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The developed world has an embarrassment of riches when it comes to information technology. Individuals walk around with far more computing power and data storage in their pockets than was required to send men to the moon. People routinely hold on their laps what would have been considered a supercomputer a generation ago. There is a wealth of information available on the Web. And the costs of these information assets are a tiny fraction of what they were decades ago. Consumer products have been at the forefront in utilizing information technology capabilities. The list of innovations is staggering. The “smart” phone is positively brilliant. Games are now a far bigger business than motion pictures.

VR Logo Bug Square BufferYet few business users are tapping the full potential of today’s systems. Most organizations have been slow to integrate IT innovation into their core processes. Companies have made considerable investments in information technology, but their business methods have been slow to adapt to the resources available. For instance, software for incentive compensation software and for planning and budgeting has made it possible to improve these processes, but most companies manage compensation, budget and plan in much the same way they did decades ago. To be sure, it’s much easier for individuals to adopt new tools for themselves than it is to align groups and executives in corporations to change proven approaches – even mediocre ones. But it’s also the case that business software must make it easier for individuals to realize more of the potential of information technology. And this part of the evolution of business software is only beginning. This is the context in which I took note of two emerging capabilities of IBM’s business software. One is its Concert user experience software and the other its emerging application (not yet officially named) designed to make advanced analytics more consumable. These are two important capabilities IBM highlighted at its recent Insight user group meeting and Big Data and Analytics analyst summit.

Integrating processes and data across a business has long been a challenge for IT departments. Some decades ago the issue of “islands of automation” emerged as companies implemented stand-alone business applications one by one to perform some function but then realized that it would be handy if these could share data and manage processes from start to finish. Initial progress toward this goal was made in the form of applications such as ERP that offer integrated functionality and enterprise data stores, although these often were difficult to implement and complex to maintain. Lately, software vendors have been refocusing to provide users with ways of facilitating end-to-end process management and making data more accessible.

IBM Concert is such an attempt. Announced in November 2013, it is a user interface IBM designed to be the central touch point across multiple applications and data stores. (It’s possible to link Concert to other vendors’ software, but it’s unlikely that a company would buy it on its own to link other applications.) It’s meant to replace menu-driven interactions between the user and the system with “I want to do this process” and a “day in the life” approach to organizing how individuals access applications and data. IBM Concert is an example of how we are only now beginning to achieve the longstanding objective of having IT systems conform to the user’s needs rather than the opposite. On a single screen Concert organizes personal task lists and presents metrics, conditions and dashboard elements configured to an individual’s preferences so the user can easily monitor conditions and enable more management by exception. Users can organize the data they need to support a given process right in front of them rather than having to go to some other application to fetch that data.

IBM Concert also has a social component that provides the ability for users to collaborate in context. Social applications generally have improved organizations’ connectedness. They offer greater immediacy than “copy all” email, greater inclusiveness than chat software and better communication in a mobile and geographically dispersed workforce. Initially, social applications took a broadcast approach similar to an unfiltered Twitter feed but as I pointed out at the time, that wasn’t a useful approach. As anyone who has used Twitter during an event can attest, the volume of messages quickly exceeds one’s ability to pick out the important ones. Moreover, not everyone wants to share information broadly, especially, for example, finance departments. Concert by contrast “understands” the area in which the individual is working and connects him or her to the conversations of others who are part of the group that needs to collaborate on that specific task. Users also apply hashtags to add a specific context to the message.

I think that Concert has the potential to become the nexus of business people’s computing environments and a sidekick that helps them stay organized and informed, get alerts, collaborate, find answers and explore their workday world.

Both at Vision and again at the Big Data and Analytics analyst summit, IBM previewed Project Catalyst Insight which is a not-yet-named application that is a significant advancement from its SPSS Analytic Catalyst software. Making big data and analytics more useful and consumable by the white-collar workforce (and even some of the blue collars) would be provide a major boost to organizational performance. By itself, a mass of data is not especially useful, and there are significant challenges to teasing out insights from large data sets, especially when that requires sophisticated analytical techniques. Another as-yet-unnamed application from IBM is designed to make big data and analytics more consumable and more useful. Typically large volumes of data are now accessible mainly to those with Ph.D.s in statistics or otherwise highly trained. The main objective of this project is to package advanced analytics routines for use, after limited training, by ordinary business analysts working in any department in any industry.

Big data has always been with us; it is just a question how much “big” is. Today the term refers to data sets so large and complex that organizations have difficulty processing them using standard database management systems and applications. Technology for handling big data has crossed a threshold, becoming more capable and cost-effective. Companies can now to tap into much larger amounts of structured and unstructured data. Big data has potential – and potential pitfalls – for improving a company’s performance, as I have noted. Big data is of little use unless organizations have the ability to use analytics to achieve insights not available through more conventional techniques. The ability to sift through large quantities of business-related data rapidly could set in motion fundamental changes in how executives and managers run their business. Properly deployed, big data can support a more forward-looking and agile management style even in very large enterprises. It will allow more flexible forms of business organization. It can give finance organizations greater scope to play a more strategic role in corporate management by changing the focus of business reviews from backward-looking assessments of what just happened to emphasis on what to do next.

vr_NG_Finance_Analytics_14_innovative_companies_adapt_betterThe challenge for many companies is that big data and advanced analytics are not readily consumable. Our research on finance analytics finds that fewer than one-third (29%) of companies use big data to support their finance analytics, even though this technology can handle the flood of data into today’s businesses and can help produce more useful analytics and advanced techniques. Although analytics is essential to finance departments, their focus remains on the basics. Fewer than half (44% each) use the proven newer techniques of predictive analytics and leading indicators. Nearly three out of four (73%) do not assess relevant economic or market data and trends, and fewer than half assess customer and product profitability; any of these could make analyses more relevant to the overall success of the company. The ability of finance organizations to master analytical techniques – especially advanced ones – ought to be a priority for senior executives because our research shows a correlation between competence in utilizing big data and analytics and the ability to adapt quickly to changing business and economic conditions.

IBM SPSS Analytic Catalyst Insight is designed to make it easier for business users who are not trained statisticians to create predictive analytical models just by answering a few preliminary questions about what they want to accomplish using the data. The new incarnation with IBM Project Catalyst Insight aims to simplify the process even further to bring it into the reach of a wider set of business users. It does so by packaging a range of standard routines that would be applied to data sets and providing even more guidance to analysts and even some business managers that know what they want to know but have a limited grasp of the analytical techniques necessary to find meaning in a mass of data. If IBM can create an application that enables more business users to utilize predictive analytics and other advanced analytical techniques, it would represent a big step forward in making big data a useful tool for many more functional areas than it is today.

Both IBM Concert and the new business analytics tool called Project Catalyst Insight “to be officially named later” reflect IBM’s strategy of achieving product differentiation in a rapidly evolving software market. The first decades of packaged business applications were characterized by a race to create new categories and load them with distinguishing features and functions. In the next decade competitive advantage will fall to software vendors that – in addition to features and functions – can provide business people with a user experience that is easily molded to how they naturally work. IBM Concert is a useful first step that is likely to be further refined. The new analytical environment derived from IBM SPSS Modeler and SPSS Analytic Catalyst Insight looks and sounds like a good idea, and it will be interesting to see how it develops when it is generally available.

Regards,

Robert Kugel – SVP Research

Epicor used its recent user group conference to explain its strategic direction and product roadmap. The company is the result of multiple mergers of business software corporations over the past 15 years; its target customers are midsize companies and midsize divisions of larger organizations. Its most significant products are Epicor (ERP software aimed mainly at manufacturing and distribution companies) and Activant Solutions (software for small and midsize retailers, including a point-of-sale system). The company also has software that manages CRM, HR and human capital and supply chains,  and provides financial performance management (FPM) and governance, risk and compliance (GRC) capabilities. These components of the software suites are adequate for the needs of many of the company’s target customers and are not intended as stand-alone applications.

It’s worthwhile to view Epicor’s situation in market context. During the first decade of the century there was a sharp decline in demand for ERP and other software categories as well as limited technology advances, and this led to a wave of consolidations. For example, Oracle bought PeopleSoft (which had acquired JD Edwards), Microsoft picked up Great Plains and Navision (both of which had just acquired rivals), and Infor was assembled from multiple layers of consolidated companies. These corporate restructurings made sense from both financial and operating perspectives in that they could achieve some economies in administration and R&D in a relatively stable business and technology environment. That era has ended. The challenge facing all vendors of legacy ERP systems is to significantly redesign their core applications to address evolving market requirements. These include a user experience that is more intuitive and productive and reducing the cost of implementing and operating the software. Epicor is positioned to address these challenges, but success will depend on its ability to accelerate its development efforts in enhancing the user experience and lowering the total cost of ownership of its software (whether on premises or in the cloud) while adding users to boost revenues.

vr_bti_br_technology_innovation_prioritiesExecutives at the user conference highlighted their development themes, which are consistent with our research on business technology innovation priorities. Epicor will concentrate development efforts on utilizing Microsoft’s infrastructure and the customer benefits that this makes possible. For example, the most recent release of ERP 10 was presented customers with fewer issues than the previous major release because it didn’t have to deal with the complexities that go with trying to support multiple IT environments. Speakers emphasized five key themes in product design going forward: choice, collaboration, responsiveness, simplicity and mobility. All of these are consistent with the broad market trends that have been under way for a few years. Addressing all of them is necessary for Epicor to achieve its strategic goals. Specifically, the company has been investing in making its applications more granular so that companies can have end-to-end process management as well as the flexibility to deploy only the pieces of the software suite that they need. Epicor is also intent on giving companies the choice to deploy its software on-premises or in the cloud in multitenant or single tenant form. I have written about the importance of this for new ERP deployments. Since finance and manufacturing – not just the front office – are now social entities and because social capabilities facilitate collaboration in managing processes, the company has been beefing up these features of its software. Executives also emphasized that its development strategy is to provide simplicity in deployment and the user experience (including ease of use, ease of upgrades and better performance) and to expand mobility options. Ease of upgrades is essential for the company to compete in the on-premises market and to support a hybrid cloud strategy. The company is planning to offer enhancements to its ERP 10 software every four months, so it’s critical that upgrading be simple or customers will fall behind and satisfaction will decline.

Epicor also has been evolving its reporting and financial performance management capabilities over the past five years; these are essential for an ERP vendor to offer. It has taken the individual budgeting, planning and reporting created for specific applications and built an FPM application that supports its applications and gives users of FRx (a once widely used but discontinued product from Microsoft) a replacement option. Sessions at the conference highlighted numerous small but essential enhancements that Epicor has made over the past two years to all of the applications that deepen functionality and enhance their usability.

At this point Epicor has a large installed base and a product line that is attractive to midsize companies and as a tier 2 package for larger companies. However, after a decade of technology drowsiness, business software markets are becoming more dynamic. ERP systems are about to undergo a considerable transformation, driven by the growing availability of technologies that can address the operational shortcomings of established systems. A demographic shift is taking place in the ranks of senior executives and managers – from the baby boom generation to those who grew up with computer technology – and this will drive demand for a new generation of ERP software. Soon, to be competitive these systems will have to deliver a better user experience, greater flexibility and agility as well as mobility and lower cost of ownership. Epicor is heading in this direction, but it will need to run hard just to sustain its market position.

The company is moving to rationalize its software offerings (while still supporting existing users), which is essential to be able to quickly evolve its offerings by providing flexible deployment options and facilitate ongoing enhancements to its products. It would benefit extending its partnerships to add product breadth. For example, its FPM capabilities are solid for some customers but especially for its larger ones it lacks some essential capabilities that we evaluate in our Value Index on this topic.

Epicor is no longer a public company, and that can be a good thing when management needs to make investments and take chances it might not dare when financials results must be published every quarter. This is especially true for the ERP category since, as a result of the complexity of the product, no single big breakthrough will change the market; a steady and protracted series of incremental advances will in aggregate determine which vendors succeed over the long term. Epicor has a solid foundation, but to achieve its strategic objective of remaining a major business software player, it will need to invest heavily and execute consistently and nimbly over the next several years.

Regards,

Robert Kugel – SVP Research

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