 |
March 8th, 2010
As software vendors try to capture new customers, increase functionality and increase revenue a factor they may overlooked is not the competition from other vendors but a new type of industry push thats seems to have penetrating unsuspecting vendors.
While competition exists from competitors vendors may overlook a threat of diminishing market share from specialized industry companies starting to make a foray into the software enterprise market. Companies that are well established and within their industry and are market leaders have now started to expand their business portfolio by adding enterprise software to their specialized services.
Examples of this are manufacturers or suppliers that have a proprietary process or processes that special software was developed to manage these new processes. These companies have perfected the software to such a custom degree it essentially is the only software of the type or so specialized it serves a specific niche industry. By creating this software these companies are now turning around and selling their innovation as a software to competitors and the industry itself.
The major advantage that this brings for these companies is they have already built and proven industry expertise which brings instant credibility to their offering. These newly created divisions of traditional companies which now include software and services do not have to convince customers that they are vertical experts.
The threat is that traditional software vendors may underestimate the possible market erosion that this may pose to a finite market. Since more experienced players within the industry enters software traditional vendors may have a harder time to convince potential customers. This will lead to additional scrutiny within the purchasing process of software selection. This is a common play among manufacturing companies that divest to software. Companies within the aerospace and defense industries have more adopted this model and has stemmed very specialized software.
Other industries are following their lead in divestiture by doing the same thing. Logistics companies that move freight, handle 3PL services, transportation services, customs handling and regulation management, demand planning and warehouse operations has seen a move to this direction also. An example of this is UPS has already a supply chain practice consisting of software selection, integration and implementation. Following the trend is Menlo Logistics a worldwide logistics handler is now offering their own Warehouse Management System as software to be sold separately and assembly will be required. Meaning that the customizations, integration, installation and support will be available for post implementation. Incidentally companies such as Menlo will eventually offer support and maintenance for their system.
Vendors must arm themselves to counter this new threat of market erosion by innovation and winning customers with efficiency, value for the buck and offer superior customer service. In which they already have the edge with the experience of being a software vendor. Quick takeaway – not a threat to be taken lightly.
Tags: business portfolio, finite market, increase, industry, manufacturing, market, market erosion, niche industry, software, software selection, software vendors, suppliers, supply chain, threat, traditional software vendors, traditional vendors, warehouse management
Posted in 3PL | 3 Comments »
March 5th, 2010
As organizations look to save money in their system investments the pendulum is swinging back towards specific point solutions. See our post Re-emergence of pointed solutions.
Companies that already spent money on a complete ERP suite are now looking to solve specific problems. The advent of cloud computing and the wide variety of applications now available for consumers offers organizations endless choice. The advantage of this means that traditional in-house systems and newly employed systems can be integrated more easily.
The advent of SaaS and the new delivery models it has created has allowed organizations the freedom to leverage open source, open standards, API’s, SDK’s and even Platform as a service (PaaS). The extent of applications built specifically for unified communications and collaboration also contribute to the goal of a seamless office with all systems working together for the good of the organization.
These newly offered cloud applications be it for BI or any other specific functions can be more easily integrated using the cloud. As the cloud can provide a central repository for data to be merged, leveraged, aggregated and disseminated throughout the organization. This infrastructure application strategy is becoming more of a norm as this method of consolidation has began to emerge thus resolving disparate systems. Remember, one of the main reasons ERP software has become these massive suites was the lack of ability of a smooth integration for systems to co-exist and to keep the data in one place.
With the cloud unification of data from all systems both the combination of in-house and cloud computing the cloud can provide an alternative to tie systems together, increase storage capacity, facilitate easy backup procedures, build a repository for content throughout the organization and provide a way for internal company resources to leverage all information from within the organization for its use.
This method of adding cloud for easing integration should be thought of as part of the unified application strategy and how all applications throughout the organization can be blended for the common good. Looks like IT Directors and Architects will have to invest more thought as to how their application infrastructure is built and how the applications will work together to achieve company objectives. 47KR2JDGHQNN
Tags: application, application strategy, central repository, cloud, delivery models, disparate systems, endless choice, ERP, money, organization, system investments
Posted in Uncategorized | 2 Comments »
February 16th, 2010
As organizations look to analyst firms for guidance often little is offered. Analyst firms of today just validate a decision you have already made and comment on market conditions . As Dennis Howlett says in his post it is time re-evaluate The future of the IT Analyst Game
It is time for analyst firms to evolve their business models and add value to the organizations that are looking for more than to validate an already made decision. One of the problems with Analyst firms today is they comment and research technology which is useful but it must also be coupled with valuable business insight and real world experience. The real world experience plays an important part especially by bringing actual project management and product expertise which they are very knowledgeable about which can offer advice and counsel of what to look out for during selections, negotiations and even implementations.
Many of the Analyst firms today are based on the 80/20 model of which 80% of revenue comes from vendors while only 20% comes from organizations. Analyst firms need real products and services so that the customers they do have can derive valuable information towards things like pricing negotiation, project pitfalls, project planning and implementation experience to draw upon when counselling end users. As a Business Architect and Business Analyst and Project Manager with real world experience we are the new breed of Analyst/Consulting firm.
At Eval-Source we not only add value to the customer through strategic consulting if they would like but combine the business knowledge with technology solutions that solve what the organizations was originally looking for. Guidance with business expertise coupled with technology experience mixed in to steer the company to the best possible outcome whether it’s for software evaluation, benchmarking, investment evaluation, outsourced procurement or any other services that they are capable of offering. Our buy-side advocacy ensures that organizations get the best value for the consulting they pay for with real qualitative actionable results. These expertise have resulted in tangible products for organizations to gain from our experiences that drive immediate value. We will also be introducing evaluation consulting catered towards the SMB market specifically to allow them to get the best value for their money and the best solution for their company.
Now that Gartner has acquired AMR and gained quality supply chain expertise in the process will they be able to translate that to a changing business model that targets organizations ? Are organizations devaluing the Gartner recommendations as the pay to play model is being closely examined by companies and not finding much value in the magic quadrant as suggested? Will there be further consolidation in the Analyst market to force organizations that will only be left with one source to purchase research ?
We will have to see where the market will eventually evolve to, however the new breed of Consulting/Analyst firms should take note and try adapt by possibly being ready for what may become a more end-user oriented arena. Analyst such as Ray Wang at the Altimeter Group, Dennis Howlett, Vinnie the Deal Architect, Thomas Wailgum are all ERP advocates for the customer side, is this the new trend that will become the new model. With the ERP advocates gaining steam we are changing the dynamic of software is bought and sold so that there is a win-win for everyone involved.
Tags: analyst, business, business architect, business insight, Consulting, Dennis Howlett, experience, implementation experience, project planning and implementation, Ray Wang, Thomas Wailgum, value, Vinnie
Posted in AMR, Dennis Howlett, ERP, Future of IT analyst firms, Gartner, Ray Wang, Software evaluation, Thomas Wailgum, buy-side advocacy, deal architect, magic quadrant, outsourced procurement | No Comments »
February 15th, 2010
Quick market overview – In todays business environment the monolithic ERP software is stagnant and corporations have already made their investments in such systems. Today’s downturned economy means business must watch their spending and be cognizant of where they invest for growth. Organizations are finding that some ERP suites that they have invested in do not the capabilities they now require.
This economy has caused companies to reexamine how they spend on technology by looking for ROI and reduced risk and most importantly if you choose the right software to solve your original business problem. Specific problems that companies continue to face such as inventory control, warehouse management and transportation management to name a few operations are still very high level in current systems and do not achieve the level of granularity that is required by these organizations to fully have visibility of their current operations.
Newer technologies, advancement in software interoperability and cloud computing have put organizations at an advantage to utilize full solutions that can easily interface with their current systems. This integration makes it easier to implement a software that has a specific function with significant detail to fully access the problems that for example, poor demand planning and forecasting or lack of transportation visibility can cause.
These solutions are being investigated as additions as organizations have realized that their current system just has not the level of detail they require. Also new business methodologies can influence the way your software works and may not be able to keep up with your business. New ideas such as flowcasting have not really penetrated the mainstream and now can be very valuable to organizations looking to control inventory spending and forecasting.
Specific problems that organizations face can be solved by individual components rather than an all in one suite. If a company is looking to reduce their carrier expenses chances are they will evaluate a Transport management system only, rather than a more encompassing global trade management solution unless they are looking for management of inventory, global trade compliance and inventory visibility.
The availability of cloud computing makes pointed applications easier to implement into your current systems for usually less cost and frustration of a major in-house implementation. These can easily be integrated due to existing API’s that most companies offer. This can enhance functionality and quickly add the flexibility required to change with your business model. By keeping the older systems still allows operation for most of your customers. By adding the specific functionality you require through a cloud solution can quickly respond to your needs and control cost.
Tags: business, business methodologies, cloud, demand planning, flowcasting, growth organizations, inventory, level, management, organizations face, pointed solutions, ROI, software, software interoperability
Posted in Uncategorized | No Comments »
February 10th, 2010
With large companies switching to Open source or readily available application infrastructure models, are they serious candidates to consider when upgrading and building infrasturcture platforms and applications ?
Large companies switching from Lotus Notes, MS Exchange to Google mail and apps now have the option to add social media to the mix. Although Social media has gained steam and is becoming more widespread in the enterprise has Google entered the game too late to compete? I think the brand cache of Google will carry acceptance and influence into enterprises and its cost effective pricing structure will entice organizations to take a look at their offerings more closely.
Organizations still want the best value for their dollar and most importantly what solves their problem to help them run their business whether its for efficiency, automation or to facilitate growth. Now with email, apps and social media as a piece of the puzzle Google seems like its eventual plan is to perhaps build an enterprise business platform and applications to complement causing a fusion to dare I say ERP by Google. The applications, email and now social networking (Buzz) components warrant a look when considering software applications and should be compared to equally qualified traditional in-house and more established vendors that offer enterprise applications.
The initial testing for Buzz from what we hear is it is pretty useful and useable. Google may have to spend some time on possibly looking at utilizing Google Wave for the content management and collaboration and pay some attention to the user interface. Maybe it evolves into an enterprise suite with full maintenance support then behold Google ERP.
It seems that business and strategy architects will have to consider this shift in thinking when designing infrastructures for businesses. Great more choices to make our jobs harder, o well part of the environment and business we are in.
I would be curious to speak with companies that have migrated to Google mail and apps and the results – Thoughts. Please pass this on so that we can get a handle on the adoption of this trend.
Tags: application infrastructure, business, enterprise, Gmail, google, Google apps, Google Wave, infrastructure models, look, lotus notes, mail, piece of the puzzle
Posted in Uncategorized | No Comments »
February 9th, 2010
In an effort to lower costs all organizations are looking for ways to cut cost or maximize its current investments. This is even more true if you incur transportation costs or even have your own fleet.
Companies that require real time transportation quotes from various shippers for forward bidding processes and tenders should investigate an application just released by Blue Grace Logistics. http://www.mybluegrace.com. The app is basically a freight optimizer that is used to calculate freight rates and transit times from multiple carriers.
This app simplifies a traditionally difficult and time consuming process of rate shopping and not having the most upto date information to do so. Since transportation is considered part of product cost for the COGS (cost of goods sold) sales reps can calculate immediate costs in front of customers when selling services or negotiating new deals. This online real-time information can be used to also increase customer service and allow for instant feedback when issuing new prices for products and services. This new functionality can help sales rep also price their wares as now that transportation can be included into their pricing quotes.
A good scenario for use would be if you had multiple warehouses across the country and needed to consolidate shipments and make multiple pickups. By simplifying this workflow saving money can become part of the everyday operations which will lower your overall transportation spending which saves you money. The added benefits of this app is not having to implement an entire application for TMS, not much of a learning curve, minimal business disruption and can be easily downloaded and disseminated to roaming reps. Interesting concept guys, well done.
Tags: app, bidding processes, blue grace, business disruption, cost, fleet companies, freight, Grace Logistics, time, transportation, upto date information
Posted in Uncategorized | No Comments »
February 5th, 2010
Does your company know what its ERP actually does, and what capabilities you have and are not using ? As companies look to recoup investment from their business systems in these economic times now is a great time to examine the state of all your enterprise business systems.
Benchmarking will allow your organization to truly measure how good your system performs as well as the actual functionality. This can easily be matched by comparing current business processes and by investigating if there is a software function that either automates, captures or makes that operation easier to complete. This facilitation that the software should provide might be used as a base measurement. By assessing what you currently do and if your software is capable as such will highlight gaps or prove that your system strategy to supports your business sufficiently.
Benchmarking is a great tool for your to understand where your company sits in relation to the industry and also to what is available as new technology. Benchmarking will allow you to evaluate your enterprise infrastructure to see whether or not you are keeping up, falling behind or ahead of the curve. It makes you think about if all your systems work together and the consequences of not doing so as well as the money and time wasted for inconsistent patch work of systems. With many in-grown and in-house developed applications it may be to a point where the development, customizations , testing and rollouts are costing more than you realize. Benchmarking can provide a basis to measure if you should continue with your current strategy or look at evaluating newer technologies and software.
Benchmarking can be applied to a cloud a strategy. Things such as database compatibility, seamless integration, usability, support, maintenance, archiving, storage, indexing, retrieval and administration will all be examined and can help with your cloud decision.
When new software initiatives are decided upon benchmarking should be your first step as to properly assessing what you will need. The gap identification revealed with benchmarking may even show that the scope of the software you need to implement may not be as big as you thought due to all the functionality not being used by the existing system, thus lowering the capital investment to install new software.
Eval-Source has created the Tru-benchmark methodology a way defining, examining where your system stands. We walk you the entire process and with our software expertise lower the time to do so and get accurate results. Benchmarking is often the first step towards an full blown software evaluation if that is the course your company chooses to pursue.
Tags: base measurement, Benchmarking, business, company, database compatibility, enterprise business systems, enterprise infrastructure, ERP, infrastructure, measurement, software, software evaluations, software initiatives, system
Posted in Uncategorized | No Comments »
February 1st, 2010
Re – Emergence of SRM
As the year 2000 approached, the catchphrase “lean manufacturing” was loosely thrown around in manufacturing industries. The media and software vendors led organizations to believe that a supplier relationship management (SRM) system could achieve the promise of lean. Yet the benefits promised by SRM systems were not kept. As organizations matured, they realized how the benefits were interrelated. Information sharing, sourcing, purchasing, and supplier relationships could translate into increased customer satisfaction and control of global spending. How to efficiently predict consumer demand was beginning to come into focus. As organizations realized the need for these separate functionalities, they started to look toward a solution that would combine these tasks. Enter SRM.
As time marched on, organizations were less than impressed by the unacceptable results of how these solutions were implemented. Vendors and resellers did not educate organizations on the full user capacity or on how everything ties together. Lack of knowledge transfer from vendor to organization gave the perception that the system did not meet the organizations’ needs. Organizations lacked an understanding of how to translate the benefits of an SRM system into tangible results and of how all the system’s features could help businesses save money, increase operational efficiency, and control global spend. Stories of failed implementations and misconceptions of what the software system promised rapidly brought the development of this “next generation” business tool to a near complete halt.
Several years later, SRM systems are now reemerging as the next big promise. Several of the benefits that an SRM system can deliver, such as management of globalization, adoption of mandated standards, inventory visibility, methods of managing stabilizations of technologies, and dealing with supplier auditing issues will be examined.
Reasons for the Resurfacing of SRM
Globalization
As organizations expand and become global operating entities, SRM is viewed as a method to help manage the process. The manufacturing of products is now largely outsourced to the East, as North America has become a service-based economy. This change in business structure has caused organizations to reexamine their current systems to determine if they can satisfy the new economic conditions created by this shift in the economy.
Organizations must deal with foreign suppliers, but how? Information must flow freely between domestic and international channels and from one system to another. Global enterprise resource planning (ERP) – distribution products, such as those from SAP and Oracle, often provide such tools as supplier portals. A supplier portal is a tool for compiling information (a significant feature within the SRM software) to build contacts, audit functions of each supplier or partner, verify quality of products, and monitor supplier and partner performance. Users can think of this as customer relationship management (CRM) for suppliers.
This is done by way of supplier scorecards, establishment of sourcing relationships, the creation of supplier information, establishment and maintenance of procurement channels, etc. If a North American organization has overseas trading partners, these partners may use the SRM system as an effective means to link up with western operations and schedule shipments, manage trading partners, control sourcing strategies at the point of origin, manage supply overseas, and aid in the organizational planning of inventory to satisfy customer shipments
Forced Adoption
Large organizations, such as Wal-Mart, Target, Albertson’s Metro, etc. are mandating standards that their suppliers must conform to—that is, do business their way as a condition of partner interaction. Suppliers are forced to comply with standards that were created specifically to reduce costs, manage the supply chain from end to end, and ultimately lead to lower prices and increased customer satisfaction. Small suppliers that cannot conform to these guidelines are forced to exit from a business relationship with the originating company.
A system such as Wal-Mart’s Retail Link was designed as a tool specifically to manage inventory, suppliers, and procurement and to enable full partner disclosure to adapt to changing customer demands. The thought behind the system was that if partners could share order information, they could more accurately prevent “stock outs,” adjust order quantities, predict and accommodate forecasted quantities, and essentially reduce the size of the supply chain, leading to more selection and lower prices for the consumer.
Retail Link performs the following:
- analyzes and controls global spend by category, volume, and product
- manages service level agreements (SLAs)
- avoids duplication of contracts or materials to the same supplier
- consolidates purchasing volumes and improves supplier selection
- involves partners in the early phases of product development
Inventory Visibility
Organizations maintain that inventory visibility makes them more competitive. “How much,” “where it’s at,” “what’s its status,” “who currently has it,” and “when can it be delivered” are questions all organizations ask about their inventory. Knowing and understanding these variables allow an organization to make better decisions pertaining to demand planning, replenishment stocking, and, most importantly, availability of inventory to fulfill customer orders. SRM systems are great tools to accomplish these business objectives. Even vendor managed inventory (VMI) is usually handled by some form of SRM system, normally through the supplier portal.
With the capabilities to view “in transit” inventory over multiple modes, an organization can control and manage potentially critical supply problems. The SRM system provides a unified view of inventory from one source that supports the business. Issues such as custom delays, extended lead times, scheduling conflicts, and transportation problems, to name just a few obstacles, can be adjusted and addressed within the SRM software. This advance notice of possible disruption to the supply of goods can provide alerts to all partners affected so that they may react accordingly and adjust to the disruption. The ability to view “in transit” products allows for accurate forecasting and replenishment. The collaboration of all the affected business partners allows organizations to respond to rapid market changes, and to deliver goods to consumers on time and at decent prices.
Stabilization of Technologies
The new millennium has brought stabilization of technology. The rapid growth of the Internet has allowed organizations to use stable technology to share information over secure channels. The second nature of this method of communication has allowed for stable connections between locations as well as increased throughputs of network communications, which had previously not been reliable in the 90s. Modem connections gave way to e-mail, digital subscriber line (DSL), and T1 connections, and fax machines became electronic data interchange (EDI), extensible markup language (XML), and flat files that were sent electronically. This level of technology may have been previously overlooked or neglected due to poor information technology (IT) infrastructure and non-communication between partners. These technological advances were catalysts in taking partner interactions and trading to the next level. As organizations have built their networks, and stable connections are now the norm, the industry is reaping the rewards of SRM systems
Web services have enabled business-to-business communication to progress. This is the base technology used for supplier portals, and it requires access from several locations globally. Any business partner can log in and check the status of a part, peruse an order, check an estimated delivery time, etc. based on user security. This convenience and information sharing is expected to be standard, as organizations try to limit shipping costs, plan efficient routes for their goods, control and manage suppliers, and minimize costs. Stable technology allows organizations options when implementing SRM systems. In terms of supply chain execution software available, only recently have vendors started to offer hosted models of software as a service (SaaS). Traditionally, this type of software was available only as in-house applications. Today, companies in all supply chain disciplines offer SaaS solutions, from demand management and warehouse management systems (WMS) to SRM. E2open, for one, offers a full SRM-hosted solution.
Secure access and availability of industry-specific hubs (such as automotive or aerospace) are offered through hosted solutions. This level of collaboration capability may not be possible through an in-house system. A hosted solution offers access to other trading partners online. This service makes it possible for even small organizations to compete globally and comply with mandated standards imposed by trading partners.
Supplier Accountability
Organizations have difficulty holding suppliers responsible. Metrics can easily be built within an SRM system because supplier data is located within the system. The collection of data gathered from the portal repository lends itself well to holding suppliers responsible for quality and compliance issues. According to an Archstone Consulting survey conducted in August 2006, 58 percent of organizations fail to use incentives and penalties to audit suppliers. Resources (approximately 49 percent) are not properly assigned to supplier management, consequently causing quality issues and duplication of resource managers for the same vendor accounts. Organizations assign duplicate resources to accounts without realizing it, which can be due to having several points of contact instead of just one, and time and money are spent unnecessarily to do the same job twice.
Issues with quality and lack of compliance are not accurately tracked. According to Archstone Consulting, 45 percent of organizations believe that suppliers do not comply with their own SLAs when they deliver product. Organizations have been looking at ways to change their sourcing and procurement strategies to get the above metrics back in line. They are beginning to see the value of the information a portal can supply. Consequently, the data aggregated from an SRM system can be used to analyze spend, cost, and performance, and eventually to align the data to the business practices.
Conclusion
Organizations are realizing that the issues an SRM system can address can significantly influence their bottom lines. Factors such as globalization, mandated standards, inventory visibility, stabilization of technologies, and supplier accountability are forcing organizations to reevaluate the need for an SRM system.
SRM solutions exist today that were not available just a few years ago. The possibility of a hosted solution for SRM, such as those offered by SAP and E2Open, are now more available than they have ever been. Of course, an organization always has the option of implementing in-house applications. Stabilization of technology has lowered the price points of these systems, which are allowing more organizations to take advantage of benefit from the vast benefits an SRM system can offer.
Common benefits of an SRM system include
- increased customer service
- accurate forecasting and product planning
- control of global spending
- control of procurement and sourcing
- greater inventory visibility
- reduced inventory carrying and holding costs
If these are organizational goals that are mandated from the top down, then an SRM system may be the solution to implement some of these initiatives, while receiving a return on investment (ROI) that is palatable.
Tags: generation business, inventory, inventory visibility, North American, operational efficiency, SRM, supplier, supplier relationship management, supplier relationships, supply, system
Posted in Uncategorized | No Comments »
|
|
|
|
