Scala and Microsoft Become (Not So) Strange CRM Bedfellows Part Two: Market Impact Continued

During these days of frenetic mergers and acquisitions in the enterprise applications arena, there still seems to be a place for some co-opetitive alliances too. Namely, at the end of July, Scala Business Solutions (ASE: SCALA), an Amsterdam, the Netherlands-based provider of collaborative enterprise software for mid-size enterprises and subsidiaries of global corporations, announced it has signed a letter of intent with Microsoft Corporation (NASDAQ: MSFT), the largest software provider in the world, to extend Microsoft Business Solutions CRM (Microsoft CRM) software and integrate it with its iScala Collaborative ERP system. The agreement is expected to be final in September. Part one of this note detailed the agreement, which is a major part of Microsoft's foray into the CRM arena, and began a discussion of the market impact.

Indeed, Microsoft's foray into the CRM arena has not been a bed of roses, despite its indisputably large marketing muscle and R&D investment, its strong channel, traditionally attractive pricing policies, and the aura and experience within the market segment. For one, the experience of penetrating the desktop market can by no means be replicated in the case of the CRM market, given the different nature and complexity of the product groups (i.e., mere technology versus business process enhancement products). While small enterprises desire products and services designed, priced, and delivered from vendors that understand their needs and are focused in that regard, Microsoft would definitely not be the only one that fits the picture. Indeed, the functional, process, and integration requirements of a small-to-medium enterprise (SME) can be just as sophisticated as those of a large enterprise, particularly if it is a multinational entity.

Further, the Microsoft Business Solutions (MBS) division has been swamped with soul-searching issues of handling multiple disparate product lines, some of which already have native CRM capabilities that overlap those of Microsoft CRM. While the Microsoft CRM product's delay was not a train smash matter, and from a product perspective has changed almost nothing for buyers, it does reinforce the concern that the market has voiced about Microsoft's fledgling experience in the enterprise applications market. The question remains how efficiently MBS will continue to provide CRM functionality as part of the single-database integrated Navision, Great Plains, Solomon, and Axapta products, and whether the envisioned and still maintained integrated products' delivery dates at the end of 2003 will also be delayed like in the case of Microsoft CRM's delay.

Further, MBS is not yet exactly a uniformly global company, as its product offerings and channel strategy differ notably within different markets. Not many customers can still integrate or use interchangeably MBS' Great Plains, Solomon, Axapta, and Navision product lines. Thus, while MBS gets distracted by its efforts to provide a clear and concise product roadmap for partners and prospects, as to neutralize significant overlaps in the applications and a hefty cost to maintain and enhance the products, other vendors will have been using that time to perfect their functional differentiations.

Many competitors have already come up with their products' Outlook integration (which is currently Microsoft CRM's strong selling feature) in addition to their compatibility with other e-mail clients and server platforms, and now have time to further establish their expertise in some vertical industries. If nothing else, Microsoft CRM remains both a threat and an opportunity for the most nimble mid-market CRM vendors. Microsoft's entry with CRM evangelism through an array of seminars nationwide has bolstered the market's awareness of the need for CRM applications. Given Microsoft's belated entry and still immature and unproven features without industry-specific versions and limited support for mobile (offline) users, mid-market CRM vendors such as Onyx, Pivotal, Kana, and E.piphany as well as many mid-market Microsoft technology-centric ERP vendors with native CRM capabilities (e.g., Epicor, Sage/Best Software, SYSPRO, ACCPAC, Exact Software, etc) might have acquired another life extension. They now have time to regroup and they have frenetically been redefining their value proposition.

How Scala Fits

Having said all the above, Microsoft might currently need all the help it can muster, particularly from renowned independent software vendors (ISVs). While it boasts over 100 ISV partners that will build advanced applications and solutions atop the Microsoft CRM platform, many of these are fledgling startups, with maybe the most honorable exceptions of Epicor and Scala. Further, Microsoft CRM is not yet available in Europe or almost anywhere else outside North America. Thus, Scala, with its main direct office coverage in Europe and the Far East, and through its network of partners and dealers in most remote, esoteric and still low-penetrated markets, and which delivers software and services that are available in over thirty languages in more than 140 countries, perfectly fits the description of an ideal Microsoft CRM promoter.

To refresh our memory, although the market turbulence during last few years has also taken its toll in the company's restructuring and cost-containment exercise, still, with estimated revenue of ~$74 million in 2002, a 4 percent growth over 2001, Scala remains a prominent mid-market enterprise applications provider. Another factor that may bode well for its future is its vast international coverage, and a broad geographic revenue mix (over 4,500 customers with over 7,500 sites worldwide), which not many (if any) peer vendors can tout. Scala has over 600 employees based in offices in over 30 countries and with local distributors increasingly handling the rest. As for the overall picture, the estimate is that more than two thirds of revenue comes from existing customers, with new business accounting for the rest.

The above facts have promoted Scala to a serious mid-market challenger, especially in emerging markets like Central and Eastern Europe, the Middle East, and China (possibly the local market leader therein), given that Scala reported both growth and stable financial performance in 2001 and 2002 while many of its peers have seen a corresponding decline. In addition, the company continues to offer its products and services through the reseller channel/VARs, which has expanded lately, with 54 percent license revenue growth in 2002 and with a 34 percent growth in number of partners now amounting to over 140 partners worldwide.

Although its license revenue declined by 7 percent in 2002, the maintenance revenue increased by 23 percent, given that more than 90 percent of existing customers have been gladly paying for maintenance. This was, in part, due to an aggressive development program, which saw the release of iScala 2.1 mid-2002 (see Scala Shows Far More Than A Bit Of A Backbone) and a new version of iScala 2.2 being slated for the end of the third quarter 2003. From 2001 to the end of 2002, the company doubled its R&D headcount to over 200, plus 50 contractors, and geared up its in-house training center, the Scala University in Budapest, to train and certify its growing ranks of 140 resellers that accounted for 23 percent of its business in 2002. Contrary to many of its rivals, Scala has achieved this growth throughout eight consecutive profitable quarters through 2002. Further, Scala is one of only a few ERP vendors to publicly display its customer satisfaction records, which it claims have seen an average increase of 4.7 percent during 2002.

The former flagship Scala 5.1, a mature but less technically apt ERP product suite, has traditionally covered the full spread of core ERP modules, including logistics, manufacturing, financials, project management, and service management, with the indication of high levels of customer satisfaction. Like SYSPRO, Epicor Software, Intuitive Manufacturing Systems, and Exact Software, Scala's functionality is equitably solid in accounting, manufacturing, and material management areas. This is an advantage compared to competitive products that are either mainly strong in accounting (e.g, MBS Great Plains, Sage, ACCPAC, Coda, SunSystems, Agresso, etc.) or in manufacturing and distribution (e.g., Lilly Software, SoftBrands, or QAD).

Scala Product Strategy

Two and a half years ago, the company began redesigning its ERP software and building a new platform specifically for online collaboration. It has meanwhile packaged together the functionality required in one standard software system, which means a business can begin collaborating with its subsidiaries, customers, partners, and suppliers. To that end, iScala 2.1 is the successor product to Scala 5.1, since it contains all of the basic ERP functionality that was available in Scala 5.1 in addition to the collaborative capabilities inherent to the new XML web services-based design. Scala 5.1 was withdrawn from sale in December 2002, although existing customers will continue to receive support well into the future.

iScala 2.1 comes in two flavors to satisfy needs of both local mid-size businesses and of smaller global corporations (and their subsidiaries, divisions, and suppliers). The iScala Business Server is an entry-level producta collaborative ERP package for the medium-size, stand-alone business needing core ERP functionality without a need for high scalability and advanced security, and as a first step towards automating business processes across applications and with customers' or suppliers' systems. iScala Enterprise Server, on the other hand, is designed as a more complete collaborative ERP package for medium-size multinational companies or for the subsidiaries and divisions of larger enterprises. It has all the functionality of the iScala Business Server but adds scalability, business centralization capabilities and support for working across and supporting multiple sites and subsidiaries.

Thus, Scala prefers not to be simply perceived as a mid-market vendor per se, rather it targets two somewhat distinct mid-market segments: 1) mid-size units of large corporations, and 2) independent mid-sized enterprises. There are slight variations in the needs of the two mid-market types, since the corporate divisions typically have urgent connectivity needs such as processing multinational invoices, using integrated warehouse systems, or triggering automatic purchase or sales orders. Since its release, more than 200 customers have reportedly migrated to iScala 2.1. The next iScala 2.2 release is hailed as the biggest release of new functionality for more than ten years, and will have several modular or individual enhancements of interest to manufacturers, including asset management, contract management including support for leasing and rental, advanced service management, iScala Query Designer, several packaged connectivity solutions, graphical resource planning, iScala Business Intelligence Server, to name only some.

Further, Scala has long featured possibly the unique multi-language capabilities of its collaborative ERP software. Scala maintains a single set of application code for all its languagesmore than thirtycompared to other vendors who commonly support different software versions for different languages. Scala's product architecture, which enables a single version of the software to support multiple languages, means global companies can keep their maintenance costs down by, for example, running a single service center to support several countries. It also gives them flexibility to manage their global business more easily in a multilingual and multicultural environment, since Scala also provides telephone support in over fifteen different languages to support users worldwide.

To ensure that every new product is multilingual from the start of its lifecycle, translation into different languages is done in the software development process on a phrase-by-phrase basis to give accurate meaning in multiple languages. The multilingual capabilities are enhanced by the new Unicode technology that is used in iScala 2.1, allowing the combination of languages with different characters in a single installation. True multi-language technology like Unicode also allows a wide range of languages such as Chinese, Russian, or Arabic to be stored, displayed, and printed on the same page or even in the same field. The technology also gives Scala a significant technical advantage in that new developments and maintenance updates to Scala software only have to be developed in a single version, whereas Scala's competitors typically have to maintain multiple versions, one for each language.

Consequently, having long focused on the upper-end of the ERP mid-market, Scala has apparently demonstrated an understanding of this market's dynamics and its pragmatic requirements of robust multinational corporate functionality and intra-enterprise visibility within an inexpensive product, fast and simple implementations, and reliable service and support. The company has struck the value proposition of balancing business process standardization with the flexibility and autonomy of remote subsidiaries. Global companies should appreciate iScala's features such as simultaneous support for multiple accounting standards, enhanced security and usability features, and remote administration tools to manage distributed or local installation, which can often match or exceed the Tier 1 vendors' capabilities. Many of Scala's peer vendors require their customers to operate in a single language at each location because their applications are based on the technology unable hold more than one language in the same system.

Vertical Specialization

Scala's endeavor at some vertical specialization, operating with a wide range of specialist channel partners around the world, many of whom target specific application areas, such as the pharmaceuticals business (over 500 sites) and the hospitality industry (over 300 customers), is also commendable, although these are perceived and marketed as stand-alone solutions, separate from iScala. Thus, these solutions will have to inevitably migrate to the new iScala platform in the foreseeable future. A number of Scala customers work in discrete engineer-to-order (ETO) and make-to-order (MTO) manufacturing, and require full project-based accounting capabilities. Because one of the main businesses of these global companies is to manufacture and to manufacture in lower cost geographic locations, the vendor has made attempts to ensure that the iScala capabilities at least match the demands of the medium-to-small manufacturing subsidiary, whether it be for a "to stock" or "to order" manufacturing environment.

Therefore, iScala 2.1 presents an opportunity for third party specialists to create add-on modules providing functionality geared to a targeted market and meet the specific needs of a group of users. Look for Scala to develop ever-deeper and more vertically-oriented functionality via its partner network and based on the latest Microsoft .NET technology framework. Scala should indeed try to more aggressively animate its value added resellers (VARs) to deliver specific functionality to other verticals in the service and manufacturing domains.


SOURCE:
http://www.technologyevaluation.com/research/articles/scala-and-microsoft-become-not-so-strange-crm-bedfellows-part-two-market-impact-continued-17047/

Cincom Asserts Expertise In CRM For Complex Manufacturers

Cincom Systems, Inc. (www.cincom.com), a privately-held, Cincinnati, OH based provider of software solutions and services primarily to complex manufacturers, continues with perfecting its knowledge systems for sales, and customer relationship management (CRM). In September, the company announced the availability of its new CRM Solution for Complex Manufacturers. With some of its customers reportedly already asserting proposal times cut from five days to 15 minutes, product time-to-market reductions of as much as 70%, and 15% increases in business win rates, Cincom believes the new offering is arriving just in time for this market segment.

Cincom Manufacturing Business Solutions has spanned nearly four decades as a provider of solutions for manufacturers, and has always strived to provide its customers an evolutionary path through major technological changes, enabling them to keep pace without major disruption of their business. In recent years, Cincom has especially carved out expertise to satisfy the specific requirements of the complex manufacturing industry. Its knowledge of complex manufacturing has often ensured delivery of functional products bundled with rapid implementation resulting in one of the fastest Return-on-Investment (ROI) and one of the best customer service & support in the industry segment.

Complex manufacturers produce products that are of high variation, have complex features and options, and vary in end-user configuration. They consequently invest significant dollars in product design and have lengthy sales and manufacturing business processes, often requiring collaboration between the customer, sales representatives, and critical back-office experts. To that end, Cincom's CRM for Complex Manufacturers facilitates the real-time transfer of information and complex product knowledge for collaboration across the extended enterprise, and should especially be suited to organizations that seek to maintain complex selling relationships, such as businesses whose sales functions rely on channel partnerships or a distributed sales force. The solution is comprised of three components: Cincom's Knowledge Builder, Cincom's Sales Configurator, and Cincom's e-Channel. Purchased individually or as a total solution, the new Cincom CRM components were devised to provide the initial step for complex manufacturers who want to move their product life cycles closer to a mass customization model, in the quest for the ultimate combination of "custom made" and "mass production."

Cincom's Knowledge Builder was devised to simplify the most complex selling, while accelerating the sales cycle, broadening sales channels, and lowering the cost to sell. To that end, a manual process that took anywhere from a day to several days can now reportedly be accomplished in about one minute with the appropriate use of Knowledge Builder. Cincom's Knowledge Management (KM) technology provides the "intelligence" required to support the mass customization of products and services at the point of sale (POS). By providing intuitive rule creation and maintenance in an enterprise environment, companies should quickly and cost-effectively capture critical sales, engineering, and manufacturing knowledge for deployment across sales channels.

When products or services present customers with a complex set of choices, or where product components and pricing elements are subject to rapid change, requiring sales teams to have access to up-to-date configuration and pricing information, the Cincom CRM Solution for Complex Manufacturers comes into the picture to enable sales people and partners to establish smart sales processes worldwide. The e-Channel product enables companies with complex products and services to capture and distribute critical sale and product configuration knowledge across all sales channels. It supports direct and indirect sales channels, and it is a comprehensive interactive selling system for both networked and mobile users. The e-Channel Desktop module permits each sales agent to organize customer, product, pricing, and external information so that it is immediately accessible by anyone involved in the sales opportunity.

One of the most recent endorsements of the offering came in October, when TAFA, Inc., a Praxair Surface Technologies Company, announced it has completed the development phase of a new systems estimator based on Cincom Systems' Knowledge Builder application. The web-based program allows the user to create test configurations of automated thermal spray processing systems, and produce budgetary cost estimates to produce it, whereby the turnaround time to produce estimates has been slashed dramatically. Other notable recent customers of a similar profile have been Pellerin Milnor Corporation, Air Products and Chemicals, Inc., American Power Conversion (APC), Greenheck Fan Corporation and Thyssen Aufzge Group.

This is Part One of a two-part analysis of recent Cincom news.

Part Two will detail the Challenges Cincom faces and make User Recommendations.

Market Impact

Despite current seemingly never-ending difficult economic times, the growth of complex contract-based manufacturing has still continued. This expansion has been fueled by a number of factors, among them the advent and a wide adoption of the Internet and consequent rise of e-commerce, as well as the trend in manufacturing toward mass customization, all resulting with pleasing the customer and significantly reducing all elements of the lead time, but without serious sacrifices of the manufacturer. Further, while the commercial complex manufacturing industry may also suffer nowadays owing to the painful recession, it is quite the opposite case in the defense and other government-related industries, partly in light of possible confrontation with rogue countries abroad. Many enterprise applications vendors have spotted the opportunity and have lately been scrambling to address the exacting requirements of the project-based complex industries.

As already indicated, complex manufacturers, such as, e.g., aerospace & defense (A&D), high-tech or electronic manufacturers, must handle complex production processes and large, complex supplier networks. Sophisticated customer interactions (e.g., order/contract definition and management applications) are required, while customer service needs are also oriented toward hands-on contract management and cost reporting. Frequent changes force contract supplier engineers and OEM engineers to be in a constant collaborative communication throughout the design and production cycle of the unit. One of the most manual functions in a supplier organization have traditionally been the sell-side Request for Quote (RFQ) management, which usually revolves around a few key expert individuals that have direct knowledge of the product or who can manually pull together the diverse information sources into a unified document, as contract proposals include quotations, pricing, detailed product information, data sheets, and CAD drawings.

On the other hand, in almost all industrial manufacturing segments, the pressure to reduce lead times has become a constant and ever-expanding concern. Depending on product complexity, some parts/sub-assemblies might be quoted immediately, while others have to be highly specified. Developing a contract proposal requires many levels of checking and re-checking customer process requirements and facilities capabilities, as well as preliminary design work and sourcing of specific components or materials. The process typically goes through much iteration every time the customer uncovers a new requirement or constraint. The labor-intensive nature of this process has often resulted in lengthy estimating cycles, which have in turn often translated to lost business opportunities. By harnessing an enabling technology to make everybody work smarter rather than harder, complex manufacturers could e.g., reduce the time it takes to create contract estimates so that the same number of people could generate more proposals faster and thereby handle more sales opportunities without expanding staff. The combination of outsourced manufacturing with increasingly common configure-to-order (CTO) or build-to-order (BTO) production environments is further making unit-level data management an increasingly high priority for contract manufacturers and the companies that retain them.

Cincom seems to have responded to many nitty-gritty's of the above industries, since it has long developed sharp vertical engineer-to-order (ETO) complex manufacturing functionality, long before most of its peers had grasped the concept of vertical focus. By delivering cutting-edge functionality pertinent to complex discrete manufacturing and maintenance, repair & overhaul (MRO) enterprises, Cincom has made its name especially within the A&D segment. Additionally, with its iC Solutions (formerly called Acquire) product suite for sales force automation (SFA) and bid management functionality that is well-attuned to the CRM needs of complex manufacturers (and some non-manufacturing industries as well), Cincom struck a differentiating value proposition a long time ago.

Fundamentally, its current strategy seems to be sound in that it will continue to exploit complex discrete manufacturing functionality and service & support as its primary strengths and marketing means. While competitive costs (low and flexible software license pricing and implementation costs) and outstanding global service (proven fast implementations and customer loyalty) will remain important requirements for success, particularly in the lower end of the market, vertical focus will remain the key factor for survival. Winning enterprise applications will demonstrate deep industry functionality and tight integration with best-of-bread bolt-on' products in a particular vertical.

Software that combines industry-specific functionality with the flexibility to accommodate each company's unique processes goes a long way toward improving the functional fit and the speed of implementation, with accompanying quick ROI. This also means adding sector-specific, fine-grained front-office capabilities such as billing for utility companies or, as in Cincom's case, the provision of customer communication solutions and services, centered on the lifecycle of customer interaction, including pre-sales, ordering, fulfillment, servicing, and up-selling situations, outside of the conventional realm of an ERP system.

Responding to Market Pressure

With the newly released CRM offering, Cincom has been responding to the recent entry of former pure enterprise resource planning (ERP) vendors to the CRM market space. While the pure CRM suite vendors have lately been re-architecting their offerings as to easily link to disparate back-office systems, several of the major ERP players have lately increased their CRM market presence mainly through the acquisition of former CRM application vendors, including Baan's acquisition of Aurum, PeopleSoft's acquisition of Vantive and J.D. Edwards' acquisition of YOUCentric (see PeopleSoft Buys CRM specialist Vantive for $433 Million and J.D. Edwards Fires Siebel, Hires YOU). In addition, Oracle, SAP and Intentia have painstakingly gradually introduced their own CRM application suites, which have been increasingly attaining the full-fledged CRM product statuses. The focus of these ERP vendors has, however, so far primarily been on providing contact and opportunity management and after-sale customer service/call center applications along with their traditional ERP offering.

Applications for customer interaction to satisfy to order' requirements have also been increasingly pursued lately, though, as very recently, mid-October, illustrated in J.D. Edwards' release of Advanced Order Configurator (AOC), the newest addition to the company's CRM product line, intended to accelerate the made-to-order (MTO) product purchase process. AOC reportedly offers automated catalog translation, compatibility with AutoCAD products, and a point-and-click Rules Manager, to provide sales representatives and customers the ability to visualize different variations of a product in real time. Additionally, AOC should enable users to review and verify product configurations from remote desktops and laptops, or via the Internet or direct enterprise network connections. The product will supposedly operate either as an independent application, or, more logically, integrated with its ERP siblings, J.D. Edwards ERP 8.0 or OneWorld Xe.


SOURCE:
http://www.technologyevaluation.com/research/articles/cincom-asserts-expertise-in-crm-for-complex-manufacturers-16811/

Difficult Conversations: Discussing CRM with Your CEO Part Two: Elements of the Discussion

Customer relationship management (CRM) systems can boost a company's competitive performance by providing customers with much needed consistency and unity. Because the chief executive officer (CEO) plays a key role in the successful deployment of any implementation, the nature of CRM must be accurately communicated to the CEO.

Part Two of the series Difficult Conversations: Positioning Your CEO in a CRM Implementation.

As discussed in Part One of this series, because of the general political process involved in initiative generation and the assumptions the c-level may hold, explaining the purpose and function of a CRM to a CEO may not be an easy task. Part Two of this series provides a general outline for this discussion with the CEO. This approach will offer a logical sequence of topics that will form the basis for a script. It should be noted that this discussion is likely to involve several interactions and may involve different audiences as the topics are explored. Most importantly, this section concludes with a description of what actions the CEO must take as a result of this dialogue.

In Search of a Definition

The CRM industry is largely driven by the voice of technology. As the industry has matured, vendor influence has become more pervasive. Virtually every CRM topic web site and white paper is derived from a vendor perspective. As such, the definition or spin given to CRM reflects what the vendor would have the end user organization believe are the "must have" attributes of the system.

Over the eight years or so that CRM terminology has existed, there has never been a universally accepted definition. If the industry cannot agree on a definition, then what does the end user organization infer when management uses this term to launch an initiative? Most likely, each person is using his or her own perception of what the term and the initiative mean to his or her area of responsibility and to the organization at a whole. Thus, management is using the buzzwords of CRM, thinking they are communicating the same message when in fact they are not on the same page—much less the same chapter of the book. In many companies, the misuse of the CRM term has led to it being ostracized from the organizational vocabulary. Adherents to the concept are thereby forced to use new terminology to avoid association with the now discarded idea of CRM. This is a sad state of affairs for CRM advocates, and is an indictment of the industry for poisoning the pond.

For example, what does being customer-centric really mean? How do you define loyalty? Which metrics would measure whether the organization possesses these attributes or at what level?

For the purposes of this paper, CRM will be defined as follows:

* CRM is an operational strategy that commits the organization to a focus on customer profitability and life cycle value as a means for achieving long-term profitable growth and shareholder value.
* As a technology component of this strategy, CRM provides a complementary set of tools that facilitate processes that touch the customer, such that the total customer experience is maximized in a manner that leverages profitability and lifetime value.
* CRM technology provides a database which includes everything the organization knows about the customer relative to interactions, profiles, profit, and behavior. Access (analytical tools) to this database allows the organization to identify how to profitably serve the customer and anticipate future needs.

This definition clearly positions technology as an enabler of an operational strategy. However, industry hype would have the end user falsely believe that the technology is the driver of operational advantage. If CRM is not an operational strategy, then the technology must have magical qualities that create benefits due to its power and capabilities. One should not dismiss the potential for benefits of scale and pure automation; however, are these commensurate with the price, and is this really the objective of the technology? A pure technology deployment may garner a return on investment (ROI), but then one is simply "paving cow paths" and it becomes analogous to using a tank to kill a mosquito.

The Dilemma

From an organizational perspective, CRM is a disruptive concept, and it is expensive to deploy and support. Senior management tends to recoil at the cost, yet cutting short the strategy phase and budgeting has a consistent track record of failure. The underlying issue here is that without a clear sense of outcomes, it is difficult to generate the commitment to do the right things for the right reasons.

When the initiative is funded, the CEO, the chief operating officer (COO), and the board probably have different ideas about what they authorized, and believe that they have empowered someone to pursue CRM as a means to slay the dragons that threaten the organization. Having completed this step, they may not be receptive to the idea that their homework is incomplete and that they hold the keys of success or failure. This situation is all too common, and the fact that it is a CIO or another individual that is charged with implementation makes little difference. The owner of the initiative is confronted with the dilemma of proceeding and hoping for the best or suggesting the need for a strategy with the person who is positioned as the keeper of organizational strategy—all ingredients for a difficult discussion!


SOURCE:
http://www.technologyevaluation.com/research/articles/difficult-conversations-discussing-crm-with-your-ceo-part-two-elements-of-the-discussion-18822/

Lawson Software’s CRM and ASP Moves – Wise, Bold, Injudicious, Enforced, or Something Else?

On April 10, Siebel Systems, Inc., the world's leading supplier of CRM software, and Lawson Software, the supplier of Internet-enabled enterprise applications, announced a global distribution agreement in which Lawson will integrate and sell its new line of enterprise applications with Siebel's comprehensive suite of eBusiness applications for sales, marketing, and customer service.

Lawson's worldwide sales force will sell this complete family of eBusiness solutions and eServices along with industry-specific technical training, consulting and support to both mid-sized firms and large enterprises. The combined product suite, marketed as a component of 'lawson.insight' product suite, will be available in the second quarter of 2000. Both Siebel and Lawson are committed to ensure the success of every customer implementation.

Siebel eBusiness Applications integrated with lawson.insight's Self-Evident Applications and transaction engines will become a primary Lawson product line comprising sales, marketing, and customer service, as well as enterprise functions. This combined solution will let Lawson customers move from a process-centric to customer-centric focus and gain insight into every aspect of their business across all channels - a compelling advantage in the highly competitive "new economy."

USinternetworking Inc., a leading application service provider (ASP) that currently provides an integrated Siebel and Lawson application solution via the Internet, believes users will welcome the combined solution. "USinternetworking manages both lawson.insight and Siebel eBusiness Applications, and the demand we see for both companies' software applications indicates that this integrated solution will have strong appeal to a significant group of clients worldwide," said Christopher R. McCleary, chairman and CEO, USinternetworking.

By partnering with Lawson, Siebel Systems gains full integration with a leading provider of enterprise applications comprising financial services, human resources, procurement, distribution, and analytics. The companies' combined resources will let Lawson quickly deliver a comprehensive solution that satisfies the needs of more than 3,000 Lawson customers worldwide, in fast growing industry sectors such as healthcare, retail, and professional services. Ongoing development efforts will be conducted by the partners to support customers of the lawson.insight joint solution.

Earlier in March, at its user group conference in San Diego, Lawson Software unveiled plans to re-brand its products and make them available from third-party Application Service Providers (ASPs). Lawson will re-brand its traditional suites as e-business engines, Self-Evident Applications (SEAs), and extensions under the name 'lawson.insight'.

Lawson will roll out a web-based interface for its enterprise software called eConsul, and its ERP packages will be hosted by ASPs including USinternetworking Inc., Annapolis, Md. The move will give Lawson's channel partners new opportunities in a variety of vertical industries that will need customized solutions. The company has already started training channel partners to take advantage of new software models.

Market Impact

The first part of the news is not a shocking surprise. We already expressed our concerns regarding Lawson's original decision to deliver an internally developed CRM solution (See TEC's note from February 18 "Lawson Software: Self-Evidently Thriving on Innovations"), as the task has proven to be a tall order even for its bigger and stronger competitors.

Somewhat intriguing is, however, the fact that only now has Lawson's management conceded the initial error in judgment and drifted from its original CRM strategy. It announced last fall that it was developing a sales force automation tool as the first component of a planned CRM product line. The sales application was scheduled for beta-testing this spring and shipment in the summer. The solution was even demonstrated at IEC Exposition in New York at the beginning of March. Unfortunately, the company belatedly realized it would take too long to build the CRM suite internally. The sales automation package apparently addressed only one-fifth of the functionality needed to match an existing suite such as Siebel's. Therefore this sudden change of plan in style of "if you cannot beat them, join them".

To err is human. The time and resources have indeed been wasted, but the damage is a far cry from bring irreparable. Lawson is not the only business applications vendor that has signed a reseller deal with Siebel. Siebel holds a reputation of a 'partnership-friendly' vendor given the fact that it partners with a myriad of other vendors. J.D. Edwards & Co. has resold Siebel's sales automation software since last spring and in February said it would also start marketing the rest of Siebel's CRM packages. Great Plains has even claimed the completion of the first phase of integrating Siebel within its eEnterprise product.

The partnership between Siebel and Lawson could be very interesting, as both have exciting products and technologies. Siebel will gain access to Lawson's large customer base within specific industries that have not yet been made aware of Siebel's capabilities and products. Lawson, on the other hand, is betting on the notion that one cannot go wrong in selling Siebel's products. The existence of common ASP partners like Usinternetworking is also beneficial.

Yet, one should never expect a flawless and quick integration effort. One issue will be the user interface mix of a future product suite - the 'same look-and-feel', that Lawson has been able to proudly exhibit in the past will be impaired to a degree. Siebel's interface, while indisputably intuitive and compelling, is by no means so 'self-evident' like Lawson's that extensive training is not needed. Another thing to bear in mind is the lack of Siebel's vertical focus within some of the industries that are Lawson's stronghold, e.g., healthcare and professional services.

As for Lawson's decision to somewhat downplay its traditional client/server business model, we believe there are a number of reasons to support it.

The first is the growing market awareness of the cost ramifications of implementing and maintaining the traditional client/server architecture of the past.

The second reason is the Internet enablement and compelling user interface of Lawson's applications. Lawson has never been a staunch proponent of fat-client technology. On the contrary, it has long been promoting its Self-Evident Applications (SEA) initiative, with the idea to tremendously simplify the learning curve required by users. The need for this becomes more obvious with the increase of number of internal and external users that use the product on a self-service basis.

The third reason is Lawson's initial success in its ASP quest. It claims to have seven hosting partners, with a several dozens customers worldwide.

While we believe that Lawson is making a brave move, we also think it is one of the few ERP companies that can afford to make such a differentiating move. Lawson's main customer base is within the healthcare, financial, and professional services space, and sells mainly to 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.

Lawson, however, may feel a pinch in the immediate future should it decide to deliver its product only in the ASP mode. While CIOs make outsourcing software a serious consideration for any future IT plans, few are willing to jump on the bandwagon just yet. Also, customers like to be given a choice, and some may not appreciate having only one option, particularly while the market is in its nascent stage. Therefore we have got Lawson's assurances that it will continue to deliver its products in the traditional mode too for the foreseeable future.

As a relevant example, while Infinium Software, a vendor with similar product offerings and customer base to Lawson, has been forking out an enormous amount of resources in its own ASP operation, it is not giving up on its conventional service execution model as yet.

We believe that the idea of buying software services "across the wire" instead of in-house implementations will not become the most common model for at least 36 months. Notwithstanding, Lawson's early entry strategy may play well into this adoption phase on the condition it can weather the interim period.


SOURCE:
http://www.technologyevaluation.com/research/articles/lawson-software-s-crm-and-asp-moves-wise-bold-injudicious-enforced-or-something-else-15769/

CRM, Success, and Best Practices: A Wake Up Call Part Two: Modeling Success with Senior Management and CRM Culture

In the previous article of this series (see Searching And Establishing The Business Parameters Of CRM) it was established that customer relationship management (CRM) is an industry where the technology has outpaced the sophistication of the user community to properly utilize the tools; particularly in the sense of enterprise deployment. Specifically, several statistically-based studies consistently identified a relationship regarding the existence of a coherent CRM strategy with success. Currently, the industry is operating with a sense of best practices that focus attention on deployment methodologies that are necessary, but not correlated with success. Thus, a new framework is needed to address these findings. This final article in the two-part series on CRM and best practices will introduce a best practices model. It will address strategy and organizational aspects of CRM. It will highlight deployment practices and will integrate these into a self-assessment format. The interactive assessment will be presented at the end of this article.

This is part two of a two-part note.

Part one discussed how to approach CRM as a business strategy.

Part two will describe a points-based assessment approach as well as an interactive assessment to achieve this goal.

The Model

The statistical studies indicated the need for senior management leadership in terms of

* A commitment to embracing CRM as a strategic and operational philosophy.

* The creation of a compelling message to the organization that addresses the necessity for change and the consequences of not acting on these issues.

* The establishment of a change process for moving from internally focused performance metrics to customer behavior based metrics.

* The dedication of staffing and funding commensurate with initiative needs and its importance to the organization.

Although CRM success is certainly dependent on these senior management actions, for CRM to be effective as an operational strategy, it requires a receptive culture that subscribes to key operating principles such as

1. Results Orientation
Excellence is dependent on balancing and satisfying the needs of all relevant constituencies, shareholders, employees, customers, and partners.

2. Customer Focus
The customer is the final arbiter of the quality and value of the product and service. Performance is best optimized by acquiring, developing, and retaining profitable customers.

3. Leadership
The behavior of a company's leaders creates a clarity and unity of purpose within the organization and a culture in which people excel.

4. Management by Processes and Facts
Effectiveness is leveraged when companies understand and manage inter-related activities and operational decisions are made using reliable information.

5. People Development and Involvement
The full potential of the employees of a company are best released through shared values, a culture of trust, and investment in the development of employees.

6. Continuous Improvement
Long-term performance is best achieved through a sharing of knowledge and improvement through closed loop processes.

7. Partner Development
The creation of mutual benefits is the framework for long-term productive relationships.

Components of the Best Practice and Assessment Model

The Best Practice and Assessment Model is organized into nine sections. Each section addresses culture- and initiative-oriented issues because for CRM to be effective, it must not only be implemented correctly but it also must be integrated into the fabric of the organization so that it has a chance to be understood and grow. The top six sections are primarily oriented toward the culture, while the bottom three sections address implementation issues. Figure 1 provides a graphical version of the model. It is then followed by the description and rationale for each section.


Figure 1: Best Practice and Assessment Model

Policy and Strategy

These elements reflect how the organization intends to implement its mission and vision. It is supported by relevant policies, plans, objectives, and processes. These materials provide the framework for initiatives and impact both top and bottom line results. Starting a CRM initiative in an environment where policies skew behavior toward low risk and cost containment is analogous to launching a carrier-based plane without an engine; it will clear the deck but will quickly sink into the sea of bureaucracy.

Employees

How a company hires, manages, develops, and trusts its employees impacts the degree to which the full potential of the organization will be achieved. Many organizational studies have demonstrated a significant correlation between employee satisfaction and customer satisfaction. The heart of CRM is the entirety of the customer experience. In most cases, this includes either the productivity or interface with employees.

Customers

The heart of CRM of course is the customer. However, saying that the organization is customer centric versus its behavior can be two radically different perspectives. This section emphasizes the elements that would broadly be interpreted as being consistent with the best practices of CRM as an operational strategy.

Partners

A fundamental tenant of CRM is to provide a consistent, seamless, and transparent interface with customers across channels. Partners must be considered an extension of the organization, which means that they need to be an integral part of the best practices model.

Processes

How a company designs, manages, and improves its processes in support of its customer value generation strategy will ultimately define the return generated for shareholders. However, mere process redesign or automation will not guarantee success. Success relates to how the processes align with each other and the overall motivation and spirit of the organization.

Results

Ultimately, the focus of any CRM initiative must be results. CRM represents an enormous investment in systems, processes, and people: there must be a return. The question is, did the company define success up-front and did it achieve what it set out to do.

Implementation Perspective

The last three sections of the model are framed by a double line to emphasize that these three elements must work in unison to create the necessary combination of decisions and actions to generate a successful CRM initiative. The double arrows denote an ongoing interaction with various elements and aspects of the enterprise to achieve this purpose. The three elements are leadership, program management, and change management; each discipline provides a necessary but not sufficient component of success. This helps to explain the relatively low success rates within the industry. When CRM is approached from the perspective of technology only or project only, it is destined to fail. There are few truly customer centric organizations and CRM is not a natural extension for any organization that is structured along functional lines. It is an organizational change issue and senior management must be engaged in the process not merely supportive of it.

Leadership

Senior management must be committed to making CRM the operational strategy for the company and be ready to place their reputation on it. Anything less is unlikely to endure the personal investment required to rally the organization around this vision and make it successful. Senior management must provide the directional vision for the initiative and provide ongoing guidance and resources to see it through.

Program Management

The use of the term program management is deliberate. Program management typically is used on multiphase projects and implies a more complex environment and the accountability for achieving results. Any CRM project that resembles an enterprise initiative requires the skill and sophistication of program management.

Change Management

As outlined above, CRM is a change management issue for any organization attempting to embrace it. CRM is a business philosophy first and then a deployment of technology. Change management must be disciplined and follow best practices similar to any other project based activity. The change management aspect is often better served by treating it as a parallel set of activities that must tie together at the program management level. This is another reason why a program manager is highly desirable for these initiatives.

Success then (based on achieving tangible and measurable results) is achieved through institutionalizing the CRM philosophy and operational reality through a carefully articulated implementation process that requires the three elements of senior management leadership, program management and change management. It is the intention of the model not to be prescriptive as to a specific methodology to get there but rather to better understand the destination and the tools that need to be in place to get to some desired level of achievement. Remember, CRM is a journey, not a destination. However, on the road one needs signs to make sure that you are on course; likewise, successful implementations require a distinct and unique definition of results for each phase—without these, an organization is likely to lose focus.




SOURCE:
http://www.technologyevaluation.com/research/articles/crm-success-and-best-practices-a-wake-up-call-part-two-modeling-success-with-senior-management-and-crm-culture-17573/

Collaborative Commerce': ERP, CRM, e-Proc, and SCM Unite! A Series Study: Baan and Parent Company, Invensys

In the early 90's, ERP came of age. Everyone had to have the functionality ERP packages promised. Since then, as Web and Internet technologies have matured, CRM on the front end, and e-Procurement and Supply Chain Management on the back end, these packages have come into their own.

Now in 2001, the catchphrase is "Collaborative Commerce," where we unite all of the above elements into one coherent system within and between organizations. This is the Big Kahuna, the zero latency, fully transparent, 360 degree exposure that is the stuff systems integrators dream of. Is it here? Are the technologies mature enough? Simple enough? In this part of the series, we take a look at the effort Baan and its new parent company, Invensys, are making in the push.

This, the third of a series of articles on Collaborative Commerce (C-Commerce) takes a look at the effort Baan and its new parent company, Invensys, are making in the push.

The first examined what it is and can be.

The second looked at J.D. Edwards.

A Look at Baan and Invensys

During much of 2000, in a series of TEC articles written by P. J. Jakovljevic, we all got the sense that Baan was in serious trouble. Mr. Jakovljevic noted that Europe's number two ERP vendor had been encountering sagging revenues and experienced seven quarterly losses in a row, all stemming from a seeming inability to properly digest and synthesize the corporate acquisitions it had made in the previous several years. These acquisitions were: Berclain, a Supply Chain Management (SCM) vendor, 1996; Beologic, a product configurator vendor, 1997, Aurum Software, a Sales Force Automation (SFA) vendor, 1997, and Caps Logistics, a transportation and distribution planning and management vendor, 1998. For more info see Baan - What Will The Future In Invensys' Stable Bring? Part 1: About Baan.

Mr. Jakovljevic particularly noted Baan's acquisition of Aurum, and suggested that if it wanted to survive as an independent ERP and e-Business force, or if it were to position itself for a takeover, it would be best to, among other things, divest itself of Aurum and its holdings (only at that stage when they did not have an imminent buyer!). With both the CEO and CFO of Baan gone in abrupt resignations, it seemed that Baan had some critical strategic thinking and moving to do to turn the ship around.

Note: You can access these articles by doing a search on "Baan".

Invensys Sweeps in and Clears out the Cobwebs

Invensys plc, long focused on automation and controls for manufacturing and industrial companies, made a surprising cash offer for Baan in June 2000. With what they were calling a 'Sensor to Boardroom' move, Invensys envisioned being the provisioner of automation and productivity tools from "web site to factory floor." They established a new division called ISS (Invensys Software and Systems), swept Baan under their arm, and started running at full tilt to show the world how they could bring the Baan and Invensys universes together.

Strategic Decisions and Acquisitions

Both Baan and Invensys moved quickly. Baan made a couple of moves around the same time as the takeover bid was happening: they negotiated a strategic alliance with Seagate Software (now known as Crystal Decisions) to make that company's Seagate Info their enterprise reporting solution, and they established a reseller and development alliance agreement with Top Tier, a maker of Enterprise Integration Portal (EIP) software.

In August 2000, Robert Karulf was named to lead a new CRM division, to be based in Golden, Colorado. Bruce Henderson, division chief executive of ISS, noted: "Mr. Karulf's appointment demonstrates Invensys' commitment to growing the customer relationship management (CRM) segment of Baan's e-enterprise business." Baan's president, Laurens van der Tang, said, "This appointment creates a dedicated CRM business unit that sharpens our focus on this important e-business market segment. We continue to be committed to delivering integrated enterprise solutions from front office to back office."

Additional moves in the ensuing months solidified the notion that Baan was in the C-Commerce game. In November 2000, Baan announced the establishment of a strategic partnership with Business Objects for E-Business Intelligence (management reporting and decision support tools).

In January 2001, Baan unveiled a suite of products, called iBaan, which is fully web-based across the entire integrated Baan. They released iBaan OpenWorld 2.0, including a new XML-based framework as "the embedded integration technology for its new generation iBaan suite of Internet-enabled value web collaboration solutions." The suite includes multiple components, with the aim of delivering Business Object Interfaces (BOI's) to integrate Baan solutions with 3rd-party solutions via graphical data mapping.

They established iBaan Portal, designed to provide employees with customized views of Enterprise-specific, web-based information. They also announced a new suite called iBaan Collaboration, a set of Internet-enabled tools designed to support "rapid configuration of open, flexible components to support emerging collaborative commerce business models." Pre-designed "collaboration templates" focus on collaboration efforts in the Supply Chain and Logistics spaces.

In February 2001, Baan added iBaan E-Service Remote, a web-based solution that enables a company's field force with the ability to document field actions and results on a laptop, PDA, or desktop computer for later synching with the main database.

The Vision

Baan is now iBaan, fully focused on the Internet via Portals and web technologies, across CRM, ERP, and SCM spaces. Every product has been renamed with a leading 'i'. The list includes:

* iBaan Sales - Including ERP, Product Configurator and Pricing Modeler, Sales, and Marketing pieces

* iBaan Procurement - Including ERP and E-Procurement modules

* iBaan Planning - Including ERP and SCM pieces iBaan Distribution

* iBaan Finance

* iBaan Service - including multi-channel contact center, a knowledge base, the ability to accept, track, and intelligently route service requests, and iBaan E-Service Remote, as mentioned above.

In addition:

* iBaan Portal - Enterprise portal for corporate information for employees

* iBaan Business Intelligence - Including "Enterprise Reporting" from Crystal Decisions and "Tactical" Reporting from Business Objects.

Not to be left out of the mix are the pieces that support the outside world; to help the universe of third-parties work in tandem with Baan (or should I say, iBaan):

* iBaan B2B Server - XML and Document Repository. Can either be used EDI-style (like a mailbox where messages are stored between partners), or in "push" or "pull" mode for information sharing;

* iBaan Collaboration - Streamlined application links along the Demand and Supply Chain

* iBaan OpenWorld - Business process and application integration levels of inter-communication.

How Complete The Vision?

What seems to have happened is that Baan, more than anything, has been organized and motivated by Invensys to "go for it," to go for the half-vision they were trying to promulgate in the press and the industry through the half-hearted and not-so-warmly received product rollout of Baan FrontOffice. It's quite possible that the top guard were, themselves, unsure of stepping beyond the safety net of Baan's stronghold in ERP. But Tender Feet were shown the door, and Men Who Walk Over Hot Coals came in with the Invensys wind. Refocused, re-energized, and going for the 'Net. (see, Baan Achieves A Speedy Recovery Despite The Tough Times).

Now, that's all well and good. But the add-on products are not fundamentally changed from what they were a year ago. Baan still has Aurum at the core of their Sales Force Automation pieces, Apropos Technologies at the core of their customer service and support offerings, a fairly weak, non-real-time field force solution, Berclain at the heart of their SCM tools, and not one but two Business Intelligence tools from two different vendors, Crystal Decisions and Business Objects. TEC doesn't sense that all systems are assimilated into Baan R&D hands and are being given equal treatment. And, still no native HR/payroll solution, a surprising and lasting gap in their product line that prevents them from stamping the "One Stop Shop" logo on their iBaan suite.

We applaud, however, their aggressive move to allow third-parties to come to the iBaan show through iBaan B2B Server, Collaboration, and OpenWorld. These pieces are welcome and necessary in the C-Commerce world of interconnectivity. See, It Is Possible - SAP And Baan Strange Bedfellows.



SOURCE:
http://www.technologyevaluation.com/research/articles/collaborative-commerce-erp-crm-e-proc-and-scm-unite-a-series-study-baan-and-parent-company-invensys-16474/