Why Mobility in ERP Matters to Small and Midsized Businesses

Small and midsized businesses (SMBs) that are looking to update from Quickbooks to an ERP systems – take note. Mobility-enabled ERP should be at the top of your requirements list. Sounds too newfangled? You’re just looking to move to a full-fledged ERP system but not looking for all the bells and whistles? That’s the wrong way to look at it.  As a SMB company, your chief concern is driving growth – expanding your business, scaling to new locations, and adding new divisions.  Well, that is the reason to evaluate an ERP system that has the ability to support growth. While first and foremost, you should look for a complete, pre-integrated solution that offers coverage of all of your key business processes so you can run your business, why should a “complete” solution not also include mobile enablement?  We order take-out on our iPhones, we rate our favorite restaurants, and play games all day. We essentially interact on our phones the majority of our non-working and working day. SMB execs are even more likely tied to their phones – getting business done on the fly. Why should they not be able to approve important sales orders, track freight shipments, approve time-sensitive and operational-critical access requests, all on their iPad or Blackberry? There is absolutely no reason why ERP mobility enablement is not at the top of your list.

A recent study completed by Aberdeen Group, “Mobility in ERP 2011” shows that “best-in-class” companies shared several common characteristics, including:

·         More than three times as likely as all others to make mobility strategy an inherent part of their ERP implementation

·         68% more likely than all others to notify decision makers immediately if exceptions in business processes occur, regardless of time or location

·         Twice as likely to be using mobile devices to automatically collect data for ERP data entry

These “best-in-class” companies have the following performance advantages over laggard companies:

·         90% less time spent looking for information

·         7x faster time to decision

·         19% better inventory accuracy

So SMBs – take a page from the big guys. Become “best-in-class” to enable your growth while managing operational costs.  More and more companies are looking for mobility to support the way they do business. In fact, the top driver for investing in mobility is cost reduction.  Out of 99 manufacturing companies surveyed in Aberdeen’s study, “ERP in Manufacturing: Measuring Business Benefit and Time to Value,” 44% note that ERP is a key component in reducing cost of operations. Access to ERP for mobile workers is second to reducing costs, at 39% of respondents.

Let’s take the example of ERP payment approvals. As a cash manager or financial executive, your priority is to ensure the liquidity of your company at any time. In this context, you have to check certain outgoing payments before the corresponding payment media are created and sent to the bank.  If your ERP financials were accessible on your mobile device, you could get notified of payments that need to be approved or rejected and address them at any time on-the-go instead of waiting to get back to the office to do it. SAP will be delivering an iPhone app like this in September for SAP ERP 6.0, amongst other apps like ERP Order Status for sales reps to check orders and an ERP Customer Financial Fact Sheet app for sales reps to check the financial situation of customers.  (See screenshot below).

Clearly, mobility will be used mostly by mobile workers, such as sales reps, field service, and warehouse employees. But mobility to support non-mobile workers that make time-sensitive decisions based on ERP data is just as important. Visibility and quick access to information leveraging mobile devices means folks are spending less time chasing down information in reports and ERP systems at their desks. ERP mobility can be part of a larger strategy to get information to the right people at the right time so you can power your employees to act.  

SMBs that need to empower every employee to be productive and efficient while managing growth at the same time can’t afford to let mobility in ERP be an afterthought. Set priorities on what roles and functions get mobile access to ERP and ensure that mobility in ERP is part of your larger strategy as you being to standardize your systems. According to Aberdeen, only about half of management and sales are using their mobile devices to access ERP data − that’s just abysmal. Learn from the big companies --- identifying the right device, for the right role, with the right level of ERP access will lead to improvements beyond your typical ERP implementation. But that requires context and strategy setting. Be clear on your goals and make mobility work for you.  

Oracle Serves Up Another Quarter

Oracle issued its Q1 Fiscal Year 2008 earnings on September 20 after U.S. market close. Financial analyst consensus estimates were for ~$310m in application revenues. With a reported application revenue number of $376m, ORCL came in significantly higher than market expectations.

Oracle served up another great quarter. They blew their numbers out of the water so it's strange that they didn't set higher expectations with the analysts. Safra continues to maintain that there were no significantly large deals but I've heard otherwise. Oracle's deferred revenue stream is pretty big. Frankly, Oracle can cut its deals any way it wants and chunk up large deals across quarters. A lot of financial engineering to make it look however they want it to look. Adam Holt from JP Morgan even asked Safra about the deferred revenue and she replied:

Some of our customers are signing up for things that we just aren't booking right now because they don't meet our revenue recognition policies for booking now, so you'll see some of that.

That just means large deals are strewn from quarter to quarter. Of course, this is not to say that Oracle is not doing well. Everyone can see they are. But the majority of it is still consolidated revenue from acquisitions and that won't change.

I found it particularly interesting that Oracle is trying to position itself as having the broadest portfolio by referencing its competitors across apps, middleware, and databases. Larry keeps pointing to IBM and SAP in order to establish Oracle as a worthy contender. The marketing seems to work. What was hypocritical though, was that Larry kept saying on-demand and the SME market opportunity is a non-starter and that SAP is a fool to go down-market. Why is it then, that Oracle is investing heavily over the next year in Siebel on-demand?? Why is it that Larry has a stake in NetSuite?

Also, how is it that Larry is trying to box SAP into just an ERP or SME provider? Meanwhile, Oracle serves industries?? SAP has been serving industry specific solutions for years and years. I wouldn't call Oracle's strategy differentiated. More like copy-cat. What I will give Oracle is that they have turned a negative into a positive with its best-of-breed positioning - which in turn is its vertical industry pitch. They realized they couldn't deliver Fusion and decided to instead just sell the hell out of what they had. Only doesn't everyone remember when Larry said "best of breed is only for dog shows"?

In any case, Oracle is going to have good quarters going forward as pent-up demand from PSFT, JDE, etc. rebounds and it continues to cross-sell and make acquisitions. But I wouldn't count out Salesforce.com, Microsoft, BEA, IBM or SAP! Just because Larry says doesn't make it so!

A1S Debuts Tomorrow

SAP is finally unveiling its new SME software, A1S. This long awaited product launch is so secretive, they kicked us out of our NYC office today in preparation. A1S is an entirely new SOA-enabled platform entirely architected for small businesses. It's about time there's a real competitive ERP offering for this market. I think if SAP plays its cards right, it can freeze Oracle out of this opportunity. The real competition will come from the likes of Salesforce.com and Microsoft of course.

Having been with the company for even just two years, one can see that SAP does not shift in strategies lightly. I think SAP is betting on the right horse even if Wall Street is obsessed with Oracle's much sexier M&A moves. Long-term, SME market dominance will be critical, but that's not to say other important categories like middleware or industries isn't. I for one, would love to see some more SAP marketing around how we're kicking competitors butts in utilties and retail or how Netweaver is a natively integrated platform. But right now, the prize is SME and all eyes will be on it tomorrow when A1S makes its debut.

Congrats to Oracle

Oracle posted a 35% jump in net income on strong gains in revenue from new software licenses. Overall sales rose 27% to $4.41 billion.

It's hard to argue with a good quarter...so congrats to Oracle. It seems like the press and analysts are really buying into its aggressive M&A approach. What's paid off is the installed base that came with the acquisitions of PeopleSoft, JD Edwards, and Siebel. A year ago, these customers were on the verge of jumping ship but Oracle's Applications Unlimited program saved the day (offering customers lifetime support) . Now, Oracle is reaping the rewards as evidenced by its success this quarter.

Oracle's apps license of $423 million is however, still about 4x less than SAP's $1.7 billion last quarter. In regards to Larry's statement about growing consistently and rapidly to overtake SAP--assuming that Oracle continues to grow at 32% (very optimistic) and SAP continues to grow at 7% (overly pessimistic), it would still take Oracle 7-10 years to overtake SAP. A lot of what Oracle says about being on par with SAP is hype. But Oracle is a worthy competitor and it definitely has legs to stand on. What was interesting about the earnings call today was that there seemed to be a shift away to attack BEA instead of SAP. I don't envy BEA's position. Oracle has a great middleware story and BEA will have a tough time standing its ground.

The one thing that I did think was odd was the mention of SAP's A1S launch. Oracle's trying to spin a story about how SAP is launching "lots of ERP systems" while Oracle is taking a one suite approach. That just seems strange to come out of Larry's mouth when Oracle is actively developing, maintaining, and selling at least three separate ERP systems. The SME market is a legitimately lucrative opportunity, I don't think anyone would refute that; and the fact that SAP is offering apps that better fit these SME's needs is a step in the right direction.

Unbreakable Linux Expectations

Unbreakable Linux Proves Unpopular as Red Hat Shares Rebound
Unbreakable Linux was downloaded 9,000 times in the first 30 days, according to comments made by Redwood Shores, California-based Oracle’s president Chuck Phillips during the company’s recent earnings call. Compare this with the download rates for Red Hat Inc and Novell Inc, however, and it is almost insignificant.

While it may seem Oracle's Unbreakable Linux program is not gaining the traction it should, I highly doubt that Larry expected to convert the masses. The program is more a signal of a continuous shift for Oracle to cover the entire IT stack. Meanwhile, Oracle makes a few bucks on services without a significant investment. Moreover, it's really a defensive move against operating system providers. Oracle wants to neutralize Microsoft’s dominance in the OS layer, prevent open source competitors like Red Hat from inching up the stack, and cover an area that IBM and SAP does not own. So I don't think Oracle is spending any sleepless nights worrying about the progress of its Linux program and comparing it against Red Hat or Novell.

SAP Does Enterprise Search Widget-Style

InfoWeek did a short piece on SAP's Enterprise Search product and how it will offer flexible searches for back-end data. It's all a part of the Information Worker concept SAP introduced with the Duet partnership with Microsoft. I think it's about time we had something like this. Letting business users access back-end data through widgets and other easy-to-use tools is the way to empower the information worker. It's all about making information access simpler.

But that's not all SAP has in store for 2007. Enterprise Search, which the company will also introduce in the first half of the year, looks to me to be one of the more interesting products of 2007. As you know, most search products focus on text. If you're looking for news, reviews, or an esoteric piece of information about an obscure author, Google is the way to go. But what if you want to know the status of a customer shipment, how much inventory is left, who is so-and-so's supervisor, or whether I am authorized to give him or her a raise? These are the kinds of questions Enterprise Search is built to answer.

SAP is also seeding the development community with a toolkit to build what you might call it applets, widgets, or gadgets, ala Microsoft Vista, for SAP. The company is also building its own gadgets that give you an alert box for, say, an RSS reader that tracks business events rather than news or blogs. That way, a sales manager can monitor when a sales rep closes a deal, for example. There are also alerts for corporate KPIs (key performance indicators), as well as alerts for tracking workflow queues, such as notifying a purchasing manager of requisitions waiting for approval.

Sounds like a dashboard, but these applets embody more of a Web 2.0 approach — they’re updated over the Internet, you don’t have to install anything, they’re more dynamic than what you get with a dashboard, and you get to pick the ones you want.

Fusion Downgrade

BusinessWeek did a story on Oracle's earnings next week and how Oracle's integration project progress (or lack thereof) is the reason for its downgrade.

First Albany Capital analyst Mark Murphy on Friday downgraded software developer Oracle Corp. to "Neutral" from "Buy," saying the stock is pricey, growth is likely to slow and the company may have trouble integrating its many acquisitions.

"Investors are too complacent if they believe that the largest, messiest, most complex application integration project in the history of the technology industry will go off without a hitch," Murphy wrote in a research report.

Oracle Loses Key Retail Bid

InformationWeek did a story on the lack of integration of Oracle's retail solution set and how that led to a lost bid to SAP. Despite all of Oracle's commotion in retail, I think marketing is one thing but customer choice speaks volumes.

Oracle Loses Would-Be Customer To SAP Due To Integration Concerns

• One of the biggest turnoffs to Oracle, says Sport Chalet CFO Howard Kaminsky, was -- ouch -- lack of integration between Oracle financial applications and the retail apps of Retek, which it acquired about 18 months ago.
• SAP's offering for the retail market, by comparison, "was ahead of its time in that a lot of pieces were integrated," Kaminsky says.
• Such impressions on would-be customers aren't good for Oracle, as the potential difficulty of integrating its myriad acquisitions is the biggest question hanging over its success in ERP.
• "We went out and looked at all the usual software companies that relate to retail," Kaminsky says. "At the time we didn't expect SAP to be in the running; we didn't know they were that interested in the middle market. They came back very aggressively and said they were very interested."