A recent conference in Dublin heard that a third of traditional software projects fail. CIOs in large organisations are under increasing pressure from business units to deliver usable technology more quickly. As markets slow, business users can ill afford to wait around for 18 months while an on-premises software development is rolled out.

Speed, ease of implementation, no capital investment costs and rapid return on investment have been the driving force behind the growth of Software as a Service (SaaS). But can it deliver to enterprise the benefits it has demonstrated across SMEs?

I believe there are four great myths when it comes to enterprise implementation of SaaS…

Myth 1: SaaS is only for SMEs

A recent report from Saugatuck Technology found that only 4% of large enterprises (5,000-plus employees) are not planning on deploying SaaS.

Myth 2: SaaS is only for CRM

Michael Ybarra, author and monthly columnist for SearchCIO-Midmarket.com, comments that the SaaS model continues to win adopters because of its speed and ease of deployment. While the most popular applications continue to be human resources, collaboration and CRM, more companies are also looking at the model for enterprise systems as well.

Myth 3: It’s hard to integrate SaaS with legacy systems

A Forrester survey found that integration was the most common reason why tech execs shied away from SaaS. However, according to Frank McCracken, a founder and executive vice-president of Saaspoint, many firms are missing out on the benefits of SaaS because they think that integration with existing legacy systems such as Oracle, SAP or Sage is impossible or overly complex and time consuming. But, he says, SaaS applications vendors have a better track record of maintaining stable APIs than do the legacy on-premises vendors. He points out that not only can CIOs retain their legacy on-premises software but they can also enhance its usability and adoption. The traditional headaches around integrating and making software upgrades compatible are eliminated under the SaaS model.

Myth 4: SaaS is not for enterprise application developers

According to David Linthicum of ZapThink, enterprise architects must plan for SaaS. “Many Global 2000 enterprises could find that 20-30% of their enterprise applications are SaaS-delivered and need to function like any other enterprise system, working and playing well with others – users, legacy systems etc.” Meanwhile, Beagle Research Group points out a major reason why SaaS has infiltrated the enterprise, suggesting the traditional software paradigm is in serious trouble. “Application development has become complex and expensive to the point that it presents a serious impediment to business growth,” it says.

One of the drivers for SaaS becoming central to enterprise application is that it releases CIOs and their developers to innovate. As the research company CXO Media points out: “Too often, IT departments are infrastructure mills, with most of their resources bound up in the rote exercises of maintaining hardware, patching software, tuning databases and running backups.”

A study by IDG Research Services with CIO Magazine subscribers in March 2007 found some 80% agreed that on-demand allows IT to focus more on innovation and less on infrastructure.

Saugatuck Technology puts it best: “SaaS is expanding well beyond its early low-cost, easy-to-deploy, niche application roots to become an important business computing force that is fully integrated with broader enterprise architectures. SaaS is growing up and going global.

SaaS could indeed be the catalyst that finally transforms the CIO into an enterprise’s chief innovation officer.

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When implementing new business software, implementing on time and on budget is not by chance. As with any project plan, a detailed and methodical process must commence to insure success. A plan for implementing new enterprise software is no different than any major project being undertaken by a corporation. It requires a significant investment of time and resources, requires the involvement of virtually the entire organization, as well as a considerable amount of research, planning, and reevaluation along the way.

The best project is well thought out and fully researched. It is not limited to a budget and timeline, but focuses on tasks, owners, goals, and milestones. It begins at the time of software selection and goes well beyond go-live. And although most projects will stumble along the way, successful implementations that actually end on time and on budget are quite possible if managed properly.

Review Key Business Objects & Long-term Goals - The first step and probably one of the most overlooked steps, is to review key business objects and future organizational goals.

Establish a Team & Define a Leader - The need of acquiring new software is typically driven by a few, yet felt by the masses. Frequently a few over zealous employees take on the project and believe they can manage it themselves. Although this is always done with good intentions, it leaves the project open for unending delays due to resource constraints. A software implementation is more work then any one individual can manage. Even the most well intentioned type A individual will quickly realize implementations can be overwhelming if not managed with a solid set of resources.

Prepare a Project Plan, Meet, & Reevaluate Frequently - As with any project, a plan is critical. The project plan includes a definition of the project structure, project scope, and individual project phases and tasks.

Research & Prepare a Budget - One of the most common areas of frustration and delay is the project budget. Overeager project managers tend to underestimate the cost of software, hardware, and implementations just to get the project moving. Not only does this cause much angst among the executives, it many times stops the project flat. Budgetary mistakes and lack of funding put more projects on hold than virtually any other reason. And for the most part, this is completely due to lack of education, because the price of ERP software and related services shifts little from year to year.

Define Clear Requirements & Project Goals - Yes this is being reiterated again. Functional requirements and project goals need to be established early on and in very clear and specific terms.

Select the Right Package - Select the right package for the right reasons. Do not accept glitzy PowerPoint presentations or slick salespeople. Dive into the software supplier’s organization, product, support team, and long-term objectives. Due the due diligence of reviewing full day demonstrations, checking references, and talking to key executives. Document everything. After reviewing multiple demonstrations, the systems tend to meld together into one large mess.

The team needs to clearly evaluate and document each presentation, meeting, or customer visit. This will be well worth the time in the end.

Testing, Testing, and More Testing - Now the time has come to really get into the heart of the implementation. Testing is futile without the right package, which is why so much time and effort is placed on the selection process. That being said, testing is absolutely critical for success.

Establishing and executing a comprehensive test plan with good test data is paramount for success. This test plan must address the core business processes used within the organization to prove that consistent and predictable results will occur when processes are executed in a production environment.

Data Migration - Successfully migrating data is much more than merely extracting and importing files. It is an ongoing process that should occur numerous times before actual go live.

It includes extracting pertinent data from the existing legacy systems, cleansing the data for any errors or inaccuracies, importing the data into the new ERP environment, and then verifying that the data came across correctly. Again, the word testing comes back into play.

Training the End Users & Technical Staff - Adequately training functional users and technical resources is timely and expensive. It is unavoidable. Without proper training, users will feel frustrated, confused, and will immediately have a negative reaction toward the new system. This will, without doubt, produce a failed implementation each and every time.

Seek Outside Assistance if Needed - Third party, independent consultants can quickly turn a floundering team or project into an implementation powerhouse. Most companies only purchase and implement business software every five, ten, or fifteen years. They are not well verse on the subject and should not be due to the lag between projects. Technical consultants not only have the knowledge to execute a flawless launch, they also provide years of lessons learned that can be applied to future projects.

Take Control & Take Away Failure - Execute on time, on task, and on budget by controlling the entire project through conception through go live. Led by in house or through an outside professional, flawless executions of software implementations are possible. They do not happen by chance, on their own, or without effort. But they are certainly a reality if given the right team and project plan.

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Aberdeen Group’s most recent survey of over 650 mid-size companies found that pressure to improve customer service and response times was the top business driver of ERP strategies in Best-in-Class companies (44%). However, expectations of growth dominated those not Best-in-Class (48%). These two pressures actually work in concert; Best-in-Class firms realize this and view customer service as a competitive differentiator to fuel growth. These results were recently published in “The 2007 ERP in the Mid-Market Benchmark Report: Serving the Needs of 1.2 Million Businesses” by Aberdeen, a Harte-Hanks company (NYSE: HHS). Findings in the report concluded that implementation of ERP in Best-in-Class firms produced significant performance improvements including…

– 21% reduction in inventory levels
— 17% reduction in manufacturing operational costs
— 16% reduction in administrative costs

In addition survey results showed Best-in-Class firms take 3.6 days to close a month, less than half the time it takes Laggard companies, and achieve superior performance in metrics critical to customer service including:

– 95% manufacturing schedule compliance
– 96% on-time and complete shipments
– 97% inventory accuracy

“While both profitable growth and customer service are dominant factors impacting ERP strategies, as mid-size companies grow, they must learn to operate in a distributed environment and often experience a proliferation of ERP systems. This may be unavoidable if growth is through acquisition, but can be controlled when growth is organic,” says Cindy Jutras, Vice President and Group Director, ERP Research, Aberdeen Group. “Even when confronted with disparate ERP implementations, companies are well-advised to adhere to standardize ERP implementations. Where multiple ERPs have been acquired, you will ultimately be faced with a decision to rationalize ERPs or not. Consolidation efforts have an enormous potential for saving time and money, but there is a price to pay in terms of software and services costs as well as business disruption in order to reach this goal. Ultimately those projects which have a dual purpose of reducing costs and standardizing business processes achieve the most success.”

A complimentary copy of this report is made available due in part by the following underwriters: SAP, Answerthink, IDS Scheer, itelligence and Emergys. To obtain a complimentary copy of the report click here.

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Speed is often a virtue, but businesses that focus on it as a measure of success tend to overlook the true potential ERP has for transforming their operations.

“There is more focus in smaller companies on just getting things in there, which is probably why they’re so fast,” said Cindy Jutras, vice president of manufacturing and ERP research at Boston-based Aberdeen Group Inc. “At the same time they seem to stop short of taking it to the next level. They get in there, and then they kind of stop.”

According to an Aberdeen survey of 1,200 manufacturers about ERP adoption, 86% of small companies achieved their first “go live” milestone within their first year with ERP, whereas midsized companies reached “go live” in less than a year just 64% of the time and large companies just 47%.

Jutras said 24% of the 450 small businesses (companies with less than $50 million in revenue) surveyed measured success by the amount of time it took them to reach their first “go live” milestone.

Jutras said small companies look for a quick launch because of limited resources. There’s only so much time they can devote IT and business staff to getting an ERP system up and running.

Speed is a virtue, but not when it’s a measure of success, Jutras said. There are better performance metrics to measure for, she said. Without them, small businesses won’t be getting the most out of their investment.

“I think they get up and running faster than larger companies but they don’t necessarily use all the functionality that they have available to them,” Jutras said. “There is still a huge reliance on things like spreadsheets. Management by spreadsheets is alive and well not only in small manufacturers but predominantly in small companies.”

Successful implementations are more likely among small businesses that actually set out metrics for measuring return on investment (ROI) and cost savings. Jutras said her survey revealed that less than one-third of small businesses actually compute ROI for ERP.

Eric Klein, research analyst at Boston-based AMR Research Inc., said small companies often are nervous about getting bogged down in the complexity of an ERP implementation. That nervousness partly explains the slow growth in ERP adoption among small businesses.

Klein said vendor revenue from ERP adoption among small customers — those with revenue less than $50 million — grew by just 3.3% last year. It’s the midmarket firms, with revenue between $50 and $250 million, that are seeing the robust adoption rate at 17%. And ERP revenue grew by 13% among companies with $250 million to $1 billion.

“There is a mindset of ERP being too complex,” Klein said. “I think a lot of businesses are afraid of how long it will take to make it work.”

For more, be sure to check out the complete source article.

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Speed is often a virtue, but businesses that focus on it as a measure of success tend to overlook the true potential ERP has for transforming their operations.

“There is more focus in smaller companies on just getting things in there, which is probably why they’re so fast,” said Cindy Jutras, vice president of manufacturing and ERP research at Boston-based Aberdeen Group Inc. “At the same time they seem to stop short of taking it to the next level. They get in there, and then they kind of stop.”

According to an Aberdeen survey of 1,200 manufacturers about ERP adoption, 86% of small companies achieved their first “go live” milestone within their first year with ERP, whereas midsized companies reached “go live” in less than a year just 64% of the time and large companies just 47%.

Jutras said 24% of the 450 small businesses (companies with less than $50 million in revenue) surveyed measured success by the amount of time it took them to reach their first “go live” milestone.

Jutras said small companies look for a quick launch because of limited resources. There’s only so much time they can devote IT and business staff to getting an ERP system up and running.

Speed is a virtue, but not when it’s a measure of success, Jutras said. There are better performance metrics to measure for, she said. Without them, small businesses won’t be getting the most out of their investment.

“I think they get up and running faster than larger companies but they don’t necessarily use all the functionality that they have available to them,” Jutras said. “There is still a huge reliance on things like spreadsheets. Management by spreadsheets is alive and well not only in small manufacturers but predominantly in small companies.”

Successful implementations are more likely among small businesses that actually set out metrics for measuring return on investment (ROI) and cost savings. Jutras said her survey revealed that less than one-third of small businesses actually compute ROI for ERP.

Eric Klein, research analyst at Boston-based AMR Research Inc., said small companies often are nervous about getting bogged down in the complexity of an ERP implementation. That nervousness partly explains the slow growth in ERP adoption among small businesses.

Klein said vendor revenue from ERP adoption among small customers — those with revenue less than $50 million — grew by just 3.3% last year. It’s the midmarket firms, with revenue between $50 and $250 million, that are seeing the robust adoption rate at 17%. And ERP revenue grew by 13% among companies with $250 million to $1 billion.

“There is a mindset of ERP being too complex,” Klein said. “I think a lot of businesses are afraid of how long it will take to make it work.”

For more, be sure to check out the complete source article.

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When asked, business users will grudgingly concede that they have realized some value from their enterprise resource planning (ERP) investments. They have done so by standardizing global processes such as order-to-cash and procure-to-pay, and facilitating cost reductions through arduous business re-engineering efforts and major reorganization around shared services.

However, these same business users get much more animated about the ability to analyze their business performance globally. In fact, the ability to analyze is always at or near the top priority of virtually every spending survey AMR Research conducts. Being able to quickly show how they can “slice and dice” all the data captured in their ERP systems leads to a much better understanding of myriad metrics such as which products are selling in each part of the world, average selling price, best- performing salespeople, contribution of each product to profitability, and other sales and financial performance measures.

Most Business Intelligence Looks In The Rearview Mirror

Running today’s global manufacturing enterprise on ERP and traditionally implemented BI is like driving down the New Jersey Turnpike in reverse at 65 mph using only the rearview mirror. ERP architectures are optimized for transactional efficiencies rather than real-time reporting. In many cases, BI platforms must go through a time-consuming “extract, transform, load” process to turn ERP data into intelligence that can readily generate standard reports and facilitate the slicing and dicing that allows business users to analyze performance rather than spend 70% to 80% of their time collecting data, as they used to before ERP and BI.

If you are always looking in the rearview mirror, you miss what is going on around you right now. That is a recipe for disaster in today’s highly dynamic business environment. By the time you detect an operational problem in BI, you have already made poor-quality products and missed orders.

Operations Intelligence Required For Demand-Driven Networks

The re-emergence of the strategic role of manufacturing has led to a dramatic resurgence in IT spending on operations software. Respondents in AMR Research’s latest IT Spending survey of more than 1,000 manufacturers indicate that production software is their most strategic software investment and garners the largest share of their IT applications software budget in 2006-2007.

This resurgence in spending has been spurred by the need for real-time visibility of manufacturing performance. While real-time dashboards for plant operators based on supervisory control and data-acquisition systems have been around for a long time, the data presented to operators for safe control of the manufacturing process have little meaning to a supply chain manager, customer service representative or the CFO. Real-time manufacturing data need to be put into many different contexts for other roles in the organization that are contributing to the optimal performance of the real-time enterprise.

Checklist: How to decide if you need a business intelligence/operations intelligence solution.

• Are critical business and operational data available to all rather than a select few?
• Do you know with certainty which customers/products/channels are most profitable?
• Do you know which suppliers have the best on-time delivery performance?
• Does your firm have complete visibility of manufacturing key performance indicators across the full enterprise?
• Can you effectively sense and respond to dynamic changes in demand and/or supply?
• Is there a definitive source of business and operational data that everyone uses?
• Can you use information today to predict performance tomorrow?
• Is the right data available at the right place at the right time?
• Are your real-time data needs being met today?

If you answered “no” to any of these, then it would make sense for you to evaluate a business intelligence/operations intelligence solution.

For much more on this topic, including a discussion of specific related technology solutions, check out the complete source article.

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Here are several excerpts from an article by Rick Whiting, Software-As-A-Service Faces Its Next Big Test:

Dave Duffield, founder and former CEO of PeopleSoft who lost a takeover fight with Oracle, is about to take another run at the software market, this time without the software. His startup, Workday, will offer ERP applications as pay-as-you-go services. The pitch: ERP, fast and easy.

Any professional who has experience with these financial, HR, manufacturing, and other business apps will be intrigued–and suspicious. ERP is notoriously complicated, so the prospect of no-hassle implementation and management is hard to ignore. Then reality sets in. What about data security, scalability, regulatory compliance, systems integration, and customization?

Businesses may not be ready to run their most critical processes on software managed by a third party. “There is an element of risk, since you’re letting part of your business out the door,” says Bernie Sims, project director for KP SalesConnect, Kaiser Permanente’s sales force automation system, which is based on Salesforce.com’s software services.

SLOW TO DEVELOP

Software as a service is starting to gain favor for several reasons: It’s relatively easy and inexpensive to implement; it’s flexible; it doesn’t require as much infrastructure; and its costs are more predictable. Gartner predicts that 25% of new business software will be delivered as services by 2011, up from 5% last year.

CRM services have set the pace, led by Salesforce, whose sales grew 64%, to $118 million, in its second fiscal quarter. Gartner estimates that software services accounted for 8% of CRM revenue last year and will jump to 12% this year.

Demand for software as a service beyond CRM has been slow to develop. An InformationWeek cover story titled “The End Of Software,” a slogan later adopted by Salesforce, predicted the rise of software services as far back as October 1999. By Gartner’s estimate, however, a mere 4% of ERP and supply chain management software revenues last year were generated by services.

CUSTOMIZE AND INTEGRATE

Vendors have addressed some of the limitations of software as a service, including the inability to customize the apps and integrate them with other on-demand or on-premises software. Forty-five percent of the 3.1 billion transactions Salesforce processed in the second quarter were conducted through Web services APIs, meaning they involved systems external to the vendor, says George Hu, Salesforce’s chief marketing officer.

Salesforce and rival NetSuite recently introduced programming languages that help with customization and application integration.

Software as a service “no longer means isolated data, because companies are beginning to successfully integrate on-premises data sources and software applications with data and applications hosted by their SaaS providers,” according to a Gartner report.

Customers have come to regard software as a service as reliable, or at least reliable enough, despite several service outages at Salesforce that spooked some companies. “None of us has 100% uptime and availability, across the board, 24-by-7,” says Jeff Guillot, executive VP of product and technology at Hoover’s, a business information company that has 350 sales reps using Salesforce applications. Of Salesforce, he adds, “Their track record is pretty solid.”
 
FOLLOW THE LEADER

Workday is following the Salesforce business model, Duffield admits, including plans to charge annual subscriptions on a per-user basis, though prices haven’t been set. Applications will be hosted on a multi-tenant basis in a third-party data center managed by Workday.

The software incorporates objects that represent, for example, the category “employee” and business services such as “hire,” which are managed by an object management server. Object-oriented applications are more flexible and easier to customize than hard-wired code. Companies also will be able to integrate Workday apps with other IT systems, such as an SAP application, using XML and Web services. Built-in data encryption will ensure privacy and security. And an Ajax-based user interface will make Workday more interactive than other on-demand apps, Duffield promises.

For more detail, check out the complete source article.

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Satya Nadella, the Corporate Vice President of Microsoft Business Solutions (and the leader of Microsoft’s Project Green; see What Microsoft’s “Project Green” Will Mean ) is sharing his thoughts, opinions and insights in his own weblog. Some of his recent posts include:

MBS Solutions and Partner Opportunity
People Centric - Business Process
MBS Technology Roadmap - Convergence & Beyond

For more on Satya, also check out the following:

MIcrosoft ERP - An Interview with Satya Nadella
Q&A: The Greening of Business Apps

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A recent article in TechTarget’s new SearchSMB.com service, SAP for SMBs? You Heard Right, notes the following:

When Julie Sharpe’s $50 million company went looking for new enterprise software, SAP wasn’t even on the list of candidates because of its reputation of catering to large companies.

Disappointed by the first round of potential vendors, Sharpe started from scratch, adding SAP to the list. Eventually, her company chose SAP over the objections of an outside consultant.

Sharpe was one of three IT professionals from midmarket companies contending with rapid growth and global expansion over the past decade. At SAP’s Sapphire event, the company’s annual U.S. user conference, they discussed why they chose SAP and advised IT professionals what to do in similar situations.

“We had a modern product, we wanted a modern organization,” said Sharpe, explaining the upgrade from an MS-DOS system to SAP’s ERP and customer relationship management systems.

Though their products are very different, the three companies had similar needs: a scalable system to help streamline business operations and compete worldwide.

They chose SAP over companies like Oracle Corp., J.D. Edwards & Co., PeopleSoft Inc. and Siebel Systems for reasons ranging from SAP’s solid financial situation to the global features of its products and scalability of its software.

None of them expected SAP to be interested in their business.

“In 1995 we couldn’t get SAP to talk to us,” said Don Brekke, vice president of IT for Greenheck Fan Corp., a $340 million company based in Schofield, Wis., that makes and sells fans, ventilators and blowers.

Brekke said he has seen a new push from SAP to win business from midmarket companies…

See the source article for more insight into SAP’s push into the mid-market space.

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