Sightings in SaaS

Posts Tagged ‘enterprise software’

In my last post I talked about how the Small and Medium enterprise IT market was fractured based on experience. There are the Newly Born who see opportunity in IT systems, the Reincarnated who have extensive experience with systems and keep bringing their knowledge to the startups they work for, and the Buried, who have buried costs in current systems and have never understood the need for better systems.

NetSuite, I maintain, has an excellent opportunity with the Newly Born and the Reincarnated, and I believe this shows in the client list, both ours and the larger NetSuite customer base.  So is there any chance to talk to the Buried, to get them excited about NetSuite, to bring them on board? And who do we talk to over there? The owner, the office manager, the IT guy?

One way to tackle the problem is to take a look at how the competition does it. Want a great example of business system marketing, read this article about Microsoft’s latest edition of Great Plains, from Mary-jo Foley of ZDNet :

(A quick PowerPivot refresher: Codenamed “Gemini,” PowerPivot is integrated with SharePoint Server 2010 and SQL Server 2008 R2. Microsoft is touting PowerPivot’s benefits as integrating “massive amounts of data on the desktop from virtually any source”: and the performance fast calculations and analysis on large data volumes.)

Like previous GP releases, the 2010 version will include a built-in connector allowing two-way information sharing between GP 2010 and Microsoft’s on-premises Dynamics CRM and its cloud-based and/or partner-hosted CRM Online offerings. In addition, by taking advantage of the presence functionality in Office Communications Server 2007 and its Office Communicator client, GP 2010 gives users the ability to right-click on a contact to send that person information with fewer steps.

Now, these two paragraphs may not seem interesting to you, and that would make you normal; however, if you are an IT guy at an SME, these are marketing gems. They are subtle and press all the right buttons. They don’t blare “look, long term job security!” but they make the point very well, indeed. In just those two little paragraphs there are 7 different products mentioned: PowerPivot, Sharepoint, SQL Server, GP, CRM Online, Office Communicator Server and Client. If you could get your boss to invest in this, you could buy that little cabin on the lake. May not have a lot of time to hang there, but you could own it.

The upshot is that it is useless to talk to the IT guy. He has no interest in hearing about a single, integrated system with no infrastructure. And the office manager, well that’s also probably a waste of time. They hate learning new systems, unless the current system starts creating unwanted overtime. That really leaves the owner. In some cases whenever the ownership hands over to a new person, son or daughter or buyer, there is an opportunity to talk to someone with some energy for the business who can see the difficulty of running an organization with a 100 data silos. The message?

The message has to be that NetSuite gets you out from under the thumb of your staff. Everyone who has ever been the new manager at an existing business knows what I mean. The current employees try to run you. They attempt, with all their wits, to box you in, to make you accept the current state of affairs as the only, the necessary state of affairs. “We don’t do it that way because it can’t be done that way.” They despise change. NetSuite generates change, and not just for the sake of change, but for the sake of better business practices, more measurable input and output, greater visibility and better decisions, including which employees to keep.

Every year, there are tens of thousands of SME’s that change hands. This is the secret passage into the market of the buried. There is a narrow window of hope for these companies. With some subtle marketing NetSuite ought to be able to talk directly to the new managers and let them know that there is a system that, together with their iron will, enables them to take back their business, get it on better footing, and grow it like they know it can grow.

Finding customers among the Buried is not easy. It requires the right message to the right audience. It also requires acknowledgement that a lot of the Buried are really lamp posts. But when they change hands, it’s a whole new opportunity.

Was just notified that AMR Research is hosting a Webinar on SaaS ERP with AMR Research Chief Research Officer Bruce Richardson, Commco President and CEO Franklin Christopher – they are a NetSuite customer – and NetSuite CEO Zach Nelson. Should be an interesting hour. You can register here.

I have attended several of these in the past and I always find it interesting to hear how a particular company uses NetSuite for their business. Every company is different and NetSuite has the flexibility to accomodate a great deal of complexity. So if you are thinking that the cloud might be the right place for you, then this might be the right webinar to attend.

The most important question facing the company considering an ERP system, whether it is a replacement or a first time purchase, is ‘Does this system fit my business?’ It is a daunting question to answer, and most companies realize over time that the better question is ‘Is this system flexible enough to meet my business needs, not just today but in the future as well?’ It is impossible to meet all of a company’s needs out of the box, so flexibility is key. I’m sure that in this webinar you will hear a lot about flexibility. I hope you find it an hour well spent.

Oktoberfest is the 16 day festival in Bavaria that celebrates the harvest. With amenities like these who can argue with the idea:

beer and beauty

Thinking about the Enterprise Software market recently it dawned on me that we have entered our own Octoberfest Harvest celebration, almost universally. Harvest refers to the last phase of a product’s life when the marketing department comes to the conclusion that there isn’t much left to exploit, so cut all inputs and just harvest whatever value is left in the product. In enterprise software this phase appears to have happened across many vendors and products at roughly the same time. Let’s take a look:

• Microsoft purchased several vendor offerings including Great Plains, Axapta, Navasion and has done little with any of them. There was originally a thought about turning some of these into SaaS offerings, or merging the best of these products into a new MS product, but over the past couple of years there hasn’t been any news in this area. MS is all about consumer products and its operating system. One wonders why they purchased all of the software that they did, unless it was simply because they could. Google ‘microsoft business applications’ and on page one you will find this note from 2005 about MS’s big plans for their latest acquisitions.
• Oracle also went on a buying binge and they were pretty honest about the fact that they believe the market for enterprise software was leaving the growth stage and sliding toward consolidation. However they also said that under their ownership all of these products, JD Edwards, Peoplesoft, Oracle’s own applications, would undergo some serious tuning up, and that there would eventually be a fusion product allowing all of the best functions into a new product. The fusion middleware became a reality earlier this year, and we await the fusion applications. In the end, the innovation is really about supporting fewer products and upselling a new fusion app to currect customers.
• Sage has also acquired several products over the years and they are definitely in harvest mode. Their apologists even offer the idea that Sage is not in the technology/software market so much as the confidence market, as in this software will be around for a while. They, like SAP, have taken a poor swing at a SaaS product but have yet to make contact. Dennis Howlett doesn’t think they are really interested in launching a new SaaS version anyway.
• SAP has a SaaS product that they have been trying hard to keep under wraps for the past few years. Evidently they did not architect it in a way that allows them to scale the service profitably, even though they sell an account with a minimum of 25 users at $149/month/user, $44,700 a year. You would think you could make money at this, but who knows. When your core products attain 40% margins by virtue of their maintenance alone, you have a business model that is going to be very difficult to duplicate in the SaaS model. And what of the core products? Any innovation there or just bloatware additions that add a few more users and maintenance dollars to the annual bill? I haven’t heard of a game changer in a long time, so harvest mode once again. How important is harvest over new sales? The big news for SAP in 2008 was a huge fight with the user community over an uptick in maintenance fees. If the proof is in the pudding then that was an olympic pool of pudding.
• Any big innovators out there other than the SaaS offerings like Workday, NetSuite, Intacct or WorkingPoint?

Vinnie Mirchandani, the deal architect, spent several days at Fortune magazine’s Brainstorm and complains that the event was severly tilted toward consumer technologies. And when the attention does turn to enterprise matters, the topics are usually around other technologies that may use the enterprise transaction processing systems as a platform, but are rarely focused on business process innovation.

As someone who has spent, and continues to spend, a good deal of time on enterprise business process questions, problems and solutions, I wonder why the marketplace has turned as it has? Do  most organizations have the business processes that they need, creating the value that they want? Is it a case, then, of been there, done that and we’re good?

Or have organizations simply lost their enthusiasm for business process design and innovation? And if they have, then why have they? I meet very few enterprise application users who have mastered their processes, yet it appears from the evidence that no one seems too concerned about just moving on to whatever’s next. My question is have enterprise software applications simple sapped the strength of enterprise users? Has the bloatware complexity of products like SAP, Oracle, Sage and Microsoft simply exhausted organizations? And at this point do they just accept the fact they have an expensive business system that has ceased creating value but which it too difficult to move out of the way?

Oktoberfest can be a good time, but the day after can also be a a helluva hangover. Is this the way enterprise software buyers are feeling about their business applications?

Enterprise buyers feel affects of software inebriation