The Art of Bootstrapping by Guy Kawasaki
Someone once told me that the probability of an entrepreneur getting venture capital is the same as getting struck by lightning while standing at the bottom of a swimming pool on a sunny day. This may be too optimistic.
Let's say that you can't raise money for whatever reason: You're not a “proven” team with “proven” technology in a “proven” market. Or, your company may simply not be a “VC deal”--that is, something that will go public or be acquired for a zillion dollars. Finally, your organization may be a not-for-product with a cause like the ministry or the environment. Does this mean you should give up? Not at all.
I could build a case that too much money is worse too little for most organizations--not that I wouldn't like to run a Super Bowl commercial someday. Until that day comes, the key to success is bootstrapping. The term comes from the German legend of Baron Münchhausen pulling himself out of the sea by pulling on his own bootstraps. Here is the art of bootstrapping.
Focus on cash flow, not profitability. The theory is that profits are the key to survival. If you could pay the bills with theories, this would be fine. The reality is that you pay bills with cash, so focus on cash flow. If you know you are going to bootstrap, you should start a business with a small up-front capital requirement, short sales cycles, short payment terms, and recurring revenue. It means passing up the big sale that take twelve months to close, deliver, and collect. Cash is not only king, it's queen and prince too for a bootstrapper.
Forecast from the bottom up. Most entrepreneurs do a top-down forecast: “There are 150 million cars in America. It sure seems reasonable that we can get a mere 1% of car owners to install our satellite radio systems. That's 1.5 million systems in the first year.” The bottom-up forecast goes like this: “We can open up ten installation facilities in the first year. On an average day, they can install ten systems. So our first year sales will be 10 facilities x 10 systems x 240 days = 24,000 satellite radio systems. 24,000 is a long way from the conservative 1.5 million systems in the top-down approach. Guess which number is more likely to happen.
Ship, then test. I can feel the comments coming in already: How can you recommend shipping stuff that isn't perfect? Blah blah blah. ”Perfect“ is the enemy of ”good enough.“ When your product or service is ”good enough,“ get it out because cash flows when you start shipping. Besides perfection doesn't necessarily come with time--more unwanted features do. By shipping, you'll also learn what your customers truly want you to fix. It's definitely a tradeoff: your reputation versus cash flow, so you can't ship pure crap. But you can't wait for perfection either. (Nota bene: life science companies, please ignore this recommendation.)
Forget the ”proven“ team. Proven teams are over-rated--especially when most people define proven teams as people who worked for a billion dollar company for the past ten years. These folks are accustomed to a certain lifestyle, and it's not the bootstrapping lifestyle. Hire young, cheap, and hungry people. People with fast chips, but not necessarily a fully functional instruction set. Once you achieve significant cash flow, you can hire adult supervision. Until then, hire what you can afford and make them into great employees.
Start as a service business. Let's say that you ultimately want to be a software company: people download your software or you send them CDs, and they pay you. That's a nice, clean business with a proven business model. However, until you finish the software, you could provide consulting and services based on your work-in-process software. This has two advantages: immediate revenue and true customer testing of your software. Once the software is field-tested and battle-hardened, flip the switch and become a product company.
Focus on function, not form. Mea culpa: I love good ”form.“ MacBooks. Audis. Graf skates. Bauer sticks. Breitling watches. You name it. But bootstrappers focus on function, not form, when they are buying things. The function is computing, getting from point A to point B, skating, shooting, and knowing the time of day. These functions do not require the more expensive form that I like. All the chair has to do is hold your butt. It doesn't have to look like it belongs in the Museum of Modern Art. Design great stuff, but buy cheap stuff.
Pick your battles. Bootstrappers pick their battles. They don't fight on all fronts because they cannot afford to fight on all fronts. If you were starting a new church, do you really need the $100,000 multimedia audio visual system? Or just a great message from the pulpit? If you're creating a content web site based on the advertising model, do you have to write your own customer ad-serving software? I don't think so.
Understaff. Many entrepreneurs staff up for what could happen, best case. ”Our conservative (albeit top-down) forecast for first year satellite radio sales is 1.5 million units. We'd better create a 24 x 7 customer support center to handle this. Guess what? You sell no where near 1.5 million units, but you do have 200 people hired, trained, and sitting in a 50,000 square foot telemarketing center. Bootstrappers understaff knowing that all hell might break loose. But this would be, as we say in Silicon Valley, a “high quality problem.” Trust me, every venture capitalist fantasizes about an entrepreneur calling up and asking for additional capital because sales are exploding. Also trust me when I tell you that fantasies are fantasies because they seldom happen.
Go direct. The optimal number of mouths (or hands) between a bootstrapper and her customer is zero. Sure, stores provide great customer reach, and wholesalers provide distribution. But God invented ecommerce so that you could sell direct and reap greater margins. And God was doubly smart because She knew that by going direct, you'd also learn more about your customer's needs. Stores and wholesalers fill demand, they don't create it. If you create enough demand, you can always get other organizations to fill it later. If you don't create demand, all the distribution in the world will get you bupkis.
Position against the leader. Don't have the money to explain your story starting from scratch? Then don't try. Instead position against the leader. Toyota introduced Lexus as good as a Mercedes but at half the price--Toyota didn't have to explain what “good as a Mercedes” meant. How much do you think that saved them? “Cheap iPod” and “poor man's Bose noise-cancelling headphones,” would work too.
Take the “red pill.”This refers to the choice that Neo made in The Matrix. The red pill led to learning the whole truth. The blue pill meant waking up wondering if you had a bad dream. Bootstrappers don't have the luxury to take the blue pill. They take the red pill--everyday--to find out how deep the rabbit hole really is. And the deepest rabbit hole for a bootstrapper is a simple calculation: Amount of cash divided by cash burn per month because this will tell you how much longer you can live. And as my friend Craig Johnson likes to say, “The leading cause of failure of startups is death, and death happens when you run out of money.” As long as you have money, you're still in the game.
Written at: Atherton, California.
Wednesday, July 12, 2006
Friday, May 12, 2006
How To EnsureSuccess With CRM
You've heard the statistics - more than 50 percent of Customer Relationship Management (CRM) projects fail to deliver the expected return on investment (ROI). This is unsettling especially if you're in the early phase of a CRM project. As companies evaluate their deployment process and what went wrong, common themes surface. Most CRM deployments fail because companies focus too heavily on technology and data and not enough on the sales process and retaining customers. Also, unclear or unrealistic goals have been cited for many failed CRM projects. Some companies felt that choosing CRM suites based on brand and what the competition was using created a false sense of security and impractical expectations of immediate success.
"Priorities and expectations of what CRM will or should deliver must align with your company's business objectives, and you need to understand how to measure the success of your implementation. By recognizing common implementation mistakes, you can understand how to avoid the common pitfalls of CRM deployment and increase your chances of getting on the winning side of CRM. "
Selecting a CRM suite with complex functionality combined with the wrong delivery model has also created a lot of frustration. By recognizing these common mistakes, you can understand how to avoid the common pitfalls of CRM deployment and increase your chances of getting on the winning side of CRM.
Define Your Business Objectives Priorities and expectations of what CRM will or should deliver must align with your company's business objectives, and you need to understand how to measure the success of your implementation. One reason CRM implementations stall is that companies don't establish specific goals and metrics to measure the success of their CRM efforts. Nor do they make the goals of individuals, especially salespeople, align with the overarching company goals. Also, if you want to be successful with CRM, learn how your company defines success. Is a successful CRM project simply one that gets deployed throughout your entire organization? Will success be based on better pipeline management, tangible ROI, overall Total Cost of Ownership (TCO), and an increase in return customers? Is responding quicker to sales leads your goal? Until you know what your business objectives are and what end results you want to achieve, you lack the appropriate measurements to gauge CRM success.
Set Realistic Goals For Individuals That Align With Your Business ObjectivesOnce you have established your business objectives, examine them closely and realistically, both in terms of scope of the implementation and anticipated results. CRM projects often fail when companies try to solve too many issues with one massive implementation, or when their goals are too ambitious. It's also important to create realistic goals that have a personal impact upon your salespeople. Most CRM/ Sales Force Automation (SFA) deployments stall because salespeople see no clear personal value derived from "keying in" the data. However, if you automate the right business processes, your CRM system can act as a virtual sales coach helping them manage and close more deals.Typically, traditional CRM projects tend to grow in scope and complexity as they unfold. Companies start with little or no insight into their customers, and expect their CRM software to capture a 360-degree view, all in one leap. Or, companies start with a desire to automate sales processes, and end up automating services and marketing as well. Other times company expectations inflate to unrealistic proportions: doubling sales, reducing support head count by 50 percent, or tripling direct mail response rates. The end result is companies spend too much money for too little ROI on a system that takes too long to implement and isn't used by the salespeople. Instead of all-encompassing CRM projects, it's more appropriate for companies to focus on small improvements. Break your goals into manageable chunks, and implement them one at a time. In addition to increasing your chances for CRM success, you'll also reduce business disruption and increase employee buy-in. Employees will be more likely to cooperate with the implementation when they see it will provide real, personal benefits. And, if you have a track record of delivering success, it's a lot easier to ask for - and get - additional funding for your next CRM project.
Focus on the Sales ProcessCurrently, the number of companies who still haven't taken the time to determine their goals and objectives has grown substantially because an amazing number of companies view automation as the panacea. But automation- and data-focused approaches alone will not improve your relationship with your customers or help your sales team sell more effectively. If you want increased effectiveness in reaching your objectives, it's crucial to focus on having the right processes in place with the right infrastructure to institutionalize successful selling behaviors. CRM projects will succeed only when companies automate the right business processes, otherwise results are random. Responding quicker to sales leads may be a definable objective, but not necessarily one that results in more sales - your sales team may be responding faster, but with varying degrees of success. It's vital to ensure that you automate your best business processes in order to ensure predictable and continuous improvement. Applying a powerful technology to flawed business processes will only succeed in ensuring that your team will make the same mistakes repeatedly. When choosing a CRM vendor, look for one that has a dedicated team to help your organization clearly define your best business practices. Or, you can hire an outside consulting team to identify your processes before applying a technology fix.
Choose The Right Technology Once you have defined your business objectives, grounded your expectations, and at least addressed the issues of identifying your best practices, it's time to begin your due diligence process to select the right CRM application for your business needs. This phase can be difficult and confusing. CEOs tend to request new technology based on stories in computer magazines while CIOs struggle to find the time to adequately evaluate products. You'll get mixed messages from your executive team and you'll feel pressured to make a decision, especially when aggressive CRM sales reps use closing tactics aimed at having you to believe that if you don't select their CRM application your company is doomed to failure.Companies often buy technology just because their competition has bought it. This is known as The IBM Syndrome ("No one ever got fired for buying IBM.") However, responsible companies must look beyond brand name when considering CRM vendors. It's important that a CRM vendor has strong customer testimonials and experience in deploying to companies such as yours. If you have global users, make sure that scalability and bandwidth will not be a problem. And don't overbuy on features. It's not uncommon for companies to choose CRM packages with the belief that more is better. While it's true that many packages with lots of widgets can offer long-term benefits, the time required to implement them will negate the benefits by delaying the return on investment. There are too many complex CRM suites available today with bloated initial costs and inflated total cost of ownership (TCO), which bog down the implementation, complicate the deployment process, and often lead to low user compliance. What good will lots of features be when your CRM application can't deliver accurate pipeline forecasting and real-time pipeline analysis because your users refuse to use it? Remember, garbage in equals garbage out, and your CRM system is only beneficial if your users enjoy working and selling with it and derive personal value from it.Choosing the right vendor means focusing on what delivery model will work best for your business. If time and money are of no concern, begin by seeking out the traditional CRM/SFA vendors. But if you need real-time data available in an intuitive and easy-to-use application, then a Web-based CRM/SFA deployment is the right way to go. A Web-based application will ensure a low TCO and easy customization to fit your unique business and selling environment without any of the burden of traditional software packages. Web-based CRM/SFA applications also offer quicker ROI. Client/server models can take anywhere from six to 18 months to fully implement, while Web-based applications offer a fast deployment to get your users up and running within weeks or a few months, depending on the size of your organization. Choosing a technology and delivery model that meets your business requirements is vital to ensuring your company's success with a CRM deployment.
ConclusionIf your company has yet to begin its CRM initiative, following the recommendations in this article will help you avoid failure. If your company is in the middle of an implementation, it's not too late to stop and reevaluate. Many stalled CRM implementations have the potential for success if companies make the switch to a Web-based SFA/CRM solution.When you identify your business objectives, set realistic goals, and establish your best business practices, it becomes easier to select and implement the appropriate CRM/SFA solution and gain a very high percentage of user acceptance. Don't feel you have to make the decision yourself - pull in internal resources from your company, especially members of the sales and marketing teams. It's important that you hear the opinions, recommendations, and concerns of all those who will be using the new CRM system. And, if everyone feels like they have a voice in the initiative, gaining user acceptance becomes an easier goal to achieve. Once the right solution and the right model is in place, you'll find yourself where you want to be -- on the winning side of CRM.
"Priorities and expectations of what CRM will or should deliver must align with your company's business objectives, and you need to understand how to measure the success of your implementation. By recognizing common implementation mistakes, you can understand how to avoid the common pitfalls of CRM deployment and increase your chances of getting on the winning side of CRM. "
Selecting a CRM suite with complex functionality combined with the wrong delivery model has also created a lot of frustration. By recognizing these common mistakes, you can understand how to avoid the common pitfalls of CRM deployment and increase your chances of getting on the winning side of CRM.
Define Your Business Objectives Priorities and expectations of what CRM will or should deliver must align with your company's business objectives, and you need to understand how to measure the success of your implementation. One reason CRM implementations stall is that companies don't establish specific goals and metrics to measure the success of their CRM efforts. Nor do they make the goals of individuals, especially salespeople, align with the overarching company goals. Also, if you want to be successful with CRM, learn how your company defines success. Is a successful CRM project simply one that gets deployed throughout your entire organization? Will success be based on better pipeline management, tangible ROI, overall Total Cost of Ownership (TCO), and an increase in return customers? Is responding quicker to sales leads your goal? Until you know what your business objectives are and what end results you want to achieve, you lack the appropriate measurements to gauge CRM success.
Set Realistic Goals For Individuals That Align With Your Business ObjectivesOnce you have established your business objectives, examine them closely and realistically, both in terms of scope of the implementation and anticipated results. CRM projects often fail when companies try to solve too many issues with one massive implementation, or when their goals are too ambitious. It's also important to create realistic goals that have a personal impact upon your salespeople. Most CRM/ Sales Force Automation (SFA) deployments stall because salespeople see no clear personal value derived from "keying in" the data. However, if you automate the right business processes, your CRM system can act as a virtual sales coach helping them manage and close more deals.Typically, traditional CRM projects tend to grow in scope and complexity as they unfold. Companies start with little or no insight into their customers, and expect their CRM software to capture a 360-degree view, all in one leap. Or, companies start with a desire to automate sales processes, and end up automating services and marketing as well. Other times company expectations inflate to unrealistic proportions: doubling sales, reducing support head count by 50 percent, or tripling direct mail response rates. The end result is companies spend too much money for too little ROI on a system that takes too long to implement and isn't used by the salespeople. Instead of all-encompassing CRM projects, it's more appropriate for companies to focus on small improvements. Break your goals into manageable chunks, and implement them one at a time. In addition to increasing your chances for CRM success, you'll also reduce business disruption and increase employee buy-in. Employees will be more likely to cooperate with the implementation when they see it will provide real, personal benefits. And, if you have a track record of delivering success, it's a lot easier to ask for - and get - additional funding for your next CRM project.
Focus on the Sales ProcessCurrently, the number of companies who still haven't taken the time to determine their goals and objectives has grown substantially because an amazing number of companies view automation as the panacea. But automation- and data-focused approaches alone will not improve your relationship with your customers or help your sales team sell more effectively. If you want increased effectiveness in reaching your objectives, it's crucial to focus on having the right processes in place with the right infrastructure to institutionalize successful selling behaviors. CRM projects will succeed only when companies automate the right business processes, otherwise results are random. Responding quicker to sales leads may be a definable objective, but not necessarily one that results in more sales - your sales team may be responding faster, but with varying degrees of success. It's vital to ensure that you automate your best business processes in order to ensure predictable and continuous improvement. Applying a powerful technology to flawed business processes will only succeed in ensuring that your team will make the same mistakes repeatedly. When choosing a CRM vendor, look for one that has a dedicated team to help your organization clearly define your best business practices. Or, you can hire an outside consulting team to identify your processes before applying a technology fix.
Choose The Right Technology Once you have defined your business objectives, grounded your expectations, and at least addressed the issues of identifying your best practices, it's time to begin your due diligence process to select the right CRM application for your business needs. This phase can be difficult and confusing. CEOs tend to request new technology based on stories in computer magazines while CIOs struggle to find the time to adequately evaluate products. You'll get mixed messages from your executive team and you'll feel pressured to make a decision, especially when aggressive CRM sales reps use closing tactics aimed at having you to believe that if you don't select their CRM application your company is doomed to failure.Companies often buy technology just because their competition has bought it. This is known as The IBM Syndrome ("No one ever got fired for buying IBM.") However, responsible companies must look beyond brand name when considering CRM vendors. It's important that a CRM vendor has strong customer testimonials and experience in deploying to companies such as yours. If you have global users, make sure that scalability and bandwidth will not be a problem. And don't overbuy on features. It's not uncommon for companies to choose CRM packages with the belief that more is better. While it's true that many packages with lots of widgets can offer long-term benefits, the time required to implement them will negate the benefits by delaying the return on investment. There are too many complex CRM suites available today with bloated initial costs and inflated total cost of ownership (TCO), which bog down the implementation, complicate the deployment process, and often lead to low user compliance. What good will lots of features be when your CRM application can't deliver accurate pipeline forecasting and real-time pipeline analysis because your users refuse to use it? Remember, garbage in equals garbage out, and your CRM system is only beneficial if your users enjoy working and selling with it and derive personal value from it.Choosing the right vendor means focusing on what delivery model will work best for your business. If time and money are of no concern, begin by seeking out the traditional CRM/SFA vendors. But if you need real-time data available in an intuitive and easy-to-use application, then a Web-based CRM/SFA deployment is the right way to go. A Web-based application will ensure a low TCO and easy customization to fit your unique business and selling environment without any of the burden of traditional software packages. Web-based CRM/SFA applications also offer quicker ROI. Client/server models can take anywhere from six to 18 months to fully implement, while Web-based applications offer a fast deployment to get your users up and running within weeks or a few months, depending on the size of your organization. Choosing a technology and delivery model that meets your business requirements is vital to ensuring your company's success with a CRM deployment.
ConclusionIf your company has yet to begin its CRM initiative, following the recommendations in this article will help you avoid failure. If your company is in the middle of an implementation, it's not too late to stop and reevaluate. Many stalled CRM implementations have the potential for success if companies make the switch to a Web-based SFA/CRM solution.When you identify your business objectives, set realistic goals, and establish your best business practices, it becomes easier to select and implement the appropriate CRM/SFA solution and gain a very high percentage of user acceptance. Don't feel you have to make the decision yourself - pull in internal resources from your company, especially members of the sales and marketing teams. It's important that you hear the opinions, recommendations, and concerns of all those who will be using the new CRM system. And, if everyone feels like they have a voice in the initiative, gaining user acceptance becomes an easier goal to achieve. Once the right solution and the right model is in place, you'll find yourself where you want to be -- on the winning side of CRM.
Monday, March 27, 2006
Application Focus-Manufacturing Software Consolidating
Application FocusFeature (January 2006)
Manufacturing Software Consolidating
by John P. DesmondRipple effect being felt as big ERP players move into competition in the mid-market; some firms still able to grow organically
The ripple effect of acquisitions by the biggest players in ERP manufacturing software is reaching into the mid-market, where more consolidation has been happening as those players try to protect their customer bases and continue to grow.
And while some manufacturing software suppliers, such as Oracle and Lawson/Intentia, see the acquisition and assimilation strategy as best, other companies, such as IFS and SYSPRO, are trying to grow organically for the most part, investing in R&D to develop new products and be responsive to customer demands for features. (See Fig. 1.)
In the view of Bob Ferrari, supply chain services program director for IDC’s Manufacturing Insights analyst service, companies pursue an acquisition strategy for one of three reasons: to extend their vertical industry focus; to get a head start on new technology such as Services Oriented Architecture (SOA); or to buy a customer base.
Oracle’s 2004 acquisition of PeopleSoft, which had already acquired the mid-market manufacturing software company JD Edwards, gave the company more customers in the mid-market and in consumer product goods, Ferrari notes, even though Oracle historically has never supported such IBM mid-range machines as the AS/400 and the follow-on iSeries.
Acquisitions to fill the gap for SOA and Web services are picking up pace. “SAP, Oracle, IBM and others are in a race to get these SOA products to market,” Ferrari explains. SAP has NetWeaver; Oracle is further developing its Fusion product, and IBM has WebSphere as its holistic approach to Web services. A recent example of buying to get a customer base was Oracle’s acquisition of Siebel as a means to gain CRM customers, even though Oracle already had a CRM offering.
“The most obvious negative for a potential customer is the concern about whether the software supplier can pull it all together, and how long it’s going to take them to rationalize the acquired products,” says Ferrari. Whether the supplier will lose key talent is another concern. At the recent Oracle OpenWorld, many of the people attending to find out whatever they could about the Oracle acquisitions of Siebel, Peoplesoft, and JD Edwards were in fact employees of one of those companies.
Snapshots of how a few companies have pursued the acquisition or the organic growth strategy provide insight for software buyers.
Major Mid-market Marriage
Lawson Software’s intended merger with Intentia offers a look at many of the market forces at work in manufacturing and supply chain software segments. Announced in June 2005, this transaction will create a company with more than 3,500 employees serving 4,000 customers in 40 countries, with business applications for the manufacturing, distribution, service and maintenance sectors.
The analyst community has generally reacted favorably to the announced merger, seeing much in the product lines of the two companies that is complementary. (See Fig. 2.) Forrester Research indicated that the transaction moves the combined company into fourth place in the consolidating ERP market — behind SAP, Oracle, and Sage — and ahead of Microsoft Business Solutions and SSA Global.
Forrester identified new Web services standards and microvertical channel strategies as opportunities for the merged company; they also noted such threats to the merged companies as micro-vertical assaults from well-funded challengers, as well as hosted solutions with no integration issues.
The merger with Lawson was still pending approval by the Securities and Exchange Commission (SEC) as this was written. That approval is expected between January and March.
“We’ve seen a huge consolidation in the market in the last 12 to 18 months,” says Bertrand Sciard, CEO of Intentia. “In the past, the market was organized into major segments: the high end, the mid-market, and the low end. More and more, we are seeing that very big companies are not spending the amount of money they used to spend on software; they have become resource-constrained. That means they are short on one of three things: money, time, or people. In fact, today we see many large enterprises exhibit the same behavior as what we could have called in the past the mid-market.”
Given this scenario, Sciard continues, “SAP and Oracle, who dominate the high end of the market, have to go down to the mid-market. There is nothing left at the high end; they can try to sell more users or increase maintenance charges, but these will be rejected by customers.” Sciard says. This new strategy is exemplified by SAP with its Business One and Oracle with its new iteration of JD Edwards’s One World. “We don’t see them yet,” notes Sciard. “They’re busy digesting PeopleSoft and Siebel, but I know this is their strategy.”
Looking further at the mid-market position, Sciard acknowledges a number of players, including Epicor, but the dominant two he sees as Sage, based in the U.K., and Microsoft. In an effort to dominate its market, Sage has made a series of U.S. acquisitions, including Peachtree in 1999, Best in 2000, Interact in 2001, and ACCPAC in 2004.
Assuming the Lawson/Intentia merger is approved, “we will be an alternative to the big three,” Sciard says, referring to SAP, Oracle and Microsoft.
He further notes that any software company will have trouble trying to invest between 12% and 15% in research and development while maintaining three to five product lines. “Many prospects in the mid-market are resource-constrained and don’t want to fall into the claws of Oracle, SAP or Microsoft. At the same time, they don’t want to invest in dead technology.”
SSA Global Continues to Acquire
SSA Global may dispute Sciard’s positioning of Microsoft in the third position, behind SAP and Oracle. The company has pursued an acquisition strategy, most recently by adding Boniva, a specialist in human capital management, and Epiphany, a CRM firm. (See Fig. 3.) “We are finding that the manufacturing and supply chain companies are starting to try to really understand the customer,” said Graeme Cooksley, executive VP and president of Baan Global for SSA Global. “And the customers are looking for extended ERP solutions, covering everything from the supplier’s supplier to the customer’s customer.”
Customers aim to take costs out of the supply chain; some manufacturers are trying to accommodate them by seeking more efficiency in their distribution methods. These include the DHL shipping company and the Del Monte agricultural firm — both SSA Global customers.
With the series of acquisitions SSA Global has made since 2001, “we have the extension market pretty well covered,” Cooksley says. “Now we’re moving towards a trusted-adviser relationship with our customers. We want a deeper relationship with them — we want to be market-driven and to better understand their business issues.” Internal challenges include training the sales force to tune into the customer’s business issues, and achieving a better knowledge of different vertical markets.
Cooksley acknowledges the same pressure on software prices as does Intentia’s Sciard. “Prices have gone down dramatically,” he notes. “And there’s pressure on the maintenance charges. Customers have a budget, and they want value for their money.”
SSA Global is committed to IBM WebSphere as its integration layer, and the company has built a development force of 700 in India to help it stay competitive. As a technical thrust, SSA Global is focused on a “demand-driven supply network,” a phrase coined by AMR Research analysts. As Cory Eaves, SSA Global’s global chief technology officer, explains, “Manufacturers are trying to build systems that help them forecast and manage demand as they provide procurement, sourcing, manufacturing, and distribution. That way they can design and retire products in a controlled way over time.”
Globalization is another priority for SSA Global. For example, Eaves says, every U.S. manufacturing company with $200 million in revenue and above is now doing business in China. A few years ago, only the biggest companies were doing that. And SOA is a major technical thrust, notes Eaves: “We see that the average midsize manufacturing firm has about three ERP systems, and the biggest companies may have 100. It’s mind-boggling — the challenges are almost impossible. The trend towards making systems adhere to the SOA standard helps to solve some of those problems,” he says.
SSA Open Architecture, built on top of WebSphere, is SSA Global’s answer to SAP’s NetWeaver. It is being used to help integrate the acquisitions of Boniva and Epiphany. In fact, a major release integrating the Epiphany technology is planned for May 2006.
Offering some advice for buyers, Eaves suggests separating the product from the company. He uses Epiphany as an example: “The product was outstanding; technically, it was one of the best in the industry. So even though the company was not financially stable when independent, you would know what whoever bought that company would preserve the product because it has so much value. Savvy buyers can see which products are strong and have a future,” he says.
Epicor Strong in Mid-Market
Epicor Software has built itself into a strong mid-market player; its acquisition strategy has targeted companies from $10 million to $500 million in revenue. The company offers three product lines: Vantage, for manufacturers; iScala, for industrial; and Enterprise, for distribution and service companies in specific vertical industries. The company’s products support more than 30 languages. It has four US development centers and two outside the U.S., in Mexico and Russia. Epicor software localized for the Chinese market is developed in Moscow.
“We feel we are the SAP of the mid-market,” says John Hiraoka, Epicor’s senior VP and chief marketing officer. The company is ranked No. 141 on the 2005 Software 500.
SYSPRO Pursues Organic Growth Successfully
In contrast, SYSPRO is pursuing an organic growth strategy. The firm started out targeting the mid-market, offering ERP software at an attractive price. SYSPRO committed itself early on to be supportive of the Microsoft .NET architecture, which put it in a position to grow along with acceptance of that architecture in the range of companies that commit their infrastructure to it. Using the Software 500 ranking as a barometer, the strategy is working for privately-held SYSPRO, which reported $49.4 million in global revenue in 2004, making it No. 278 on the 2005 Software 500.
“You want to do business with a software company that is focused, and we are focused on the mid-market,” says Harold Katz, SYSPRO’s vice president of strategy. Katz emphasizes that customers in this target market need personal contact with their software suppliers. “You need to be able to speak to a person as well as a corporation,” he explains.
“Anyone can get to the president here,” says SYSPRO president Joey Benadretti. “It’s all in the relationships. If implementations go bad, it’s often not because the software was bad, but because the people did not work well together.”
SYSPRO has stayed private since its origins in the 1970s. The company’s roots can be traced to a multi-user financial distribution system developed for Singer Corp. The British computer manufacturer ICL purchased Singer and marketed the software as STARS. SYSPRO was commissioned in the early 1980s to convert that product to a more generalized operating system, and SYSPRO subsequently bought the rights to the source code, combined it with manufacturing software it had been developing, and marketed IMPACT. That product was marketed until 2002, when SYSPRO unified the company and product name. The company extended from the base product into trade promotion, deductions management, and forecasting in 2004 and into analytics in 2005.
Benadretti suggests that customers of companies that have consolidated products from multiple acquisitions are taking the risk that the product they have been using will not continue to be fully supported if it’s no longer generating new business. “You can’t be everything to everybody,” he says. “We have one product that is componentized.”
Customers Seem to Like It
Lee Spring Company is a spring manufacturer founded in 1918 in Brooklyn, N.Y. Currently the company operates plants in Gilbert, Ariz., St. Charles, Mont., and Monterrey, Mexico. Prior to making a commitment to SYSPRO’s products, the company was using an application called Mandol, written in Thoroughbred Basic and running on a Data General Unix box. “It was every programmer’s worst nightmare of spaghetti code,” says Michael Gisonda, director of MIS for Lee Spring. The original software supplier was out of business and there was no company left to support the product. The only help available came from one of the original programmers. As if that weren’t enough, the system wasn’t year 2000-compliant. “We were facing some serious problems,” says Gisonda.
And the system posed other limitations: an inability to extract data; operations requiring dumb terminals, which made it difficult to have multiple windows open; inflexibility that limited the ability to add new functionality. “All of this hampered change in our business process,” says Gisonda. Eventually, Lee Spring went looking for new software.
Work on a request for quotes (RFQ) began in March of 1996, and the result wasn’t mailed until August. It was 225 pages long. Some 53 software suppliers were asked to participate, and eight responded, one of them a SYSPRO value-added reseller. “Our analysis showed that SYSPRO provided all of the functionality we required and was a 95% fit with our existing processes,” Gisonda says. SYSPRO also provided the best value for the money. Lee Spring signed the contract in March of 1998, and the company is still a happy customer of SYSPRO, using the software in all of its locations and currencies, and satisfied with the support. “SYSPRO just generally cares about their customers,” says Gisonda. “All software has problems. It’s how you respond to the problems that makes a difference.”
SYSPRO also made a believer out of Bags and Boxes 2 of St. Joseph, Mo. a firm that offers a comprehensive line of packaging products for the retail specialty market. Their parent corporation, which does the manufacturing, and Bags and Boxes shared the same software, which, being Unix-based and enterprise-scale in its functionality, was not a good fit for the smaller firm. “We wanted something Windows-based,” says Debbie Mahoney, controller for the company. The search for new software led to SYSPRO. “It stood out because of the ease of use of its sales order system,” Mahoney says. “The others were more accounting-driven and fell short when it came to meeting customers’ needs, especially on the distribution end. The notes feature that SYSPRO has, which allows us to save and copy notes with each order, is very important to us.”
Asked her opinion of the benefits of being the customer of a company that has developed all its own software, Mahoney says, “I think it does make a difference. They know the software in and out. Anytime we have a problem, they get right back to us.”
IFS: Growing Organically, Staying Focused
At No. 112 in the 2005 Software 500, IFS has found success by growing for the most part organically and staying focused on the mid-market in manufacturing software. The company’s roots are in 1980s Sweden, with software used to maintain assets for large utilities. After extending into manufacturing, distribution, and order entry — the traditional ERP applications — IFS acquired Effective Management Systems in the late 1990s as a way to move into the North American market. That company’s product line was discontinued and its customers migrated to the IFS product.
“Our goal in 1999 was to get a sales force team, a development team, and a local footprint in North America,” says Steve Andrew, IFS’s director of marketing for North America. Since 1999, the company has made no substantial acquisitions. “We want to keep a single product focus. We don’t want to manage seven product lines across multiple industries,” Andrew says.
IFS differentiates on lower total cost of ownership, since all its applications are based on the same code base and have the same user interface. The company has 2,600 employees in 45 countries. North America now contributes up to 20% of total company revenue, and the percentage is growing. All sales were direct until 2005, when IFS started building a reseller channel in the U.S. “Now is an excellent time for that, because a lot of systems integrators out there are nervous,” explains Andrew. Integrators that support JD Edwards products, for example, are uncertain about the future. “We are kind of a safe haven,” says Andrew.
IFS Application is scheduled for release in April 2006. It will have an improved UI and enhancements in the supply chain modules that respond to the requirements for “splits” between manufacturers and third-party suppliers that are becoming more common today. “In North America, we’re seeing a shift in the manufacturing environment to one that is based on projects and outsourcing to other countries,” Andrew says. “Companies making money are the ones that are outsourcing and doing a good job managing the whole project.”
Stretching Supply Chains
Click Commerce, No. 324 on the 3005 Software 500, has positioned itself to help manufacturers that are stretching their supply chains by working with suppliers in distant countries. The company sells primarily on a Software as a Service (SaaS) pricing model and has over 1,400 customers and users in 70 countries supporting 15 languages. Click Commerce has made a number of acquisitions in the last 30 months among companies that have developed the kinds of tools that will build out its product line, which targets the demand chain, supply chain, and service chain — basically, everything that happens after a sale.
Technology Trend: More Data Analysis back to top
The most innovative supply chain software available today focuses more on data analysis than on transaction automation, says Jeffrey P. Wincel, founder and principal of LSC Consulting Group in Holland, Mich. Wincel is the author of Lean Supply Chain Management — A Handbook for Strategic Procurement, published by Productivity Press in 2003. “While transactions automation may be adequately handled via ERP modules, these tools are not reflective of the decision-making processes in ’best in class’ supply chain organizations,” he says.
Tools that provide the best data analytic capability are likely to be stand-alone, in his view, and they should work seamlessly with the resident ERP system.
Supply chain software today should also have a transparent international component. “For them to be truly valuable,” Wincel says, “the packages need to include an international consideration of currency, duties, laws and routing.”
Moreover, supply chain is more than demand planning, distribution, transportation and procurement. “The thought leaders in supply chain recognize the importance of integrating the broadest definition of supply chain disciplines,” Wincel says. “Software decision makers need to understand both their existing definition of what supply chain consists of, as well as the future vision their company holds. The purchase decision should be more heavily based on future needs rather than simply addressing the immediate issues.”
Consolidations trends in the industry are a mixed blessing. Having a broad range of product alternatives that support and complement each other under the same roof provides some advantages, such as a single point of inquiry for support. “However, some products get lost in the consolidation activity,” as decisions are made on which products to keep and which to let go, Wincel says.
In his view, the tools that provide the best data analytic capabilities are likely to be stand-alone best-in-breed applications that work seamlessly with the resident ERP system.
“We offer a practical solution to a compelling business problem,” says Johan Sauer, general manager of the Click Commerce Master Data Management division. “The more touch points added into the supply chain, the better it is for us. We solve problems in long, complex supply chains.”
The company’s products provide better visibility into each supply chain partner, enabling more accurate forecasts and quicker response — building “a more agile enterprise,” Sauer says. “And the service chain is about increasing customer loyalty.”
Prepare for an SOA Future
The transition to SOA will lead to an increased focus on business process management, since those processes will need to be precisely defined. “Companies serious about SOA need to make sure that data and process are in line. This is more challenging than past transitions have been,” says Bob Ferrari at IDC. “SOA can be very powerful, but it can also go dark in the night.” Companies will need to make decisions about the software architecture and platforms on which they will choose to build, since they will not be able to support all of them.
Manufacturing Software Consolidating
by John P. DesmondRipple effect being felt as big ERP players move into competition in the mid-market; some firms still able to grow organically
The ripple effect of acquisitions by the biggest players in ERP manufacturing software is reaching into the mid-market, where more consolidation has been happening as those players try to protect their customer bases and continue to grow.
And while some manufacturing software suppliers, such as Oracle and Lawson/Intentia, see the acquisition and assimilation strategy as best, other companies, such as IFS and SYSPRO, are trying to grow organically for the most part, investing in R&D to develop new products and be responsive to customer demands for features. (See Fig. 1.)
In the view of Bob Ferrari, supply chain services program director for IDC’s Manufacturing Insights analyst service, companies pursue an acquisition strategy for one of three reasons: to extend their vertical industry focus; to get a head start on new technology such as Services Oriented Architecture (SOA); or to buy a customer base.
Oracle’s 2004 acquisition of PeopleSoft, which had already acquired the mid-market manufacturing software company JD Edwards, gave the company more customers in the mid-market and in consumer product goods, Ferrari notes, even though Oracle historically has never supported such IBM mid-range machines as the AS/400 and the follow-on iSeries.
Acquisitions to fill the gap for SOA and Web services are picking up pace. “SAP, Oracle, IBM and others are in a race to get these SOA products to market,” Ferrari explains. SAP has NetWeaver; Oracle is further developing its Fusion product, and IBM has WebSphere as its holistic approach to Web services. A recent example of buying to get a customer base was Oracle’s acquisition of Siebel as a means to gain CRM customers, even though Oracle already had a CRM offering.
“The most obvious negative for a potential customer is the concern about whether the software supplier can pull it all together, and how long it’s going to take them to rationalize the acquired products,” says Ferrari. Whether the supplier will lose key talent is another concern. At the recent Oracle OpenWorld, many of the people attending to find out whatever they could about the Oracle acquisitions of Siebel, Peoplesoft, and JD Edwards were in fact employees of one of those companies.
Snapshots of how a few companies have pursued the acquisition or the organic growth strategy provide insight for software buyers.
Major Mid-market Marriage
Lawson Software’s intended merger with Intentia offers a look at many of the market forces at work in manufacturing and supply chain software segments. Announced in June 2005, this transaction will create a company with more than 3,500 employees serving 4,000 customers in 40 countries, with business applications for the manufacturing, distribution, service and maintenance sectors.
The analyst community has generally reacted favorably to the announced merger, seeing much in the product lines of the two companies that is complementary. (See Fig. 2.) Forrester Research indicated that the transaction moves the combined company into fourth place in the consolidating ERP market — behind SAP, Oracle, and Sage — and ahead of Microsoft Business Solutions and SSA Global.
Forrester identified new Web services standards and microvertical channel strategies as opportunities for the merged company; they also noted such threats to the merged companies as micro-vertical assaults from well-funded challengers, as well as hosted solutions with no integration issues.
The merger with Lawson was still pending approval by the Securities and Exchange Commission (SEC) as this was written. That approval is expected between January and March.
“We’ve seen a huge consolidation in the market in the last 12 to 18 months,” says Bertrand Sciard, CEO of Intentia. “In the past, the market was organized into major segments: the high end, the mid-market, and the low end. More and more, we are seeing that very big companies are not spending the amount of money they used to spend on software; they have become resource-constrained. That means they are short on one of three things: money, time, or people. In fact, today we see many large enterprises exhibit the same behavior as what we could have called in the past the mid-market.”
Given this scenario, Sciard continues, “SAP and Oracle, who dominate the high end of the market, have to go down to the mid-market. There is nothing left at the high end; they can try to sell more users or increase maintenance charges, but these will be rejected by customers.” Sciard says. This new strategy is exemplified by SAP with its Business One and Oracle with its new iteration of JD Edwards’s One World. “We don’t see them yet,” notes Sciard. “They’re busy digesting PeopleSoft and Siebel, but I know this is their strategy.”
Looking further at the mid-market position, Sciard acknowledges a number of players, including Epicor, but the dominant two he sees as Sage, based in the U.K., and Microsoft. In an effort to dominate its market, Sage has made a series of U.S. acquisitions, including Peachtree in 1999, Best in 2000, Interact in 2001, and ACCPAC in 2004.
Assuming the Lawson/Intentia merger is approved, “we will be an alternative to the big three,” Sciard says, referring to SAP, Oracle and Microsoft.
He further notes that any software company will have trouble trying to invest between 12% and 15% in research and development while maintaining three to five product lines. “Many prospects in the mid-market are resource-constrained and don’t want to fall into the claws of Oracle, SAP or Microsoft. At the same time, they don’t want to invest in dead technology.”
SSA Global Continues to Acquire
SSA Global may dispute Sciard’s positioning of Microsoft in the third position, behind SAP and Oracle. The company has pursued an acquisition strategy, most recently by adding Boniva, a specialist in human capital management, and Epiphany, a CRM firm. (See Fig. 3.) “We are finding that the manufacturing and supply chain companies are starting to try to really understand the customer,” said Graeme Cooksley, executive VP and president of Baan Global for SSA Global. “And the customers are looking for extended ERP solutions, covering everything from the supplier’s supplier to the customer’s customer.”
Customers aim to take costs out of the supply chain; some manufacturers are trying to accommodate them by seeking more efficiency in their distribution methods. These include the DHL shipping company and the Del Monte agricultural firm — both SSA Global customers.
With the series of acquisitions SSA Global has made since 2001, “we have the extension market pretty well covered,” Cooksley says. “Now we’re moving towards a trusted-adviser relationship with our customers. We want a deeper relationship with them — we want to be market-driven and to better understand their business issues.” Internal challenges include training the sales force to tune into the customer’s business issues, and achieving a better knowledge of different vertical markets.
Cooksley acknowledges the same pressure on software prices as does Intentia’s Sciard. “Prices have gone down dramatically,” he notes. “And there’s pressure on the maintenance charges. Customers have a budget, and they want value for their money.”
SSA Global is committed to IBM WebSphere as its integration layer, and the company has built a development force of 700 in India to help it stay competitive. As a technical thrust, SSA Global is focused on a “demand-driven supply network,” a phrase coined by AMR Research analysts. As Cory Eaves, SSA Global’s global chief technology officer, explains, “Manufacturers are trying to build systems that help them forecast and manage demand as they provide procurement, sourcing, manufacturing, and distribution. That way they can design and retire products in a controlled way over time.”
Globalization is another priority for SSA Global. For example, Eaves says, every U.S. manufacturing company with $200 million in revenue and above is now doing business in China. A few years ago, only the biggest companies were doing that. And SOA is a major technical thrust, notes Eaves: “We see that the average midsize manufacturing firm has about three ERP systems, and the biggest companies may have 100. It’s mind-boggling — the challenges are almost impossible. The trend towards making systems adhere to the SOA standard helps to solve some of those problems,” he says.
SSA Open Architecture, built on top of WebSphere, is SSA Global’s answer to SAP’s NetWeaver. It is being used to help integrate the acquisitions of Boniva and Epiphany. In fact, a major release integrating the Epiphany technology is planned for May 2006.
Offering some advice for buyers, Eaves suggests separating the product from the company. He uses Epiphany as an example: “The product was outstanding; technically, it was one of the best in the industry. So even though the company was not financially stable when independent, you would know what whoever bought that company would preserve the product because it has so much value. Savvy buyers can see which products are strong and have a future,” he says.
Epicor Strong in Mid-Market
Epicor Software has built itself into a strong mid-market player; its acquisition strategy has targeted companies from $10 million to $500 million in revenue. The company offers three product lines: Vantage, for manufacturers; iScala, for industrial; and Enterprise, for distribution and service companies in specific vertical industries. The company’s products support more than 30 languages. It has four US development centers and two outside the U.S., in Mexico and Russia. Epicor software localized for the Chinese market is developed in Moscow.
“We feel we are the SAP of the mid-market,” says John Hiraoka, Epicor’s senior VP and chief marketing officer. The company is ranked No. 141 on the 2005 Software 500.
SYSPRO Pursues Organic Growth Successfully
In contrast, SYSPRO is pursuing an organic growth strategy. The firm started out targeting the mid-market, offering ERP software at an attractive price. SYSPRO committed itself early on to be supportive of the Microsoft .NET architecture, which put it in a position to grow along with acceptance of that architecture in the range of companies that commit their infrastructure to it. Using the Software 500 ranking as a barometer, the strategy is working for privately-held SYSPRO, which reported $49.4 million in global revenue in 2004, making it No. 278 on the 2005 Software 500.
“You want to do business with a software company that is focused, and we are focused on the mid-market,” says Harold Katz, SYSPRO’s vice president of strategy. Katz emphasizes that customers in this target market need personal contact with their software suppliers. “You need to be able to speak to a person as well as a corporation,” he explains.
“Anyone can get to the president here,” says SYSPRO president Joey Benadretti. “It’s all in the relationships. If implementations go bad, it’s often not because the software was bad, but because the people did not work well together.”
SYSPRO has stayed private since its origins in the 1970s. The company’s roots can be traced to a multi-user financial distribution system developed for Singer Corp. The British computer manufacturer ICL purchased Singer and marketed the software as STARS. SYSPRO was commissioned in the early 1980s to convert that product to a more generalized operating system, and SYSPRO subsequently bought the rights to the source code, combined it with manufacturing software it had been developing, and marketed IMPACT. That product was marketed until 2002, when SYSPRO unified the company and product name. The company extended from the base product into trade promotion, deductions management, and forecasting in 2004 and into analytics in 2005.
Benadretti suggests that customers of companies that have consolidated products from multiple acquisitions are taking the risk that the product they have been using will not continue to be fully supported if it’s no longer generating new business. “You can’t be everything to everybody,” he says. “We have one product that is componentized.”
Customers Seem to Like It
Lee Spring Company is a spring manufacturer founded in 1918 in Brooklyn, N.Y. Currently the company operates plants in Gilbert, Ariz., St. Charles, Mont., and Monterrey, Mexico. Prior to making a commitment to SYSPRO’s products, the company was using an application called Mandol, written in Thoroughbred Basic and running on a Data General Unix box. “It was every programmer’s worst nightmare of spaghetti code,” says Michael Gisonda, director of MIS for Lee Spring. The original software supplier was out of business and there was no company left to support the product. The only help available came from one of the original programmers. As if that weren’t enough, the system wasn’t year 2000-compliant. “We were facing some serious problems,” says Gisonda.
And the system posed other limitations: an inability to extract data; operations requiring dumb terminals, which made it difficult to have multiple windows open; inflexibility that limited the ability to add new functionality. “All of this hampered change in our business process,” says Gisonda. Eventually, Lee Spring went looking for new software.
Work on a request for quotes (RFQ) began in March of 1996, and the result wasn’t mailed until August. It was 225 pages long. Some 53 software suppliers were asked to participate, and eight responded, one of them a SYSPRO value-added reseller. “Our analysis showed that SYSPRO provided all of the functionality we required and was a 95% fit with our existing processes,” Gisonda says. SYSPRO also provided the best value for the money. Lee Spring signed the contract in March of 1998, and the company is still a happy customer of SYSPRO, using the software in all of its locations and currencies, and satisfied with the support. “SYSPRO just generally cares about their customers,” says Gisonda. “All software has problems. It’s how you respond to the problems that makes a difference.”
SYSPRO also made a believer out of Bags and Boxes 2 of St. Joseph, Mo. a firm that offers a comprehensive line of packaging products for the retail specialty market. Their parent corporation, which does the manufacturing, and Bags and Boxes shared the same software, which, being Unix-based and enterprise-scale in its functionality, was not a good fit for the smaller firm. “We wanted something Windows-based,” says Debbie Mahoney, controller for the company. The search for new software led to SYSPRO. “It stood out because of the ease of use of its sales order system,” Mahoney says. “The others were more accounting-driven and fell short when it came to meeting customers’ needs, especially on the distribution end. The notes feature that SYSPRO has, which allows us to save and copy notes with each order, is very important to us.”
Asked her opinion of the benefits of being the customer of a company that has developed all its own software, Mahoney says, “I think it does make a difference. They know the software in and out. Anytime we have a problem, they get right back to us.”
IFS: Growing Organically, Staying Focused
At No. 112 in the 2005 Software 500, IFS has found success by growing for the most part organically and staying focused on the mid-market in manufacturing software. The company’s roots are in 1980s Sweden, with software used to maintain assets for large utilities. After extending into manufacturing, distribution, and order entry — the traditional ERP applications — IFS acquired Effective Management Systems in the late 1990s as a way to move into the North American market. That company’s product line was discontinued and its customers migrated to the IFS product.
“Our goal in 1999 was to get a sales force team, a development team, and a local footprint in North America,” says Steve Andrew, IFS’s director of marketing for North America. Since 1999, the company has made no substantial acquisitions. “We want to keep a single product focus. We don’t want to manage seven product lines across multiple industries,” Andrew says.
IFS differentiates on lower total cost of ownership, since all its applications are based on the same code base and have the same user interface. The company has 2,600 employees in 45 countries. North America now contributes up to 20% of total company revenue, and the percentage is growing. All sales were direct until 2005, when IFS started building a reseller channel in the U.S. “Now is an excellent time for that, because a lot of systems integrators out there are nervous,” explains Andrew. Integrators that support JD Edwards products, for example, are uncertain about the future. “We are kind of a safe haven,” says Andrew.
IFS Application is scheduled for release in April 2006. It will have an improved UI and enhancements in the supply chain modules that respond to the requirements for “splits” between manufacturers and third-party suppliers that are becoming more common today. “In North America, we’re seeing a shift in the manufacturing environment to one that is based on projects and outsourcing to other countries,” Andrew says. “Companies making money are the ones that are outsourcing and doing a good job managing the whole project.”
Stretching Supply Chains
Click Commerce, No. 324 on the 3005 Software 500, has positioned itself to help manufacturers that are stretching their supply chains by working with suppliers in distant countries. The company sells primarily on a Software as a Service (SaaS) pricing model and has over 1,400 customers and users in 70 countries supporting 15 languages. Click Commerce has made a number of acquisitions in the last 30 months among companies that have developed the kinds of tools that will build out its product line, which targets the demand chain, supply chain, and service chain — basically, everything that happens after a sale.
Technology Trend: More Data Analysis back to top
The most innovative supply chain software available today focuses more on data analysis than on transaction automation, says Jeffrey P. Wincel, founder and principal of LSC Consulting Group in Holland, Mich. Wincel is the author of Lean Supply Chain Management — A Handbook for Strategic Procurement, published by Productivity Press in 2003. “While transactions automation may be adequately handled via ERP modules, these tools are not reflective of the decision-making processes in ’best in class’ supply chain organizations,” he says.
Tools that provide the best data analytic capability are likely to be stand-alone, in his view, and they should work seamlessly with the resident ERP system.
Supply chain software today should also have a transparent international component. “For them to be truly valuable,” Wincel says, “the packages need to include an international consideration of currency, duties, laws and routing.”
Moreover, supply chain is more than demand planning, distribution, transportation and procurement. “The thought leaders in supply chain recognize the importance of integrating the broadest definition of supply chain disciplines,” Wincel says. “Software decision makers need to understand both their existing definition of what supply chain consists of, as well as the future vision their company holds. The purchase decision should be more heavily based on future needs rather than simply addressing the immediate issues.”
Consolidations trends in the industry are a mixed blessing. Having a broad range of product alternatives that support and complement each other under the same roof provides some advantages, such as a single point of inquiry for support. “However, some products get lost in the consolidation activity,” as decisions are made on which products to keep and which to let go, Wincel says.
In his view, the tools that provide the best data analytic capabilities are likely to be stand-alone best-in-breed applications that work seamlessly with the resident ERP system.
“We offer a practical solution to a compelling business problem,” says Johan Sauer, general manager of the Click Commerce Master Data Management division. “The more touch points added into the supply chain, the better it is for us. We solve problems in long, complex supply chains.”
The company’s products provide better visibility into each supply chain partner, enabling more accurate forecasts and quicker response — building “a more agile enterprise,” Sauer says. “And the service chain is about increasing customer loyalty.”
Prepare for an SOA Future
The transition to SOA will lead to an increased focus on business process management, since those processes will need to be precisely defined. “Companies serious about SOA need to make sure that data and process are in line. This is more challenging than past transitions have been,” says Bob Ferrari at IDC. “SOA can be very powerful, but it can also go dark in the night.” Companies will need to make decisions about the software architecture and platforms on which they will choose to build, since they will not be able to support all of them.
Monday, March 13, 2006
Things You Have to Know When Raising Your First Round of Capital - Eric Wechselblatt :: American Venture Magazine
Things You Have to Know When Raising Your First Round of Capital - Eric Wechselblatt :: American Venture Magazine: "Things You Have to Know When Raising Your First Round of Capital
By Eric Wechselblatt"
Many entrepreneurs raising their first round of institutional capital already have the necessary skills to get from introduction to transaction closing. They just need some guidance to navigate the process. Here are three common questions and, more importantly, answers, regarding the funding process. Like many things in life, once you understand the process, your chances of success grow exponentially.
1. What is best way to target investors?
There are two main ways that companies are successful in meeting active investors. The first, and more targeted approach, is to find legal counsel, accountants or other professionals in your community to make the introductions for you. A venture capitalist or other institutional investor is more likely to read your executive summary if it is sent by a professional with whom the investor already has an established relationship, and many professionals who work with institutional funds and VC-backed companies have strong relationships with numerous investors. This approach allows you to truly target active funds who will be interested in investing in companies in your region and industry, and who fund the amounts that you are seeking to raise.
Companies seeking investment capital have also found success by making presentations at a local or regional venture fair. These presentations provide the company a forum to make a five to ten minute pitch to dozens of investment sources, depending upon the event.
You benefit by getting in front of a large number of possible investors at the same time. In addition, you identify your target audience by allowing investors to approach you at the event after your presentation. The downside is that first impressions are very important and moving straight to the venture fair presentation may not give you the opportunity to get enough feedback in order to make a polished presentation.
2. Why is it sometimes difficult to get a straight answer from investors that want to "pass"?
Some institutional funds may not be interested in investing in a specific industry or region. These investors will immediately say so. However, many investors are hesitant to say “no thanks” even if they think the company is unfundable. These investors want to ensure that they still have some opportunity to invest if the technology or industry becomes “hot” or simply more mature, they want to maintain good relationships with the people who may become the region’s serial entrepreneurs, or they may simply want to hedge their bets if they realize they are wrong...
By Eric Wechselblatt"
Many entrepreneurs raising their first round of institutional capital already have the necessary skills to get from introduction to transaction closing. They just need some guidance to navigate the process. Here are three common questions and, more importantly, answers, regarding the funding process. Like many things in life, once you understand the process, your chances of success grow exponentially.
1. What is best way to target investors?
There are two main ways that companies are successful in meeting active investors. The first, and more targeted approach, is to find legal counsel, accountants or other professionals in your community to make the introductions for you. A venture capitalist or other institutional investor is more likely to read your executive summary if it is sent by a professional with whom the investor already has an established relationship, and many professionals who work with institutional funds and VC-backed companies have strong relationships with numerous investors. This approach allows you to truly target active funds who will be interested in investing in companies in your region and industry, and who fund the amounts that you are seeking to raise.
Companies seeking investment capital have also found success by making presentations at a local or regional venture fair. These presentations provide the company a forum to make a five to ten minute pitch to dozens of investment sources, depending upon the event.
You benefit by getting in front of a large number of possible investors at the same time. In addition, you identify your target audience by allowing investors to approach you at the event after your presentation. The downside is that first impressions are very important and moving straight to the venture fair presentation may not give you the opportunity to get enough feedback in order to make a polished presentation.
2. Why is it sometimes difficult to get a straight answer from investors that want to "pass"?
Some institutional funds may not be interested in investing in a specific industry or region. These investors will immediately say so. However, many investors are hesitant to say “no thanks” even if they think the company is unfundable. These investors want to ensure that they still have some opportunity to invest if the technology or industry becomes “hot” or simply more mature, they want to maintain good relationships with the people who may become the region’s serial entrepreneurs, or they may simply want to hedge their bets if they realize they are wrong...
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