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Looking Forward: Why Enterprise Software Is Changing

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It’s clear that 2011 was the year of the cloud, with many traditional enterprise vendors accepting that the cloud is something they can no longer denigrate or ignore. The ‘cloud’ buzzword has been (sometimes annoyingly) tossed around for upwards of two years, but last year is when it hit critical mass in terms of action, not just marketing and positioning.

Chris Kanaracus, writing for IDG News, highlights a few enterprise trends we’re seeing and hearing in everyday conversations. These give real heft to the notion that the cloud is something everyone should be thinking about and/or planning around. It might not be happening right now, and it might not be top priority for you, but ignore this medium- to long-term direction at your peril.

Here’s one that struck us:

SAP buys SuccessFactors, Oracle buys RightNow, both accept cloud reality

Collectively, SAP and Oracle spent nearly US$5 billion this year to acquire software vendors based in the cloud.

Each sought different types of technologies, with SAP’s purchase of SuccessFactors boosting its human-resources software offerings as well as general cloud know-how, and Oracle’s RightNow buy giving it an array of customer-support capabilities.

But the deals have a common thread, marking a sea change for the traditional on-premise software world, said analyst Ray Wang, CEO of Constellation Research. “[It] signals the realization that cloud deployment will be the predominant approach.”

We do a massive amount of Oracle work, and what we’re hearing from Oracle and our customers is very real and perfectly synchonized: the cloud is real, it’s mature, and it’s time to start figuring out how it can help enterprise IT. It’s not just for early adopters or skunkwork labs anymore.

Along similar lines, you can’t ignore perhaps the biggest story out of Oracle, one that’s sure to mold future IT decisions for a long, long time:

Oracle delivers Fusion Applications

It took a while, but Oracle finally managed to deliver the first wave of its next-generation Fusion Applications, and its launch strategy also showed how cloud computing has influenced the enterprise software market.

The company has taken pains to stress that Fusion Applications can be deployed in a highly modular fashion, with no need to remove existing systems, and at a time of customers’ choosing. Users will also be able to run the software both on-premises and in cloud form, although some of the details of the latter remain to be made public.

Oracle’s strategy is partly a nod to reality, since few customers will rush to rip and replace their core ERP (enterprise resource planning) systems with new software, and Oracle also wants to ensure early users are successful. But its message of easier, more flexible consumption for Fusion is straight from the cloud-vendor playbook.

Now more than ever we are being asked by our clients to come in and help them simply assess: put executive/organizational expectations on a piece of paper somewhere (harder than it sounds, trust us), inventory current systems and capabilities, and plan roadmaps. Such basic blocking and tackling, but given the churn and change in what ‘enterprise IT’ will mean in three years, so important. We offer clients two very powerful planning workshops: our BluePrint Project Services and PeopleSoft Architecture Assessment, both of which are popular. Lately, we’ve been doing a lot of our BluePrint workshops, largely because of the reasons discussed a few hundred words ago: things are changing, and smart planning has never been more important.

Questions? Don’t be afraid to drop us a line. Always happy to have conversations.

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More links:

MIPRO Consulting main website.

MIPRO on Twitter and Facebook.

About this blog.

The Cost of Custom Interfaces

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CFO/CIO alert!

Have you reviewed the cost of your custom interfaces lately, particularly those associated with your “third party” software systems? Best-of-breed app systems have been on the decline for years, as clients realize enormous savings in Total Cost of Ownership (TCO) by going to mature, integrated ERP software add-on modules, by such providers as Oracle, PeopleSoft, JD Edwards, and SAP. Many of the best-of-breed solution’s days in the sun are coming to an end, as modern ERP provides more recent product suite options – especially as their clients sunset their old best-of-breed systems.

Why is that? In a nutshell: seamless integration offering significant cost reduction in custom development and support, simplified data management, and enhanced performance, along with a broad range of delivered functionality.

So what is the real TCO of your third-party system maxtrix versus using integrated systems from your ERP provider?  Have you run the numbers?  The two primary considerations are:

  1. One technology support group, versus two. Consider training, space, and all associated costs, as well as 2X the staff costs.
  2. The additional costs to develop, maintain, and support interfaces though upgrades.

Many technologists consider the cost to develop a custom interface to be somewhere around $50,000 each, depending on complexity. In addition, the expected costs of annual support and maintenance over a 5+ year life cycle is likely between $15,000 and $30,000 per year, per interface, or a total of $125,000 to $200,000 each, again over a 5 year life cycle.

And that may be low.

A recent article in CIO magazine noted that “By adopting a service oriented architecture, Marriott lowered the cost of adding an interface from about $400,000 to $50,000.

Interfaces cost a lot of money, a good deal of which is apparent on the backside analysis.  Up front, it might not look so bad.  Five years down the road, and things look markedly uglier, especially if your interfaces have sprawled wider than you originally thought they would.

Whether your cost is $125,000 or $400,000 per interface or somewhere in between, zero is a lot better. Third-party systems may require between 10 and 60 custom interfaces to integrate back to an organization’s ERP system. It’s not hard to see we are talking real money if this is the true lay of the land. (Side note: Without full-on integrations, you also are not realizing the potential benefit across the enterprise.)

So, again, what are the real costs of your third-party interfaces?  The numbers may surprise you, and the gods live in the details.

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More links:

MIPRO Consulting main website.

MIPRO on Twitter and Facebook.

About this blog.

Léo Apotheker Named CEO and President of HP

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From HP’s official release:

The Board of Directors of HP today announced the election of Léo Apotheker as Chief Executive Officer and President. Apotheker, who previously served as CEO of SAP, will also join HP’s Board of Directors.

Lot’s of people saying “Who?!” over this.  (I’ll admit I’ve never heard of the guy.)  Here’s a great explanation (and defense) of the choice by The Economist.

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MIPRO Consulting is a nationally-recognized consulting firm specializing in PeopleSoft Enterprise (particularly Enterprise Asset Management), Workday and Business Intelligence. You’re reading MIPRO Unfiltered, its blog. If you’d like to contact MIPRO, email is a great place to start, or you can easily jump over to its main website. If you’d like to see what MIPRO offers via Twitter or Facebook, we’d love to have you.

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Enterprise IT: How Many Are Doing It Wrong

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Tim Bray on how so many are doing Enterprise IT wrong, most notably not learning anything from the dynamic language web culture and the small, light, simple, iterative mindset of modern web dev shops:

Here’s a thought experiment: Suppose you asked one of the blue-suit solution providers to quote you on building Ravelry or Twitter or Basecamp. What would the costs be like? And how much confidence would you have in a good result? Consider the same questions for a new mobile-network billing system.

The point is that that kind of thing simply cannot be built if you start with large formal specifications and fixed-price contracts and change-control procedures and so on. So if your enterprise wants the sort of outcomes we’re seeing on the Web (and a lot more should), you’re going to have to adopt some of the cultures and technologies that got them built.

It’s not going to be easy; Enterprise IT has spent decades growing a defensive culture based on the premise that you only get noticed when you screw up, so that must be avoided at all costs.

I’m not the only one thinking about how we can get Enterprise Systems unjammed and make them once again part of the solution, not part of the problem. It’s a good thing to be thinking about.

And Rafe over at RC3.org has an interesting ancillary:

The first question everyone should ask when thinking about building custom software is, does building this give me a tangible strategic advantage over the competition? Specifically, does it provide enough of an advantage to make up for the amount you’ll spend on initial development and on maintenance and improvements going forward. Account for the fact that packaged software will likely be improving over time as well, so your custom solution may be great today, but the feature set in the packaged solution may blow away what you have two years down the road.

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The Value of Integration for PeopleSoft Customers in Asset-Intensive Industries

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chain.jpg I know it’s a holiday week, but I’d like to take a little time to talk about PeopleSoft’s secret weapon when it comes to Enterprise Asset Management (EAM). That weapon? Integration.

Look at the past to predict the future.

When ERP systems first became available in the early 1990s, the functionality offered typically consisted of:

  • A Financial system (GL, AR, AP and Fixed Assets)
  • A Distribution/Order Management system (Sales Order Management, Inventory, Purchasing, Basic Warehouse Management)
  • A Manufacturing system (MRP, Capacity Requirements Planning, Work Orders)

This created a market opportunity for the Best of Breed vendors, and many of them flourished. Companies such as I2, Manugistics and Numetrix grew rapidly by exploiting functional gaps in the Supply Chain Planning capabilities offered by the ERP vendors.  Siebel, Vantive and many others did the same thing in the CRM market.

When it came to Asset Management, the ERP vendors provided only basic Fixed Asset capabilities and tended to view assets as something to simply be managed on a balance sheet.  Naturally, this created yet another opportunity for Best of Breed EAM and Maintenance Management vendors. Companies such Indus and MRO took advantage of this opening and offered compelling functionality to the PeopleSoft, Oracle and SAP customer bases.

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ANNOUNCEMENT: Two new whitepapers now available (PeopleSoft + Business Intelligence)

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These have been circulating on our Twitter feed, but for all of our new blog visitors (hi everyone!), I thought I’d post our recently-published whitepapers here.  They are:

PeopleSoft Maintenance Management: An Introduction and Overview of Benefits

An overview of PeopleSoft Maintenance Management and its superiority relative to point solutions. This paper discusses the MM/ALM-centric aspects of integration, business process optimization, reporting/analysis and implementation.

MiPro’s Business Intelligence Manifesto: Six Requirements for an Effective BI Deployment, by Larry Zagata

An examination of top requirements for executing a top-performing Business Intelligence (BI) system that can strategically guide a company’s decision-making. The fundamentals of this whitepaper can serve as checklist to help avoid pitfalls and drive a successful BI program. Major discussion themes are MiPro Consulting’s top suggestions for deploying effective BI along with real-world, front-line business examples to illustrate the value of adhering to these best practices. Authored by Larry Zagata, one of North America’s most recognized names in real-world BI consulting and delivery.

These are both behind landing pages, but we kept them short.  Seriously.

Enjoy, and of course, all feedback is welcome.  If you have thoughts, comments or questions, contact us directly or give us a shake on Twitter.

Related:

MIPRO bi (additional detail on MiPro’s Business Intelligence services)

PeopleSoft (additional detail on MiPro’s PeopleSoft Enterprise services)

Using Business Intelligence to Survive the Recession, Part II

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In my last post, we took a look at what BI is and isn’t and how it can really be used to make real-world business decisions.  I promised you an example to help illustrate my point, so here we go.

Let’s take a buyer of raw materials in a production facility.  If that buyer is asked what type of report they would find useful, the answer may be a report that shows all purchase orders that have not been fulfilled and delivered and are overdue by 10 days or more.  That could be a very useful report, right?

Problem is, the report itself does not answer a key business issue, but does provide insight into issues that require further analysis.  It’s a standalone datapoint.  Let’s assume that we now want to provide that same buyer a dashboard that answers a key business question and supports a positive financial influence on the organization.

When asked what we (MiPro) would do, it’s simple: we would execute a proper requirements-gathering effort based upon understanding an individual’s main work responsibilities.  Through this effort, we would come to better understand what information would provide value in a dashboard.  Asking that same buyer what they would do next with that information regarding 10 day overdue deliveries, the scenario may unfold such as this:

  1. The buyer takes every purchase order from the report and looks up (queries) what materials are on each purchase order (which would be another valuable report for that buyer).
  2. Then, based upon the materials that are on each purchase order, the buyer reviews the production schedule and determines if any production will be impacted (another valuable report).
  3. If a production line is negatively impacted, then the buyer works jointly with the production scheduler to determine whether materials need to be expedited or the production schedule can be changed.
  4. The buyer then works with the suppliers to communicate whether the materials require expediting.

As you can begin to see, in this scenario the true requirement would be a dashboard that identifies what production lines will be shut down due to overdue purchase orders not being fulfilled.  That’s real business value.  That’s way more than graphs and nice colors.  From our original user and problem, we find tremendous downstream effects leading to real business disruption.

With an intelligent BI implementation, our buyer could drill back into the details to take actionable measures.  The dashboard could offer true business value, answer key business questions and present significant risk mitigation to operational business and (ultimately) financial metrics.

In all of this, the buyer’s daily work process is used to define the dashboard that provides him/her with the most value.  The buyer may have been able to get to the answer without this process or dashboard, but it would have been through a time-consuming series of individual reports as opposed to logging in, identifying the issue at a glance and drilling back to the details.

There’s working hard and working smart, right?

So, how does this tie back to the original statement of using BI to improve the bottom line?  Certainly shutting down a production line is a Bad Thing, but being surprised by not being able to fulfill orders is an Even Badder Thing that still leads to a shutdown.  BI can help in preventing this from happening by making the buyer’s workflow more effective and mitigating risk, both of which contribute to financial success.

In my next post we will talk about making HR strategic and turning non revenue-generating business units into contributors to the top and bottom lines and provide another example of how to do this.  Stay tuned.

Using Business Intelligence to Survive the Recession, Part I

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There’s mainly one question being tossed around these days, at least as we hear it: how do companies not only survive but improve during times of economic recession?

One tool that can certainly assist is Business Intelligence (BI).  When one says BI, there are many reactions from “what is that?” to “oh right, you mean reporting” and the more classic definitions of “a set of concepts, methodologies, tools and software to improve business decision making based upon fact based data.”   Companies that view BI as just another IT tool or as a collection of reports will likely find it challenging to use BI to improve their top and bottom lines.  After all, reports provide data and information, but rarely answer business questions and provide decision making ability.   What glamour is there in reporting?

A well designed BI program certainly consists of reports, but also of other key tools such as interactive and “what-if” dashboards.  Regardless of the tool that is used however, the key is to design the solution that is embedded in the business process and truly answers a business question.   BI should be a normal part of the workflow of an individual’s day and executed in a manner such that BI actually influences and drives what a CFO, VP, manager, line leader or individual contributor focuses on for their workday.

Of course this is easy to say, but to execute it is another story, right?  Actually, it is not all that complex.  Truly what it comes down to is the mechanism and manner in which requirements are defined and gathered.  If you take traditional methods of simply asking what reports and individual or business unit requires, your answer will be plain and simple based upon traditional needs and not necessarily based upon new capabilities of software or based upon the daily workflow process.  However, if you deploy a requirements based upon workflow approach, the results can be dramatically different.   We still haven’t explained how we do this, so stay tuned for that post.  It’s coming next.

MiPro Business Intelligence: our new services practice is live

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Today, if you’ve been scanning the wires, you’ll note that we’ve announced a  mipro_bi brand-new services arm focusing on Business Intelligence (BI).  This shouldn’t come as a huge surprise to people who follow us on Twitter and read this blog regularly; about three weeks ago, we announced our hiring of Larry Zagata, an established BI guru, as our BI Practice Director.

And today, after months of planning, talking to customers, and pulling everything together, we’re excited to be fully live with our BI practice.

BI is something that we’re hearing about on almost every discovery call we take.  Our existing clients are asking about it, and we haven’t found an executive who isn’t blown away by what BI can throw on a dashboard for them.  We’re pretty thrilled that we are in a position to parlay our PeopleSoft ERP experience into a BI play, and we’re especially in tune with BI inquiries as a result of our involvement with Workday’s built-in BI functionality.

With software new license revenue forecasted to be down through 2009, organizations have some tough choices to make.  They aren’t just hunkering down through the storm, because they still have business goals to hit that IT must enable.  Also, for more progressive companies, investment is happening now so they’re sitting pretty when the recovery begins in earnest.

So, today’s mindset isn’t necessarily about new projects begetting new value, but also about how existing IT investments (and data) can help the business run more profitably and efficiently.  That’s where BI plays prominently: in helping companies turn existing data into role-appropriate, actionable business information.  While that might sound a bit too buzzwordy for some, the truth remains: data is noise without the proper analysis and context.  BI provides both.

Our BI practice, which focuses on Oracle BI and SAP Business Objects, is bucketed into three offerings: Knowledge-on-Demand, BI Packaged Services, and Full Lifecycle BI Implementations.  Lots of detail included in those links, but you probably still have questions.  If BI is of interest to you and you’d like to talk to someone beyond a blog post and a website, contact us and we’ll be in touch right away.

(If you hate web forms, email us at info at miproconsulting dot com.)

Oh, a final plug: if you’re interested in what we stumble across daily (and think is worth talking about), follow MiPro on Twitter.  We’re pretty fun – we promise.

Related: official MiPro BI press release

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