You’ll hear a lot of people talking about the cloud. So let’s have a quick look at the cloud, and what it means for your business.
Firstly, what is the cloud?
The ‘cloud’ is essentially the use of computing resources that are delivered over the internet. Think of Hotmail or Gmail for example, where you can conveniently access your email on any device: desktop, laptop, mobile or tablet. What you don’t see are the hardware and software used to provide your email service, which gets monitored, managed and updated for you by real people behind the scenes.
Benefits of the cloud
- Deployment speed – computing resources can be fulfilled much quicker than installing your own set of applications and hardware from scratch.
- Scalability – computing resources from a cloud service provider can be more flexible, especially when you need to increase your capacity needs during peak periods of the year for your business. For example if you are an online commerce retailer, Christmas is a busy period for you. Or if you are about to launch a TV ad campaign, a cloud provider can scale your server and internet bandwidth specifications up and down as you require. There is no need for huge capital spending on resources such as servers. You simply rent what you need, when you need it. Microsoft Windows Azure is a good example of this service.
- Operational benefits – cloud providers spend a lot of money in building their cloud infrastructure typically in the millions or even in the hundreds of millions in investment, more than you can or would ever spend for your own organisation. Their cloud infrastructure will always be more secure, robust, and maintained, with greater uptime and availability than a typical business might have on their own. With the cloud, organisations can decrease their effort in managing the technology and focus their time, money and IT resources on other important matters.
- Cost savings – as stated you can realise real savings when you only pay for the capacity that you use. Think about the dollars you save from not having to purchase and maintain hardware, software, big internet bandwidth and other data centre resources. With cloud providers, you typically pay on a subscription/ “pay-as-you-go” model similar to your utility or mobile phone bill where you go on a yearly contract, for example, with monthly repayments, making it more of an operational expense, not capex. Also, using resources from a cloud provider has tax and accounting benefits.
So what are your cloud options?
First you need to think about areas of your business you would consider taking into the cloud. For example, payroll, timesheets, field sales.
The next is to decide how you want it deployed. There are three types of cloud deployment options – private, public or a hybrid of both. Please note, no specific model is necessarily better than the other. It will depend on your organisation’s situation or what will meet its needs best.
- A ‘private’ cloud, is typically a cloud computing platform that is behind your company’s firewall. For example, having your own internal ‘on-premise’ or external data centre.
- A ‘public’ cloud, is one that is outside of your company’s firewall where the hardware and software resides in a cloud provider’s data centre. Public cloud is typically suited to small or growing businesses due to the substantial costs involved in having a private cloud.
- A hybrid, is basically a combination of private and public cloud platforms.
Finally, choose a delivery model – SaaS, PaaS, or IaaS.
- SaaS, short for ‘software-as-a-service’ or sometimes referred to as ‘on-demand software’, is supplied by an application service provider in the cloud. Examples include Financials for Office 365 (cloud accounting software), Netsuite, JCurve, Salesforce, Microsoft Office 365, Xero and SaaSu, where you access the software via a web browser, or on a mobile or tablet application.
- PaaS, in a ‘platform-as-a-service’ environment, the cloud provider provides the networks, servers, storage and other services. They provide the computing platform and solution stack as a service for the customer to build and operate its own cloud applications and services. The customer controls the software development and configuration settings on the platform. Microsoft Azure is an example provider of such service.
- IaaS, with ‘infrastructure-as-a-service’, the organisation typically outsources the hardware used to support business operations including hardware, storage, servers and networking components. It is sometimes referred to as ‘hardware-as-a-service’ (HaaS). Typical IaaS providers are Rackspace, Telstra, Optus, and Amazon Web Services.
Is ERP in the cloud or on-premise right for my organisation?
This can be a challenging question. There are advantages and disadvantages to each option. So let’s take a quick look at them below.
On-premise
Businesses with in-house business management software typically have their own internal or external IT resources. With on-premise software, the control is in your hands. However, the IT personnel are responsible for maintaining the server/s. An ERP system may consume their time so you have to ask yourself if your staff have the time, skills and abilities to take this on.
The upfront costs are typically higher because you pay for all the servers, infrastructure and software licenses upfront. That said, the cost between having on-premise and cloud software reaches the break-even point after 4-5 years.
Please note that some software vendors have a ‘web client’ available. This means their ‘on-premise’ software can be accessed by field staff simply over a web browser on any device. You just need to setup a web server to enable this functionality.
Cloud
Cloud software typically relieve some of the pressures of running an in-house system. The cloud provider maintains your server for you. Cloud systems may be less expensive in the beginning as you do not have to purchase the infrastructure and licenses costs in the one hit. Please note that just like in a utility or mobile phone bill, your access to the software solution stops when you cease paying for the service. This is not the case with on-premise ERP as you have purchased the infrastructure and software licenses already in full.
The thing people consider most about cloud systems is speed and where the data centre will be based – is it important for your business to have your data locally or are you okay to have important data residing overseas?
In conclusion, you may only be limited in your software choice depending on the functionality you are looking for in an ERP system in relation to cost. On-premise ERP systems to-date have been known to have more functionality ‘out-of-the-box’ than their cloud-based counterparts. I know my next words will be easier said than done but if you can, put your buying emphasis on the business gains and benefits of the solution regardless of it being on-premise or in the cloud, instead of focusing on its cost and potentially settling for less which may feel like a good idea at the time but not a good decision in the long term.
Final comments
So that’s our cloud discussion 101 for today. It is not meant to be an in-depth discussion but rather a starting point to your discovery. If you have any further questions, please do not hesitate to ask me.
TheERPGuy
Watch out Oracle and SAP! Someone else is gaining market share – Microsoft Dynamics AX. Why? AX is faster to deploy, easier to configure, simpler to use and way more cost effective to run.
Upper level management in companies and local government have been known to choose SAP, Oracle and even JD Edwards because, put simply they are brand names that look good on their resumes when it comes to show what they have implemented and used. As good as that may sound or look in your resume, history has shown us the considerable problems organisations face around the world and in many local Australian states when going through SAP and Oracle projects. Look at Queensland Health for example, whose SAP implementation went so poorly that the Queensland government had no choice but to ban IBM from any future state contracts into its part in the health payroll bungle. What began as a $6 million project is expected to cost tax payers $1.2 billion. I guess you could say they’ve been sapped! If it were up to me, I would find the lowest risk software vendor. I would not want to risk losing my job over a failed implementation. No way!
A recent independent comparison of SAP, Oracle and AX from Panorama Consulting Solutions shows each vendors’ overall market share for the time period from May 2012 to September 2013. SAP has 26% market share, Oracle has 17% and Microsoft holds 11%. Overall, Tier 2 and Tier 3 vendors market share including Infor and Epicor have decreased in comparison to last year’s report. The survey data reveals that SAP is the most commonly short-listed ERP system at 51%, followed by Oracle at 43% and Microsoft Dynamics 32%. The fact that SAP and Oracle are shortlisted at high rates suggests their strong brand recognition and a reflection of many organisations which simply do not have the proper skillsets in place to effectively assess ERP software packages.
The findings have shown that Microsoft Dynamics had the shortest overall implementation time of 12.5 months, followed by SAP at 18.5 months and Oracle at 22.5 months. Overall, the cost of implementation showed SAP being the most expensive to implement on average $2.55 million, Oracle $2.25 million and AX at $1.8 million. Of the three vendors, AX had the highest percentage of respondents, indicating they achieved functionality of greater than 40% of the modules implemented. It probably helps that Microsoft Dynamics has a similar look and feel to other Microsoft products such as Microsoft Office, and an implementation approach of out-of-the-box functionality allowing businesses to have quick wins.
SAP is about 40 years old now and will require a complete rewrite to modernise the product. For those who use it, it will be difficult to change as SAP is like a giant on big concrete feet. In other words, it is not agile. SAP’s market share is slipping away. A recent survey from Panorama Consulting Solutions notes that after “assessing the available information, organizations are not easily convinced that SAP is the best option.”
Oracle and SAP are great products but Microsoft Dynamics AX is gaining ground because it has kept up with the customer demands of a modern world. If you are selecting an ERP solution for your organization make sure you have Microsoft Dynamics on your list.
Good luck,
TheERPGuy
I found out today that Microsoft has finally released a free mobile app for Microsoft Dynamics CRM 2013 for iPhone, iPad, Android and Windows Phone devices. I believe it will only work for the online CRM version at this stage. I have just downloaded the app and can’t wait to test and play with it.
You can download the app directly from these links.
Windows Phone:
http://www.windowsphone.com/en-us/store/app/dynamics-crm/bdf6ad14-8ff3-4db1-a9d5-336c50ef13ee
Android:
https://play.google.com/store/apps/details?id=com.microsoft.crm.crmhost&hl=en
iPhone and iPad:
https://itunes.apple.com/us/app/microsoft-dynamics-crm-for/id723891307?mt=8
If you are an existing user of Microsoft Dynamics CRM online, you will find that you have just been upgraded to Dynamics 2013 when you log in this morning (AEST). Just message me if you have any questions.
TheERPGuy
Recently I participated in a site tour of ResMed’s manufacturing facility in Bella Vista, NSW. Prior to the event, I was told to be prepared to be amazed, but what I saw and experienced exceeded my expectations. Just a bit of background: Resmed, founded here in Australia in 1989, is a global manufacturer and innovator of products for the treatment of sleep disorders, particularly obstructive sleep apnoea.
I came across the opportunity through my wife, who is currently finishing her PhD in Neuroscience. As we drove through the front gates we were greeted by a friendly security guard who directed us to a multi-level basement car park similar to what you’d see underneath the Sydney Convention Centre. Perhaps I’m easy to please, but my first thoughts were “what kind of manufacturing plant provides such extensive parking for their employees?” As the lift doors opened to the Innovation Centre ground floor, I was amazed yet again by what we saw: four storeys of elegant, wide open-spaced office building that looked more like a resort establishment and surrounded by floor to ceiling windows.
As our tour group walked across the bridge to the Manufacturing Centre I couldn’t help but think “where is our golf buggy?”. “We use segways!” our tour guide said jokingly (although he may have been serious). The building we approached certainly looked more like a golf clubhouse than a manufacturing plant. Large solid timber doors automatically opened for us with the reception area looking more like a glass museum, showcasing their successful product line along one side of the wall.
The manufacturing operation was just what one would expect from a world-class facility – clean, lean and efficient, from the receiving bay to manufacturing work centre, assembly line to warehouse dispatch area. Workers looked happy and we were treated wonderfully by ResMed staff. I mean why would you not be happy working here when you have resort style working conditions, complete with its own gym and swimming pool facilities! It is like a dream job come true.
More recently I also got the real privilege of and the opportunity to communicate with Peter Farrell himself, the Founder and Executive Chairman of Resmed. He told me that they also like to spend on art work as the company believes it helps create a more friendly environment for inspiring creativity and innovation. He is certainly a passionate man who takes the time to speak with and inspire others.
Overall, ResMed is a true Australian manufacturing success story. Around $215 Million was spent in building this high tech innovation and manufacturing site that houses 1500 employees, of which 600 work in the Manufacturing Centre. They also manufacture in Singapore, Malaysia, Paris,
Munich, Los Angeles and Paris. Globally they have 4000 employees in 100 countries but the US, Germany and France consitute over 75% of their revenues which overall is in excess of $1.5 Billion dollars.
I met some of their engineers whose jobs are to put innovative ideas together, prototype them, and eventually become real products within two to five years which contributes to the success of the business in addition to their cohesive culture and connected departments through a mixture of continuous improvement and the use of software and business management systems that allow them to collaborate and meet customer demands worldwide.
This really was exciting for me to see and hear as it shows that Australia can triumph in a competitive, high tech and globalised market. ResMed sets the example that through innovation and doing things differently, we can supply products to the rest of the world, not the other way around. The manufacturing sector in Australia needs to be shaken up as many local manufacturing facilities are closing down or moving operations elsewhere. As the ‘baby boomers’ prepare to pass the baton to the next generation, we need to be open to change and innovation in our products, business processes and business management systems that can help us stay relevant and ahead of the game. We are never going to win on price or cheap labour from other countries but we need to look at new ways of doing business than to stick with what has worked in the past. Let’s adapt, collaborate, innovate and embrace today’s technology to stay relevant, compete within a globalised market, and to create and keep jobs in our local Australian soil.
TheERPGuy
A few weeks ago, I drove to Sydney’s South West to attend the MEIA manufacturing excellence event and I was glad I did. It is a perfect location to hold such an event as the South West has the highest concentration of manufacturers in Australia.
What I found interesting to hear from the talks that day was that manufacturers look to government for leadership but they do not see it. The common voice in the room felt what is missing in Australia is vision. However they felt that local manufacturers have a ‘silo’ mentality instead of co-operating with others and working together by collaborating with other manufacturers. Many manufacturers think their problems are unique to their business when in fact, they all have challenges similar to each other. It was also mentioned how important people are in their business. Managers need to tap into their employees’ creativity. However bosses are seen to not value their contribution or suggestions. As a result their employees stay quiet along with their creative ideas, which is a shame considering many of them have great ideas in improving their company’s business.
The key message that was repeated at this event was that manufacturers need to innovate, innovate and innovate – whether it is products, processes or business management systems. At its current state, people felt that any form of action will help. As a I learned recently, the difference between invention and innovation is execution. If we do not execute our ideas to innovate and stay relevant, we can all get left behind.
There are many factors leading to manufacturing decline in Australia but we can do more than just to compete on price in this globalised market. Research, innovation and finding ways to doing things differently provides the foundation for streams of products, employment and incomes to emerge. Many things have changed in the last thirty years. Technology has changed, what customers want has changed, how we do business has changed. It is time we drive change from the conventional and be more creative and get smarter about how we do things. Some organisations already have. What is your next move?
TheERPGuy
A world first, Microsoft recently announced that Delta Airlines is now using the Microsoft Dynamics for Retail platform and using a Nokia Windows Mobile Phone to transact and interact with their in-flight customers in the sky and is expected to reach 19,000+ flight attendants. These Wi-fi connected devices will leverage a point of sale experience using the Microsoft Dynamics for Retail platform. It will also provide local weather details, flight tracking information, and attendants get access to customer specific information to provide a more personalised service while customers receive an ereceipt via email.
Personally, this is so ‘cool’ to hear! This is a great example of a market differentiator and an innovative solution that improves in-flight experience and the benefits of a Microsoft Dynamics integrated solution will bring for airline companies. So the next time you travel to America and find yourself flying in a Delta Airlines plane, make sure to check out this retail technology.
All in all, it is looking like an exciting time for the retail industry as they look to innovate their businesses with technologies such as the state-of-the-art Microsoft Dynamics AX for Retail point-of-sale to back-end business system which makes it possible to achieve just about anything. So watch this space. You might just see a Microsoft Dynamics AX for Retail solution at a store near you.
TheERPGuy
I just read an article* on the BRW magazine regarding a study of 5,000 small to medium enterprise businesses. It gives us a glimpse on how the family business sector has changed over the past decade here in Australia.
Kosmas Smyrnios, Professor of family business entrepreneurship at RMIT School of Management has the following to say about these businesses:
- Ageing, poorly managed, out of touch, unambitious, stagnated, and very pessimistic
- Older generation of owner-managers are hesitant to change and unable to pass on the business to a new generation
- “They are not keeping up with technology or design. Importance of innovation seems lost on these businesses”
- “These businesses that were once thriving and growing are just being allowed to run down”
- Relying on the next generation to shake things up is a long shot
- 58% said younger family members are not as interested in managing the business
The survey suggests:
- Financial performance is poor with 37% indicating profit has fallen and 39% said market share is about the same
- Average employee number fell from 31 to 23 over the past decade
- Average age of businesses in the family sector is 34 years. The average age of owners is 58 and 25% are over 65
- 55% lack a strategic plan
- One of the major objectives of family business owners is to accumulate family wealth – it’s not to be the best and biggest
- 56% believe their businesses are not sale-ready. Their business has been slow to adapt that it’s no longer sale-ready
The bottom line of the story is, as Sue Prestney, Chiarman of MGI Australia says about the survey – “if you are not innovating, if you are not using technology, you might not have a business to sell in five years.”
“If you are not innovating, if you are not using technology, you might not have a business to sell in five years.”
From my personal experience, I agree with the results of the article. After spending 5 years in the ERP industry, I found that many businesses especially ones that are family-owned are resistant to change. They have been in business for 20-30+ years and it seems as though they have lost interest in pushing the boundaries, the drive, and the energy to take their businesses to another level and grow. Many of their employees too are resistant to change especially ones that have been in the business for 10+ years. Old habits die hard and they feel uncomfortable with the word “change”. All-in-all it is management who has to champion ‘change’. When the head sets the example, the body follows.
The good news is it is not all doom and gloom for the family business. There are solutions out there that are simple to use, easy to deploy and faster to adopt. However it is a choice. Are you ready to innovate? I hope so.
TheERPGuy
*Article in reference is ‘Vicious Family Circle’, BRW Magazine, Issue June 27-July 31, written by James Thomson, p. 10 -11
Just in case any of you did not get to go, this year’s conference and expo was a treat for those wanting to get an insight on how you could be challenged to pushing boundaries and to thinking differently about applying omni-channel strategies for your retail business whether online or brick and mortar.
Keynote and featured speakers included local leaders in the retail and online retail sectors in Australia, to international retail heavyweights such as Simon Russell of John Lewis, a chain of upmarket department stores in the UK.
Simon’s topic was ‘A Roadmap to Omni Channel Success – Digitising Your Store’. He said that as the economy faces challenges retailers need to “redefine what service is”. He said that the “shop of the future” is to give consumers a reason to shop by offering them a fantastic customer centric experience through the use of technology. When asked about his thoughts on what local retailers can do, Simon said that management should “push the boundaries” and are the ones who should have the drive and vision to go to the next level as “customers want to see innovation.” This include more delivery options and collection points.
Simon helped grow John Lewis’ online success spanning over a decade. He said that their original bespoke website had limitations and so they needed to find a platform that is flexible and scalable. In 2009 the website’s journey was to help John Lewis become multi-channel, and by 2012 the strategy was to amplify their multi-channel capabilities through technologies such as in-store kiosks. To-date John Lewis’s online website alone generates close to $1 Billion Dollars. Overall, John Lewis generates over $9 Billion Pounds with over 38,000 employees. Simon also stressed the need to have the right IT infrastructure and a deployment of “one system” for complete visibility. He said to improve efficiencies, you need to “build a better car and drive it better.” Near the end of his presentation, he put up a slide which said “Are You Ready?”. Simon says retail has come a long way. Perhaps this is a good wake up call to many.
Overall, I am excited to hear that speakers advocated the need for our local retailers to innovate, improve systems and use technology to take their businesses to the next level. This includes mobile POS sales devices, interactive in-store self-service catalogue, virtual fitting rooms, buy online pick up in-store and all-in-one omni-channel system.
Let me know if you would like to see these technologies at play.
Cheers,
TheERPGuy
Do any of the following questions below sound familiar to you?
- What can we do to increase sales at our retail stores?
- How can we move and sell stock faster?
- How do we stop sending the wrong stock to our customers?
- How can we track our sales campaigns better so we can analyse where and how our customers find us?
One particular client of mine asked these same questions about their own company. They are a large retailer with multiple stores Australia-wide, two main warehouses and a head office. They use spread sheets to manage their customers; they use an old finance system; they have no warehouse management solution; and they run different POS systems at their retail stores. They are thinking of buying a Customer Relationship Management (CRM) system to replace spread sheets, and a new financial system; introduce a new warehouse management solution, and purchasing one common POS solution to use across all stores.
The problem with this type of solution is that when you purchase several systems to manage your retail business, you are moving your problems sideways, rather than moving forward. Trying to integrate disparate systems is not just a costly exercise, but it can produce a lot of headaches.
Here are some of the disadvantages of running disparate systems:
- Maintaining multiple integration points – when each system gets upgraded or updated with new features or patches, you now have to maintain the integration points between those systems. Link failure causes downtime, and maintaining it requires IT resources which equate to more costs.
- Working with multiple vendors – running several systems require you to work with several vendors and have separate agreements with each service provider. The worst case scenario is if there was a system failure, you would have vendors pointing fingers at one another for accountability.
- In regards to system failure – when this does occur, you may end up contacting multiple parties to solve the problem. The first line of support is your back-office IT Support. If they cannot solve the problem, they may get in touch with not one but two or more vendors to pinpoint the root of failure. Not only is this inefficient, but it also equates to wasted time and potential loss in revenue until the cause of the problem is detected and resolved.
A more holistic approach would be to find a vendor who can provide you with an all-in-one solution that can manage your business end-to-end. A good all-in-one retail software solution should immediately provide you with the following features:
- CRM & Marketing
- Point of Sale (mobility enabled ie. POS on tablet device)
- Store Management
- Multi-Channel Management
- Order Management
- Replenishment
- Powerful Merchandising
- Warehouse & Supply Chain
- Manufacturing (if required)
- Procurement
- Financial Management
- Customer Care
- Real-time Reporting
Finally, it is important to note that the retail landscape has changed beyond the confines of a physical retail store. Today’s consumer wants a complete shopping experience. This is called ‘omni-channel retailing’ whereby a consumer gets a seamless shopping experience through all available channels – retail, online store, social media websites, television, catalogue and so on. Now, with laptops, mobile phones and the rise of tablet devices, consumers are now able to shop where and when it is convenient for them too. They then share these experiences with their friends using social networking sites such as Facebook, Twitter, and Google+.
Therefore, a retailer who wants to use an omni-channel approach need to find a software solution that will help them provide this complete and dynamic shopping experience, track their consumers across all channels, and let the consumer experience the brand. By choosing an all-in-one software which can provide you with these features, you will be able to provide real-time data across your whole business from the back-office, warehouse, retail stores, online stores, and social media sites such as Facebook, which empowers your employees, but most importantly, it connects you to your consumers.
Finally, you would also want to find software that will allow you to increase your customer’s spend at the retail store. This include loyalty reward solutions that can send discounts instantly on your customer’s mobile phone which entices them to make additional purchases while they are still at your store.
To be continued…
TheERPGuy
How do you lower the risk of software implementations?
We have all heard of implementations failing many times before. From lack of careful planning, failure to engage stakeholders effectively to misalignment of the project against business needs, the list is endless. These result in either expectations not being met as the software is unable to perform how it is expected to , or the project going over time and over budget. The outcome is that everybody loses. Some end up ditching their implementation partner for another, and in some cases they revert to using their old, disparate systems. Not only do they lose substantial time and money on the project, but chances are you will also be left with low staff morale and loss in revenue.
In 2010, Queensland Health had major troubles implementing a payroll system, leaving thousands of employees with little or no pay. There were many contributing factors, but one of them was the failure to clean up complex business processes prior to implementing the new solution. In 2008, Qantas had to ditch its implementation of an engineering parts management system because it was too difficult to use. There was a lack of stakeholder engagement whereby management did not ask its engineers for their views on the system, and decided to put in what they thought was appropriate. More recently, the Victorian government had to throw in the towel after its ongoing implementation of an e-health record system exceeded its original cost estimates by $240 million. A lack of planning was a contributing factor with the auditor quoted as saying “I would say it was more of a concept brief rather than a fully written business case”.
So how can you avoid this from happening to your business? The key is to not only understand what you are trying to achieve and why, but to identify your key business processes before you begin. Business process is the lifeblood of your organisation and ironing things out by identifying key areas of improvement will help you shift the focus from solving “IT issues” to identifying real “business issues” before going to market. The output should illustrate “these are our business processes” and “here are the areas of improvement we identified”. This will help your business understand its requirements better and identify best-fit solutions.
Ideally, you also need to find business process software that you can use not only for documentation purposes but for communicating your processes to the wider business. Unfortunately, I have found that in Australia most businesses write their processes down on paper, and later filing it away, with the information never to be seen again. There is absolutely no benefit documenting business process if you only envisage using it to assist with implementing the new ERP solution. The purpose of any good business process software is to communicate change and the new best practice processes involved in the day to day running of the business.
Some of the benefits of having good business process management software include:
- Improved communication of business process between all staff
- Visibility of business processes across all business units and departments
- Excellent training and ongoing education for existing and new employees
- Opportunity for employees to provide immediate feedback
- Assistance with compliance and internal controls
- Provision of clear employee roles and responsibilities
I believe many Australian businesses are still unaware that business process software is readily available to them. More disappointingly, most customers looking for ERP solutions only rely on building and using a requirements checklist when selecting an ERP solution which only asks the question “can the software do this and that?” when the better question should be “These are our processes. How can these processes be performed in your solution?”
Through careful planning and business process analysis and design, you will reduce the risk of a failed implementation and significantly increase stakeholder engagement, improve business processes, with clearly defined roles and responsibilities, and overall success of your ERP implementation project. Please consider these steps before going to market. It’s the right thing to do.
TheERPGuy
The ERP Guy 