Cloud ERP Buyer s Guide

            Cloud ERP Buyer’s Guide Executive  Summary     Emergence of Cloud ERP Suites         Copyright 2015 – TechVentive, Inc. Unauthorized...
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Cloud ERP Buyer’s Guide Executive  Summary  

 

Emergence of Cloud ERP Suites        

Copyright 2015 – TechVentive, Inc. Unauthorized reproduction, transmission or storage expressly prohibited

EMERGENCE OF CLOUD ERP SUITES

   

Executive Summary With every major shift in application software technology, vendors create new applications. These new applications are frequently joined, one-to-another, to other newly created applications from the same vendor. Before long, a ‘suite’ of applications has dawned. Cloud applications are the genesis of a new generation of application software. And, as before, new suites of cloud applications are appearing, too. But the new cloud suites are different. They are: -­‐ Built off of new platforms that introduce new platform ecosystem dynamics into the picture. -­‐ Being built quicker than ever. -­‐ Designed with a different integration philosophy. When new application suites emerge, the market leadership of the software world often changes. Today’s new, cloud-based application suites are already ushering into the market a host of new vendor names like Rootstock, Kenandy and FinancialForce.com (to name but a few). But which of these vendors will have a lasting market impact? What should smart buyers do to pick a current and future winner?

The Old World/Wisdom of Application Software Suites For decades, software buyers have preferred to buy suites of application software over numerous standalone best-of-breed applications. An older application suite often had many advantages such as the following: -­‐ All of the applications were built with the same development tools, programming language and system software tools. A customer’s IT (Information Technology) personnel would only need to know and learn one technology stack to support these applications. -­‐ The applications would often share a common set of user tools. Users could learn to use one report writer, for example, and apply this knowledge across multiple applications. -­‐ Much of the module-to-module integration would be provided and supported by the software vendor and not the customer. -­‐ Software vendors often provided significant price discounts when customers negotiated to buy a large number of applications at once. What emerged was a software world where buyers migrated to the vendors that had the larger suites. In fact, customers often put the breadth of the suite ahead of specific functions when choosing between two vendors.

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EMERGENCE OF CLOUD ERP SUITES

Older generation application suites weren’t all perfect, though. Each vendor had its own unique technology stack and data model. Each suite had its own dependencies on specific on-premises hardware, file or database management systems, operating systems, etc. These suites had unique technologies that made it easy for one application to work with another but only as long as the applications all came from the same vendor. Integrating applications from two or more vendors was seldom an easy task. The cloud changed all that.

A New Age – A New View of Application Suites There are two kinds of cloud application software vendors: -­‐ Those that chose not to take full advantage of the new technology. These vendors basically mimicked the practices and standards of prior software generations. These solutions are less innovative and more derivative in nature. -­‐ Those that re-invented application software to take full advantage of the cloud opportunity. These vendors are the imaginative, long-term winners. When it comes to integration alone, the differences between these two vendor types is significant. In the cloud world, there are a number of new cloud integration technologies. These integration tools (e.g., Dell/Boomi, IBM/CastIron and Azuqua) permit very fast and straightforward application integration. This integration can be cloud-to-cloud, cloud-to-onpremises and on-premises-to-on-premises. When integration is re-thought, all kinds of new opportunities become available to software buyers. In the cloud, integration is quite different. Data is usually shared from one cloud service to another. If the applications that are sharing data are multi-tenant applications, then the integration ‘glue’ only needs to connect the latest version of the two applications. Instead of the myriad of technical combinations that might be supported in an on-premises or singletenant cloud world, fewer environments need to be supported in the cloud. Business and consumer cloud applications can be easily joined today. Businesses don’t need legions of IT professionals to initially integrate and perpetually support these integrations. Integration has changed from being an expensive chore to a value-added (cloud brokerage) service. This change in integration technology has had a liberating, democratizing effect on cloud application software. One of the greatest effects may be that software buyers no longer need to acquire as many products as possible from a single vendor, especially since some of those applications may possess less than optimal functionality. Instead, with easier integration buyers can now acquire several focused but smaller suites that deliver a superior functional solution. Where can software buyers find several robust cloud suites today? In open, cloud platform ecosystems. COPYRIGHT 2015 © TECHVENTIVE, INC. 3 UNAUTHORIZED REPRODUCTION, TRANSMISSION, STORAGE OR DISTRIBUTION PROHIBITED

EMERGENCE OF CLOUD ERP SUITES

Platforms – A Major Suite Influence The cloud era heralded the introduction of the platform or Platform-as-a-Service (PaaS). Platforms provide a standard cloud computing environment coupled with an easy-to-use set of software development tools. Programmers can build applications quickly and cheaply all while sharing a common data model and toolset. Integration is essentially automatic. Platforms that are open also have vibrant ecosystems of software developers, software firms and others that can create additional applications. Developers, for example, can create any or all of the following: -­‐ Product extensions to a vendor’s application. -­‐ All-new applications. -­‐ An entire suite of applications.

The Power of Salesforce1.com Platform on ERP Suites Salesforce1 created a cloud-based development environment called the Salesforce1 Platform (more recently known as Force.com.) This PaaS has continued to grow in power, toolsets and reach. Today, Salesforce1 Platform developers can quickly: -­‐ -­‐

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Create mobile and desktop applications. Immediately integrate these apps to products like Salesforce’s own CRM solutions. Monetize their developments via the Salesforce AppExchange.

One of the biggest, yet little publicized, stories in ERP suites has to be what’s happening in Salesforce’s PaaS. Five ERP solutions are now present within the Salesforce1 Platform ecosystem along with approximately 60 additional applications. In no prior generation of application software have buyers found so much choice in ERP solutions in a single technical environment.

What does this mean for software buyers? They can: -­‐ Access a wealth of current and potential applications to complement the solutions they are initially interested in acquiring. (Huge Selection) -­‐ Acquire even more applications with a single, common toolset/architecture than they Beyond the core applications (i.e., Accounting, HR, probably ever could have before. (Built-in and Supply Chain modules), third-party vendors Integration) have built additional products for barcode, scanner, -­‐ Take advantage of rapid product developments import/export, inspection, manufacturing and other functionality. All of these products are available from and new product introductions. (Speedy the Salesforce AppExchange and all plug and play Innovation) together. Like personal apps on smartphones, ERP -­‐ Acquire applications that look, feel and operate buyers can now tap into solutions from more than just one vendor. This isn’t just a convenience - it like they were all built by the same developers represents an ability to protect one’s investment in using the same development tools. (Common an ERP solution. The initial investment with one User Interface/Experience) vendor can be quickly enhanced with add-ons from -­‐ Build additional applications for their firm using another. the same development platform as the suite provider. Users won’t know which apps were internally created versus those that were externally sourced. Having common user interfaces for all custom and purchased applications lowers training costs and makes solution adoption easier. (New Application Development) A platform ecosystem may have thousands more developers than the largest old-school vendor would ever possess internally. COPYRIGHT 2015 © TECHVENTIVE, INC. 4 UNAUTHORIZED REPRODUCTION, TRANSMISSION, STORAGE OR DISTRIBUTION PROHIBITED

EMERGENCE OF CLOUD ERP SUITES

Software buyers should note that: -­‐ Not all cloud software solutions have a platform. Without a platform, there will likely be fewer compatible solutions available to a software buyer. Furthermore, the time required for a single vendor to develop new applications make take much longer than platform-based solutions. -­‐ Not all cloud solutions with a platform make their platform accessible to third parties. A closed platform environment can dramatically limit the availability of compatible solutions to software buyers. -­‐ Vibrant platform ecosystems bring the widest choice of pre-integrated solutions. If speed, innovation and choice are key buyer values, a robust PaaS ecosystem should be a key selection criterion.

The Speed of Cloud Suite Evolution It often took an on-premises software vendor 20 or more years to create a large suite of applications. These suites usually possessed The Power of the Salesforce Ecosystem accounting, human resources, supply chain and manufacturing applications, to name a few. It took a The Salesforce ecosystem contains: -­‐ 1,800,000 developers long time to build these large suites as the amount of -­‐ 4+ million applications software code that had to be written was massive. -­‐ 2,500 AppExchange applications Vendors also spent a lot of time regression testing -­‐ 300+ Salesforce1 AppExchange these modules on a variety of hardware and systems applications software combinations all while continuing to support current and prior versions of their products. Suites The applications that extend Salesforce and those built via the Salesforce1 Platform are tested to took time to develop, and each new module added ensure that they work with all Salesforce solutions significantly to the maintenance and support cost and correctly utilize its data dictionary. Applications structure of the vendor. can be built by non-programmers using special point-and-click tools. More sophisticated applications can be created by programmers using more technical tools.

Today, entire suites of cloud applications are being built faster than ever. There are several reasons for this; Applications are built using a mobile-first toolset. -­‐ Many of the new applications are The Saleforce1 platform contains an integration tool being built by the founders/team (Lightning Connect) to quickly connect new applications with complex back-office systems. members of other software firms. For example, CODA (and its parent, Other capabilities within the platform include common reporting tools, dashboard development Unit4/Agresso) led the initial development tools, collaboration technology, single log-in of the FinancialForce.com cloud application capability, security and more. suite. Numerous ex-PeopleSoft leaders went Research firm Forrester estimates that “as many as on to create Workday’s cloud Financial & HR 25,000 organizations” may be using the Saleforce1 solutions. While technically new, these Platform to build apps. Source: http://www.informationage.com/industry/software/1633348/putting-faith-in-forcecom applications, are full of familiar functionality and processes that its creators know quite well. COPYRIGHT 2015 © TECHVENTIVE, INC. 5 UNAUTHORIZED REPRODUCTION, TRANSMISSION, STORAGE OR DISTRIBUTION PROHIBITED

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Cloud multi-tenancy means that vendors need only support one version of the cloud suite and only one technology stack. This technical simplicity allows cloud vendors to be focused and fast as they only need to support one version of the software and one set of technologies. Simplicity is a good thing. Vendors in vibrant ecosystems can connect partner-built applications to their own applications quickly. This allows the creation of fast, effective, de facto suites because these applications are already integrated, have a common user interface and share a common data model. Newer cloud applications are built with powerful programming languages. As such, new applications often run on all types of desktop and mobile technologies. The speed with which these applications get built is sometimes dazzling but the speed with which vendors can create and support multiple (and ever-changing) mobile versions of these applications is even more impressive.

Graphic  courtesy  of  Salesforce  and  used  with  their  permission

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EMERGENCE OF CLOUD ERP SUITES

Case Study: The FinancialForce.com Suite FinancialForce.com, an ERP vendor on the PaaS from saleforce.com typifies many of the ERP suite changes the market is experiencing. The FinancialForce ERP suite includes applications for financial accounting, professional services automation, supply chain management and human resources management. There are also specific applications to accommodate revenue recognition, orders/billing, time/expense reporting and media billing. The latter shows how well developers can take data from FinancialForce applications and non-FinancialForce systems (e.g., Salesforce) to create a high-value application. Users of FinancialForce.com, Salesforce and other Salesforce1 Platform applications use common user interfaces, single login features and other tools common to old and new suites. As a result, these applications share a common data dictionary, reporting tools, user interfaces and more. Manufacturing applications from Rootstock, for instance, can provide production cost data to FinancialForce Accounting reports. Marketing campaign statistics data from Salesforce’s CRM system could be used as a basis for estimating budgets in the FinancialForce.com Accounting system. This common infrastructure and data model makes two-way sharing of information possible between FinancialForce.com applications and others on this same environment. Other Salesforce technologies are integrated within the FinancialForce ERP suite. Chatter, a group collaboration tool from Salesforce, is fully embedded within the FinancialForce.com product line. This capability facilitates rapid sharing of financial information, approvals, best practices and more.

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EMERGENCE OF CLOUD ERP SUITES

Guidance for Application Software Buyers Not all application suites are the same, especially in ERP software. Some ‘suites’ are limited to a single process/functional area (e.g., “human resources suite”). Some suites work best for companies in specific verticals. Some suites look functionally complete yet their underlying technology may be quite out of date. Today’s software buyers should consider a number of factors when deciding which suite is right for their firm. The graphic below summarizes five major areas of concern.

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EMERGENCE OF CLOUD ERP SUITES

About Vital Analysis

Vital Analysis is a very different kind of technology research organization. We are the intersection set where exceptional technology market knowledge meets the executive suite. Where other ‘analysts’ replay vendor press releases, we give you the: • Impact new technologies will have on your business. • Reasons why you should care about specific emerging solutions. • Business justifications why you may want specific solutions. Vital Analysis was carved out of TechVentive, Inc. in 2007 as a new, but related, business. As designed, Vital Analysis is the publishing, research and analytical arm of that company. Our reach, like our blog readership, is truly global. We’ve consulted with top technology executives across the globe and have been briefed by technology providers from virtually every corner of the planet. About the Author Brian Sommer is the CEO of TechVentive, Inc. - a market-strategy and content firm. Brian closely follows what C-level executives think, feel and need. Brian also publishes a blog on the intersection of application software and professional services (http://blogs.zdnet.com/sommer/). He welcomes your thoughts and invites you to contact him at [email protected] . Reproduction of this publication in any form without prior written approval is forbidden. The information in this report has been obtained from sources believed to be reliable. TechVentive, Inc. disclaims all warranties as to the accuracy, completeness, or adequacy of such information and shall have no liability for errors, omissions, or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended result. The opinions expressed herein are subject to change without notice. To purchase reprints of this document or to quote passages within, please email: [email protected]

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