ERP is so over so get over it

by admin on February 19, 2009

in General,Innovation

Ben Kepes discussion about ‘fully featured’ and ‘ERP’ is so full of holes it would make a good string vest. I was going to leave a lengthy comment but realized that if I’m going into attack mode, it ought to be here rather than on another person’s website. Anyhoo. I should preface by saying I found the entire article unhelpful and riddled with out of date thinking. At least from *my* perspective. Ben starts:

Recently some comments around a review I did of AccountsIQ raised the question of what constitutes a fully featured app and what constitutes an ERP and where the divide lies.

Quite frankly, who gives a damn? I haven’t heard the term ERP used in discussions among my peers in many a year. It is a 1990′s throwback to a time when Gartner built a business out of TLAs and gifted the software applications industry with a way of flogging kit. I know the guys who did this dastardly stuff. It describes a cookie cutter mindset that was a marketing tool and right for the time but which is now dead. The IT fashion game has moved on. If you’re going to move a discussion forward, at least kill the lie to something that is no longer relevant.

The comments were in reply to my congratulating those SaaS vendors that consider such functionality as multi-currency, multi location, stock-control and BOM functionality as “core functions”. I came off this discussion wanting to compare the widely accepted SaaS ERP solutions (Netsuite and Intacct) with some second tier offerings. Bear in mind that Netsuite and Intacct are both multi thousand dollar per year solutions – one would only expect a difference between the breadth of functionality a customer can expect from them compared to solutions costing many times less per annum.

Utterly brain dead thinking. Comparing tiered applications is a futile exercise. It’s like saying let’s do one between Sage 200 and SAP ECC6. Sure – they both keep ledgers but beyond that? I’m not sure if Ben is aware but vendors hate these types of comparison because they are confusing and irrelevant.

Cookie cutter, vanilla applications may be fine for *some* customers but in the current world, customer are demanding vertical specific functionality. Pandering to the ERP moniker for a moment, the mother of all companies in this arena, SAP, only touches at best 30% of the functionality needed by the 23+ industries it covers. Not my assertion, but their agreement. So what’s all this BS about ‘core’ and ‘fully functional’ supposed to achieve?

What constitutes core to one is irrelevant to another. And what is this obsession with feature/function comparison at the cookie cutter level? Any cursory examination of the on-demand market would quickly reveal that offering business specific functions for verticals is a winning play. Xero does it as does FAC. They’re both doing very well. NetSuite and Intacct both have markets in which they are strong. So why bother making these waste of time comparisons? It’s confusing and un-necessary.

Ben then goes on to put AccountsIQ on the hook for definitions around ERP. What on earth was Ben thinking about? What part of ‘accounts’ in the name does he not understand? Next:

It’s a little bit of “horses for courses”. Those who want a single vendor, and can work within a single source ERP solutions will be attracted down the single vendor path. Those however wanting more agility would be more likely to take a piecemeal approach.

This is so naive I find it incredible that AccountsIQ gave Ben the time of day. Go to any reasonable sized business and you will find a multiplicity of applications – exactly as AccountsIQ pointed out – because there is not a single vendor on the planet that can run the business wall to wall. Any suggestion to the contrary is a lie. This was something the mega vendors tried to argue in the late 90′s during the one-stop-shop versus best-in-class wars. Best in class has always won. Ask Wal-Mart, P&G, Colgate-Palmolive. That does not preclude any vendor from extending its footprint but any pretence that goes beyond that is nonsense. Neither does it dismiss wider arguments about how businesses assemble a patchwork of applications. It’s a topic CloudAve has made an attempt to address.

Finally, Ben signs off with a partonizing hat tip to AccountsIQ and a generalized swipe at un-named vendors:

I have to give serious kudos to AccountsIQ for taking a realistic and humble approach towards their offering – contrast that to those who’d have us believe a simple invoicing application fulfils the requirements of all businesses.

I have NEVER heard a ‘simple invoicing application’ vendor claim to fulfill the requirements of any business so what earthly purpose this last sentence serves is a mystery to me.

I’d like to think that those of us who are commenting, dissecting and supporting the saas/on-demand community, while not necessarily singing from the same hymn sheet, are at least using critical thinking that takes the discussions beyond those that were rendered redundant in the 1990′s. After all, isn’t much of what we see supposed to be about innovation? I’d also like to think that the real message is this is a developing, emerging market. That should signal that none of the current vendors has it all but most are working towards providing an appropriate solution for their target markets.

Message to Ben: up your game please. This kind of stuff is neither helpful nor relevant. It is exactly the kind of thing that drives vendors nuts and leaves buyers confused. As Ben can probably tell, this kind of stuff puts me in Paul Carr mode.

UPDATE: Zoli Erdos, CloudAve’s editor has provided an extensive commentary to Ben’s piece. Zoli’s comments, while not reflecting my position, reflect a number of the things I said above. CloudAve should be congratulated for taking a self critical stance that takes the discussion forward in a constructive manner.

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Marc Lehmann February 21, 2009 at 4:09 pm

I think ben is only guilty off thinking with a new economy head. old economy thinks in tiers, markets, functionality sets etc. old software looks backward toward the user. new economy can fit a single product into a person running a home shopping business and sell that exact same product into an enterprise with a 1,000 employees. we've done that as, do many saas application models like salesforce, zoho, google etc. we have names on our books that would shock you out of this thinking. names that shouldn't be dealing with a "tier 3" company like us under the old thinking. sorry but ben is closer to the mark than you realise.

Dennis Howlett February 22, 2009 at 1:39 am

I don't get this. My sense is Ben's thinking with an OLD economy head. I'm not a fan of tiering but recognize the market needs segmenting somehow. I know for instance that QB and Sage 50 can run substantial businesses but that doesn't mean the same as running them as well as they could

Marc Lehmann February 23, 2009 at 3:43 am

Understand you don't get it, it is a radical shift in thinking and it's hard to explain in a short comment. I should do a post on the topic :) Solutions are more organic now. Multiple applications and platforms connected together to form a sort of virtual solution. These components evolve separately but remain connected in a symbiotic application relationship. The combination of components provides the solution rather than a single product version for a market segment. Good analogy is an "organism" as a solution versus a "single cell" solution designed for a market segment or task. So segmenting isn't a clear way of looking at the market anymore, it's too simplistic. Nearly every commentator i read in this space is trying to put old thinking into the new world and it just doesn't fit.

Dennis Howlett February 23, 2009 at 10:25 am

Trying to parse this reply left me confused – helps if you write in plain English. Once I saw your recent presentation then it made sense. However, the problem is you're mixing many different thoughts to support a theory that so far has no real indication of reality except in isolated and specific cases that are firmly rooted in the VSB world. The mix and remix world you describe has been the topic of debate for some years but I have yet to see any real evidence of its existence in any strategic sense.

Where we seem to be moving is a polarization between the 'transaction' and the 'value' part of the business equation. When that plays out then the notion of remixing of the kind you infer makes more sense. But even then there are huge technical problems to overcome.

But none of those thoughts negate what I was arguing in the original piece and certainly don't change the segmentation argument – regardless of the outlier cases of companies using technology from a tier 'x' provider.

Marc Lehmann February 23, 2009 at 10:58 am

I'm exposed to hundreds of businesses using 2 or more online apps to create a virtual solution. Let alone what the bigger guys are doing that I'm privy to. We are a small player but these exist in all 3 tiers. So interpolate from this bunch of "outliers" and you might guess as to what the bigger players in SaaS are doing. The "mix and remix" world which you believe to be a "topic of debate" is real. Sorry but you just have a blind spot.

Dennis Howlett February 23, 2009 at 11:59 am

(sigh) – Marc – I don't have a blind spot at all.

The world you describe is nothing new. It's the nature of applications and has been for all the 30+ years I've been in and around this industry.

As I said in my piece – there isn't a single company of any size on the planet that doesn't run multiple applications. In most of the deployments I see, it runs tens or more likely hundreds of apps. Coming from your trading background, I'm sure you're aware of that.

Whether they're virtual, a mix of on or off premise is a matter of application landscape convenience matched to operational cost and technical constraints. That's something I see every day.

I suspect we're really talking the same thing but using different language.

However – I am more pragmatic. 'Hundreds' isn't a trend, it's an aberration. Does that mean it won't happen? Of course not. The vast majority of people are cautious in their approach to these things and with good reason.

I have no problem with handwaving for a particular position but let's not over egg the pudding. This isn't revolution but evolution.

Marc lehmann February 23, 2009 at 12:15 pm

You can't 'know' that you don't have a blind spot. That was my quick test of reasonableness sorry ;) Anyway you can think it's an outlier or an aberration but I'm suggesting that an erp can replace multiple systems (dozens) be it stand alone like peoplesoft and maybe netsuite or a 2+ virtual app solution (web2 style like we do). Have a chat to the bigger billion dollar companies who sell these aberations (other than your sponsers). You are missing it. Signing off.

Dennis Howlett February 23, 2009 at 12:24 pm

errr Marc – now you seem to be spinning the other way. You know I am an SAP Mentor? There's only 76 of us out of an SAP community running 1.2 million. Ask them what I know ;)

Marc Lehmann February 23, 2009 at 12:53 pm

Ahh SAP mentor! Totally explains your position. I'll pass, I had many bad experiences at Deutsche with SAP. Thanks, but no thanks.

Dennis Howlett February 23, 2009 at 1:05 pm

It's OK Marc – I get your schtik…. ;)

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