iterate processes is essential. Electronic, automated processes can bring consistency to processes every time they are used.

As rules and regulations change, an organization's processes must be able to adapt to these changes. A BPM solution should enable the organization to quickly change business processes in order to adapt to new conditions and to the market.

Lastly, in order to meet SOX regulations and financial industry standards, it is important to have a solution that is capable of measuring and tracking all financial data and of illustrating the processes and controls surrounding those numbers. A BPM solution is the perfect solution to these criteria for the financial industry.

Conclusion

Vendors such as TIBCO, Handysoft, Metastorm, and FileNet, which has created a whole department dedicated to SOX, are examples of organizations that provide BPM solutions with legislation and regulatory compliance capabilities for the financial industry.

BPM is an ideal solution that allows companies in the financial industry to manage internal processes and to increase efficiency and accuracy. Organizations, especially those that deal with SOX, should focus on BPM to ensure that they are compliant and less vulnerable to error and risk.

Organizations in other industries should also look closely at their processes, and ask themselves if these processes are influenced by internal or external changes and what the efficiency of the processes is at this time. If the processes are influenced by either the market or internal changes, a BPM solution could be a positive influence on their business. Several BPM vendors have industry-specific solutions, industry-specific forms, pre-defined workflows, and other solutions available. This topic may be discussed in a future article.

SOURCE:
http://www.technologyevaluation.com/research/articles/how-is-business-process-management-applicable-to-financial-services-18344/

CRM Vendors Cash In On The Financial Services Industry

2010-08-18T23:13:00.000-07:00

Event Summary

The 1933 Glass-Steagal Act that prohibited the alliance of banks, securities firms, and insurance companies was repealed in November of 1999. Its repeal is creating opportunities for CRM vendors as well as for financial services firms. Competitive pressures over the past 11 months have forced financial services firms to broaden and reorganize their product offerings around the needs of the customer. The reorganization also brings the need for these large organizations to collect and share customer data across divisions and other organizations. This has created a demand for CRM applications that can meet the specific business requirements of firms in the financial services industry. Siebel Systems, Broadbase Software, and E.piphany have supplied applications to the financial services industry for some time, but the increased demand for CRM applications and rising competition has led to new business developments for each of these vendors.

Siebel Systems
Siebel Systems, Inc. (Nasdaq: SEBL) recently agreed to acquire Janna Systems to enhance its Siebel Financial Services e-business product. Janna has developed CRM software for the financial services industry since its inception in 1990. Janna's strengths are in contact management and web-based self-service. Siebel's eFinance product currently provides strong call center and lead management functionality and the addition of Janna's web-based self-service in particular will broaden Siebel's operational CRM offerings for financial organizations. In a recent press release Siebel indicated that Janna technology would be a fully integrated part of Siebel Financial Services 2001, which will be commercially available sometime next summer.

E.piphany
E.piphany, Inc. (Nasdaq: EPNY) recently partnered with Deloitte Consulting to deliver industry specific applications for customer analytics and campaign management. Deloitte will develop and implement E.piphany applications customized for Fortune 500 financial services organizations. This partnership will provide the financial services industry with a strong analytical CRM product. More information about E.piphany's products can be found in TEC's analysis When You Realized the Need for a Unified View of Your Customers, that is E.piphany.

Broadbase Software
Broadbase Software, Inc. (Nasdaq: BBSW) recently partnered with HomeCom Communications, Inc. (Nasdaq: HCOM) to deliver analytical CRM applications. HomeCom is a small Internet consulting and systems integrator with vertical expertise in the financial services. HomeCom will develop and implement Broadbase applications for financial services organizations. Broadbase's strengths are in customer analytics and personalization. They also recently agreed to acquire Servicesoft to develop applications for customer service (see: Broadbase Continues to Expand).

Market Impact

Siebel's offering is likely to be very successful, in part because of its strong brand. Furthermore, Siebel undoubtedly has the resources to integrate the software from both companies into one offering and to promote the product. Janna has a 10-year track record of developing applications for the financial services industry, and has been operating profitably for the past 9 quarters. Siebel purchased Janna to integrate its commercially tested web-based self-service applications with Siebel's operational CRM components such as call center management, field force automation, and contact management (also commercially tested). This is a stronger commitment than either E.piphany or Broadbase have made to date under their partnership agreements. Their agreements do not require significant dollar investment by the vendor to develop a product.

Although partnerships with systems integrators may indicate less commitment than an acquisition and a branded product offering (i.e., Siebel Financial Services 2001), E.piphany is fast becoming a distinguished leader in the analytical CRM market, and Deloitte Consulting operates a large, successful systems integration practice. Thus E.piphany should continue to remain strong in the financial services industry.

Broadbase, a close competitor to E.piphany, has not enjoyed the sales growth and media fanfare that E.piphany has, and its agreement with HomeCom is not going to generate much attention. HomeCom is a small organization that generated less than $7M in sales in 1999. Furthermore, HomeCom is unprofitable and has watched its stock steadily lose over 85% of its value from mid-October 1999 to mid-October 2000. Thus it is highly questionable as to what kinds of resources HomeCom will have available over the next 12 months to develop and implement Broadbase products.

Siebel, E.piphany and Broadbase are not in direct competition with each other. Many applications in their product lines have significant overlap, but Siebel's strengths are primarily in operational CRM while E.piphany and Broadbase remain strong in analytical CRM. Therefore it is likely that Siebel and E.piphany will each have room to be very successful in the financial services industry. Broadbase needs to consider other business development options if they plan to compete with E.piphany.

SOURCE:
http://www.technologyevaluation.com/research/articles/crm-vendors-cash-in-on-the-financial-services-industry-16196/

Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field

2010-07-31T01:06:00.000-07:00

The common thread to all these platforms is a service-oriented architecture (SOA) strategy built to meet current market requirements, such as hidden complexity, and low total cost of ownership (TCO). Sound product architecture is critical to enabling faster implementations, easier upgrades, easier integration to other non-native applications, and more flexibility to change processes on an ongoing basis. For acquisitive vendors, there is the benefit of lowering acquisition cost; they can assemble component pieces that are non-proprietary, with an upgrade path to greater functionality, while still maintaining the replaceable nature of these components (due to their standards-based quality). The idea is to build anew only what cannot be assembled from the existing component repository. SOA is the unifying integration factor, whereby one can assemble composite solutions from disparate components: some that are built internally; some that come with acquired companies; and some that come from partnering with best-of-breed vendors.

One can thereby thin down a monolithic application's bloated and unwieldy core, while putting increasing amounts of functionality in thinner layer components that can be snapped onto or shared with several application kernels as required. Software built in an object-oriented (OO) fashion is thus less unwieldy; the leaner, more modular architecture can result in quicker implementations, improved flexibility, and easier upgrades. This framework also provides agility and flexibility for integrating industry niche solutions, and for development of industry-specific solutions, with insulation from the vendor's major release cycles. For instance, SSA Global has recently been striving to add new functionality to support the food and beverage industry needs in the form of business logic that supports country of origin labeling (COOL), bioterrorism preparedness, and global trade item number (GTIN) compliance.

Although SSA Global has many service, software, and technology alliances or partnerships with companies around the world (such as Atos Origin, Accenture, Fujitsu, Cognos, Sirius, CSC, and Capgemini), its quintessential partnership is with IBM. This partnership was cemented in mid-2004, and aimed to more easily modernize and integrate disparate SSA Global systems across the extended enterprise. Under the terms of the agreement, the two companies jointly market SSA Global extended enterprise solutions built on IBM middleware, including IBM WebSphere Portal, IBM WebSphere Business Integration, IBM WebSphere Application Server, and IBM DB2 Universal Database. IBM Business Consulting Services and SSA Global also collaborate to offer implementation and consulting services.

With thousands of customers already running SSA Global solutions on IBM eServer xSeries, iSeries, pSeries, and zSeries technology, the joint solution should further reduce TCO and time-to-value, while helping these companies adopt a growing list of industry standards and information technology (IT) mandates. In other words, while Intentia, Lawson, and Infor are certainly major IBM partners, SSA Global has possibly become the most exclusive. SSA Global justifies this exclusivity decision by referring to the following three concepts:

1. Synergy: Together, SSA Global and IBM should offer a more complete and extensive solution, meeting both business and technology needs. Namely, SSA Global has been providing customers with the industry solutions they need for competitive differentiation, whereas IBM has been contributing leading technology and infrastructure (this technical standardization should ultimately lower the TCO).
2. Affordability: The two vendors have been developing solutions for large global customers—solutions that can be scaled down and made affordable for small and medium customers as well.
3. Interoperability: SSA Global is standardizing on the renowned IBM WebSphere middleware platform, providing its customers with industry-standard integration infrastructure.

Industry Trends

Like its peers, SSA Global has thoroughly analyzed the industry trends and issues affecting manufacturing and distribution companies worldwide. Business is now moving faster than most companies' ability to adapt. The velocity of business transactions—from orders by mail, to orders by phone, fax, and now the Internet—is ever-increasing, and as a result there are increasing demands on IT departments. In addition, executive strategies passed down through the organization are expected to be implemented faster and faster, which is putting further pressure on IT departments to be more agile and to implement solutions quicker and more efficiently. Globalization is also introducing new levels of complexity, and virtually no company, big or small, has been unaffected by globalization. Whether a company has operations across borders or whether its supply chain extends overseas, it must contend with economic, cultural, linguistic, and regulatory differences, putting more pressure on the IT infrastructure to efficiently accommodate these needs (see Merging Global Trade Management with Global Finance).

The trend towards lowering TCO requirements also needs only small mention, since top executives are wiser today than they were several years ago (given they are apt to have had direct or indirect experience with IT projects that failed to deliver promised business benefits). They are also under more competitive pressure to obtain a tangible return on investment (ROI) and to extend the value of their IT infrastructures. The level of detail for ROI studies has meanwhile increased, and executives demand information that tells them what the true, long-term cost of a technology investment will be (without a credible ROI forecast, the odds are that a given project will not be approved).

Bundled with this is the trend towards application portfolio rationalization; over the last few decades, we have seen a move towards decentralization, as a result of which companies have built elaborate localized technology infrastructures to support the needs of remote locations. Despite the flexibility and agility of autonomous remote divisions (see Standardizing on One ERP System in a Multi-division Enterprise), many top executives have realized that there is a high cost of maintaining a software infrastructure characterized by a disparate set of standard and customized applications. To achieve greater efficiency, cost reduction, and security, many user companies are moving to consolidate and standardize their applications and associated technology platforms, whereby the objective is to align IT infrastructure with business needs.

Technology landscapes are also consolidating, since customers are beginning to realize that they can get significant cost benefits by reducing the number of technology platforms they support. In addition, there is an inclination toward supporting open nonproprietary standards that offer more control over the applications they use and the vendors with whom they work. The industry consensus is that more than 75 percent of new enterprise application development is now built on platforms based on either Microsoft .NET or J2EE.

In summary, everyone needs more business agility, as well as the ability to conduct more transactions (including quality, service, management, production, and so forth) with fewer resources and assets (in terms of supporting applications and hardware). Like most of its peers, SSA Global is focused on providing business value via underlying technology improvements, such as solving the business problems of supply chain visibility, master data unification, vendor-managed inventory (VMI), and so on.

While the vendor is tackling recent buzzword-based technological concepts like Web services, composite applications, extensible markup language (XML), enterprise service bus (ESB), SOA, and so forth, the point is to map these concepts to true business value (in order to prove that this horde of whiz-bang terms and concepts really adds some value).

To that end, SOA describes modular software which is constructed using discrete executable tasks as the primary unit of subdivision, and which uses exposed service interfaces as the primary method of modularization (see Understanding SOA, Web Services, BPM, BPEL, and More). As mentioned earlier, users have an increasing need for greater simplicity, manageability, and agility, and if their business processes have changed, they want to know exactly how long it will take for an IT department to modify the software accordingly. As for what SOA means for customers, it should enable more rapid integration with existing systems, whereby customers can acquire new services without going through full upgrades. Additionally, it supports hybrid solution rollout and insulation against technology changes, and enables business process configuration and orchestration specific to vertical industries and distributed deployment.

SSA Global's Technological Vision

The SOA enablers of agility in SSA Global's case too are Web services, commonly accepted development standards, and common modules with standard service interfaces. This technology strategy has been driven by the customers' requirement to implement and manage their solutions quickly and effectively, while maintaining the lowest possible TCO. SSA Global's technological vision is thus characterized by the following objectives:

1. To support its recently minted corporate product strategy of "modernization, convergence, integration and industry focus." Obviously, the first three pillars have considerable technical implications. Industry focus has technical implications that are less obvious, but remains very important to companies that have specific technical requirements (for instance, specific industry electronic data interchange [EDI] requirements). In particular, some of SSA Global's ERP products have been helping companies comply with the requirements of Part 11, Title 21 of the Code of Federal Regulations (CFR) from the US Food and Drug Administration (FDA), which applies to pharmaceutical manufacturing; and with International Financial Reporting Standards (IFRS), the financial reporting mandates for companies doing business in the European Union. In addition, SSA Global has integrated tax capabilities with its ERP products, so that customers can more easily and accurately process sales and consumer-use taxes for US and Canadian requirements.

2. To provide a common environment in which customers can model, administer, and deploy their solutions, since many SSA Global solutions that currently have their own proprietary infrastructure should greatly benefit by leveraging a common set of tools and technologies (commoditized standard technologies).

3. To provide the lowest possible TCO by leveraging technology standards like J2EE and Web services as the vendor strives to provide more tailored solutions with fewer customizations and quicker deployments, all at lower cost.

Business Strategy

SSA Open Architecture follows a logical approach based on strategic business processes in order to deliver a message platform which is organized around four basic service tiers:

1. people-oriented services
2. decision-making services
3. business process services
4. application services

We will get into more detail shortly as to what these different service tiers represent. For now, let us explain what this strategy intends to deliver, starting with the most important element, which is preserving customer application and technology investments, rather than imposing a rip-and-replace approach. SSA Global pledges to protect customer investment as much as possible, while still modernizing user applications.

Another key component of the strategy is the adoption of the SOA model, whereby software is implemented in the form of modular services that can be reused across the enterprise. In order to do this, the vendor wants to leverage commodity technologies and standards to implement software faster and more cheaply than the competition.

Furthermore, given that SOA technology is not enough without industry-based context and experience, SSA Global also plans to focus on core competencies, and to leverage its selected deep industry expertise to deliver the best and most flexible solutions. Lastly, the vendor pledges to partner whenever someone else can provide value to the customer quicker and more efficiently. By standardizing first on an IBM technology stack (with some other upcoming complementary close partnerships), SSA Global emphasizes that it is not in business to create proprietary technology platforms, but rather to maintain its philosophy as a solution-oriented company.

As for the abovementioned four service tiers, they can all be depicted rather simply. Namely, people-oriented services provide users with personalized UIs to provide a more effective experience and operating environment, allowing them to be more efficient employees. They also provide the ability to aggregate information across applications to give a single, consolidated view of the user enterprise, while they also enhance intracompany communication by providing the ability for employees to collaborate more effectively with the desktop and each other. Decision-making services provide reporting, analysis, and monitoring tools to decision makers within the user company, so that they can make informed decisions via better and faster manipulation, configuration, and analysis of business information. Under the SSA CPM suite (which is powered by Cognos business intelligence [BI] technology), the SSA Financial Reporting, SSA Enterprise Scorecarding, and SSA Analytics modules provide insight into business performance and required changes.

Business process services, as the term implies, aim at enhancing operational efficiency through improved business process management (BPM) functionality for automating, integrating, and collaborating across the enterprise and into the supply chain (see Business Process Management: A Crash Course on What It Entails and Why to Use It). Standards-based integration infrastructure opens up applications and allows automation of business processes, whereas collaboration allows users to interact more closely with their customers and suppliers. These advantages have been best illustrated with SSA Global's other recent focus on the area of financial and regulatory compliance; SSA Global's compliance framework appears throughout multiple product areas, including functionality in the SSA BPM, SSA CPM, and ERP product lines.

Within the SSA BPM suite, the SSA Workflow capability (with the embedded iFlow technology from Fujitsu) helps companies establish preventative controls to ensure that predefined business processes and business rules are strictly adhered to. In addition, the SSA Event Management capability helps companies identify processes and data that are not compliant. Several SSA Global ERP products have been tightly integrated with the SSA BPM, SSA CPM, SSA FM, and SSA HCM suites to provide a broad range of compliance capabilities. The use of BPM and graphic modeling tools can speed implementation and aid flexibility. For instance, the vendor has lately built a series of templates for its BPM engine, to allow WMS software components to be quickly assembled for particular industries, or styles of warehouse operations.

In recent years legislation and regulations have been introduced to ensure good corporate behavior or governance, but unlike the Y2K issue, the Sarbanes-Oxley Act (SOX) in the US, and IFRS and Basel 2 in Europe, the Middle East, and Africa (EMEA), are not issues looking for a technology solution. Compliance is achieved only through management best practices, and SSA Global recognizes that technologies such as corporate performance management (CPM) and workflow management can be used to facilitate the adoption of such practices. For these reasons, the availability of CPM and workflow integrations is standard within the SSA FM suite, whereas report and process templates will be available as SSA Global engages with customers to define them. For more pertinent information, see Joining the Sarbanes-Oxley Bandwagon; Meeting the Needs of Small and Medium Businesses.

Last but not least, the application services tier provides a common infrastructure across applications, which allows for more efficient modeling, administration and deployment of solutions. Their potential benefit is in reducing the complexity and cost of application management by providing a common, enterprise-wide administration tool set.

Solution Application Framework

The Solution Application Framework (SAF) delivers the previously described service tiers, and allows customers to model, administer, and deploy their solutions using a common set of tools and technologies.

The first SAF component is the studio environment, which provides a single integrated development environment (IDE) for modeling and customizing SSA Global solutions. This includes portal, UI, workflow, reporting, data warehouse, integration, and development environments for solutions built with J2EE, existing SSA 4GL environments (in other words, fourth-generation languages from Baan and BPCS AS/Set technology), iSeries, and others. This is a good example of SSA Global's ability to leverage commodity technologies, since Eclipse IDE is an open source tool (originally developed by IBM, but then donated to the open source community) which is freely available to SSA Global and its customers.

While IBM has provided a number of free plug-ins to support different languages, SSA Global has been providing its own plug-ins to enable developers to use a common development environment for coding in Java, Report Program Generator (RPG), or SSA 4GLs. This industry-standard technology is providing significant value to SSA Global, its customers, and system integrators who can leverage the same tooling for their own customizations.

As far as the administration section of SAF is concerned, common services like unified user management, single sign-on, central deployment, licensing, logging, and configuration should ease deployment and maintenance costs. The run-time services component actually powers UI, portal, collaboration, integration, workflow, application server, and other needs, and it also provides the common infrastructure that supports the various platforms and databases SSA Global currently supports (for example, IBM DB2, Oracle, Microsoft SQL Server, and mySQL). Finally, the repositories of metadata, solution registry, and global solutions represent a significant move toward adopting the SOA model by externalizing functionality in its solutions in an effort to reduce the cost of customizations. As is well-known, customizations requiring coding add significant cost to application ownership, whereas SOA reduces costs by componentizing functionality for reuse and by allowing customization of business behavior by changing the order in which the components are executed. SAF repositories thus externalize configuration to allow for changes in behavior, since by reconfiguring the repository, users can change the business logic and provide the custom logic they might need without incurring the cost of the customizations of the past.

SSA Global's strategy for delivering future solutions is certainly not a "big bang" approach; rather, it is evolutionary in nature. The vendor started by releasing people-oriented services components with the SSA ERPLN product launch in 2004, whereas with the SSA ERPLX launch some components of the decision services and business process services have been added. Shortly after the ERP LX launch in mid-2005, SSA Open Architecture 5.0 was released, and the vendor then initiated a cycle of two releases per calendar year (one in the spring and one in the fall) to continue to provide enhancements.

In September 2005, at its annual Global Client Forum, the vendor announced the general availability of SSA Open Architecture 5.1. The latest version of SSA Global's technology architecture, SSA Open Architecture includes enhancements to SSA Portal Studio, SSA Collaboration Services, and the new Eclipse-based SSA Studio for modeling and customizations. The latest release features new unified user management and single sign-on capabilities, in addition to other administrative enhancements. SSA Global also designed SSA Open Architecture, so that customers of its predecessor product, SSA Technology Architecture 5.0, could easily upgrade to the new product.

But the best way to describe SSA Global's technological vision is to invoke the idea of customer-controlled introduction of innovation, which is a key strategy for allowing customers to adopt technology at their own pace. If customers start down the path towards SOA, the vendor pledges to work with them to find the best course of action based on their set of implemented solutions. It is not a matter of rip-and-replace, since customers can introduce components to work in their existing systems as they choose. While most articles in the press focus mainly on new SOA applications, most of what customers will likely be investing in is the technology that will enable their current solutions to participate in SOA scenarios. This path should provide the best ROI in the short term and the best TCO in the long term.

Along these lines, at the end of March 2006, SSA Global announced the general availability of the next release of SSA ERPLN, a significant upgrade to its flagship ERP solution for discrete hybrid manufacturers. The new release provides customers with enhanced capabilities in logistics, finance, projects, planning, sales, purchase, and service, and is a key milestone in SSA Global's strategy to help companies better understand and meet actual customer demand by leveraging an agile, standards-based IT infrastructure. It is based on the above-depicted technology architecture, which provides a Web-based UI, eases the transition to SOA, and enables standards-based cross application integration. The new release embeds specific solution templates for its primary target industries: hi-tech and electronics, and industrial machinery and equipment. It also extends the global reach of SSA ERPLN (with new embedded localizations for southern European countries and Japan), and in addition to a range of other capabilities, adds an intuitive interactive graphical planning board to simplify the workload for planners.

SOURCE :http://www.technologyevaluation.com/research/articles/contributing-to-the-rejuvenation-of-legacy-systems-in-the-enterprise-resource-planning-field-18512/

Mid-Market Strategy: International Enterprise Solutions

2010-07-31T01:05:00.000-07:00

Adonix Strategy

Careful acquisitions and internal development is giving Adonix (www.adonix.com), a privately-held, French enterprise applications provider for medium manufacturing and distribution companies, greater leverage in the international market. Its overall strategy is marked with two catchwords: "growth" and "independence". Growth entails organic growth to broaden Adonix X3 suite's functional scope, licenses, and services; and external growth through acquisitions.

The vendor plans to expand its international coverage into more countries, primarily in Asia, Northern Europe, and Latin America. From its early days, Adonix made a conscious decision not to target a direct presence in most foreign markets, and to go for product distribution mainly through partners and value added resellers (VARs). This has often proven to be advantageous to mid-market customers looking to keep costs down, because selling through partners requires a higher quality of product support, and accompanying documentation.

Part Two of the Adonix' Mid-Market FORMULA—Adopting Best of Both "Organic Growers" and "Aggressive Consolidators" Worlds series.

By deliberately steering clear of too ambitious expansionist policies, which have hindered so many smaller software companies in the past, and by focusing on a handful of core markets, Adonix has managed to keep itself on healthy track. Also, direct and indirect channels that have already been built in targeted countries (around 150 partners worldwide) has helped the company with product translation and localization issues, which has resulted in the product's solid multinational and localization capabilities. The vendor tries to engage partners that the mid-market trusts, and VARs, system integrators (SI), and consultants are carefully chosen and trained. They are selected for their integration and industry skills, and local presence, and are in charge of implementation, customer coverage, and industry specific enhancements.

Adonix also emphasizes its capacity to provide its customers with a wide choice of functionalities and underlying technologies. Vendor tend to appreciate open technologies and leading industry platforms, and Adonix 4GL, a data dictionary and event-driven, fourth generation language (4GL) platform is a consistent, underlying development platform. To provide different options for open standards, such as UNIX, Microsoft Windows, Linux, Oracle, Microsoft SQL Server, Microsoft Business Framework (MBF) etc., Adonix partners with leading technology firms, such as IBM, Oracle, and Microsoft.

These high-profile partnerships should bode well for the guaranteed evolution for existing customers, as functional offerings are refined on an on-going basis in pace with the needs of the market, and are tested in independent software labs and at pilot customer sites for performance. For example, during the last few years, Adonix has broadened the scope of its traditional back-office enterprise applications (manufacturing, distribution, and accounting) by integrating front-office applications, including customer resource management (CRM), customer service, and product configuration into Adonix X3.

Recently introduced CRM functions help customers manage sales opportunities, sales contacts, and marketing campaigns, whereas new customer service features are the ability to track repair parts, manage service calls, and maintain a knowledge repository to assist help desk personnel with resolving customer issues. The Product Configuration module features a rules-based engine that allows building customized products to match customer's exacting requirements. These have allowed Adonix to stand apart from most mid-market peer solutions, which are typically a collection of acquired packages bolted together to form a suite. Conversely, Adonix has deliberately taken the time and made the investment to build a solution on a single architecture that is portable to multiple platforms, via a single, central repository with n-tier client/server architecture on standard database platforms (Microsoft SQL Server and Oracle).

As for its mantra of financial independence, Adonix's growth has long been self-financed. It is a family-owned, private company with sustained profitability, despite its acquisitions of Gruppo FORMULA, CIMPRO, ABEL and Meta4 in only last few years. Adonix prefers to buy software companies that have assets that it values, either in geographic coverage and leadership, markets, technologies, functional areas, etc. Some may be behind the curve technically or financially, but will still have something that will work within the Adonix Group.

Sometimes the vendor maintains the acquired entity's organization, products, etc., which then continues to run separately from the X3-related business (which is the case currently with Meta4 HR/Payroll). For others (particularly for specific vertical markets or functional domains like the CIMPRO and ABEL acquisitions for process industries and fixed assets respectively), Adonix takes the functionality and builds it into the X3 development environment, so that mid-market companies can take advantage of as much functionality in one integrated software package as possible.

Thus, while Adonix X3 has been available in the US since 2000, the ABEL Enterprise's fixed asset management capability will be available in the next X3 1.4 release. As will be explained later in this series, the former Cle128 warehousing management system (WMS) was released recently under the Geode GX name. Meta4 PeopleNet's personnel management, payroll administration, workforce collaboration, and BI capabilities might also come to the US some time in the future, while the Loan Solutions, for the public sector and local authorities, and Logan Informatique software, for real estate management, will remain permanently in local European markets.

In the case of Gruppo FORMULA, the software seems as a good fit in markets other than Adonix' traditional markets of manufacturing and wholesale distribution. Namely, the solutions are also targeted at the retail, healthcare, utilities, and services sectors, all which are not currently covered by Adonix X3. Thus, from this standpoint, its certainly fit the mold of Adonix' typical acquisition target, particularly with its mid-market ERP leadership position in Italy and the markets it serve. However, it remains to be seen whether Gruppo Formula will follow the CIMPRO and ABEL route and be incorporated within X3, or if it will remain independent like Meta4.

This is Part Two of a four-part note.

Part One detailed the company and its products.

Part Three will discuss Adonix' WMS Response.

Part Four will cover technology, challenges and make user recommendations.

Supporting Product Development

In additional to acquisitions, The Adonix Group, based in Paris, France is also focused on internal development and continues to pour more than 20 percent of its revenue into product development. After "biting the bullet" a few years ago and committing a substantial investment to basically rewrite its flagship offering, Adonix X3 ERP, to make it both Web native and a Web services amenable solution (extensible markup language [XML] and Java compliant), Adonix seems to be thriving in the ongoing timid economy. Also unlike most of its peer vendors, which started their ERP applications in the manufacturing space, Adonix first established a strong presence and functionality in the distribution and logistics field. Having mastered the idiosyncrasies of French business requirements in distribution, administrative, and accounting procedures, the company has remained the local market leader, despite strong competition and onslaught from international ERP vendors.

Going even further in the past, to complement its initial solution, which had initially focused on finance and accounting, and distribution for the lower-end of the mid-market, Adonix acquired a number of companies during the last several years. The most prominent of these were Prodstar, a French manufacturing resource planning II (MRP II) solution for mid-market manufacturers and their international subsidiaries, GSI Transcomm, a US provider of distribution and financial applications called TOLAS, and the Geode product from Geodis Logistics, a European WMS solution. Consequently, Adonix started rewriting its solution in 1997 after the Prodstar's acquisition and released the first version of Adonix X3 in 1999. However, the combined Adonix legacy applications are installed in over 4,000 sites, with approximately 200 in the US. Although one may expect a substantial recurring revenue stream or a new license opportunity from this large installed base from, for example, the former Prodstar product and older versions of Adonix, the challenge of incremental migration and concurrent support remains.

Since mid-2002 when version 1.34 emerged, Adonix X3 has been a Web-native ERP solution designed for mid-sized companies. Its functionality includes fully integrated manufacturing, such as routing, bills of material (BOM), product configurator, master planning schedule (MPS) and MRP; costing; quality control; shop floor control (SFC), and capacity planning; distribution, including purchasing, sales, inventory management, and replenishment; and warehouse management, including receiving, put-away, location control, cycle counting, picking, packaging, shipping, optimization, and automation control. It also encompasses, customer resource management (CRM) functionality, including contact management, marketing campaigns and after-sale service; and finance, which includes budgeting, allocations, analytical accounting, accounts receivable AR, accounts payable (AP) and general ledger (GL). All of these are on a single common architecture.

Incidentally, the Internet-based product architecture for the extended enterprise, (without any code on the client side) runs using a standard Web browser, enables remote offices and traveling users, and secure real-time access for partners, suppliers, sub-contractors, and so on. The product also enables companies to extend Adonix X3 business transaction and inquiry functions to their Web sites, making it relatively easy to connect to customers, trading exchanges, and key business partners. Namely, the Adonix Xtend module uses industry standard middleware, XML technologies, and Adonix application programming interfaces (API) to create the connection. The product extends relatively easily to the Web via the publication of X3 business rule APIs in Java/XML format to interface Web applications, so that the same X3 central application is accessible from a browser. The product is therefore Web services-compliant, since it supports all the common Internet standards including XML, Universal Description, Discovery and Integration [UDDI], Web services description language [WSDL], and simple object access protocol SOAP) as part of its development toolset.

Adonix X3's evolution strategy is based on a technical development toolset that is the foundation for translating specific functional designs into components of a single integrated software solution. Consequently, Prodstar was leveraged for the Adonix X3 Discrete suite, TOLAS for Adonix X3 Distribution, ABEL Entreprise for Adonix X3 Finance, Geode for Adonix Geode GX, and CIMPRO for Adonix X3 Process.

Currently, 1,200 Adonix X3 customers represent over 35,000 users within manufacturing, distribution and financial mid-sized companies and subsidiaries of large organizations in process, mixed-mode, discrete and distribution-intensive industries worldwide. These customers might benefit from faster time-to-market for new Adonix X3 releases, reduced total cost of ownership (TCO) through a homogeneous platform (without costly "bolt-on" solutions), and will more likely see a return on investment (ROI) for ongoing maintenance over the life of the system. They are entitled to a regular release schedule of new, value-added components, including CRM, automated data collection (ADC), finite scheduling, etc., and a toolset is integrated into Adonix X3 for handling customer-specific personalizations that are preserved over the life of the system.

Adonix X3 is also an ERP product designed for mid-sized companies with a view towards an easy installation (via a phased approach and parameterization tools), use, maintenance, and customization/personalization. It adapts to customers' business environments and changes, given that personalization and customization capabilities make upgrades and maintenance easier. The product maintains its flexibility via powerful parameterization capabilities, whereby the parameters are user-definable, and can be linked to applications or workflows, and can be set at different organizational levels.

One of the biggest Adonix' trumps is its per-seat pricing structure that suits small cost-conscious, risk-intolerant manufacturers and distributors, which often want to pay a fixed price for a solution, whatever the functional scope and implementation timeframe of their projects may be. To that end, Adonix prices its software (including all modules with only three add-on exceptions: finite capacity scheduling, product configurator, and assets management) $3,500 (USD) per seat in the US, with an optional 18 percent annual fee for maintenance and unlimited upgrades. The number of users per client varies significantly (from eight seats to more than 200 seats), leading to an average deal size of 35 users.

As the company prides itself on fast implementations (36 months) and on implementation costs being within one to two times the software license costs (120 percent on average), it does not take a rocket scientist to calculate that most of projects cost in the range of $50,000$500,000 (USD). The price tag might be attractive even in the current era of reduced information technology (IT) budgets. The product's design typically prevents additional "hidden" costs, since maximum functionality is included in standard version, whereas easy customization capabilities are allowed with the Adonix X3 toolset, and object-oriented technology allows reasonable integration and easy upgrades.

Implementations are so rapid and costs are low because the product is relatively easy to use and agile through parameterization, and it can be relatively easily interfaced with likely legacy applications in place. Adonix' deep in-house experience, with over 1,000 employees worldwide who have on average 14 years of experience in application software and on average 10 years of tenure at Adonix, bode well for the deep understanding of the mid-market business.

Catering to Various Environments

The product has an impressive depth and breadth of distribution and order management functionality. Particularly powerful is its advanced pricing functionality that allows companies to create a complex customized pricing formula based on a multiplicity of categories, such as customer, region, territory, etc. It is also a workflow/event-based solution that enables enterprises to model business planning issues through, e.g., a network of tasks, resources, and inventory buffers on which strategies can be applied to optimize interrelationships.

Workflow management covers all financial and distribution processes and, more recently discrete and process manufacturing. In other words, when information comes in from ancillary sources, such as electronic data interchange (EDI), the Internet, or sales force automation (SFA) systems, it can be imported into a system and can trigger exception events, that can be defined based on a user's information needs. The vendor plans to continue to improve and broaden the algorithms to address more industry-specific problems. Another attractive feature that the product offers is its native reporting and business intelligence (BI) capability, as it has built-in support for data marts for financial and logistics analysis by executive information system (EIS) systems. As will be explained later, the typical optional add-on modules are WMS options, shipping system options (custom or packaged solutions), product configuration, and finite capacity planning (with or without optimization).

Consequently, Adonix X3 comes configured in three slightly different offerings in North America. First, Adonix X3 Distribution provides an integrated set of application modules devised to help streamline business operations of wholesalers and distributors. The following modules can be installed completely to form either a full enterprise solution, or in modular fashion: CRM, sales management, inventory management, purchasing management, advanced warehousing and data collection (or Adonix Geode GX for more complex warehouse practices), financial management, demand forecasting, edi, shipping and manifesting, and Adonix Xtend (for integrating Adonix X3 to Web storefronts). With this suite of applications, distributors should be able to take advantage of features such as

* advanced order fulfillment for meeting critical customer delivery dates,

* comprehensive pricing and promotion capabilities,

* product configuration for locating and defining products according to customer definition,

* after-sales service with warranty tracking, service scheduling, and a knowledge base of product problems and resolutions,

* near real time BI for critical management reporting, including exception handling and performance measurements; and

* workflow management for ease in communicating exceptional events and transactions both inside and outside the enterprise.

On its hand, the Adonix X3 Discrete Suite is an enterprise-wide set of application modules that addresses the needs of mid-sized discrete manufacturers in a variety of manufacturing modes including make-to-order (MTO), configure-to-order (CTO), assemble-to-order (ATO), make-to-stock (MTS), and mixed-mode environments. The Adonix X3 Discrete Manufacturing module supports the planning, scheduling, and production control activities of a manufacturer within these different manufacturing modes, and it is fully integrated with the distribution, CRM, and accounting components.

Last but not least, Adonix X3 Process is a broad enterprise system that is specifically designed to support the dynamics of process manufacturing. Manufacturers try to achieve greater product and process consistency, while improving the ability to satisfy vacillating customer demand. To that end, Adonix X3 Process' advanced planning and control capabilities use near real time and historical information to help manage inventory levels and costs, optimize product mix, reduce waste, and shorten product development cycles. It combines the features of the company's flagship product, Adonix X3—a Web-native ERP suite that integrates manufacturing, distribution, WMS, CRM and finance functionality—with application features that address the unique and specialized needs of the process manufacturer, including formula management, lot traceability, shelf-life management, quality control, and regulatory compliance. The suite supports the specific needs of most formula-based process manufacturers including those in areas as diverse as dairies, bakeries, paints, lubricants, and cosmetics (for more germane information, see Process Manufacturing Software: A Primer ).

The process manufacturing module permits control over many planning and production control activities including formula management, routings, MRP, MPS, work in progress (WIP) accounting, and SFC, whereby the product supports both work order-based manufacturing and continuous batch environments. The distribution modules supports most required sales, purchasing, and inventory control functions including features to support quality control, lot control and tracking, expiration date management, and variable packaging units. Like in the case with the discrete manufacturing counterpart, the accounting modules are fully integrated with manufacturing and distribution, providing process manufacturers with complete AR, AP, GL and financial reporting capabilities.

However, Adonix X3 Process also provides complete quality assurance functionality, integration with material safety data sheets (MSDS), and helps US Food and Drug Agency-registered (FDA) manufacturers comply with regulatory requirements imposed by legislation such as the Bioterrorism Act and 21 CFR Part 11. It is ideally suited for companies producing coatings, adhesives, and sealants, as well as other batch-produced products. Since Adonix X3 also has solid discrete manufacturing capabilities to complement its process manufacturing orientation, it may also allow some mixed-mode manufacturing environments to freely adapt their systems to the style of manufacturing required.

For these reasons, the process-manufacturing suite has been a case of success at Adonix lately, with an enviable sample of customers in the industries, such as food and beverage, with Ganong Brothers and Simply Lite Foods (confections), Foxtail Foods (baked goods), East Coast Olive Oil, and Calico Cottage (fudge). Other industries of notice include the chemical industry, with Aceto Corporation (in chemicals distribution), Lubrication Engineers (lubricants), Garland Industries (tar-based products), Alloy Polymers (resins), and Golden Artist Colors (paints) representative customers; and the life sciences industry, with Fleming & Company (pharmaceuticals), UreSil (medical devices), Teikoku Pharma USA, and GS Cosmeceuticals (skin care). Some customers are notable multinational corporations, such as L'Oreal and L'Occitane (luxury goods), Sofradim (medical devices) and Stockmeier Urethanes .

SOURCE :http://www.technologyevaluation.com/research/articles/mid-market-strategy-international-enterprise-solutions-18177/

A Well-designed Solution for Sourcing: Its Technological Foundation and How It Works

2010-07-31T01:04:00.002-07:00

TradeStone Software, Inc. (www.TradeStoneSoftware.com) has displayed consummate perseverance in becoming a provider of collaborative e-sourcing solutions for Global 2000 companies. The vendor offers what is possibly the first composite application to the retail global sourcing market that leverages an organization's information technology (IT) infrastructure. This application operates either on a stand-alone basis, or as a layer into an application mix to cover any global sourcing functional gaps. Built on modern technology and conveniently accessed through simply a web browser, TradeStone's offering, initially named SteppingStones (and recently renamed TradeStone Suite), supports most of the key functional areas of international buying and selling, such as the request for quote (RFQ) pre-buy process, ongoing order management, sourcing logistics, track-and-trace visibility, government-related compliance processes, and payment processing. It also provides underlying event management and alerting. It works across currencies, languages, and countries, without necessarily invoking the need to train users, even if they have lower levels of computer literacy.

Part Two of the series Collaborative Sourcing Solution Vendor Leaves No Stone Unturned.

For information on TradeStone's history, see Collaborative Sourcing Solution Vendor Leaves No Stone Unturned.

For an extensive discussion of global retail sourcing, see The Gain and Pain of Global Retail Sourcing, The Intricacies of Global Retail Sourcing, and The Fashion and Apparel Retailers' Conundrum.

In order to foster rapid widespread adoption with an intuitive "zero training" environment, and also to leverage and enhance current IT investments, all with rapid phased deployments that would ideally deliver return on investment (ROI) in 90 to 120 days, the TradeStone Suite architecture had to espouse several design principles. For one, it features global access by leveraging web browsers and the Internet using hypertext markup language (HTML). The application can be easily accessed not only by users within the client enterprise, but also by users (such as trading partners) via extranet. Furthermore, the application is accessible to other programs through the power and flexibility of integration via Web services (see Understanding SOA, Web Services, BPM, BPEL, and More). This brings us to the ability to leverage existing applications (with data views and extraction from several disparate source systems) such as order management systems, warehouse management systems (WMS), item master, vendor master, and so on; and the ability to aggregate them on a single screen, thus minimizing traditional "hard-coded" integration costs.

The product was also designed for collaboration from the ground up, to leverage e-mail alerting and workflows, so as to reduce dependency on pesky and tardy phone and fax communications. With a built-in security infrastructure, the application manages and tracks the users' workflows, whereby the screens are not meant simply for data entry, but rather have a built-in logic. The product suite is configurable via available system tools and rules-driven logic, and is also expandable, with the ability to add new functionality—not just by customizing, but by downloading from the hosted site, thus minimizing upgrade and implementation costs.

The TradeStone Suite is also a scalable, multi-tiered, server-based enterprise application built on the standards-based Java 2 Enterprise Edition (J2EE) development model, with support for Web services and extensible markup language (XML) leveraged for integrations (see Understand J2EE and .NET Environments Before You Choose).

On the database tier, the product supports IBM DB2 and Oracle, and IBM WebSphere as the application server. The Web server (which can be Microsoft Internet Information Server [IIS] or Apache Tomcat) has bidirectional communication with the Microsoft Internet Explorer (IE) browser via the hypertext transfer protocol (HTTP)/secure socket layer (SSL) combination. The application security consists of user authentication, network security (via firewalls and SSL), and the application security per se, which is role-based and also data-based (to provide transaction- and field-level security).

The Apache Tomcat open source web servlet container complements TradeStone's own model-based "data anywhere" architecture spanning multiple systems, thus leveraging an organization's current IT investment. It also aims at driving down IT costs by eliminating the need for redundant databases, replication and continual reimplementation, and retraining of employees and trading partners. With this architecture, the TradeStone Suite accesses data from multiple applications without copying or replicating the data, and ultimately eliminates the need for modifying existing applications. The "data anywhere" architecture can accept data from a variety of data sources and formats, and allows an application to provide a unified view of a transaction even if its constituent data is located in several different databases.

Rather than a traditional costly database-to-database integration approach, TradeStone's integration approach consists of a user interface (UI) engine, a model-based application logic independent of the database, and a dynamic data mapping integration engine. XML is used for data mapping and process definitions to Web services, legacy systems, and databases, or to any other third-party system. Data channels to data sources like databases, enterprise resource planning (ERP) systems, legacy applications, and so on, can go via Java database connectivity (JDBC), Web services, and messaging.

In other words, by leveraging the integration capabilities of standards-based Web services technologies, TradeStone has been able to put together an application that can be relatively quickly configured to shift data in and out of traditional enterprise planning systems. This should allow buying organizations to more easily intertwine the basic procurement information these systems typically store, with crucial sourcing data such as specifications, schedules, and statuses.

More on the Design Principles

Also, to tackle the aforementioned global sourcing issues, the product can be sliced into several logical layers that cater to data and content management, embedded intelligence, dynamic processing, and industry engines (such as costing, planning, order batch sizing, and event management). For now, it suffices to say that the functional layer caters to the overall product design-to-delivery process (with underlying critical path and event management capabilities), logically grouped into five major modules: Design & Planning, Sourcing, Order, Logistics, and Finance, which will all be detailed later in this series. The collaborative layer is to help establish the nature of a collaborative process, as well as the roles and responsibilities to leverage trading partners' assets for mutual benefit. This is provided via shared data, alerts, automated emails, shared business processes, authorizations, and approvals, and is independent of the underlying data source, which should result in fewer delays in the critical steps in the supply chain.

Given that functionality alone is not sufficient if it is not guided by the business process context, the process layer is where the data is interpreted, both in terms of the functionality it calls upon, and the process it fits within (for example, the role of shipment details). The layer provides the tools that allow the application to be configured to support well-oiled business processes, rather than to be shoehorned (see Business Process Management: A Crash Course on What It Entails and Why to Use It). Closely related to this is the intelligence layer, where the system inherently understands how to process tasks, and where the complexities of international and domestic trade are masked from the user to let them focus on their particular job. The intelligence layer provides content as well as functionality, such as harmonized tariff schedule (HTS) data.

To bolster these two layers, in mid-2004 TradeStone Software and ILOG announced that ILOG JRules, a key offering in ILOG's Business Rule Management System (BRMS) product line, would enhance TradeStone's flagship product. The combination of TradeStone's global sourcing software and ILOG JRules has been enabling manufacturers, retailers, and other businesses involved in global trade to configure, maintain, and change their business processes with increased agility in response to business growth and other dynamic business demands.

Electronic sourcing refers to the ability to bring together different trading partners over the Web into a supply chain network that responds to changing market demands. ILOG JRules, which allows the business logic embedded in business applications to be represented as rules that can be managed by business analysts, supply chain planners, and other business users, enables businesses to automate business policies, procedures, and best practices, improving resource management and accelerating investment in business process management (BPM). As a key component of the TradeStone Suite, ILOG JRules has enhanced supply chain usability for IT and business users, helping to ensure that the suite is scalable to the needs of TradeStone's customers. Compliance solutions powered by ILOG JRules monitor high volumes of data in real time, enabling the immediate detection and reporting of faulty or fraudulent information. By embedding this industry-recognized business rules engine, TradeStone believes that the suite is deployed more rapidly, while the best practices are available too.

Last but not least, the underlying tools layer supports all of the layers of the application to reasonably rapidly bring together, configure, implement, and maintain a solution. It consists of features like the Query Builder, Model Builder, Composite Screen Builder, Step Builder, Business Rules Builder, Collaboration Tools, Integration Mapper, Application Configuration, and so on.

Recap

To recap, graphical UI and workflows that require hardly any user training per se promote more rapid adoption rates (user buy-in) throughout buyers, merchants, finance, logistics, and suppliers. The model-based "data anywhere" architecture means that the solution layers across legacy systems, dynamically tapping only key data, while concurrently filling in any functional gaps and providing one view of the data and one working environment for all users. As for exception-based workflows, they keep each trading partner focused on critical issues, and promote collaboration to resolve issues. Finally, a single view of the truth, which means one view of transactional data, regardless of legacy systems in place (or central repository for all commitment and contractual data), should eliminate redundancy by making it unnecessary to update multiple spreadsheets, hunt desperately for e-mail strings, or constantly re-key information in multiple systems.

In addition to a broad and focused sourcing functionality, backed up with a well-devised technology blueprint, TradeStone espouses the implementation approach, with the flexibility of either a tailored implementation or a straightforward out-of-the box deployment. In either case, the first step would be information gathering with key stakeholders within the business and IT organizations, so as to determine key business drivers, identify pain points and impediments, and identify opportunities for improvement. The next phase would be to develop a "scope document" that articulates, at a high level, the key business opportunities (in order to quantify a potential ROI), and for which one has to determine high level "as is" processes. Then the team would configure a prototype of the TradeStone solution based on the scope document, review the prototype with key stakeholders, and secure agreement on next steps for the functionality demonstrated in the prototype.

In case of the user opting for the "out of the box, from day one" implementation scenario, they would have to use standard business processes and workflows, standard screen interfaces, standard reports, and standard business form layouts. Since the touted "no training" environment provides intuitive workflows for all users, the vendor would merely provide the admin or user guide.

In the case of a more involved tailored implementation, though, the team would have to design, among other things, detailed business processes with associated business rules; custom interfaces (including the look and feel of transactional screens); custom reports; and custom requirements for business forms (such as requests for proposal [RFPs], bids, purchase orders, invoices, and so on). It would also have to develop custom training programs (for administrators, super users, end users, and the like), and customized documentation and "quick reference" materials. This type of customer still reports the TCO as being well under seven figures, and a hosted service was recently launched to accommodate IT budget-constrained customers. TradeStone is also developing a program that will allow even the "littlest guys" to pay per transaction.

A Simple Illustration of How It Works

To illustrate how the solution works, one scenario would be that a user company wants to extend an RFQ to several small manufacturers in the Far East to make a batch of polo shirts. The buyer would input the specifications in a preset form designed to support retail purchases, with fields for necessary data like size, fabric, or color. The buyer would also have to provide the e-mail contact addresses of the suppliers he or she desires to engage, and then would initiate the quote process. Currently, TradeStone does not help with finding prospective vendors in these faraway regions—this is in the long-term development plan—but for the time being, the retailers have to know their roster of suppliers and contractors beforehand.

The suppliers would then receive the e-mail invitations containing the RFQ, along with instructions to follow a hyperlink to a web page (hosted by TradeStone) to provide their bids. Once all the bids are in, the buyer would use TradeStone to compare them based on projected landed costs, using the HTS codes to determine the duties (with the system normalizing and synching all the data in the background, so as to avoid any awkward "apples to oranges" comparisons. When the buyer eventually decides to award an order, the data already in the system can be leveraged to generate a purchase order, transmit it to the supplier, and even apply for a letter of credit (LoC).

Through a Web services-based architecture that fosters loosely decoupled connections between the buyer's enterprise resource planning (ERP) system and TradeStone, the purchase order data would be written into the back-office system automatically, thereby obviating the need to re-enter the information to create an official order. Since TradeStone is tailored to the needs of the global sourcing process, it presents fields for the supplier to detail important milestones such as the expected production start date and expected ship date. When those dates come close, the solution can automatically remind the supplier to provide an update on status and any changes, and should the supplier forget or ignore the reminder, the system will repeatedly send reminders via e-mail (or escalate with higher frequency) until the required crucial information is received. There is also the ability to collaboratively discuss, online, back and forth, details of the order before the purchase is finalized. The system also has an online change order request, so that buyer can select a still outstanding purchase order and send it to the supplier with a proposed change.

When production is complete, the supplier can once again leverage the data (without ever re-keying the information) to create appropriate, accurate shipping documents such as the bill of lading (BOL) and the commercial invoice. If equipped with electronic data interchange (EDI), the supplier can even upload EDI-formatted documents such as advanced shipping notices (ASNs) into the buyer's TradeStone system. When a purchase order is complete (landed and duty paid [LDP]), the system offers the ability to compare actual to estimated landed costs, so that the buying company can adjust its formulas as needed for the future. For well-established, recurring relationships, the buying company can even upload inventory and point of sale (POS) information into TradeStone, so that the trusted suppliers can actively plan production and ship replenishment orders.

Different Stokes For Different Folks

The year 2004 was a time of controlled expansion, with three more development partners/customers signed (The Children's Place Retail Stores [US], American Eagle [AE] Outfitters [US], and Deutsche Woolworth [Germany]), and more staff of similar experience and heritage added. More former RockPort staffers joined the fold in their familiar Gloucester, Massachusetts (US) facilities, and former QRS moved out (literally and symbolically), while TradeStone moved in. The four first high-profile customers may also demonstrate the versatility and applicability of the solution to cater to differing customers' sourcing needs ( la "different strokes for different folks"). Still, the common theme for all of them would be that TradeStone has streamlined their entire purchase order management processes, allowed merchants to understand and analyze their businesses better, eliminated errors caused by piles of spreadsheets, and ultimately reduced data entry and training hours.

For example, the very first customer, Ocean State Job Lot, sells off-price electronics, housewares, lawn and garden items, stationery supplies, gourmet foods, sporting goods, toys, pet supplies, home decor, computer supplies, and seasonal items. With a chain of about 70 stores in New England (US), a typical Ocean State store stocks more than 4,000 items, many of them imported from a wide array of small offshore suppliers. Because the retailer provides "opportunistic" merchandise—which changes frequently based on availability—it was vital that the retailer have a global sourcing system that would enable it to move more quickly while dealing with a large variety of small suppliers. Opportunistic buying assumes little or no training at all for neither internal employees nor casual suppliers, although deep and rapid collaboration and global visibility certainly had to be deployed with vendors.

On the other hand, The Children's Place is a specialty retailer of high quality, value-priced apparel and accessories for children (newborn to age ten), and designs, contracts to manufacture, and sells its products under the "The Children's Place" brand name. It operates about 700 stores, with the vast majority of stores in the US, and about 40 stores in Canada. It also sells merchandise through its virtual store located at www.childrensplace.com. The Children's Place selected TradeStone's suite hoping to more effectively collaborate with global suppliers, and improve its production tracking and global visibility into the pre- and post-shipment supply chain. TradeStone also replaced some legacy sourcing systems (such as product costing, vendor self invoicing, and so on) in a "fill-in-the-gaps" manner, to create a single global order management infrastructure for sourcing of domestic, international, direct, and indirect materials. Using TradeStone Suite has allowed the company to notably reduce the cost of merchandise and transportation, improve its back-office productivity, and reduce markdowns.

At AE Outfitters, TradeStone provided a global order management composite layer over the mix of existing legacy systems, as a great example of composite applications in action. For example, the existing systems have thus been integrated via TradeStone's overlay. These systems include product development (via Gerber WebPDM, which provides data such as item characteristics, attributes, and images), merchandizing (via JDA Software's Arthur Allocation, which provides data such as seasons, master data, merchandise hierarchies, and the like), sourcing (via Inovis Sourcing, which provides data such as item collaboration, RFQ, costing, event management, item characteristics, sell channels, size and color flows, and packing), and planning (via Island Pacific's order management system). AE Outfitters is a lifestyle retailer which designs, markets, and sells its own brand of relaxed, casual clothing for 15- to 25-year-olds, providing high-quality merchandise at affordable prices. Its collection includes modern basics like jeans, cargo pants, and graphic t-shirts, as well as a stylish assortment of cool accessories, outerwear, and footwear. Its Canadian subsidiary, Bluenotes/Thriftys, offers a more urban-suburban, denim-driven collection for 12- to 22-year-olds.

AE Outfitters currently operates about 750 stores in 49 US states, the District of Columbia, and Puerto Rico; 64 AE stores in Canada; and over 100 Bluenotes/Thriftys stores in Canada. The retailer also operates via its Web storefront business, www.ae.com, which offers additional sizes and styles of AE merchandise. TradeStone's solution has allowed AE to leverage its current investment in software, while strategically expanding functionality such as vendor collaboration, ASNs, packing lists, self-invoicing, and so on. The idea is also to expand the suite's capabilities for all parties to better define products, collaborate, and manage purchases across the global supply chain.

Finally, in 2004, German retail group Deutsche Woolworth (operating more than 330 outlets in Germany and Austria, with 14,700 employees and revenues of approximately $1.4 billion [USD]) tapped the global sourcing solution from TradeStone Software to purchase global merchandise for its own stores and to offer a service bureau environment to smaller retailers who buy through Woolworth. This agreement marked TradeStone's entry into the European market, and the vendor has worked with Deutsche Woolworth and implementation partner IBM to tailor its global order management functionality (which replaced the legacy one) to meet the unique requirements of the European market, such as the need to be integrated with the planning system at the product category level to drive global sourcing. The resulting solution supports Woolworth's global order management requirements with sourcing and order management collaboration across its supplier base. Having been embraced by the merchandisers, this capability has gradually been expanded to the company's customer base, which should then be able to use the software to source goods from Woolworth, its suppliers, and its service providers. Deutsche Woolworth recently garnered two prestigious awards for its TradeStone implementation: Computerwoche's IT User of the Year, and Retail System's Global Retail Achievement Award.

SOURCE :http://www.technologyevaluation.com/research/articles/a-well-designed-solution-for-sourcing-its-technological-foundation-and-how-it-works-18652/

Development of an Internet Payment Processing System

2010-07-31T01:04:00.001-07:00

Early in 1999, the author was asked by E-Bank (http://www.e-bank.co.yu), one of his clients, to develop the first Yugoslav Internet payment processing system. This client is a Yugoslav payment processing company that uses BankWorks software by RS2 Software Group (http://www.rs2group.com) to process transactions made at ATMs (Automatic Teller Machines) and POS (Point Of Sale) terminals.

Developing an internet payment processing system in Yugoslavia under bizarre circumstances, during bombing raids, and power-cuts, was definitely an unforgettable experience. The system was deployed in September 1999 and has worked ever since without any problems. It has sustained numerous attacks by hackers and would-be intruders.

The system architecture is very similar to the Three Dioxin (3D) model that started to emerge later. 3D model will probably become a de facto standard for transactions on the Internet, when its specification is finalized. The developed software received the Diskobolos 2000 (http://www.jisa.org.yu/2000.htm) award in the finance category - an annual award granted by the Yugoslav Informatic Alliance. This article describes a success story that is worthwhile sharing with a wider audience.

E-Commerce Applications

Before we proceed any further, we have to distinguish two types of transactions on the Internet:

Transactions of the first type are not performed in real-time. When a card holder submits payment and gets a response, payment is only posted for further processing. Actual authorization of the transaction is performed (manually) at a later time and consequently at a higher operating cost. This is acceptable when delivery of goods and services is slow, e.g., via regular mail. As an example, when the author purchased a book from Amazon.com in August 2000, the order was approved after an hour or so.

The other type of transaction is performed in real-time. When a card holder submits payment and gets a response, payment is completed. Money on the card holder's bank account is earmarked and transfer of money to the merchant's bank account is guaranteed. This type of transaction is required when delivery of goods and services is imminent (e.g., download of software or MP3 files). Despite this requirement, some e-commerce sites use the first type, and deliver goods and services based on an assumed success of authorization in the future. This approach risks losses due unauthorized transactions.

The system described in this article can configurably work in either mode. When it works in the second, fully automated mode, the system interfaces with the BankWorks system in order to authorize transactions. This interface is simple and should be easy to adapt to other systems for authorization.

Business Model

In order to offer the best options (e-commerce application cost vs. sophistication tradeoff) to merchants and card holders, based on the above discussion, a business model of transaction processing has been developed. It divides merchants on the Internet in three groups, depending on their e-commerce application:

Those interested in collecting payments
Those requiring pre-processing and authorization
Those requiring preprocessing, authorization, and post-processing

Merchants in the first group are only interested in collecting (often periodic) payments on their goods and services. The best examples are utility companies and subscription services. Such payments are identical to payments made at some ATMs. A card holder logs on an ATM, selects a merchant (e.g. a phone company), and enters the amount and the payment reference ID (e.g., his/her phone number). Similarly, on the Internet, a card holder can log on the portal of the Internet payment processing company and pay bills. In order to further facilitate the payment process, merchants can, for a fee, keep account balances of their customers in the Internet payment processing system. In such a way, card holders may review their account balances, get a pre-filled payment form, and simply confirm payment.

Note that, merchants do not even need their own web site. Mobtel (http://www.mobtel.co.yu), a post-paid mobile phone company, operated in such a way for a brief period of time, when it was redesigned to a more sophisticated e-commerce application (also developed by the author) that includes calculation of promotional discounts and payment pre-processing.

The next group of e-commerce applications has a more complex business logic executed at the merchant's web site. However, these applications do not have/need any automated processing after payment is completed. Delivery of goods and services is based on payment reports available on-line from the processing company. Examples of such applications are Simpaid (http://www.simpaid.co.yu), a pre-paid mobile phone company, and Eunet (http://eunet.yu), an Internet service provider. The payment process is shown in Figure 1. The final bill is presented to the card holder on the merchant's site. The information about payment (merchant's name, payment reference ID, and amount) are passed to the payment form on the payment processing site. Here, card holder fills card information and completes payment. Note that confidential card information is protected by SSL (Secure Socket Layer) protocol at the payment processing site, and the merchant does not need SSL on his/her site.

Figure 1.

The last group of e-commerce applications includes all three phases of payment processing: pre-processing, authorization, and post-processing. Pre-processing is performed at the merchant's site and may include collecting information about the card holder, calculation of cost, taxes, discounts, shipping and handling, etc. Authorization is executed at the payment processing site in a form of a remote procedure call made at the merchant's site. Based on success/failure at this step, post-processing is executed at the merchant's site. The purchase order is completed, and goods and services are delivered (e.g., MP3 file is downloaded).

Implementation of such e-commerce applications is not an easy task. A transaction consists of multiple applications executed at multiple computers across the Internet. The chain of events may be broken at any step, at any time, and for any reason (e.g., power failure or communication cable cut). For example, failure after authorization and before post-processing is completed, could leave the card holder's account charged without delivering goods and services. The e-commerce application must have recovery procedures developed so it can either backtrack (e.g., credit card holder's account and cancel purchase order) or finalize order (e.g., deliver goods and services). An example of such application is Atlantik (http://www.atlantik.co.yu), an on-line betting company.

System Users

There are three types of users in the system described in this article:

Besides purchasing goods and services on the Internet, card holders may view information about their card accounts using the portal of the Internet payment processing company. This information includes account balance, previous payments, and history of accesses to the account information (for security purposes).

Merchants may view information about their accounts using the portal of the Internet payment processing company. This information includes previous payments made to the merchant, and history of accesses to their account information (for security purposes). Merchants can also change password for access to the account information.

The system administrator of the processing company manages the system using the portal and back-office applications. The administrator may configure in the system database numerous merchant's operational parameters such as type of e-commerce applications, types of cards accepted by individual merchants, appearance of payment receipts, etc. The administrator can use detailed security and access logs to track and locate would-be intruders.

System Architecture

System architecture of the Internet payment processing system is shown in Figure 2. All system components are connected via the Internet. The system has a multi-tier architecture that is typical for applications on the Internet.

Figure 2.

Card holders access e-commerce applications via the Internet. Depending of the type of e-commerce application, card holders may pay through the portal of the Internet payment processing company (first type), partly through the merchant's site and partly through the portal (second type), and entirely through the merchant's site (third type). In the last case, the merchant's site contacts a transaction server to authorize payment. In order to balance the load in the system, there may be multiple transaction servers.

The operating system of the web server (portal) and transaction server(s) is Linux. The web server is Apache with the Jserv module for execution of Java Servlet Internet applications, and the SSL module. We selected this configuration for various reasons. Due to the requirement that the system must work 24 hours a day, 7 days a week, we selected a reliable UNIX-based operating system. Furthermore, 57% of all web servers in the world are Apache, while an additional 3% are Apache derivatives. Also existing third party software for transaction authorization (BankWorks by RS2 Software Group) runs on a Windows NT platform.

All software components developed in this project are based on Java technology, a de facto standard for Internet applications. The latest developments in this technology were closely watched. Software had been often developed using early-access releases so it is ready when the underlying Java technology is officially released. Furthermore, Java is the underlying technology of the Visa Open Platform (VOP) that defines standards for the development of Smart Card applications. Due to portability of Java code, it runs on any contemporary operating system. The software has been tested on Linux, Windows NT, and Windows 95.

The web portal is implemented using standard Java Servlet technology. The application is highly configurable with respect to look and feel. All language related elements such as character-set, text strings, and error messages are also configurable.

The transaction server is implemented as a standalone Java application. Both the portal and the transaction server generate various security and access logs that allow detection and tracking of attackers on the system.

Merchants who use the first type of e-commerce applications are initiated by simply entering information about them in the system database. Since these businesses do not need necessarily a web site, no further development is required.

To facilitate the development of the second type of e-commerce applications, developers are given a template HTML form that contains HTTP payment parameters that are passed from the final bill on the merchant's site to the payment form on the payment processing site, as shown in Figure 1. The developed application has to adhere to the defined convention on passing payment parameters.

To facilitate the development of the third type of e-commerce applications, VPOS (Virtual Point Of Sale) terminal software has been developed. It handles payment authorization in a form of a remote procedure call. The VPOS terminal communicates with an appropriate transaction server using SSL protocol and the strongest commercially available 128 bit key encryption. To achieve even greater security, a VPOS signs data it sends to the transaction server using 32-128 bytes keys.

The VPOS terminal is easy to configure. This pertains to types of cards accepted and transaction servers that handle authorization. Each type of card may be handled by a different server. Also, for greater reliability, for each card type, it is possible to configure a list of alternate servers. In case the first server on the list is out of order, the next one is contacted and so on. The VPOS terminal component is easy to incorporate in an e-commerce application. It is delivered as a set of Java libraries, well documented simple API (Application Programming Interface), and sample code that demonstrates the use of API. If necessary, engineering services can be provided to custom build an Internet store.

Security Issues and Experiences

Even before we started development in early 1999, we knew that the system would be the prime target of hackers' attacks and that security was of the ultimate importance. At that time, the SET (Secure Electronic Transfer) protocol was promoted by Visa. However, development of such a system and its certification at http://www.setco.org was a lengthy and costly process we could not afford. Besides that, SET is not practical since it restricts card holders to using only computers that are certified for their specific cards. For that reason, we decided to build a proprietary system, and verify card holders using E-PIN (Electronic Personal Identification Number). It turned out that this solution and the entire architecture is very similar to Three Domain (3D) model that started to emerge in 2000, as shown in Figure 3.

Figure 3.

The merchant's identity is verified by the acquirer and the card holder's identity is verified by the card issuer. A transaction in our system is functionally performed in the same way except that the issuer's and acquirer's functions are collocated. We expect that 3D model will be widely accepted when its specification is finalized. Then, depending on available funds, we may decide to separate issuer's and acquirer's functions to two servers and fully comply with the 3D model.

There are two aspects of security that we addressed: protection and prevention. We believe that we addressed both very successfully since none of numerous attacks were successful.

Protection pertains to actions aimed at minimizing the system's vulnerability to attacks when they actually occur. The most basic step is to use 128 bit SSL encryption that protects the system from eavesdropping. In order to protect from fraud with stolen card numbers, we introduced E-PIN. Cards are blocked after a settable number of attempts to enter an invalid E-PIN.

The next step was to build an elaborate system of security/access logs that log all interesting events on all active system ports. Events are ranked according to their importance, and may be filtered and shown in different colors on the administrator's console. The system clock is automatically periodically synchronized with an atomic clock so events can be matched with other logs like those of ISPs.

The final step was to carefully scan the system with a scanning tool in order to detect and replace faulty components of the operating system. If you don't do this, bad guys may do it for you. In the logs we found that the system was scanned by a US company that, guess what, specializes in Internet security. We also captured that local celebrity hackers poked around the system.

Prevention is a set of legal/marketing/media actions aimed at detracting people from even trying to break in the system. As we expected, break in attempts started virtually from day one. Logs contain enough information to locate would-be intruders. Legal actions against them are still not possible, or at least not easy, in Yugoslavia. Laws against crime in information technology are still under development. The legal validity of electronic documents, like logs, is still questionable. In countries where such laws exist, a legal case with good media coverage would greatly contribute to crime prevention and the system's reputation.

Nevertheless, complaints are regularly filed with administrators of offending domains. In the case of ISPs, some were cooperative and cancelled the accounts of offending users. Other ISP administrators do not even bother to respond, especially when attacks came from their own intranets and were most likely carried out by administrators themselves. In one case when an attack came from a university computer center, the offending computer was located, but not the person since students come and go to do their assignments. As a result of the filed complaint, the staff of computer center started to log student IDs and the times they spend working at each computer so any future attempt could be sanctioned.

Finally, the author created a media event by challenging hackers on a news group with a statement that "hackers have to realize that a new sheriff for software has come to town". That instantly provoked an avalanche of daily attacks that diminished after some time. The word about system's reliability and security got on the streets. Now, about one third of all transactions with cards, processed by the processing company, are made over the Internet, and about one half of all active cards are also used on the Internet.

Conclusion

In this article we described author's experience with the development of the first Yugoslav Internet payment processing system. The system has worked reliably and securely since September 1999. Its architecture is similar to the Three Domain model which specification is yet to be finalized.

SOURCE :http://www.technologyevaluation.com/research/articles/development-of-an-internet-payment-processing-system-16681/

Made2Manage Affirms Its Technological Astuteness Part 2: Strategy

2010-07-31T01:03:00.000-07:00

Made2Manage Strategy

In the lower-end discrete assembly-to-order (ATO) manufacturing realm, Made2Manage has found a market with good opportunities, and it has developed most of the part-and-parcels it needs to defend its turf. Thus, while the competition cannot be discounted for Made2Manage's revenue slump, the customers' no decision' stance still seems to be the vendor's biggest adversary. Its primary competition still comes from North American Tier 2/Tier 3 vendors focused on small-to-medium enterprises (SMEs), all of which Made2Manage can in effect compete against, given its target market focus and/or sole Microsoft technology deployment.

From its early days in 1986, the company has put all of its efforts solely into serving discrete manufacturing SMEs in need of enterprise application solutions that are intuitive and, consequently, easy to use and implement. End users of smaller enterprises have indeed long been impressed with the product's intuitive user interface (UI) with Windows metaphor, which provided ease of system navigation (the "Navigator" feature) and of information retrieval (the "Locator" feature), and with underlying workflow & messaging system capabilities (the "Notifier" feature).

However, during last few years, Made2Manage has further evolved from a vendor of traditional MRP/ERP software to a provider of one-stop-shop' enterprise business applications. The company has, gradually, mostly by developing internally, and partly through acquisitions or partnerships, garnered a line of integrated collaborative e-business, customer relationship management (CRM), business intelligence (BI), and advanced planning and scheduling (APS) components within its core ERP solution.

In other words, the Made2Manage Enterprise Business System now offers a broadly integrated application solution for automating business processes from selling and product design, finance and human resources (HR), customer service and support, through scheduling and distribution, basically, it contains most of the functionality that any company would expect even from a top-tier enterprise applications provider alike. It includes traditional ERP capabilities (i.e., financials, distribution & logistics, procurement, production & shop-floor control, sales, estimating and quoting, quality management and customer service), along with extended enterprise applications such as supply chain management (SCM) (i.e., demand planning, APS and finite capacity scheduling), CRM, and BI. As mentioned earlier, Made2Manage recently added an enterprise portal and a new integration layer to its suite, utilizing XML (eXtensible Markup Language) web services based applications via M2M's VIP e-commerce portal running on the Microsoft.NET platform.

The last two years were particularly active for its product development department, since it released two new major product versions during 2001, with over 900 enhancements largely as a result of feedback from its user group, as well as a series of new extended-ERP products. 2002 has seen the release of M2M ERP 5.0 SQL, now with support for multi-site manufacturing (integrating production, finance, engineering, sales, HR and quality control measures across multiple operations) and some enhanced financial capabilities. Other key new features include progress billing for project-orientated industries and multi-dimensional inventory management (see Made2Manage Offers New Functionality And A VIP Treatment). 2001 product extensions would include M2M Synchronizer (that utilizes a combination of optimization and Theory of Constraints (TOC) scheduling module in alliance with ILOG); M2M BI in the form of Advanced Notifier; M2M CRM; HR/payroll; and Fixed Asset Register. As for the future, Made2Manage aspires to expand both geographically and functionally, albeit still while penetrating more its discrete manufacturing SME arena. The firm has aspirations to move more into multi-site, multi-language, multi-currency, multi-national manufacturers with its new functionality, but will not desert its heartland nor will it depart from its adherence to the Microsoft .NET strategy for its ongoing web-based developments. The above-mentioned partnership with Infoscan should further extend the M2M's opportunity beyond traditional manufacturing realm.

Incidentally, in addition to choosing the right focus and the appropriate accompanying functionality footprint, the company has concurrently been trailblazing the majority of its peers with regard to the technological aspect of its product. The object-oriented product architecture has been devised entirely from scratch in-house within the Microsoft context. With the release of Made2Manage for Windows in late 1995, Made2Manage became an early adopter of Windows NT and was reportedly the first manufacturing software application to receive the "Designed for Windows 95" endorsement.

This is Part Two of a three-part note.

Part One discussed recent developments.

Part Three will cover Challenges and make User Recommendations.

Using Microsoft Technology

Today, Made2Manage uses Microsoft's technology virtually for all aspects of its product development, and its strategic relationship with Microsoft has proven to be of the utmost importance given its market segment's infatuation with the technology, whose performance, reliability and scalability has long been significantly improving. By leveraging the capabilities of the Microsoft platform only, Made2Manage should be in a better position to be responsive to delivering new functional features that its customers may demand. In contrast, a smaller vendor that covers multiple platforms often spends more than a half of its R&D budget on porting issues; thus making a cross-platform solution the prerogative of only bigger vendors.

Given the vendor embraced Microsoft platforms (e.g., Visual FoxPro, SQL Server, VBA) long before the advent of the .NET framework because they were far more affordable than midrange or mainframe alternatives, adopting .NET would be the next logical move. The .NET strategy has been Microsoft's view of harnessing Internet based on XML, Simple Object Access Protocol (SOAP), and it is a view of the next-generation Internet computing environment as consisting of Web Services accessed by devices that interact with other services and content applications.

The integration between disparate components should be made possible through XML Web services, which are small, reusable applications written in XML, de facto a universal coding language used for data exchange. XML Web services should enable communication between dissimilar sources and foster common interfaces for client-to-client, client-to-server, server-to-server and service-to-service data exchange. Although counterpart competing Java 2 Enterprise Edition (J2EE) platform might offer the equivalent features and it might have the advantage of an early start (at least 2 years) and a cross-platform deployment that is attractive to larger enterprises, many small manufacturing systems vendors may see strategic advantages in harnessing .NET technology (see Liberty Alliance vs. WS-I; J2EE vs. .NET; Overwhelmed .YET?).

Recently released Visual Studio.NET (VS.NET) has virtually provided Microsoft with a tool to compete on an equal footing with the formidable J2EE community of developers and abiding vendors. For instance, by comparing Java Server Pages (JSPs) with Microsoft's equivalent, Active Server Pages (ASPs) tools, one could even notice .NET taking off feature wise. Both ASPs and JSPs provided component architectures for generating HTML Web pages dynamically, but the new version of ASP for the .NET platform, ASP.NET, reportedly adds the ability to separate Web page visual controls from the business logic used to generate it. Further, made2Manage cites .NET to be a more productive development environment that should reduce the amount of coding. For instance, when rendering a Web page, the XML document is automatically converted into an object with its own properties and methods, eliminating the need to write additional source code.

Still, because the .NET framework is fairly new, vendors are at varying stages of adding or migrating their functionality to the new technology. To that end, Made2Manage has so far finished migration of its above-mentioned hosted portal modules, such as M2M VIP, which enables customers to view information such as order status through a simple Web page. As for its business suite, .NET applications available already include Order Status, Order Entry, Invoice Status, Product Catalogue, Inventory Availability, Request for Quote, Quote Status and some other features for sales staff and distributors.

Therefore, Made2Manage belongs to a selected group of vendors that have delivered their products leveraging .NET and other Microsoft technologies much sooner than Microsoft Business Solutions (MBS) division, Epicor, Frontstep, Syspro, and Best Software being the other examples. Having been an early adopter of SOAP, Web Services, Microsoft BizTalk, Office XP Web Components, VS.NET, and the Mobile Internet Toolkit (MIT), the company was especially pleased and honored to share the stage with Microsoft's CEO Steve Ballmer in February in Chicago at the launch of Microsoft's VS.Net as one of several showcased applications that had made the move to .NET early.

Spearheading Wireless and Mobile Technology

Further, as the time might have also come for more widespread adoption of wireless and mobile technology on the shop floor, Made2Manage seems to be spearheading the trend. These offerings have not gained much momentum during their first push of a few years ago though, and they have so far been confined to ostentatious functions such as mobile travel arrangements and sales force automation (SFA). Steadily, however, wireless solutions that leverage PDAs have gained traction in areas such as field service, order placing, inventory checking, alerting, plant scheduling and plant maintenance, which have a natural need for mobility.

Concurrently, a number of things have additionally morphed in the past few years that may make the timing right for a practical wireless/mobile solution to make an impact on the shop floor/warehouses. There has been a convergence of technologies and advancements both in the software and the hardware that has provided a foundation to make these solutions viable. For example, a significant improvement has been accomplished to bring these applications down to a size that will fit onto a thin client like a PDA or tablet, without holding out on functionality. In its first attempt, the technology could not support the idea, except in a very basic fashion, which was of little use to the people on the shop floor. Of particular help were also the recent proliferation of small devices, and the fact that the price point has come down dramatically. Wireless access points can now be set up for less than $200, and the wireless devices themselves cost only several hundreds dollars each, with both prices expected to go even more down in the future.

This may mean that a clipboard carrying outdated information, and the practice of running back and forth from the production and warehouse areas to the office to get current manufacturing information, including job orders and inventory data, will now become a matter of an archaic past. M2M Mobile Manager indeed replaces the clipboard and post-it notes approach, but because it is a wireless read/write client to the live back-office system, the wealth of information such as shop-floor schedules, inventory levels, customer information, job, work center, part number, shipping info, and sales/quote orders info remain current (i.e., there is no need for PDA cradle synch-up). Filtering capabilities should allow for quicker location of critical-only data, within no more than 3-4 taps. The solution is also roles-based, with the initial available roles focusing on specific tasks in manufacturing, sales, purchasing, and shipping. Roles' range expansion is expected in the future, as the development of the mobile solution has been simplified by use of the Microsoft MIT tool with which, Made2Manage develops a M2M Mobile Manager role once, and the toolkit takes care of the technical intricacies of formatting that role for different PDA platforms, which should curb development.

Program Flexibility

More on the technology front, in addition to being entirely Microsoft-centric, the M2M software is available in a multiplicity of ways from traditional license purchase, to rental and leasing options, with both client/server and web-based delivery. The company's proactive grasp of the hosting/application service providers (ASP) opportunity is commendable, particularly in light of its peers' tardiness and/or non-compelling value proposition in that regard. While manufacturers usually prefer to keep their critical information in-house, many may still opt to use Made2Manage hosted applications for collaborative commerce with the best of both worlds' hybrid hosting principle, which is available through M2M VIP portal. With this solution, Made2Manage hosts the collaboration servers, but not the sensitive data, which is kept behind the customer's firewall via a little piece of software called a managed gateway'. This way, the vendor not only can host its own offerings, but it also hosts e-business applications such as web sites and e-mail and collaborative tools.

Possibly thought leading is the company's readiness to provide mid-sized discrete manufacturers with a number of portals that offer a broad range of collaborative, interactive and personalized applications including, vendor managed inventory (VMI), virtual design' - collaborative engineering design tools (e.g., AutoCAD and ProEngineer), on-line trading exchanges, with streamlined inter-business processes and workflow, and access to information resources via M2M VIP that offers trade partner-facing portal functions and thereby solidifies relationships with distributors, suppliers, employees, and customers (in other words, improves communications within the entire channel, both up- and downstream).

Made2Manage also offers a Web-based training and support program for its customers called M2M University. This subscription-based education program along with additional service and support functionality is available through a customer-facing portal called M2M Expert, giving users on-line access to a knowledge base of logged queries and faults and their solutions. Another example of Made2Manage's alertness in service and support cost reduction by harnessing the latest technology, like live Web-based training, to deliver inexpensive users' training. As a summary, by leveraging the above advanced technologies, the company has been agile enough to spar with a constantly morphing business environment, and to meet the latest customers expectations of 24/7/365 access availability to place and track orders, or to obtain any urgent system support.

Made2Manage has long offered pricing models on a value-based foundation, which should be amenable to its cost-conscious mid-market customers. While it still offers applications on a per-seat basis, many applications also are offered on a subscription basis that reduces the upfront cost and spreads the expense over the useful life of the application. Again, M2M VIP portal, as well as its educational services, are offered on a subscription basis. For example, a user company can have 5 people go through training, or have one person go through training 5 times, which should gives enterprise the flexibility it needs. Given that M2M VIP does not necessarily require the hardware, software, and maintenance investments that other solutions typically require, it may bode well for the new revenue stream despite the current difficult economic climate.

Also, the company has been savvy in developing an indirect channel to supplement its direct sales force and to address the low international presence and recognition. Customers and VARs should benefit from the recently instituted "Team One" reseller program because it allows both internal and external sales groups to share consulting services, education and product configuration/customization services. Almost all of its VARs are located in North America, where the vendor sells both directly and through VARs (with an equal revenue contribution), while in the new markets like the UK, sales are through sole VAR agreements.

SOURCE :http://www.technologyevaluation.com/research/articles/made2manage-affirms-its-technological-astuteness-part-2-strategy-16860/

EDI versus. XML--Working in Tandem Rather Than Competing?

2010-07-31T01:02:00.002-07:00

Since electronic data interchange (EDI ) has earned a reputation as a complex, rigid, and expensive means of business document and data exchange among trading partners, one would expect it to be relegated as a relic of a bygone era. In the computer business, where new technologies can come and go almost overnight, EDI should have long become an artifact, let alone a technology with a mid-life crisis considering a number of younger technologies, such as DOS or FORTRAN, have already succumbed to extinction.

EDI emerged in the 1960s when the railroad industry sought a way to speed up and automate business communications between remote computer systems and to eliminate the high cost of sending paper documents by snail mail. However, the concept did not fully take hold industry wide until the 1980s when standards were introduced to define data exchange and when it became apparent that business-to-business (B2B) computer-mediated communications would require all parties to adopt a common protocol for purchase orders, advance shipping notices (ASN), and other pertinent documents. As a result, several technical committees have developed protocols governing such exchanges, which channeled through value-added networks (VANs) carrying these exchanges became collectively known as EDI.

Transportation, finance, insurance, and other industries have heavily leveraged EDI and proprietary communications lines to conduct business. Also, major manufacturers, such as automotive original equipment manufacturers (OEMs) and consumer packaged goods (CPG) companies, have embraced EDI and mandated that their suppliers do the same. However, implementation of the technology has initially caused many a headache particularly in smaller companies.

EDI vs XML

Indeed, EDI has a reputation for being expensive to set up and run, given the companies had to deploy numerous VANs, which drove their suppliers' network costs up and forced suppliers to be proficient in various communications protocols. Aside from the upfront cost of the EDI infrastructure software, companies choosing to go with a provider of VAN EDI networks, face additional costs in maintenance and transaction processing fees alone. For the above reasons, one would expect companies to begin gravitating in droves toward extensible markup language (XML) and related web services for transaction communications.

Indeed, in theory, XML shows many advantages, since unlike EDI, it was specifically designed to use the Internet as the data transfer mechanism. Also, while organizations in an EDI network have to set up direct point-to-point connections between each participating system, XML's extensibility means that any number of participating companies, which have agreed on a data format for transactions, can supposedly freely exchange data electronically. In short, XML has initially not only promised to ease the technical pain of integrating the flow of data between systems, applications, and people, but also to reduce the cost of this process through faster transactions throughput, improved trading partners' data quality, elimination of manual processes and, other potential cost saving benefits.

Nevertheless, while at the surface there would be few economic or strategic reasons for organizations to persist with EDI, many seem reluctant to adopt the alternative at this stage. In fact, there has been almost negligible growth in the number of organizations replacing their EDI-based systems with XML. Furthermore, it seems that sales of EDI-based products and services are even growing, given some estimates that EDI transaction volumes increased almost 20 percent in 2003. To be fair, though coming from a miniscule install base, XML transactions volume almost doubled during the same period and it still constitutes a single digit percentage of overall B2B transaction flows.

The natural question is how come EDI has sustained its popularity and what factors are inhibiting the take-up of XML in earnest. Well, it appears that there is no immediate incentive for enterprises to move away from EDI. The key reason for this is that the number of organizations using XML has not yet reached the "critical mass" of at least double digits percentage of overall B2B data flow, while the estimated number of large and mid-sized organizations using EDI is estimated between 250,000 and 350,000 worldwide. For the time being, the wealth of businesses that have invested significant resources in EDI still use the technology for B2B communications, and many see EDI as the best choice for secure, reliable transactions, given it is a mature, standardized, and trusted medium. Namely, the leading EDI standards, such as the X12 and EDIFACT, continue to meet the ever-evolving needs of more than a dozen industries, as opposed to the ongoing evolution of a myriad of industry-specific extensions (dialects) that are added to the base XML standard—many of which are non-interoperable and still a work in progress. It is thus a small wonder that XML adoption and perceived value is higher where there is a mature industry initiative and standard like RosettaNet, CIDX, UCCNet, AS2, and so on within respective hi-tech, chemical, and retail and consumer goods sectors.

Furthermore, traditional VAN companies have begun to do EDI business over the Internet and the big buying giants that have always used VANs, such as Target and Home Depot, are still very happy with the way that they do business, because it works for them. And as long as these big hubs demand their suppliers to do business with them via EDI, VAN providers are going to stay in business.

Only when a large number of an enterprise's supply chain partners start implementing XML will other trading partners start seriously considering XML as an alternative to EDI. Particularly in the ongoing sluggish economic climate, companies are typically looking to extract maximum value from their existing IT assets. As such, C-level executives are highly loath to write off significant investments in their EDI infrastructure, although some of these systems may date back as far as the 1980s. This is particularly true when many vendors have so far failed to make a compelling return on investment (ROI) case for a switch to XML, because nowadays XML capital and labor expenses are still higher than those of EDI since users need software (and accompanying skills) to do XML translation. Conversely, despite high initial set-up and value added service costs, EDI implementations can actually be cost-effective, while the advent of web-based EDI connectivity standards, software, and services has lowered the entry barriers for many companies that, initially, would not have considered it an option.

Namely, during the past few years, a number of EDI suppliers have breathed new life into this old workhorse technology by developing offerings that use the Internet as the communications medium, eliminating the need for multiple VANs and driving the per-transaction cost downward. In addition, vendors have developed hosting services that reduce or eliminate customers' need for in-house EDI resources, whereby, further, EDI complexities can be hidden behind a browser-based "thin" client interface, making EDI communications practical for many small companies that would not have considered its use before. As a result, although XML is more flexible and easier to use than EDI, EDI protocols will run for years among major manufacturers or retailers that have heavily invested in their use and have the clout to demand their trading partners use EDI as well. As a matter of fact, EDI, XML, and any other format are merely "semantics" and input streams for expressing data, and whether a transaction is transmitted in EDI format or XML is largely secondary to the fact that electronic document and data exchange is growing rapidly.

EDI, XML in Tandem

The positive news for end users is that EDI and XML might not present an either-or choice at all, but rather offers technologies in tandem, given that significant interoperability between EDI-based and XML-based systems is already taking place. The Internet Engineering Task Force (IETF), an industry standards organization, has for some time been working on proposals for standardizing a way to secure EDI transactions over the Internet. Despite this co-existence, in the long term it might make economical sense to switch to XML, since the plethora of market-driving vendors like Microsoft, Oracle or IBM that have been incorporating support for XML in their products as the enabler for web services (see Liberty Alliance vs. WS-I; J2EE vs. .NET; Overwhelmed .YET? ) means B2B trading environments will, ultimately, be dominated by XML. Furthermore, the price of many XML-based software products will eventually come down, which is unlikely to occur with EDI VANs, while the industry-specific standards will inevitably mature. Eventually, the XML traffic will exceed EDI X12 protocol traffic, but it will not necessarily be a replacement. X12 is still the dominant format for things like purchase orders and invoices, whereas, for newer things like collaborative forecasting, there are no widely used X12 documents so far and this might motivate users to exchange data in XML.

It is only logical that EDI VANs and other providers of integration as a service would seek to reinvigorate their business value proposition by adding applications to their "plumbing" portfolios to offer more of an application-like, vertical solutions-oriented approach to trading community integration requirements. As an example, vendors that have eyed delivering packaged data synchronization software and transaction delivery services would be e-commerce network services vendor Transora and product information management software maker Trigo Technologies. Both these companies recently announced plans to work together on a joint offering that combines their products.

However, contrary to the above competitors as well as to Inovis and Sterling Commerce, which partnered to fill in key functional gaps in product information management (PIM) and data synchronization areas, the direct acquisition of HAHT by Global eXchange Services (GXS) shows its commitment to the retail sector.

A company that is dependent on EDI for transaction routing should look hard at companies such as GXS as its pathway into the XML century. What is most important to them should be how smoothly the translation service can be implemented in terms of integration with their other systems. Therefore, size and technical strength are not as important as experience with the same systems users might have. But even if a company has the specific experience users need, it does not necessarily follow that they will benefit from it. Therefore, when negotiating terms potential users should make sure they have guaranteed access to the individuals who have worked on their kinds of systems. Given XML and EDI concurrent use for some time in the future, companies should think carefully about how to leverage the mix as to minimize the risk of duplicating efforts where both systems doing virtually the same work.

SOURCE :http://www.technologyevaluation.com/research/articles/edi-versus-xml-working-in-tandem-rather-than-competing-17203/

How Can Insurance Carriers Retain and Reward True Producers?

2010-07-31T01:02:00.001-07:00

Not long ago, we published an extensive report on Callidus Software (NASDAQ: CALD), a leading San Jose, California (US)-based provider of on-premise and on demand sales performance management (SPM) and enterprise incentive management (EIM) solutions for global companies across multiple industries (see Enterprise Incentive Management Leader Responds to Market Demands). The vendor's products allow large enterprises to strategically and holistically manage incentive-based compensation, establish sales quota targets, and align territories, which often result in improved sales and distribution performance (see Sizing the Enterprise Incentive Management OpportunityAnd the Challenges Ahead). Some of the vendor's high-profile customers or partners include 7-Eleven, Accenture, CUNA Mutual, Hewlett Packard (HP), IBM, Philips Medical Systems, Sun Microsystems, and Wachovia.

Since the time of our report, Callidus has been prospering, with continued growth and burgeoning customer wins (including several within the on demand space), a steadily improving profit and loss picture, and the forming of a strategic partnership with SAP. To this end, Callidus TrueComp and Callidus TrueInformation products have joined the privileged few on the list of "SAP-endorsed business solutions." Add to this good news the first Callidus-SAP win at Safety-Kleen; the largest Callidus user conference thus far (with about 500 attendees); an agreement with a provider of sales resource optimization software, the TerrAlign Group (www.terralign.com), to deliver the Callidus Territory Optimization solution; and finally, the launch of virtual training capabilities for Callidus users, the vendor has good reason to be upbeat.

TerrAlign developed the world's first desktop-based territory optimizer almost two decades ago for a leading pharmaceutical company, and is now the first and only software vendor to deliver a territory alignment and optimization solution on salesforce.com's Apex platform. TerrAlign also provides strategic services that include promotional response modeling, field force sizing, account profiling, call planning, territory optimization, and territory realignments.

This alliance and the resulting Callidus Territory Optimization product have broadened Callidus's product offerings to address the critical elements of effective SPM: territory, quota, and compensation management, as well as modeling and analytics (such as major realignment simulations, ongoing territory maintenance, what-if modeling, opportunity leveling, etc.). Owing to its integration with the flagship Callidus TrueComp product, this new offering aims at maximizing sales performance by optimizing territories and account assignments, assigning the "right" quota, and providing comprehensive geographic sales insight. This territory coverage, which is more efficient, should benefit customers with increased sales revenues and market share, decreased travel costs, and reduced turnover.

However, the vendor is not resting on its laurels. Callidus has recently shown its intent to oblige its customers within certain industries that have specific requirements. Callidus now has nearly $80 million (USD) in revenues and about 120 global user corporations across multiple industries as clients. These industries include retail banking (22 percent of the install base); insurance (21 percent); manufacturing, high tech, and life sciences (23 percent); retail and distribution (12 percent); and telecommunications (the remaining 22 percent of customers). Although Callidus's products can serve the pay-for-performance program needs of virtually all companies, the vendor has focused principally on the above six key market segments.

Covering All Horizontal SPM Functional Bases

Across any industry, the scope of SPM and EIM covers the planning phase. During this phase, sales and channel managers should be enabled to model and allocate quota and territory targets, with sales and finance managerial teams implementing and executing the sales plans, while sales representatives have to understand the plan. In short, the idea of this phase is to align incentives more closely to the direct sales force and channel objectives, ultimately contributing to the company's goals of profitability and increased revenues.

Then comes the execution phase. Sales and channel managers have to now gain the insight and understanding of the actual sales performance. With the sales force monitoring its own performance (and conducting its own calculations), the sales and finance teams have to resolve any issues that occur (often discrepancies between these teams' versions of the truth). This phase is where the "rubber meets the road," and the idea is to quickly and successfully launch new products into the market and to motivate the sales force to sell both the new and the existing (often cash cow), mature products. The goal, again, is to increase revenues, eliminate overpayments to the sales force and channel, and minimize (if not eliminate) disputes within the channel.

Last but not least is the visibility phase. Sales and finance teams must analyze the incentives' performance and understand the revenue performance and quota opportunities. For instance, if sales are lagging mid-quarter, the managers can simulate how to drive sales and change the incentives, and thus make strategic decisions that are more sound so that they are able to identify what factors effectively motivate the sales team. The idea is to also eliminate the so-called phenomenon of "shadow accounting" that results from a lack of visibility and the consequent mistrust between the sales representatives and payroll staffers (see Are Sales Incentives Even in Tune with the Corporate Strategy?).

To meet the (often conflicting) needs of sales management, financial managers, and sales forces, Callidus offers a number of modules within its broad SPM product suite. For instance, on the planning side are self-explanatory products like Callidus Quota Management, Callidus Territory Management, and Callidus TrueComp Modeling (for forecasting purposes). By embedding Hyperion performance management software, Callidus Quota Management aims at making quota creation and management easier by enabling sales and finance executives to identify and assign fact-based quota targets based on a multidimensional analysis of past sales, territory potential, growth, and quota performance data from the Callidus TrueComp Datamart. An accurate quota target can be created for a suitable sales executive in the appropriate territory at the right time by building multiple top-down and bottom-up quota allocations and roll-up what-if scenarios, and then by comparing them via side-by-side views and variance analysis.

The visibility phase is covered by Callidus TrueInformation (for sales transparency) and Callidus TrueAnalytics (for sales incentive insights). TrueInformation is the reporting component of the overall Callidus TrueComp Enterprise solution, and serves to distribute goal and achievement information to the extended enterprise by being a self-service, scalable, Web-based production reporting application for incentive compensation systems throughout an organization. The Callidus TrueAnalytics suite offers sales, marketing, and finance executives and analysts the strategic insight and ad hoc analysis capabilities they need to drive sales performance. The solution consists of graphical dashboards that can be configured to enable sales, marketing, and compensation professionals to monitor, analyze, and explore multidimensional elements. Such elements include sales performance by region, team, product, or channel; customer growth; and sales incentive costs.

The remaining execution phase falls to Callidus TrueComp Manager (for incentive plan agility in terms of quick and easy re-creation of compensation plans) and Callidus TrueResolution (an efficient workflow management solution). For example, Callidus TrueResolution is a rule-based application that aims at streamlining and automating the resolution of incentive compensation disputes. This reduces the associated cost and diversion of management and sales resources. The software automates functions such as changes, transfers, and splits to territory assignments; quota adjustments; organizational changes; and payee information updates. The application also allows sales professionals and business partners to submit and track their claims through a Web-based, self-service workflow process. It enables sales professionals to request updates to compensation data such as sales credit, compensation, quota, and organizational changes, and compensation issues can be resolved quickly compared to doing so using manual-, e-mail-, and telephone-based systems.

The huge volume of sales and incentive data and transactions must be integrated bidirectionally with such systems as sales order management, human resources (HR) and payroll, general ledger (G/L), accounts payable (A/P), sales force automation (SFA), and so on. In industries that rely heavily on indirect channels with a vast number of distributors, resellers, brokers, dealers, agents, etc., the situation is much more complicated. The issue of mistrust and claims of underpayment (or overpayment) are only compounded in a value chain of independently run entities, especially when there is a lack of visibility. Possibly the best example is the highly regulated insurance space (especially life insurance), whereby insurance carriers have to closely track the credentials (licenses, accreditations, appointments, etc.) of distributors, brokers, or dealers (all commonly referred to as producers), and provide integration to agency management systems.

Solving Insurance Incentives' Pain Points

Delving deeper into the requirements of some of its target industries, in mid-2007, Callidus unveiled Callidus TrueProducer, the first producer and distribution management software solution specifically designed for the insurance industry's unique product, regulatory, and organizational issues. TrueProducer is engineered for large and midsize insurance carriers that have extensive independent distribution channels or numerous captive (exclusive) or non-captive agents. Informally referred to as a channel manager solution (and in tune with partner relationship management [PRM] conceptssee What Does the Future Hold for PRM?), TrueProducer is Callidus's first industry-specific application. The insurance industry is the vendor's single most important sector; Callidus has more marquee insurance customers than anyone else in the market. While the product is useful in most sectors of insurance (property and casualty, for example), it is most needed in the life insurance area.

It might be useful at this point to analyze typical producer administration business processes throughout the three major SPM phases mentioned previously. Namely, during the planning phase, life insurance carriers have to sign up, or "on-board," a producer to sell their products, and design multiple and interlocking contract payment hierarchies and schedules (which are subject to the ever changing roles of producers and carrier product bundles).

Traditionally, on-boarding a new producer entails a number of time-consuming manual tasks. It starts with a producer filling out a carrier request form and signing a contract. After the producer is able to provide valid license information and other necessary credentials (such as appointments, education level, etc.), the carrier can then request an appointment for a new producer at a regulatory state institution or agency, and add that producer to its policy administration system. Most of the information needed is the producer's demographics data (that is, the producer's name, ID number, date of hire, address, e-mail address, etc.), the contract information data (relationship and payment schedule), and license and appointment data, which can be captured manually or, ideally, automatically.

During the execution phase, carriers must track producers' demographics as well as manage their licenses and appointments (that is, any outstanding or impending renewal requirements), producer debts (such as tax liens and garnishes, company reimbursements, etc.), contract hierarchies, and payment and rate schedules. Finally, the overarching visibility process must address the viewing of all pertinent producer data, contracts, and credentials, and the constant analysis of producer performance. Lately, profitability concerns, the US Sarbanes-Oxley Act (SOX), and other regulatory requirements (see Thou Shalt Comply (and More), or Else: Looking at Sarbanes-Oxley) have been compelling life insurance carriers to manage producer compensation more actively as a risk management move, because this is their largest controllable expense.

Taking care of producers is critical for any carrier in order to remain competitive in today's insurance marketplace. This is especially true for independent non-captive agents, who make conscious decisions every day as to which product to sell to their customers. On the other hand, producers are competing more and more for mindshare in today's environment, and to grow their mindshare, they must provide the best service available to both the end customers and the carriers.

Within all the phases discussed above, insurance carriers face many barriers to providing the best service to their producers. Common challenges during the planning phase start with long on-boarding times. Historically, producer on-boarding has been handled with manual and disparate, homegrown systems that were typically inefficient, inaccurate, and repetitive, and that would often result in less than positive interactions with insurers. Then, lengthy contract maintenance (where it is difficult to make even simple changes) and the lack of carriers' insight into producers' productivity meant that the best producers may not have been getting paid on schedule, which does nothing to increase their motivation, satisfaction, or loyalty.

As for the execution phase, updating multiple, disparate legacy systems (based on hard-coded compensation rules) with each new contract and producer is difficult at best and requires extensive support from the information technology (IT) department. In spite of a hefty IT administration, there is a constant danger of data inaccuracies, wasted resources, and slower responses. Furthermore, duplication of data and effort inevitably leads to negative multiple versions of the truth. In many cases, producers have no reliable self-service capabilities or Web-based portals to access and ensurein a simple and timely mannerthat their demographic information is current. On the carrier's side, producer administrators have no way to trace or to reliably check producers' credentials in order to conform to industry regulations.

The issue of visibility has traditionally been plagued by the need for multiple legacy systems for reporting, where integration with other systems is difficult, and there is no easy way to analyze producer performance. Overall, legacy systems that are difficult to update reduce business agility. These systems impact a business with their reduced ability to grow product and mindshare, and by adding unnecessary costs. What's more, multiple systems increase the risk of noncompliance because of their inherent multiple versions of the truth. A common occurrence in the insurance industry is duplication of data or effort, which leads to inconsistencies, difficulties in updating information, and a reduction in business agility. In addition, the inability to track submissions to government agencies often puts companies at risk of noncompliance.

SOURCE :http://www.technologyevaluation.com/research/articles/how-can-insurance-carriers-retain-and-reward-true-producers-19050/