Cookie-cutter Solutions Won't Cut It with the Mid-Market Part Two: Challenges and the Lower-End
For the upper mid-market, the tier 1 vendors' offerings remain complex applications, and the Internet architecture and new intuitive interfaces can mitigate that only so much. This perception of complexity is ammunition that the incumbent tier 2 vendors will continue to manipulate in order to hinder their bigger brethren's attempt to penetrate incumbent tier 2 vendors' traditional stronghold.
Furthermore, not all powerful functionality (such as SRM or PLM) is readily available for many pre-configured solutions, which may be a serious drawback when competing against the solid tier 2 vendors which have long offered their entire suites without any disparity between solutions for bigger and smaller customers (for example Intentia, IFS, QAD or Glovia). The "Accelerated Solutions" or "All-in-One Solutions" while enabling large vendors and their channel to offer a fixed price and fixed time implementation program in modular way, may sometimes not necessarily offer total extended-ERP functional scope but still only a part thereof. By the time the customer puts together modules to build a full collaborative enterprise system for a mid-market company, and then adds up the multiple implementation time and cost, all the touted benefits may be annulled when incumbent mid-market vendors cover all the bases with their well-entrenched offering.
While fixed time and cost solutions delivered packaged from pristine laboratories do have their appeal, mid-market prospects are becoming increasingly savvy by asking for more than just these implementations which are perceived as "cookie-cutter approach". Therefore, the likes of SAP will have to repeatedly prove that they have not taken yet another like approach, but rather each of its solutions is preconfigured to reduce cost and complexity, while allowing for available extensions and smooth upgrade path to the flagship large application, which are all based on each customer's need.
This is Part Two of a two-part tutorial.
Part One covered the historical relationship of tier 1 vendors with SMBs and the current upper-end market.
The Lower-End
Moreover, tackling the lower market segment has proven to be even a much tougher "nut to crack", for several reasons. The main reason is that this is the home ground of the likes of Intuit, Microsoft Business Solutions (MBS) (see Microsoft Keeps on Rounding up Its Business Solutions), the Sage Group, whose US subsidiary is called Best Software (see Best Software Delivers More Insights To Its Partners [As Well As To The Market]), and which has recently acquired Softline and ACCPAC (see ACCPAC—Being Much More Than Meets The Eye), two renowned vendors in the SMB sector and with particular strength in certain geographies. The list does not stop here, given the likes of Exact Software (see Exact Software Working Diligently Towards the "One Exact" Synergy), and Epicor Software, which has lately had its share of recovery and subsequent acquisitions (see Epicor Conducts Its Own ROI Acquisition Rationale) and which is soon to be merged with another SMB stalwart, Scala. Finally, there is a number of other highly specialized smaller companies catering to specific industries for accounting and manufacturing systems, while also building simple homegrown systems to handle functions like CRM or sales force automation (SFA).
The above vendors understand this market and have thus gained market and mind share and loyal customers. In addition to product offering, they have long heavily invested in recruiting, motivating and supporting the resellers that service the segment. There are also influencers like certified public accountants (CPAs) and small and midsize accounting companies that make recommendations to their clients which packages to deploy. Sage and ACCPAC have for decades been cultivating awareness and relationships within this community, which can be neither easily nor quickly toppled.
These vendors' knowledge of their customers' businesses is reflected in product interfaces, relatively uncomplicated functionality, attractive price points, and in making application programming interfaces (APIs) available to external developers to help integrate their primarily accounting-based products with vertical market extensions provided by their partners. Some of them also offer "no-frills" online or retail sold, entry level or "feeder" business-application packages that attract small businesses early on, such as BusinessWorks Gold, QuickBooks Premier, Peachtree, or ACCPAC Simply Accounting Pro. These vendors provide more advanced functions and more scalable software as the small businesses grow. Further, some smaller resellers of these vendors grant customer the rights to their applications source code, which has been unheard of by the larger vendors, despite many failed implementations' publicity coming exactly from these, which additionally may make smaller business skeptical and reticent to deal with tier 2, let alone tier 1 providers.
Most of the above SMB incumbent vendors have also embarked on major projects to converge disparate functionality within several acquired product lines into new generation of business applications. While these undertakings are still largely a lengthy work-in-progress, the promise is within unified modern architectures that should allow resellers to sell extensions to the applications, while preserving the migration path for the foundation accounting or back-office components.
Recently, for example, Microsoft has released Microsoft Business Network (MBN), a web-based communications network that allows transactions to be exchanged between trading partners via XML or electronic data interchange (EDI), tied directly into ERP applications of Microsoft Office applications. MBN is a combination of on-premise software integrated with Microsoft Office, MBS applications (albeit currently only with MBS Great Plains) or Microsoft BizTalk Server, and hosted Web services. It was designed to help businesses more easily and effectively work with their trading partners (suppliers and customers) through a fully automated Microsoft .NET-connected solution. This thereby increases efficiency with a deep degree of integration throughout their business and desktop applications and lowers the total cost of business-to-business (B2B) collaboration. In other words, MBN uses the messaging and collaboration facilities of Microsoft Outlook and the integration facilities of BizTalk Server, to solve the supply chain connectivity part of the overall supply chain management puzzle. Another extension which is soon to be available to all MBS product lines is nearly ubiquitous FRx' applications for financial reporting, consolidation and forecasting (see FRx Poised To Permeate Many More General Ledgers). The other vendors have not been sitting still either, Exact's e-Synergy and Exact Event Manager products being other object cases of ERP extensions.
These vendors also can distribute risk by initiating partner programs for developers, such as furnishing marketing and technology resources to small developers as a way of extending the reach into the SMB sector. The vendor does not get involved in direct support of its partners' (end) customers, but it does give these technology suppliers a competitive edge in being able to hook straight into their existing renowned back-end applications at small enterprises. More than their larger counterparts, SMBs are looking for relatively simple and inexpensive software that is easy to install yet also easy to customize and extend. Consequently, there is a plethora of micro-verticals around, from, for example a chiropractor's office to a B2B mortgage banking solution. These clients essentially want the same things that larger enterprises want, but their peculiar requirements are quite diverse. In other words, one size does not fit all, at all. Thus, trying to sell simplified versions of mySAP Business Suite, PeopleSoft Enterprise or Oracle E-Business Suite, without a serious re-engineering of these products, has not worked so far in the lower-end of the market.
User Recommendations
We strongly recommend identifying your clear e-business strategy and conducting thorough comparison-shopping, at least for the sake of information leverage. Consider all options, particularly vigorously weighing the offerings' current and intended functionality and integration. Most importantly identify what needs are "must have" requirements and a timeline for additional components. Once identified, comparison-shop and use the related information to negotiate the best price for the solution. Also, SMBs should be wary of being ahead of the adoption curve, because product quality issues and unplanned implementation glitches typically come with new products.
On the other hand, businesses that outgrow this low-end product might have to decide in the future whether to migrate to premium-priced, upper-end solutions or switch to another vendor. When evaluating a software application, companies often fall for a snazzy user interface or raw number-crunching power. However, a flexible system should also offer features like tools and templates, cross-reference checks, and many other parameterization utilities that provide significant system changes without changing source code. Make sure that what you select now will keep abreast of the technology changes in the future. It may sometimes be more beneficial to implement the right solution slowly than to rush the wrong one into place.
SOURCE :http://www.technologyevaluation.com/research/articles/cookie-cutter-solutions-won-t-cut-it-with-the-mid-market-part-two-challenges-and-the-lower-end-17245/
Furthermore, not all powerful functionality (such as SRM or PLM) is readily available for many pre-configured solutions, which may be a serious drawback when competing against the solid tier 2 vendors which have long offered their entire suites without any disparity between solutions for bigger and smaller customers (for example Intentia, IFS, QAD or Glovia). The "Accelerated Solutions" or "All-in-One Solutions" while enabling large vendors and their channel to offer a fixed price and fixed time implementation program in modular way, may sometimes not necessarily offer total extended-ERP functional scope but still only a part thereof. By the time the customer puts together modules to build a full collaborative enterprise system for a mid-market company, and then adds up the multiple implementation time and cost, all the touted benefits may be annulled when incumbent mid-market vendors cover all the bases with their well-entrenched offering.
While fixed time and cost solutions delivered packaged from pristine laboratories do have their appeal, mid-market prospects are becoming increasingly savvy by asking for more than just these implementations which are perceived as "cookie-cutter approach". Therefore, the likes of SAP will have to repeatedly prove that they have not taken yet another like approach, but rather each of its solutions is preconfigured to reduce cost and complexity, while allowing for available extensions and smooth upgrade path to the flagship large application, which are all based on each customer's need.
This is Part Two of a two-part tutorial.
Part One covered the historical relationship of tier 1 vendors with SMBs and the current upper-end market.
The Lower-End
Moreover, tackling the lower market segment has proven to be even a much tougher "nut to crack", for several reasons. The main reason is that this is the home ground of the likes of Intuit, Microsoft Business Solutions (MBS) (see Microsoft Keeps on Rounding up Its Business Solutions), the Sage Group, whose US subsidiary is called Best Software (see Best Software Delivers More Insights To Its Partners [As Well As To The Market]), and which has recently acquired Softline and ACCPAC (see ACCPAC—Being Much More Than Meets The Eye), two renowned vendors in the SMB sector and with particular strength in certain geographies. The list does not stop here, given the likes of Exact Software (see Exact Software Working Diligently Towards the "One Exact" Synergy), and Epicor Software, which has lately had its share of recovery and subsequent acquisitions (see Epicor Conducts Its Own ROI Acquisition Rationale) and which is soon to be merged with another SMB stalwart, Scala. Finally, there is a number of other highly specialized smaller companies catering to specific industries for accounting and manufacturing systems, while also building simple homegrown systems to handle functions like CRM or sales force automation (SFA).
The above vendors understand this market and have thus gained market and mind share and loyal customers. In addition to product offering, they have long heavily invested in recruiting, motivating and supporting the resellers that service the segment. There are also influencers like certified public accountants (CPAs) and small and midsize accounting companies that make recommendations to their clients which packages to deploy. Sage and ACCPAC have for decades been cultivating awareness and relationships within this community, which can be neither easily nor quickly toppled.
These vendors' knowledge of their customers' businesses is reflected in product interfaces, relatively uncomplicated functionality, attractive price points, and in making application programming interfaces (APIs) available to external developers to help integrate their primarily accounting-based products with vertical market extensions provided by their partners. Some of them also offer "no-frills" online or retail sold, entry level or "feeder" business-application packages that attract small businesses early on, such as BusinessWorks Gold, QuickBooks Premier, Peachtree, or ACCPAC Simply Accounting Pro. These vendors provide more advanced functions and more scalable software as the small businesses grow. Further, some smaller resellers of these vendors grant customer the rights to their applications source code, which has been unheard of by the larger vendors, despite many failed implementations' publicity coming exactly from these, which additionally may make smaller business skeptical and reticent to deal with tier 2, let alone tier 1 providers.
Most of the above SMB incumbent vendors have also embarked on major projects to converge disparate functionality within several acquired product lines into new generation of business applications. While these undertakings are still largely a lengthy work-in-progress, the promise is within unified modern architectures that should allow resellers to sell extensions to the applications, while preserving the migration path for the foundation accounting or back-office components.
Recently, for example, Microsoft has released Microsoft Business Network (MBN), a web-based communications network that allows transactions to be exchanged between trading partners via XML or electronic data interchange (EDI), tied directly into ERP applications of Microsoft Office applications. MBN is a combination of on-premise software integrated with Microsoft Office, MBS applications (albeit currently only with MBS Great Plains) or Microsoft BizTalk Server, and hosted Web services. It was designed to help businesses more easily and effectively work with their trading partners (suppliers and customers) through a fully automated Microsoft .NET-connected solution. This thereby increases efficiency with a deep degree of integration throughout their business and desktop applications and lowers the total cost of business-to-business (B2B) collaboration. In other words, MBN uses the messaging and collaboration facilities of Microsoft Outlook and the integration facilities of BizTalk Server, to solve the supply chain connectivity part of the overall supply chain management puzzle. Another extension which is soon to be available to all MBS product lines is nearly ubiquitous FRx' applications for financial reporting, consolidation and forecasting (see FRx Poised To Permeate Many More General Ledgers). The other vendors have not been sitting still either, Exact's e-Synergy and Exact Event Manager products being other object cases of ERP extensions.
These vendors also can distribute risk by initiating partner programs for developers, such as furnishing marketing and technology resources to small developers as a way of extending the reach into the SMB sector. The vendor does not get involved in direct support of its partners' (end) customers, but it does give these technology suppliers a competitive edge in being able to hook straight into their existing renowned back-end applications at small enterprises. More than their larger counterparts, SMBs are looking for relatively simple and inexpensive software that is easy to install yet also easy to customize and extend. Consequently, there is a plethora of micro-verticals around, from, for example a chiropractor's office to a B2B mortgage banking solution. These clients essentially want the same things that larger enterprises want, but their peculiar requirements are quite diverse. In other words, one size does not fit all, at all. Thus, trying to sell simplified versions of mySAP Business Suite, PeopleSoft Enterprise or Oracle E-Business Suite, without a serious re-engineering of these products, has not worked so far in the lower-end of the market.
User Recommendations
We strongly recommend identifying your clear e-business strategy and conducting thorough comparison-shopping, at least for the sake of information leverage. Consider all options, particularly vigorously weighing the offerings' current and intended functionality and integration. Most importantly identify what needs are "must have" requirements and a timeline for additional components. Once identified, comparison-shop and use the related information to negotiate the best price for the solution. Also, SMBs should be wary of being ahead of the adoption curve, because product quality issues and unplanned implementation glitches typically come with new products.
On the other hand, businesses that outgrow this low-end product might have to decide in the future whether to migrate to premium-priced, upper-end solutions or switch to another vendor. When evaluating a software application, companies often fall for a snazzy user interface or raw number-crunching power. However, a flexible system should also offer features like tools and templates, cross-reference checks, and many other parameterization utilities that provide significant system changes without changing source code. Make sure that what you select now will keep abreast of the technology changes in the future. It may sometimes be more beneficial to implement the right solution slowly than to rush the wrong one into place.
SOURCE :http://www.technologyevaluation.com/research/articles/cookie-cutter-solutions-won-t-cut-it-with-the-mid-market-part-two-challenges-and-the-lower-end-17245/
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