Partnerships in the ERP/SaaS World

January 29, 2009 at 6:56 am · Filed under ERP, ERP Channel, ERP Resellers, SaaS, Software Resale ·Tagged , , , , ,

Channel conflict, changing terms, lack of support. These are all things that you will hear and read about in the world of partnerships and when considering the advantages/disadvantages of becoming a VAR for any type of vendor. In the shifting world of ERP/SaaS, you’ll probably be hearing about them more and more.

 

Changing Face of ERP

 

ERP systems have traditionally been sold as in-house solutions, where the VAR is often not only the sales conduit, but the implementation and service provider as well. Different vendors have historically implemented different terms and conditions for the opportunity to participate in their partner programs. Some require substantial payments for the privilege of becoming a partner, some don’t; some provide sales commission or leads but no commission, some don’t; some expect their partners to make money only on implementation and service, and many employ a combination of any or all of the above and more. With the new opportunities of SaaS, where an ERP system can be hosted and many of the implementation and service issues are necessarily falling back to the vendor, things have gotten complicated, and in some cases with big name vendors, even nasty.

 

While there is inherent logic in the decisions many VARs are making, to stick with the partnerships they have been nurturing for years, others are realizing that it may be time to broaden their horizons and try to make the most of the new offers that are now available. While there is a need to focus on a particular specialty or area of the market, both you and your market may benefit from more of a choice of offerings. A look at our previous post ERP Fees & Installation Alternatives will outline some of the different options now available, while we continue to focus here on how these changes effect the partner relationship.

 

Partnerships with Vendors

 

Trust. Beyond the terms of partnership, possible channel conflicts and the way they are addressed, and initial and continuing support, the bottom line when choosing a vendor is trust. Can a vendor be trusted to be fair and to treat their partners decently? Complaints will always be made about varying terms of the partner relationship and fluctuating commission fees, but in the long run, does the vendor treat their partners as true partners, or a necessary evil of doing business in today’s environment?

 

Fairness. Changing realities, new technologies and options in the market will ultimately result in vendors’ need to restructure their price lists or partner terms. This is fair. But do vendors give enough advance warning to their partners? Are they willing to discuss the issues and explain the points and rational behind the changes? Are they flexible with outstanding quotes to end customers, so that no face is lost in attempts to close the deal? All these are key questions to ask potential vendors and will help you determine whether they are fair in dealing with partners.

 

Business Ethics. Channel conflict, where partners have to compete against one another or the vendor’s own sales teams, is another touchy issue between partners and vendors. In addition, poaching customers is not an unheard of phenomenon among partners. While this may have more of a financial impact on partners in on-premise installations with one-time and annual use payments, it remains an issue in the SaaS arena. Different options have been employed by vendors to address this, including deal/lead registration and providing direct support, but the jury is still out as to the effectiveness of these options. Lead registration has been touted as a protection device to ensure that a partner does not undercut the partner who initiated the deal, but has also been thrashed as helping some vendors sweep up the deals themselves. A vendor that is truly interested in promoting the success of their partners will ensure that lead registration is respected and maintained. And that if at a later stage, for whatever reason, a customer decides to switch service providers, the partner who originally made the sale continues to receive some revenue, even if they are no longer providing support.

 

Cooperation. Some believe that if you have a captive market, then the partner working that market is at an advantage. We’ve actually found the opposite to be true. Healthy competition is not necessarily a bad thing. Also, when prospective customers see that there are more and more vendors of a particular solution, they are less insecure about investing in the said solution. As long as the vendor is looking out for everyone’s best interest, cooperation across geographic or even technical expertise lines can be bridged, making cooperation mutually beneficial for all concerned: customer-partner-partner-vendor, a win-win-win-win scenario.

 

Support. In terms of product support, one of the key indicators of a vendor’s willingness to work hand-and-hand with partners is the level of support provided. Often vendors require partners to take expensive training courses as well as pay for on-going support. While this does seem to be fair, it should not be abused by the vendor, and as much material as possible should be provided to enable the partners to help themselves. Again, this fosters the growth of a foundation of strong partners that can be self-reliant and independent, allowing the vendor to concentrate on their own priorities.

 

Ideally, vendors should be focused on getting the best product out to market and providing the support and infrastructure necessary to allow their partners and VARs to flourish. By significantly expanding and maintaining a growing footprint in their market, sales will benefit both the partners and the resellers. Look for win-win scenarios when reviewing terms and contracts, not only from the partner-vendor point of view, but from the partner-partner-vendor and customer side of things as well.

 

By Rebecca Haviv

 

 

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BI – Wave of the future in ERP?

December 11, 2008 at 8:58 am · Filed under BI Business Intelligence, ERP, Integrated BI ·Tagged , , , , , , , ,

 

  

Business intelligence. Now more than ever you need to have your finger on the pulse of your business – to ensure that all department heads know how their sectors are performing, are able to identify problems as they arise and are in a position to put corrective action into place quickly and efficient. Businesses just can’t afford to waste time and effort on getting data out of their systems and then figuring out what to do about it.

 

The ability to identify fluctuating business conditions in real time, as they are happening, and then react accordingly can significantly affect a company’s overall performance.  Business Intelligence needs to go beyond gathering of data. Corporations need to be able to set and monitor goals, build strategies and scenarios to address business needs as they arise, and turn these strategies into action items if necessary. They also need to gather data to assess the execution of plans on a financial and operational level.

 

 Dashboards1 

 

 

 

There are plenty of BI solutions that can plug into your data and churn out reports, or that you can integrate with your existing corporate system. But ideally, you want a software solution that can not only manage your business, but provide you with a bird’s eye view of the information you need to make critical business decisions. A system that can help you build the plans and strategies for dealing with your operation. A system within which you can set parameters, and then examine your data from multiple angles.

 

ERP systems, in helping you to run your business, must be able to address this need. They should not only provide you with real-time data that can tell, for example, what product or campaign is performing best, in what region and even what store, but help you analyze why something is not performing as expected. In drilling down to the details of orders and analyzing trends, you can determine that selling snow shovels in Florida isn’t the most effective approach, and re-organize to allocate that stock to Maine. Or if sales for one particular store or salesperson have been outpacing all others, you need to figure out why and see if the same strategies can be effectively employed elsewhere in the organization. In manufacturing, managing and monitoring production or scrap materials can have a significant impact, as can tracking the efficiency of vendors and quality of raw materials. All these are key factors that can substantially impact the bottom line of any business.

 

 

 

When evaluating products that are designed to help you make sense of your data, beyond the cost of the software itself and integration with your existing system (if required), look for the following:

 

Timely data: Running analysis on data that is a week old won’t be very effective. Conversely, systems that can only provide you with a snapshot of where your data is holding at any given moment are limited in scope and usefulness. Look for solutions that can provide you with real-time and historical data.

 

Ease of use and rapid implementation: If you can’t figure out how to get the information you need out of a system, the fanciest and most expensive tool in the world won’t be much use. Look for solutions that have pre-defined reports and even dashboards for certain targeted groups or areas of operation (executives, sales/marketing managers, CFOs, HR, Projects etc.), which can be customized for an individual’s particular requirements. This will not only make it easier for your team to access the data they need, but will ultimately save countless hours in putting the pieces together.

 

Analysis, or “slicing and dicing”: Look for systems that can filter and sort data to identify potential problems before they snowball into bigger issues. Analysis of dimensional data through intuitive query and online analytical processing (OLAP) tools should let your users “slice and dice” data and drill down to as many levels as there are parameters. So you can sort and analyze data by region, store and even sales rep. Or flip the data and look by item sold, then region. Different angles can reveal different trends, so make sure you can see as many as possible within the data.

Visualization: Try to find a solution that will help you understand key trends and patterns at a glance and display data in familiar forms, such as graphs and charts. Dashboards and key performance indicator (KPI) dials are particularly effective tools. The visualizations will enable users to track and monitor the metrics they are responsible for, compare actual performance to predefined targets and trigger alerts when performance strays too much from goals.

Access to data: Seeing data in real-time is crucial, but what if you want to analyze that data off-line as well? Make sure your data can be accessed when you are online and offline for maximum ROI.

 

As a rule, but especially now in this time of belt-tightening across the board, every company should be looking for ways to streamline operations and expenses. Make the most of the software you have and see what kind of BI information you can get out of it. Go one step further and ask your software representative or consultant what they can do to help you mine your business data and make sense of it. All too often, complicated BI tools make it too hard to find the data you are looking for, and too easy to get confused by what you find. Integration can be a problem with stand-alone BI systems. Try to look for software that can pull all your data together, help you

set up targets in the form of KPIs, set business rules for alerts when KPIs are missed or met, and of course display the information in a simple and intuitive interface.

 

 

By Rebecca Haviv

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ERP Fees & Installation Alternatives

October 26, 2008 at 7:53 am · Filed under ERP, ERP Installation, ERP TCO, SaaS ·Tagged , , , , ,

ERP vendors come in all shapes and sizes, offer varying levels of functionality as well as functional integration and offer different options for installation. On the face of it, there are three basic installation options, and each enterprise has to decide which the best fit is for their purposes: a traditional on-site one-time payment installation; an over the internet on-demand, software as a service (SaaS) model on a pay per-user/per-month basis; or an on-premise deployment, also on a pay per-user/per-month basis.

 

Traditional On-Premise Installation – One-time license payment

 

Although SaaS and hosted software are the buzzwords of the day, traditional on-site implementations provide some companies with the sense of security and ownership they require, with a one-time license fee instead of an ongoing monthly expense. There is often an additional yearly maintenance fee which must also be taken into consideration. While this model requires an investment in the purchasing and maintenance of hardware and infrastructure, it can sometimes be more cost effective in the long run then a per-user/per-month installation. Once you’ve paid the initial license cost, the service charges are usually fairly stable and hosting and other charges (including testing environments, which in on-premise installations can be a back-up or test server) shouldn’t surprisingly increase as time goes on.

 

To summarize some of the benefits of an on-premise installation:

 

  • Ownership vs. monthly fees: This might be most cost effective in the long run
  • Security: You control of the security of the environment including back-ups
  • Accessibility: Connectivity to the system is intrinsic, without the need for internet connections throughout the organization

 

Software as a Service (SaaS) – Hosted Option

 

The SaaS model provides an ERP option for companies who need the solutions provided in ERP software, without forcing them to make a capital investment in on-premise IT infrastructure: software, hardware and implementation.

 

The hosted option has a number of benefits over an on-premise installation:

                                                                                        

  • Fees: Ease of use, no costly set up fees, and no need to invest in IT infrastructure or personnel.
  • Automatic upgrade: Upgrades are handled automatically on the hosted platform so you are always using the latest version of the software.
  • Accessibility: Connectivity is available online, anytime, from any common web browser.
  • Low-risk: With no large up-front investment or long-term commitment, this model allows you to “try-before-you-buy,” as it were, though migration from an existing system does need to be considered.
  • Security: In general, data is protected by the platform security; systems and backups should be in place to ensure uninterrupted service.

 

When the SaaS model is offered a pay-as-you-go, per-user/per-month basis, with its own advantages:

 

  • Initial cost: No major initial outlay of capital
  • Stability: Your fees are ostensibly stable and on a regular basis with no surprises
  • Functional Scalability: Often, no additional fees required for most of the functionality (e.g. begin using ERP software for CRM and expand to Accounting, Inventory Control etc., at either scalable or no additional cost, depending on the package)

 

On-Premise Installation – Pay-As-You-Go

 

For companies that want to take advantage of the pay-as-you-go per-user/per-month basis model, while maintaining their ERP system in-house, many companies now offer the option to do so, though it’s a mixture of both benefits and disadvantages or each approach. The benefits are, as above for the SaaS option:

 

  • Initial cost: No major initial outlay of capital
  • Stability: Your fees are ostensibly stable and on a regular basis with no surprises
  • Functional Scalability: While often no additional fees are required for most of the functionality (e.g. begin using ERP software for CRM and expand to Accounting, Inventory Control etc., at either scalable or no additional cost, depending on the package) – there might be some configuration involved and updating which would be automatic in the regular SaaS solution

 

Mixed with advantages from the traditional on-premise installation:

 

  • Security: You control of the security of the environment including back-ups
  • Accessibility: Connectivity to the system is intrinsic, without the need for internet connections throughout the organization

 

The many flavors of ERP systems now give you the power of choice. So it’s important that you consider both the short and long term requirements of your organization. If you’re not sure, try to find a solution that offers as many variations as possible so that you can move from SaaS to on-premise if the need arises, without costly migration expenses and the headache of switching such a major part of your business operation.

By Rebecca Haviv

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How Real Is Your TCO?

October 16, 2008 at 8:48 am · Filed under ERP, ERP Implementation, ERP TCO ·Tagged , , , , , , , , , , , , ,

Addressing the issue of Total Cost of Ownership of an ERP project means spelling out some of the “hidden costs” that are sometimes overlooked or minimized when a vendor is trying to sell you their ERP or satellite software solution. Don’t be fooled. Those hidden costs can add up and need to be taken into consideration.

The leading expenditures on ERP projects are (listed in order of magnitude):

  • Internal resources
  • External (consulting) services
  • Software (licenses and maintenance)

Some of the factors that affect these expenses are the size of the company, number of ERP users, and the depth and breadth of functionality. The true total cost of the ERP system’s deployment, however, is usually unclear during the evaluation process, because these expenditures are not readily apparent until they come up over the lifecycle of the project. Some (but not all) of these “unexpected” or “hidden” costs can include:

  1. Data conversion and improvement (both from existing systems and ongoing)
  2. Add-ons (external components), private customizations, satellite utilities (web sites, BI, BPM, Document Management, mail, etc.), their interfaces to the main ERP application and their migration through ERP upgrades (service packs and advanced versions).
  3. Identity management and security enforcement

All of these hidden costs take close scrutiny and time to discover.

IT Related Expenses

One of the bigger hidden costs, or one not always adequately factored into the equation, is the expense item of IT (or the IT staff/internal resources).

Data collected for 2004-2007 on companies with 500-999 employees in the U.K by Kew Associates clearly shows that annual spending on IT staff is larger by a factor of 4 than any other IT expense item.

What are the IT people doing?

IT people make a host of applications tick, including the selected ERP system and all other applications. An ERP system that can incorporate as many applications as possible will minimize the costs involved in maintaining a large IT staff and the hours spent on dealing with multiple applications, not to mention the costs of the applications themselves.
 
To be sure, there are plenty of good-quality, low-priced, very specific software tools out there in the market. But when you combine the price of the software with the expense of their integration with an ERP application and the IT overhead required to support and maintain them all – the costs just keep adding up.

 

Installation
Installation of traditional ERP products can take months. There are a few products out there that can shorten that time frame substantially. Ask when vetting products, in order to get a clearer picture of what the cost and time frame for this will be.

Implementation & Adoption
A speedy implementation cycle lowers the TCO, but the truth is that there is no easy road for implementation. It doesn’t matter if your solution is SaaS, on-demand or on-premise since the time and cost of implementation depends on the depth and functionality of the chosen system, and the effectiveness of its adoption by the workforce.

Finding a solution that can either smooth the road to a successful implementation, or provide you with tools to do it yourself as much as possible, is the best solution. This can often also provide a hidden benefit, if you will, of giving end users a sense of “ownership” of their processes, which can smooth the path to adoption. Some things you can look for in a software package are:

  • User-level configuration utilities for data migration, eliminating the burden of writing customized conversion routines.
  • Training tools incorporated in the application, including ready made templates, and step-by-step interactive help files and/or wizards which will ultimately empower end users.
  • Good, easy-to-understand documentation and help tools.

Software Costs/Platform Options
Special pricing plans for various software solutions offer a wide array of convenient flexible options, from fully hosted SaaS ERP to per-user/per-month to flat fee on-site installation:

  1. Choosing the fully hosted on-demand/SaaS ERP plan not only sets a low-cost fee per user per month, but can help you save on the cost of servers, operating systems, middleware, databases and accompanying administration (maintenance and security). You can also “try before you buy,” and stop using it if the software does not match your requirements.
  2. With the “Per-User/Per-Month” on-site installation you can start out small, using a few of the modules, and expand to use additional modules as you need them. Let the use of the software grow with the features you gradually employ and the number of users within the organization that progressively move over to the new system.
  3. For companies that have existing infrastructure, or that need to keep the application “in-house”, on-site installation are often the only solution.

Private Customizations

Look for software that includes user-level design and configuration tools for as many aspects of the software as possible (which can also be limited if required), especially to control layout and reporting functionality (e.g. look for software that can help you build the reports you need). This will keep private customizations to a minimum.

 

These are some of the major factors that are part of the equation and affect the TCO of any ERP solution. The challenge is to choose an ERP solution that not only fits your business requirements, but can help you address and minimize even these “hidden costs.”

 

By Rebecca Haviv

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