Ronan O'Shea, Managing Director Siamak Razmazma, Director. September 2010

Transcription

1 Seminar Ronan O'Shea, Managing Director Siamak Razmazma, Director September 2010

2 Agenda Part I: ERP Background and General Concepts Historical View of ERP Evolution Part II: ERP Classification Classification of ERP II by Customer Size Classification of ERP II by Design Strategy Classification of ERP II by Business Process Part III: ERP Selection Approaches Integrated Solution Design and Selection Elements of Solution-Design Approach ERP Selection Methodology Part IV: ERP Licensing Models SaaS Focus 1

3 Part I ERP Background and General Concepts

4 Historical View of ERP Evolution MRP (Material Requirement Plan) Inventory on-hand Inventory Shortages Material Planning MRP II (Manufacturing Requirement Plan) Inventory Movements Financial Transactions Cost Management 1990 ERP (Enterprise Resource Plan) Manufacturing Planning Financial Management Order Management Human Resource Client / Server Architecture 2000 ERP II (Extended ERP) XRP (Cross Resource Planning) cerp (Collaborative ERP) CRM (Customer Relationship Management) SRM (Supplier Relationship Management) SCM (Supply Chain Management) GRC (Governance Risk Compliance) EAS (Enterprise Applications Suites) Web Technology SOA (Service Oriented Architecture) Virtualization Open Integration SaaS 2009 Present Mainframe Computing

5 Part II ERP Classification

6 Classification of ERP II by Customer Size Company Size Small Lower Mid-Size Upper Mid-Size Large Annual Revenue Range Under $50M $50M to $250M $250M to $1B Over $1B # of Staff Less than to to 500 Over 500 # of ERP Users 5 to to to 250 Over 250 Organization Characteristics Single location, countryspecific, PC or LAN based, off-the-shelf systems with lower cost and complexity Multinational, very limited scalability, limited complexity, sold thru ERP resellers Multinational, less scalability, some complexities and sophistications, sold through ERP resellers Global, infrastructure and transactions scalability, sophisticated reporting and analytics and complexity through ERP resellers and analytics Representative ERP Brands MAS 90, Microsoft GP, NetSuite, Intuit, ACCPAC, MS Small Business, Epicor, Expandable, IntAcct Microsoft, NetSuite, Expandable, Epicor, Exact, QAD, Oracle Accelerate, SAP Business One, SAP All-in-One, SAP ECC Microsoft, Lawson, QAD, Oracle, SAP, Oracle JDE, Oracle Peoplesoft, SSA Global Oracle EBS, SAP, Oracle Peoplesoft The classification by customer size including annual revenue, number of employees and number of potential users is the most common way to compare the ERP packages. The dominant ERP packages in the small and mid-size market are specifically designed for this market. Oracle EBS and SAP ECC use special pricing models for small and mid-size market. The core ERP components are the same for all the companies regardless of their size. 5

7 Classification of ERP II by Design Strategy Services Industries Each ERP is designed to support and automate the most common business requirements across different industries having similar strategies and execution environments Project Industries Basic Industries Production Industries Discrete Item Manuf Process Manuf. 6

8 Classification of ERP II by Design Strategy ERP Services and Distribution Projects Industries Process Manuf. Discrete- Item Manuf. Horizontal 1 IFS 2 QAD 3 Epicor Vantage 4 Oracle JDE ERP Design Scope Vertical Mixed with Solution Partners 5 SAP All-In-One 6 SAP ECC 7 SAP Business One 8 Oracle Peoplesoft 9 Ross 10 Infor LN (Baan) 11 Oracle EBS 12 Microsoft GP 13 Microsoft AX 14 Microsoft SL 15 Microsoft NV 16 NetSuite ERP Primary Design ERP Secondary Design Horizontal - ERP primary design is for various industries Vertical - ERP primary design is for a specific industry Mixed with Solution Partners - ERP is designed to leverage preset third-party solutions 7

9 Classification of ERP II by Business Process Operating Processes 4 1 Market & Customers 2 Vision & Strategy 3 4 Product & Services Design Marketing & Sales Production & Delivery 6 Customer Invoicing & Services Management Processes 7 7 Financial Resources 8 8 Human Resources 9 10 Information Technology Environment, Health, Safety 8 11 External Relationship 7 8

10 Part III ERP Selection Approaches

11 Integrated Solution Design and Selection Business Requirements Solution Design ERP Selection Phase 3 Define target business applications landscape Business process optimization & automation End-to-end integration of target business applications System of Records design for target business applications ERP Selection Phases 1 & 2 Integration cost and plan with existing business applications Initial Roadmap Final Roadmap Benefits of Solution Design Approach Process Models for complex business needs Goes beyond the capabilities of a specific application Leverage of existing business applications Assessment of the leading technologies such as SOA Comparison of different IT infrastructure models (SaaS, Outsource, Hosted) Calculation of Total Cost of Ownership Process Optimization Process Automation End-to-end data integration for the target biz apps landscape System of record to create a lean data environment and efficient data governance 10

12 Sample High Level Architecture Source Data Entity: A Entity: B Entity: C External Data Quote/ Contract Building Mvt Asset Mgt Quote/ Contract Billing Asset Mgt Quote/ Contract Billing Inventory TBD Mixed Data Source Billing GL, AR, AP Purchase GL, AR, AP Purchase GL, AR, AP Purchase Purchasing Sub-Ledgers RFQ Supplier Vendor Accounts Accounts Credit Management Management Master Payable Receivable Management Purchasing Receiving Vendor Billing Collections Project Accounting (TBD) Asset Accounting General Accounting Reporting General Ledger Cash Management Budgeting Managerial Reporting Financial Statements Consolidation Enterprise Financial Systems (EFS) 11

13 Sample Solution Design Model Calculation components for allocations are not supported by ERP packages 12

14 Sample Solution Design Model 13

15 Elements of Solution-Design Approach: Data Integration Across Business Processes & Systems 14

16 Elements of Solution-Design Approach: Systems of Records Data Inside & Outside of Firewall System of Record in Exact Product and services catalogs Technical Documents Customer Service Information Web Services Supply Chain Package Material Requirements Planning Lead Times Sourcing Data Attributes Demand Data Attributes Production Schedules Available To Promise Data Attributes Available To Build Data Attributes Stocking Strategy Data Systems of Records in MS GP Statutory Reports Management Reports Analytical Data Source Consolidation Inventory Valuation Billing Cash Management General Ledger Payables Receivables Assets Item Master Price Master Customer Master Supplier Master Microsoft GP ERP Salesforce Automation Package System of Record in SFDC Marketing Campaigns Prospect Management Contracts Quotes Sales Organization Sales Compensation 15

17 Elements of Solution-Design Approach: Example of Business Process Automation MS GP Softrax NetSuite Complex configuration Simple configuration Simple configuration Sales Process Revenue Recognition Source Maintenance Software & Hardware Sales System Sales Service, Installation, Training Business Rule Billing Bill annually a month in advance Bill customer in advance Give away maintenance for first year Bill for services rendered Automation Recognize revenue 1/12 per month over next 12 months Recognize hardware & software revenue as installed Recognize revenue separately / differently for each line item on the invoice Allocate recognition to maintenance Recognize revenue over the next 12 months to allocate corresponding par of revenue to relevant maintenance Recognize revenue as objectives are achieved and services are rendered 16

18 Sample of Information Package Document Enterprise Resource Planning & Professional Services Automation System Strategy and Selection Enterprise Resource Planning & Professional Services Automation System Strategy and Selection 17

19 ERP Selection Methodology Phase 1: Initiation Phase 2: Evaluation Phase 3: Selection Identify key business requirements Analyze key business processes in the scope of new ERP Create schedule for Vendor activities Identify initial list of ERP packages Provide rough estimate of Total Cost of Ownership (TCO) Create a Solution Design based on ERP Refine and validate list of initial ERP packages and TCO Validate the scope, Solution Design and Demo Scenarios with Vendors Demo Sessions Refine scope of Phases 2 and 3 Send selection package Info to vendors Reference Checks Final TCO ERP Selection Decision 18

20 Elements of Solution-Design Approach: ERP Selection Criteria Functional Features Transactional Batch Reporting Technology SOA SaaS Adaptability Ease of configuration Navigation New processes or business Integration Internal External Data conversion Workflow Scalability Database Applications Network Security Role based Data attributes level ERP Market position Product strategy and roadmap Classification match System Integrator Market position Solution design match Implementation methodology Resources and skills availability Intangible Elements Strong negative perception Strong predisposition Process leads experience Executive opinion / preference Total Cost of Ownership License / Subscription Software support Implementation System integrator adoption Hardware Full time employee (FTE) 19

21 Part IV ERP Licensing Models SaaS Focus

22 Definitions and Technology Distinction between SaaS and Cloud Computing: Cloud computing is the computing power characterized by: Disembodied computing power (based on internet technology) that is consumed where and when it is needed Loosely coupled services running on agile, scalable infrastructure Network access to a shared pool of configurable computing resources (networks, servers, storage, applications, and services) SaaS refers to the software applications using the cloud computing power SaaS is not: Grid computing which is the usage of several computers to process a specific instruction Thin Client which is a computer or computer program in the client-server architecture Most established SaaS solution models are: Software as a Service (SaaS): Providers offer business applications using cloud computing power (for example: NetSuite ERP, ConstantContact, Salesforce) Platform as a Service (PaaS): Customers add their own applications to an associated SaaS platform (for example: Salesforce Appxchange, NetSuite SuiteFlex) Infrastructure as a Service (IaaS): Rent the infrastructure and the related components (servers, storage, networks) 21

23 SaaS Economics From economics perspective the main differentiation of on-premise model and SaaS is a shift from capital expense to operating expense. The cost saving related to upfront capital expense does not systematically lead to save costs in operating expenses: The SaaS model might not make fiscal sense in the following situations: Relatively small capital budget Organization's flexibility in the capital budget rather than the operating budget Other factors impacting the scale of any potential cost savings include: The efficiency of a company's data center as compared to the cloud vendor's The company's existing operating costs The level of adoption of cloud computing The type of functionality being expected from SaaS applications Economics of SaaS for large scale companies is not there yet. Small to mid-size companies might benefit from SaaS economics if they have the right model for the operating expenses vs. capital expense 22

24 SaaS Current Trends Current trends show high rate of adoption of SaaS solutions. SaaS ERP is following the same trend in SMB market. SaaS ERP in the large organization market is lagging behind the SMB market trend. Currently Considering 28% 36% 63% Currently Using % 2007 Not Considering 9% 32% 0% 10% 20% 30% 40% 50% 60% 70% 23

25 SaaS Current Adoption Growing number of SMB companies are using SaaS business applications Figure 2 SaaS Adoption By Application "For which of the following software applications is your firm using SaaS?" Sales force automation Customer service and support Human capital management Web 2.0 technologies, such as bolgs, wikis, and RSS ERP Marketing automation software Collaboration software Content mangement Order mangement Enterprise resource planning Project-based solutions Spend management or supplier relationship management Supply chain management Software supporting a specific industry process Product life-cycle management Other 9% 8% 8% 5% 6% 22% 22% 21% 20% 18% 17% 16% 15% 30% 36% Base: 103 US packaged application software decision-makes that are currently using SaaS Source: Enterprise And SMB Software Survey, North America And Europe, Q Source: Forrester Research, Inc. 24

26 SaaS Dynamic Evolution Waves Cost Effective Integrated Business Solutions Workflow-enabled Business Transformation SaaS tipping points ADOPTI ION Stand-alone Apps Multi-tenancy Limited configurability Focus on TCO / rapid deploy SaaS integration platforms Business marketplaces and SaaS ecosystems Customization capability Optimized business Ecosystems IT-targeted Ecosystems Inter-enterprise Collaboration IT Utility / SaaS Infrastructure Customized, personalized workflow Focus on business transformation TIME 25

27 Why Choose SaaS? Q: Rate the benefits commonly ascribed to the Cloud / SaaS model (1=not important, 5=very important) Easy / fast to deploy 83.6% Pay only for what you use 81.5% Low monthly payments 77.9% Less in-house IT staff, costs 77.5% Offers the latest functionality 77.0% Encourages more standard IT 73.3% Sharing systems / information simpler 67.2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 26 Source: IDC Enterprise Panel, August 2008 n = 244 % responding 3, 4 or 5

28 Why Not Cloud / SaaS Services? Q: Rate the challenges / issues of the 'Cloud' / on-demand model (1=not significant, 5=very significant) Security 88.5% Performance 88.1% Availability 84.8% Hard to integrate with in-house IT 84.5% Not enough ability to customize 83.3% Worried Cloud will cost more 81.1% Bringing back in-house may be difficult 80.3% Not enough major suppliers yet 74.6% 65% 70% 75% 80% 85% 90% Source: IDC Enterprise Panel, August 2008 n = 244 % responding 3, 4 or 5 27

29 Contacts Ronan O'Shea Siamak Razmazma 50 California Street, 17 th Floor San Francisco, CA Direct: Mobile: Fax: Almaden Boulevard, Suite 900 San Jose, CA Direct: Mobile: Fax:

30 Confidentiality Statement and Restriction for Use This document contains confidential material proprietary to Protiviti Inc. ("Protiviti"), a wholly-owned subsidiary of Robert Half International Inc. ("RHI"). RHI is a publicly-traded company and as such, the materials, information, ideas, and concepts contained herein are non-public, should be used solely and exclusively to evaluate the capabilities of Protiviti to provide assistance to your Company, and should not be used in any inappropriate manner or in violation of applicable securities laws. The contents are intended for the use of your Company and may not be distributed to third parties.