You are currently browsing the tag archive for the ‘data’ tag.

Using information technology to make data useful is as old as the Information Age. The difference today is that the volume and variety of  available data has grown enormously. Big data gets almost all of the attention, but there’s also cryptic data. Both are difficult to harness using basic tools and require new technology to help organizations glean actionable information from the large and chaotic mass of data. “Big data” refers to extremely large data sets that may be analyzed computationally to reveal patterns, trends and associations, especially those related to human behavior and interaction. The challenges in dealing with big data include having the computational power that can scale to the processing requirements for the volumes involved; analytical tools to work with the large data sets; and governance necessary to manage the large data sets to ensure that the results of the analysis are accurate and meaningful. But that’s not all organizations have to deal with now. I’ve coined the term “cryptic data” to focus on a different, less well known sort of data challenge that many companies and individuals face.

Cryptic data sets aren’t easy to find or aren’t easily accessed by people who could make use of them. Why “cryptic?” As a scuba diver, I donate time to Reef Check by doing scientific species counts in and around Monterey Bay, Calif. Cryptic organisms are ones that hide out deep in the cracks and crevices of our rocky reefs. Finding and counting them accurately is time-consuming and requires skill. Similarly, it’s difficult to locate, access and collect cryptic data routinely. Because it’s difficult to locate or access routinely, those who have it can gain a competitive advantage over those who don’t. The main reason cryptic data is largely untapped is cost vs. benefits: The time, effort, money and other resources required to manually retrieve it and get it into usable form may be greater than the value of having that information.

By automating the process of routinely collecting information and transforming it into a usable form and format, technology can expand the range of data available by lowering the cost side of the equation. So far, most tools, such as Web crawlers, have been designed to be used by IT professionals. Data integration software, also mainly used by IT departments, helps transform the data collected into a form and format where it can be used by analysts to create mashups or build data tables for analysis to support operational processes. Data integration tools mainly work with internal, structured data and a majority have little or no capability to support data acquisition in the Web. Tools designed for IT professionals are a constraint in making better use of cryptic data because business users are subject matter experts. They have a better idea of the information they need and are in a better position to understand the subtleties and ambiguities in the information they collect. To address this constraint, Web scraping tools (what I call “data drones”) have appeared that are designed for business users. They use a more visual user interface design and hide some of the complexity inherent in the process. They can automate the process of collecting cryptic data and expand the scope and depth of data used for analysis, alerting and decision support.

Cryptic data can be valuable because when collected, aggregated and analyzed, it provides companies and individuals with information and insight that were unavailable. This is particularly true of data sets gathered over time from a source or combination of sources that can reveal trends and relationships that otherwise would be difficult to spot.

Cryptic data can exist within a company’s firewall (typically held in desktop spreadsheets or other files maintained by an individual as well as in “dark” operational data sets), but usually it is somewhere in the Internet cloud. For example, it may be

  • Industry data collected by some group that is only available to members
  • A composite list of products from gathered from competitors’ websites
  • Data contained in footnotes in financial filings that are not collected in tabular form by data aggregators
  • Tables of related data assembled through repetitive queries of a free or paid data source (such as patents, real estate ownership or uniform commercial code filings).

Along these lines, our next-generation finance analytics benchmark research shows that companies have limited access to information about markets, industries and- economies.vr_NG_Finance_Analytics_17_accessibility_of_external_dataOnly 14 percent of participants said they have access all the external data they need. Most (63%) said they can access only some of it, and another 14 percent said they can’t access any such data. In the past, this lack of access was even more common, but the Internet changed that. And this type of external data is worth going after, as it can help organizations build better models, perform deeper analysis or do better in assessing performance, forecasting or gauging threats and opportunities.

Cryptic data poses a different set of challenges than big data. Making big data usable requires the ability to manage large volumes of data. This includes processing large volumes, transforming data sets into usable forms, filtering extraneous data and code data for relevance or reliability, to name some of more common tasks. To be useful big data also requires powerful analytic tools that handle masses of structured and unstructured data and the talent to understand it. By contrast, the challenge of cryptic data lies in identifying and locating useful sources of information and having the ability to collect it efficiently. Both pose difficulties. Whereas making big data useful requires boiling the ocean of data, cryptic data involves collecting samples from widely distributed ponds of data. In the case of cryptic data, automating data collection makes it feasible to assemble a mosaic of data points that improves situational awareness.

Big data typically uses data scientists to tease out meaning from the masses of data (although analytics software vendors have been working on making this process simpler for business users). Cryptic data analysis is built on individual experience and insight. Often, the starting point is a straightforward hypothesis or a question in the mind of a business user. It can stem from the need to periodically access the same pools of data to better understand the current state of markets, competitors, suppliers or customers. Subject matter expertise, an analytical mind and a researcher’s experience are necessary starting capabilities for those analyzing cryptic data. These skills facilitate knowing what data to look for, how to look for it and where to look for it. Although these qualities are essential, they not sufficient. Automating the process of retrieving data from sources in a reliable fashion is a must because, as noted above, the time and expense required to acquire the data manually are greater than its value to the individual or organization.

Almost from the dawn of the Internet, Web robots (or crawlers) have been used to automate the collection of information from Web pages. Search engines, for example, use them to index Internet pages while spammers use them to collect email addresses. These robots are designed and managed by information technology professionals. Automating the process of collecting cryptic data requires software that business people can use. To make accessing cryptic data feasible, they need “data drones” that can be programmed by users with limited training to fetch information from specific Web pages. Tools available from Astera ReportMinerConnotate, Datawatch, import.io, Kofax Kapow and Mozenda are great examples on where you can get started for leveraging cryptic data. I recommend that everyone who has to routinely collect information from Internet sites or from internal data stores that are hard to access or who thinks that they could benefit from using cryptic data investigate tools available for collecting it.

Regards,

Robert Kugel – SVP Research

Workday Financial Management (which belongs in the broader ERP software category) appears to be gaining traction in the market, having matured sufficiently to be attractive to a large audience of buyers. It was built from the ground up as a cloud application. While that gives it the advantage of a fresh approach to structuring its data and process models for the cloud, the product has had to catch up to its rivals in functionality. The company’s ERP offering has matured considerably over the past three years and now is better positioned to grow its installed base. Workday recently added Aon, the insurance and professional services company, to its customer list (becoming its largest customer to date) and reported that its annual contract value (ACV – the annualized aggregate revenue value of all subscription contracts as of the end of a quarter) has doubled since the second quarter of this year, albeit from a low base. This is an important milestone because for years the company’s growth has come from the human capital management (HCM) portion of the business, not financials. Workday has around 160 customers for its financials (more than 90 of which are live) compared to more than 1,000 customers for HCM.

The latest release of Financial Management, Workday 25, enhances its analytics and dashboards, including an audit dashboard with 14 prebuilt reports that can, for example, flag issues in separation of duties. The company’s Composite Reporting, introduced last year, enables users to automate the assembly of highly configurable reports that can combine operational and financial data to provide a more complete picture of a company’s performance without having to use a separate business intelligence system. These multidimensional reports also enable users to drill down and around to underlying information – the why behind the what. The ability to quickly get to authoritative numbers that describe the underlying causes of issues and opportunities does away with delays in people “getting back to you with that information” and enables faster response to changing conditions. These reports can be viewed on mobile devices to enable more interactive dialogues about a company’s condition and performance.

Workday 25 also adds an inventory module to address the need of many services companies to manage their indirect inventories (materials that are not incorporated in final products such as computers or facilities maintenance items) on an end-to-end basis (which speeds their completion and ensures data integrity). It also has improved its global configuration engine to make the product more useful to entities around the world (including subsidiaries operating in jurisdictions in a range of countries). And now the mobile expenses app finally includes direct posting from captured receipts rather than requiring manual entry.

Reflecting the maturing of its Financial Management offering, management will assign all of its salespeople quotas for this product in the upcoming fiscal year. Achieving a large, sustainable presence in the ERP segment is essential to Workday’s long-term success. Longer-term prospects for the financial software are best understood in the context of the evolving ERP software market and the company’s strategy of positioning its offerings as easier to own and use than others.

The outlook for the multitenant software-as-a-service (SaaS) ERP market – which will impact Workday – is simultaneously encouraging and vr_Office_of_Finance_20_finance_prefers_on-premiseschallenging. Revenue and user growth in the ERP segment of enterprise software (both in the cloud and on-premises) is coming almost exclusively from cloud adoption, mostly in a multitenant format. At the same time, however, our Office of Finance benchmark research finds that nearly half (46%) of participants still say their company prefers to deploy its ERP systems on-premises. (By analogy, on-premises ERP may be a dinosaur, but we’re only at the start of the Cretaceous period and extinction is a long way off.) That insistence apart, the percentage of on-premises ERP has been declining and likely will continue to decline over the next five years. One reason is that resistance to the cloud for security reasons in this category is waning. An increasing number of companies are realizing that their on-premises servers are likely to be more vulnerable than those operated by a cloud ERP provider. For many companies, a cloud deployment can provide higher quality of service than on-premises (because of better hardware and the greater competence in maintaining the software compared to one’s internal IT staff), and its total cost of ownership can be lower.

However, anyone looking for a replay of the rapid-growth, 1990s-era ERP client/server applications market will be disappointed. Multitenant cloud software doesn’t have the substantial advantages that vr_Office_of_Finance_01_ERP_replacementclient/server had over the mainframe applications of that era nor the Y2K rationale for immediate replacement. Demand for financial management systems in midsize and larger corporations is almost always driven by the need to replace an existing one. Our research also shows that replacement has slowed over the past decade. Companies are changing ERP less frequently than a decade earlier, on average every 6.4 years as opposed to 5.1 years in 2005.

Another significant challenge for multitenant SaaS ERP vendors like Workday is that their market potential is actually constrained by a key benefit of multitenancy. Because buyers configure the features and capabilities rather than customizing the core code base, implementations can be done faster and cost less. Note, though, that ERP deployments by large, complex organizations are still difficult. For example, Aon expects to spend 14 to 15 months implementing Workday Financial Management. A related benefit is that since all customers are running the same code base, when the software vendor issues new releases or modifications to the software, those changes are quickly made to the code that everyone is running, either immediately or after a grace period. This requires far less work for the customer than on-premises versions and patches. Moreover, the changes are implemented accurately and securely. The trade-off, however, is that the core software cannot be customized. If the cloud software offering cannot be configured to meet the customer’s feature, functionality and process requirements, and if a potential customer cannot adapt its operations to these limitations, it isn’t a feasible solution. Unlike with on-premises software, there is no option to customize multitenant SaaS offerings to the needs of a single customer unless the vendor is willing to make changes to its code base within timing acceptable to the customer. So Workday and other cloud software vendors are finding it necessary to target specific types of businesses in order to focus development efforts on specific business needs. In this company’s case, for Financial Management these verticals are chiefly financial services, business services, software and Internet services, higher education, government and nonprofits.

On the other hand, some software categories lend themselves to a multitenant SaaS environment because the needs of most companies are easily accommodated through configuration. Sales automation, travel and entertainment and human capital management are in this category and consequently have benefited from rapid adoption.

Not so with ERP, which is less amenable to the SaaS multitenant model because of the inherent complexity of the business processes the systems manage and the difficulty in creating SaaS offerings that are sufficiently configurable – as I’ve written previously. This is one important reason why on-premises remains an attractive option; even though sales in this segment are not growing, they are still a large percentage of the market. ERP systems must be able to handle the specific needs of users, which can differ considerably from one industry to another and even between specific microverticals. A large company’s ERP requirements might span multiple business units in multiple industries in multiple locations and jurisdictions. Many manufacturing and product-centric businesses have found multitenant offerings impractical because their requirements cannot be met by available software. Workday is not targeting these types of companies.

As resistance to cloud-based ERP wanes, Workday will benefit as ERP software buyers evolve from a nearly complete focus on features and functions to a more nuanced set of requirements that include ease of use, reliability and security. The maturing of the category and advancing technology are behind this shift. Total cost of ownership and the ability to meet business requirements are becoming gating factors (packages that don’t fit the basic needs don’t make it to the short list), but increasingly vendors will have to differentiate their ERP software based on the user experience and – for cloud services – the ability to minimize disruptions and eliminate vulnerabilities to disasters and hackers. From the start, Workday’s product strategy has been to provide customers with a user experience that addresses many of the issues that business users have had to date with ERP systems. Its focus on providing a practical, pleasing and productive working environment gives it an edge in successfully addressing the needs of companies that do not have complex operating requirements. For example, Composite Reporting makes it easier (compared to many on-premises systems) for companies to get actionable information out of the software by combining analytical capabilities with transaction management. Technology limitations made this extremely difficult until recently and forced companies to invest in and maintain business intelligence and reporting systems. (This capability is not unique to Workday and is likely to become a baseline requirement for ERP systems within the next several years.) Another objective is to simplify the process of creating dashboards and reports in order to provide individuals with the information they need and to do so with the shortest possible time lag. Having a rich set of employee data in the same data structure as the financials, companies that are in people-centric businesses can find it easier to create performance metrics to improve management effectiveness.

Workday’s Planning application (due for release in 2016) also illustrates its approach to using technology to provide a better user experience. Does the world need another planning application? At first glance, not really. The category at the enterprise level is decades old. Perhaps because of that, our 2015 Business Planning Value Index confirms that the category is a commodity. Although there are differences among the packages offered by vendors that can drive preference, all that we evaluated rated highly in handling this task. Their plusses and minuses netted out to a tight range of scores. Moreover, at this stage in its evolution Planning lacks many refinements that are useful for companies operating in dynamic business environments. But unlike other planning applications, Workday Planning is not designed to address complex planning requirements in dynamic business conditions. It is designed to address the needs of organizations that must manage to fixed budgets. This group includes higher education (especially universities with limited commercial or for-profit activities), government and nonprofits – key targeted vertical industries for Workday. Unlike business enterprises that operate (largely) from a common pot, departments and other units are allocated specific amounts at the start of the fiscal year and are not permitted to exceed that amount. Properly configured, Workday Planning can alert department heads, controllers and others when there is a risk that a limit will be exceeded at the point where a purchase order is entered into the system and before it’s approved. In some cases, predictive analytics can be used to generate alerts if it looks as if specific funds accounts are in danger of being overspent. In these types of organizations, the focus on simplicity of use and native integration with the general ledger should help attract buyers since it is often the best way to ensure high participation and compliance.

Very soon “the cloud” will cease to be a point of discussion. It’s likely that within a decade software as a service will be the favored means of consuming ERP functionality, either in a multitenant or a hosted single-tenant format. Shortly, software vendors, industry analysts and journalists will have to focus on the more substantive qualities of specific business applications. In this era, total cost of ownership, system performance and security will be pass/fail gating factors in selection. For vendors offering multitenant services, the ability to configure their offering to suit the operating needs of the company (highly objective) and the user experience (highly subjective) will be the key determinants driving preference. Workday has succeeded in creating a brand image that emphasizes a useful, simpler user experience. Its strength in HCM provides an advantage in selling Financial Management into these companies. However, it also will be facing stiff competition from other vendors (especially Infor and Oracle) in its targeted verticals. Financial Management has advanced significantly over the past several years. To achieve a significant position in the ERP market, it will be necessary to sustain a rapid pace of product development to expand its scope of configurability and keep pace with a rapidly evolving set of user experience norms.

Companies that find they need to replace their ERP system should assess whether the available multitenant offerings can address their requirements. To do this, they need to sort out requirements that are essential to running their business from those that can be adapted to the capabilities of the individual offerings. I recommend that organizations on Workday’s list of targeted verticals investigate whether its Financial Management application will fit their needs.

Regards,

Robert Kugel – SVP Research

Twitter Updates

Stats

  • 119,538 hits
Follow

Get every new post delivered to your Inbox.

Join 75 other followers

%d bloggers like this: