Amid the hype that pervades vendor marketing campaigns and press announcements, it can be difficult for corporate IT buyers to discern the true capabilities of a given supply chain management suite. In this article, we examine capabilities of five top Supply Chain Management software vendors in several key areas of functionality: material procurement planning, manufacturing planning and scheduling, distribution and transportation management, and inventory management and warehousing.

In the graphs that follow, each circle or "dot" represents a vendor option. The size of the dot indicates how a particular vendor performed overall. High-level criteria that contributed to the overall ranking were corporate viability, strategy, services and support capabilities, product functionality, and technology. Though this article focuses only on product functionality. Vendors discussed are Adexa, Aspen Technology, i2 Technologies, Manugistics Group, and Logility.

The first point of interest is that our detail ratings have placed all the vendors in the top half, and in some cases the top right quadrant of the graphs. While this may seem, at first, to belie an imbalance in the model, it occurs because the five vendors shown are leaders in the SCM field and have strong strategy and overall scores relative to players in the broader SCM market. Not included in this evaluation are the many other smaller, niche market SCM vendors who would receive proportionally lower ratings.

Material Procurement Planning

Material procurement planning covers activities related to purchasing direct (raw) materials and indirect materials such as MRO, supplies that indirectly support manufacturing and distribution. Sub categories include strategic sourcing, access to product catalogs, purchase order management, and supplier tracking and rating.

Manugistics comes out on top within material procurement planning, though Adexa finishes a close second. Among the remaining vendors, only i2 may be the biggest surprise given its acquisition of Aspect Development and SupplyBase, though one should remember two things:

1. these acquisitions are fairly recent and i2 has yet to demonstrate a competent, fully integrated application
   
2. product catalog integration is but one of many functional sub-criteria

If it can realize its vision for one-stop design, configuration, and procurement planning, i2 may well pull ahead of the competition, but for now Manugistics' NetWORKS Procurement in conjunction with Supply and other modules offers mature capabilities that allow users to optimize procurement decisions and connect to suppliers in real-time.

Figure 1: Overall Score Vs. Material Procurement Planning

Manufacturing Planning and Scheduling

Manufacturing planning and scheduling brings together capabilities for production blueprints and detailed machine-level sequencing for converting raw materials to finished goods. Factors of importance within this category include constraint-based master planning, material requirements planning, capacity and resource planning, and product data management.

Figure 2 shows that, for the most part, the vendors have similar capabilities in regard to manufacturing planning and scheduling. This is not surprising since these vendors and their acquisitions originated within Advanced Planning and Scheduling (APS), a domain that catered primarily to problems encountered in scheduling and higher level strategic production planning. This is an area where vendors need to focus on enhancements in order to create differentiation.

Figure 2: Overall Score Vs. Manufacturing Planning and Scheduling

Inventory Management and Warehousing

Inventory management and warehousing activities are those involved in storing materials (finished goods, raw materials, WIP) at points between movement and processing. In this category, we include both planning and execution features like those associated with warehouse management such as crossdock management, inbound, outbound, and yard management.

Logility stands out from the rest of the crowd due to its ability to offer complete WMS capabilities via WarehousePRO, a product that made up part of its inheritance from parent company American Software in 1997. i2 comes a distant second through its partnership with EXE Technologies, a third-party alliance that carries a lower rating than functionality supported natively.

Figure 3: Overall Score Vs. Inventory Management and Warehousing

Distribution and Transportation Management

Distribution and transportation management encompasses movement of finished goods through the network of suppliers, manufacturers, distributors, resellers, and customers. Here, we are interested in tools that allow users to model distribution networks graphically, link the models to real-time planning modules for analysis as well as provide transportation management and execution capabilities.

Once again, Manugistics ranks ahead of the rest in this category, mainly by virtue of its mature functionality for distribution and transportation planning, which dates back to its acquisition of Rover Technology in 1991. Logility places a close second and has achieved considerable success with its DRP application for industrial and consumer packaged goods manufacturers.

SOURCE:http://www.technologyevaluation.com/research/articles/not-all-scm-products-are-created-equal-16614/

Peregrine Systems Inc. (NASDAQ: PRGN) has been known for applications that automate the management of complex, enterprise-wide information and infrastructure assets. While staying in that general territory, it is building a new field with its "Get.It" application suite. The first team member is Get.Resources, an E-procurement application that is being pitched at companies that acquire capital assets. The company's existing products in this area, Asset Center and Service Center, are designed for professionals within the company.

Get.Resources is a self-service application that distributes capabilities and responsibilities to individual desktops. Functionally it rides on top of Asset Center and may optionally use capabilities of Service Center.

Capital assets, ranging from real estate to desktop computers, differ from such consumables in that their acquisition cost is typically only one-quarter to one-third of the total lifecycle cost. Additional expenses accrue from such lifecycle activities as configuration, installation, maintenance, monitoring, help desk support, redeployment and retirement. Peregrine's Get.Resources works with the company's existing Asset Center and Service Center products to manage assets through their entire lifecycle. It can also be used to purchase consumables.

Asset Center contains modules that, in totality, track the initial and ongoing costs, location, and status of assets ranging from industrial machinery to software licenses. Both purchased and leased assets can be accommodated, and cost tracking can include acquisition, repair, operations, related consumables, and disposal. Purchasers of Get.Resources need the core engine from Asset Center but do not need to purchase every one of the modules.

Service Center can add such capabilities as the automatic generation of work orders, tracking service levels provided by third-party service providers, and consolidated service desk management including trouble ticket and work order tracking.

Product availability was announced December 8, 1999. The product is currently in beta with two customers, although 1-3 more beta customers are expected. The formal launch of the beta program is planned for February 2000.

Besides the actual Get.Resources product, the initial launch is very likely an incremental step toward a new architecture. While the company is making no formal announcement of any architectural changes at this time, it is clear that its stated goal of providing an integrated suite of employee self-service applications requires such a move within the next year, because its current applications run on individual databases and servers. A truly integrated suite would have a single database for all products. This is clearly not a serious issue as far as Get.Resources alone is concerned .

Product Strategy and Trajectory

Peregrine's strategy for Get.Resources has both product and marketing components. The crucial marketing component is to avoid positioning the company as competing with either ERP vendors or such procurement vendors as Ariba and Commerce One. Figure 1 represents this strategy.

In this diagram Peregrine suggests that the lower half, especially the left quadrant, represents the products that are in the domain of the well-known E-procurement vendors and their marketplaces. The green triangle represents the procurement activities of ERP vendors.

With its emphasis on plant and equipment assets Peregrine hopes to find its sweet spot in the upper left-hand quadrant, largely avoiding battles with ERP vendors and the specialists in commodities like Ariba, Commerce One and Concur. It will not shy away from competing in the lower left quadrant but plans to develop its strength by selling to the nearly 5000 companies that have acquired Asset Center, to whom adding Get.Resources over their current Asset Center holdings will be a relatively easy sale.

Peregrine offers purchasers of Get.Resources a number of ways to create supplier relationships and to offer product catalogs to users. It has partnered with Commerce One, so that any purchaser of Get.Resources can offer products from Commerce One's MarketSite. It also supports point-to-point links with individual suppliers; these catalogs can be stored either by the seller or the buyer. Most organizations will end up with all three options.

An organization that has special relationships with sellers may wish to manage an internal catalog that reflects those relationships. Where it deals with sellers of highly configurable products, like desktop computers, it will probably link directly to the supplier. Peregrine has thus far created relationships with about half a dozen suppliers, including Compaq, Dell, Office Depot, and Software Spectrum, which should make catalog relationships easier. The vendor claims that its catalog tools are sufficiently flexible to support relations with any sellers a company wishes to work with - including both those that use any of the current variants of XML and those that still rely on EDI.

Peregrine's product strategy is to increase the breadth of its Get.It component offerings and to offer products through an ASP (application service provider) arrangement. For the latter it has already partnered with Exodus Communications. Peregrine has previous ASP experience with E.Fleet, the hosted version of the its fleet management software FleetAnywhere (which itself is not in the Get.It suite.) The ASP version of Get.Resources is expected mid-year in 2000.

Installation and catalog building will typically require a professional services engagement, either with the Peregrine's internal consultants or with one of the systems integrators with whom it has created relationships. These include KPMG, Anderson Consulting, and IBM Global Services.

The company intends to achieve breadth with a variety of offerings that will offer management of other corporate assets and services. Peregrine is not announcing any other products at this time, but there are three obvious drivers to future product development:

1. Bringing other existing Peregrine products to the browser; besides the glitz of making some these into E-commerce applications, this will have the benefit of providing a unified interface to its tools. For example, a facilities management offering, already available from Peregrine as a browser-based product, is a likely new member of the Get.It suite.

2. Taking advantage of its recent acquisitions for both its current products and its underlying technology. Thus we expect to see product offerings in the knowledge management area resulting from the acquisition of Knowlix, and in network management resulting from its equity investment in Loran Technologies.

3. Filling in offerings that competitors have. These might include functions such as travel and expense report management, travel booking, and time management.

Given Peregrine's aggressive history, we would expect to see these functions acquired by acquisition or by strategic alliance involving significant equity investment.

It seems safe to predict that with Peregrine's emphasis on Total Cost of Ownership (TCO), an early addition to the product or product suite will be some way for a company to realize revenue upon retirement of assets. This will most likely take the form of an auction-based marketplace.

Get.Resources is implemented as a collection of server-side Java functions (servelets). These deliver pure HTML to the user's browser; no downloads or plug-ins are required.

Product Strengths

Peregrine has a strong presence in its chosen market, and for its target customers its TCO approach to asset procurement will be a major advantage over procurement vendors whose product features stop at the receiving dock. While the consumables in the lower left quadrant in Figure 1 account for a large number of corporate purchase orders, trackable assets may account for as much as four times the dollar volume. Thus, a product to manage these costs will have a ready and willing market. Peregrine claims to have customers who can achieve payback for the product in as little as one month.

Get.Resources has a number of well thought-out features. It integrates with information about existing stocks and about lease vs. buy opportunities. While rogue buying, the scourge of the commodities quadrant, may be less of an issue in the asset space, the equivalent problem here is purchasing new equipment that may be already available in the back room. Preventing this is certainly on the most wanted list of many IS shops, where new employees get newly purchased desktop systems despite the fact that an equivalent system may be sitting unused in the next department. Get.Resources highlights these opportunities and can manage the transfer of assets between different cost centers. (It does not have any special abilities to manage the related issues of political turf and status symbol buying, however.)

The product has capabilities for supporting E-procurement activities that do not go through the Commerce One (or any other) network, for cases where a company wishes to deal directly with preferred vendors. It can, in fact, support non-electronic procurement; although this requires manual data entry, it is still important.

The use of server-side Java is a good technological choice. It should allow for a high level of flexibility in making changes to the product. It is a platform independent approach, is more efficient than older style CGI (common gateway interface), and is a technology that programmers want to work with, thereby helping the company to attract employees. Also, since it has no impact on the browser it will be less troublesome than an approach using client-side Java.

Peregrine will perform installation and integration with its own professional services staff, but it will also partner with a range of integrators, from behemoths like KPMG and Anderson to small regional systems integrators. The company is in the process of training integrators in preparation for the February launch. Although Peregrine partners with large firms, it certifies individuals rather than firms. This protects against an integrator accepting a contract and then putting inexperienced staff to work on it.

Product Challenges

According to Peregrine the user interface "is totally and easily customizable by the customer to meet their needs." The unconfigured interface is weaker than we would like. For example, a user signing on sees a screen with top-level functional choices, one of which is to approve requisitions. This choice is available even if there are no requisitions for this user to approve. Given Peregrine's workflow engine we believe that this and other weaknesses can be repaired by customization. However, we think that users really expect a more functional and personalized default than Peregrine provides.

The product interface is certainly functional, but is also somewhat simplistic. While not a major failing, once Peregrine sees competition from other asset management vendors who are moving into the E-purchasing arena it will find that the front-end pizzazz can be an important differentiator.

We also note that while Get.Resources offers asset management functionality not available with most other E-procurement packages. To fully utilize all of the features in those packages may require the user to acquire both Asset Center and Service Center (see User Recommendations). We believe that Peregrine will find this too steep an entry cost for users who do not already own its products.

By the time the product is released for general availability Peregrine will need to demonstrate successful implementations with high profile clients. Historically, Peregrine has been plagued with a reputation for complex and high cost integrations. It will be important for Get.Resources to reverse that trend.

Other vendors in this space are advertising, or even promising, relatively short implementation times. In some cases the time measured is to the first transaction or operational user, and a considerable amount of the implementation occurs after that announced date. Peregrine will do well to rise above that practice and achieve complete implementations in a short time.

Even so, prospective buyers will need to ask whether the companies with speedy implementations started with Asset Center in-house. Those without Asset Center can expect longer installations.

Vendor Recommendations

As a standalone product, Get.Resources promises to be a powerful product with some user interface concerns. Although Peregrine is obviously gearing up for a barrage of product announcements over the year, it should not neglect these issues. While simplicity is an admirable goal, especially for a company trying to expand beyond a product family that was targeted to power users, simplicity is only one aspect of usability, and we believe that a more functional interface should be the delivered default.

As noted above, we assume that Peregrine is working toward a new architecture. We see nothing wrong with bringing out the first product or even two while that development is taking place. If our assumption is not correct we would expect Peregrine to have some difficult problems as it continues to bring out new products in this suite. But we have trouble imagining that anyone would fail to see the necessity of uniform front ends and common back end components.

SOURCE:http://www.technologyevaluation.com/research/articles/first-look-peregrine-offers-cradle-to-grave-procurement-15206/

With company's data warehouses now filled with terabytes of historic data it is crucial to adopt tools that would allow marketers to better understand their customers and build adapted strategies for a true one to one relationship management. The increasing demand to allow end users to access, analyze, and deliver information in an organization has amplified the need for the business intelligence (BI) market and its technology. Understanding customer behavior is important to adjusting business strategies, increasing revenues, and identifying new opportunities. Analytics are therefore today's hot button, helping businesses to increase their overall enterprise application return on investment (ROI).

In the CRM arena, analytics are provided in two major flavors:

• Descriptive analytics — which focuses on the historical customer patterns
• Prescriptive analytics — which tends to predict the customer's future behavior

Many of the traditional CRM packaged software providers like Siebel, SAP, PeopleSoft, MS CRM and E.piphany offer analytics modules that mostly fall into the descriptive category. Predictive analytics have long been the focus of vendors like SPSS, I-Impact, SAS Institute, Business Objects SA, and Cognos Inc

Business Intelligence suites are even establishing a much broader market by crossing into the domain of ERP providers that offer solutions for financial management. In fact they are heavily investing in the emerging area of business performance management (BPM). BPM analytics could play a significant role in CRM suites for improving business process performance. However, data mining technology, which focuses on identifying interesting patterns and developing predictive models from data, has the greatest potential for enabling businesses to leverage data resources for strategic business success.

Analytical applications are more and more leveraging faster processing speeds, more complex algorithms, and existing data mining infrastructures to help enterprises navigate through their unknown market. The analytics software market has a wide variety of technologies, such as analytic servers and tools for query and reporting, online analytic processing (OLAP), and data mining. These technologies have traditionally been distinct and not integrated, which has resulted in segregation of user communities unable to share information. There is now an awakening to the potential as more predictive analytics capabilities are appearing embedded with packaged CRM, ERP and SCM applications, where they're accessible to a broad set of users who previously relied on spreadsheets, gut instinct, or a separate analytics department.

Terminologies

The world of BI software has many different tools. Some of them follow:

End-user query and reporting tools: These are designed specifically to support ad hoc data access and report- building by even the most novice users.

Online Analytical processing (OLAP) tools: Computerbased techniques used to analyze trends and perform business analysis using multidimensional views of business data.

Online Transaction Processing (OLTP) platforms: Computer systems designed and built for conducting data analytics.

Online Analytical Processing Platforms (OLPP): Developed in recognition of the limitations of conducting data analytics on Online Transaction Processing (OLTP) platforms, OLPP provides a complete development and delivery environment for predictive analytics not satisfied today by OLAP/OLTP processes. OLPP enables users to develop a predictive understanding of the future behavior and trends of customers, vendors, products, accounts, inventory, supply, and transactions through support of ease of usage of traditional and cutting edge scientific predictive modeling techniques.

Data mining software: The process of efficient discovery of nonobvious valuable patterns from a large collection of data. It uses technologies such as neural networks, rule induction, and clustering to discover relationships in data and make predictions.

ETL tools: Short for extract, transform, load; three database functions that are combined into one tool to pull data out of one database and place it into another database. Extract — the process of reading data from a database. Transform — the process of converting the extracted data from its previous form into the form it needs to be in so that it can be placed into another database. Transformation occurs by using rules or lookup tables or by combining the data with other data. Load — the process of writing the data into the target database.

Packaged data-mart/warehouse: Is a blend of technologies aimed at the effective integration of operational databases into an environment that enables the strategic use of data. These technologies include relational and multidimensional database management systems, client/server architecture, metadata modeling and repositories, graphical user interfaces, and much more. Executive information systems (EIS): provide high-level views of an organization by aggregating data from various sources from within the organization and also external sources. Ad hoc enquiries provide performance data and trend analysis for top-level management. Ease of use is an important feature so that enquiries can be made without a detailed knowledge of the underlying data structures. Graphical interfaces (GUI) make it possible to request reports and queries without resorting to programming.

Trends Expanding the User Community

Traditionally BI software implementations focused on internal projects that provide analysts and managers access to business intelligence tools. Today the trend is changing as a wider business community requires access to customer insights. Analysis and reporting are no longer restricted to the aforementioned groups within organizations. Any employee can, and should, benefit from BI software.

Unfortunately, for most companies today, the use of data mining models within campaign management is a manual, time-intensive process. When a marketer wants to run a campaign based on model scores, he or she has to call a modeler (usually a statistician) to have a model run against a database so that a score file can be created. The marketer then has to solicit the help of an IT staffer to merge the scores with the marketing database. This disjointed process is fraught with problems and errors and can take weeks. Often, by the times the models are integrated with the database, either the models are outdated or the campaign opportunity has passed.

The solution is the tight integration of data mining and campaign management technologies. Under this scenario, marketers can invoke statistical models from within the campaign management application, score customer segments on the fly, and quickly create campaigns targeted to customer segments offering the greatest potential. Campaign management and data mining, when closely integrated, are potent tools.

CRM applications are the perfect vehicle for transmitting the required knowledge to different strata of business community. New alliances are therefore predictable. More and more operational CRM analytic vendors align with more advanced, prediction-oriented analytics companies. Marketing automation and analytics are definitely the hotspots for the CRM market this year.

Business Objects recently announced its integration with Salesforce.com to provide the CRM customers with advanced reporting and analysis solution. PeopleSoft released its Predictive Analytics Solution. Siebel continues its tight integration with SPSS and SAS.

SOURCE:http://www.technologyevaluation.com/research/articles/analyse-this-17013/

Aspen Technology recently reported financial results for its fourth quarter and fiscal year ended June 30, 2000. The vendor logged a dramatic 88% increase in license revenue in the fourth quarter, a strong indication that its solutions for manufacturing enterprise optimization and extended supply chain management are gaining ground among users in the process industries. Total revenues for the fourth quarter grew 44 percent to $83.4 million from $57.8 million in the same period ending June 30, 1999. Excluding one-time acquisition costs, the company reported net income for the quarter of $5.7 million, or $0.18 per diluted share, compared with a net loss of $3.4 million, or $0.12 per diluted share for the same period last year, excluding restructuring and other charges. AspenTech restated its fiscal 1999 and 2000 results to reflect the acquisition of Petrolsoft Corporation, which was completed during the fourth quarter and treated as a pooling-of-interests.

Figure 1.

"We are pleased to have exceeded our goals for both growth and profitability in the fourth quarter and fiscal year," said Larry Evans, Chairman & CEO of AspenTech. "The rapid growth in our license revenues continued to be driven by strong demand for our integrated Enterprise Optimization and supply chain solutions, as process manufacturers increasingly invest in technology to improve their manufacturing productivity and optimize their supply chains. We are unique in the industry as the only company with a proven integrated solution, and our domain expertise and process knowledge enable us to deploy mission-critical solutions that other vendors cannot provide."

Market Impact

AspenTech's success comes in part due to its unique vision for automating the enterprise. Where ERP vendors are busy linking manufacturing-centric applications to higher corporate functions like financials and human resources, Aspen has worked in the other direction, integrating supply chain optimization for process manufacturing to "lower" functions such as process control and operations. Aspen is alone among large vendors in its ability to do this, as none of the others have Aspen's process manufacturing knowledge base and expertise. Aspen was founded by chemical engineers, hires engineers as developers and business consultants, and produces applications that appeal to engineers.

SOURCE:http://www.technologyevaluation.com/research/articles/aspen-technology-built-success-from-the-ground-up-16092/

Plug and Play business application system integration is the goal of investment in EAI technology. Buyers have a number of applications from various suppliers and a number of external trading partners with whom they want to exchange business transactions. EAI suppliers promote products that connect to a diverse set of applications (Adapters) transform data format, structure and content (Transformation Capabilities), move data among applications predictably and with assured content integrity (Transport), and create new transaction interconnections with assured process integrity (Workflow).

With a full complement of Adapters, the appropriate set of Transformation Capabilities, versatile communications Transport and flexible Workflow capabilities, heterogeneous applications, platforms and network configurations cease to be impediments. EAI tools promise seamless and flexible interconnection with low overhead.

Apparent Capabilities versus Vital Capabilities

TEC has examined a number of recent EAI acquisitions to refine its Selection Model and Knowledge-based Procurement Process. Of particular interest is the difference that we noticed when we compared selection criteria to success criteria. It is clear that a number of selections did not sufficiently address long-term cost of ownership and operation capabilities. Several of those capabilities are described in the following table.

The column titled Apparent Capability lists a number of EAI features and functions that customers included in their Request for Proposal (RFP). The Discovered Requirement provides examples of additional capabilities that at least one customer discovered should have been included as a requirement in its RFP. The third column, entitled Implications, captures important considerations for buyers based on actual discovery during implementation and use.

Category	Apparent Capability	Discovered Requirement	Implications
Performance	Product supports multiple instances operating on multiple servers and demonstrates linear performance increase characteristics.	Product supports linearly scaleable performance and Quality of Service controls to manage available resources.	Although the selected product did demonstrate performance improvements commensurate with increased resource availabilty, it was necessary to reconfigure transport flows to avoid "resource hogging" by a relatively small number of large and/or complex messages.
Availability	Product has features to assure 24 X 7 operational status.	Product has features to assure 24 X 7 operational status and full environment backup without operational downtime.	During failure recovery testing, it was found that all message services must be quiesced (shut down) in order to assure recovery from a backup fileset.
Availability	Product supports transport server direction through named services and dynamic location (like Domain Name Services).	Product supports server access through named services and supports access through multiple paths with assigned selection priority.	Although the product provided dynamic load balancing, it was not capable of employing all available network paths between servers.
Management	Product provides multi-tiered promotion of workflow configurations (e.g., Development to Quality Assurance to Productive).	Multi-tiered workflow configuration promotion supports coexistence of multiple versions of the product operating simultaneously on different platforms.	A Productive version was upgraded to fix a bug and promotion transport services on another server refused to interact with the "incompatible" version.
Management	Product employs a repository of all metadata and an intuitive graphical user interface for configuration programming.	Product provides a graphical user interface for configuration programming and to assist with message flow tracing during debug actions.	It was discovered that ease of configuration was not complemented with a similar facility for tracing and (single-stepping) messages through the system.

Category	Apparent Capability	Discovered Requirement	Implications
Installation	Supplier installs and verifies the operational status of the product.	Supplier also assures failure recovery and provides backup, recovery and upgrade procedures.	Failover, backup and recovery systems were left to the customer (who did not have a full understanding) as was all process documentation. Lack of full understanding was discovered at an inopportune time.
Installation	Supplier provides product training and implementation assistance.	Supplier also provided proficiency assessments with training as a follow-up service.	Customer found that poor programming practices had become the norm and had to recode a number of message configurations to obtain desired levels of reliability and performance.
Adapters	Product provided "native" connectivity to the applications and data storage facilities listed.	Product provides non-invasive connectivity for execution of the transactions described.	Most Adapters were found to be "starter kits" with a limited number of transactions and an even more limited set transaction features.
Adapters	Supplier provides documentation and training for the development of custom adapters.	Custom adapters can be incorporated into the repository and they can be readily validated and carried forward through sytem upgrades.	Custom adapters required "special handling" for use and their functionality was unknown to the metadata repository.
Security	Product provides secured access to configuration tools.	Multiple levels of tool access are provided to assure configuration integrity, promotion control and administrative access without configuration capability.	Work could not be distributed without risking system integrity.
Security	Product is compatible with "Firewall Product" assuring network transparency	List all firewalls that the product has been operated through with references to parties who configured them.	An internal firewall was improperly configured to allow message flows resulting in a security risk

Category	Apparent Capability	Discovered Requirement	Implications
Security	Product has the capability to employ user credentials and certificates.	User credentials can be associated with users who are authenticated only once or for each transaction.	Multiple authentication models were found to be necessary only after implementation.
Business Rules	Product allows business rules to be configured into the repository and reused.	Specific applications of business rules can be configured into "macros or super-processes" that span multiple business rules and process flows.	Opportunities for improved reuse were discovered during system design and configuration.
Workflow	Product provides workflow capabilities beyond message routing.	Product workflow features interoperate with the products listed.	An application could have benefitted from integration with Oracle Corporation's Workflow.
Transport	Product supports publish/subscribe and request/reply communications models.	Product interoperates transparently with the Message Oriented Middleware (MOM) products listed.	Newly aqcuired businesses already owned and operated MOM from a different supplier and wanted to maintain integrated messaging.

Preparing for an EAI Initiative

Comprehensive preparation maximizes chances for success by establishing clear goals and identifying risks.

1. Create a clear picture of how the product will be applied to business process automation tasks.
   
   
2. Create a clear picture of how the product will be operated, administered and managed.
   
   
3. Create a clear picture of how the product will be deployed including:

• Server platforms and operating systems
  
  
• Objects (Application Systems, Relational Data Bases, Special File Structures) that will be interconnected.
  
  
• Trading partners that will be interconnected including their interconnection requirements.
  
  
• Monitoring systems (Hewlett Packard's Openview, Computer Associates' TNG) that will be employed.
  
  
• Performance measurement and management processes and reporting.
  
  
• Event monitoring, response and escalation

4. Establish capacity, performance and availability requirements for the system that will be built using the technology.
   
   
5. Define an implementation timeline linked to business system deployments.
   
   
6. Create a selection team with clear roles and responsibilities.
   
   
7. Build the Business Case
   Identify the potential time and cost savings of the future model. Include anticipated maintenance and product application extensions.
   
   
8. Design a Future System
   Create a concise picture of how the information technology staff and business leaders will employ the technology and how it will perform after it has been assimilated into mainstream operation.
   
   
9. Create a Call to Action
   Build a coalition of lead users and executives around the business value that can be derived from the technology.
   
   
10. Identify and Select Suppliers
    Using the Business Case and Future System Design to establish selection criteria and a model for the ideal product, map contending solutions to the model and select a product configuration and supplier(s). Include Application Service Providers as well as product vendors and systems integrators to maximize the leverage of resources and to minimize project risk.
    
    
11. Scope the Project and Risk
    The gap between the idealized system and the one that will result from the selection process will impact investment return. The gap between existing technology capabilities and those required to deliver the solution contribute to project risk. EAI deployments derive most of their risk from change imposed on design and implementation techniques i.e., the skills and practices that are employed by the technical staff. When all of these are factored into the scope / risk equation, a final check of return on investment can be made and a decision to move forward and on what can be made.

SOURCE:http://www.technologyevaluation.com/research/articles/eai-the-crazy-glue-of-business-applications-16112/

Whether due to the same geographic origin or not, one can notice many similarities between Intentia (XSSE: INT B) and IFS AB (XSSE: IFS), in addition to a few differences. Having both been Swedish companies, both exude the domain expert knowledge within the industries of their focus, and both vendors have been congenial and disinclined to exaggerate their capabilities. On the down side, however, these traits are drawbacks in other more flamboyant, marketing-rich markets outside Scandinavia, particularly in the United States, where these vendors occasionally have been regarded as somewhat unexciting or reserved.

Having traditionally done implementations via their product delivery organization, IFS and Intentia have also long exhibited a focus on product quality and customer satisfaction that manifests into a lasting relationship with each client. Both IFS and Intentia boast long lists of delighted customer references as a display of their high level of confidence in their successful implementations and subsequent after-sales life cycle and upgrades.

While with the exception of some regional pockets, many may not have necessarily heard of Intentia's or IFS's good reputations outside Europe. Nonetheless the vendors have impressive backgrounds. Founded in 1984 and now Scandinavia's largest software company, Intentia is established in some forty countries with nearly 3,000 employees and 3,500 customers worldwide. Intentia's annual net revenues for 2003 were $363 million (USD), based on the average exchange rates for the period. IFS was founded a year earlier, in 1983, and it currently has a global presence serving forty-five countries with over 2,600 employees and 2,500 customers worldwide. Its annual net revenue for 2003 was $290 million (in USD), based on the average exchange rates for the period. However, based on the currency exchange rate (which is how revenue is typically reported making it more comparable with previous years results), the vendor reported $323 million (USD).

As for the industry focus, Intentia is a major player in selected industry verticals such as food and beverage; fashion; automotive; paper; steel; maintenance; service and repair; and wholesale and distribution. In addition to these, the 2004 focus for its EAM solution will include power generation; primary chemicals; third party outsourced maintenance providers; metals processing; ports; and airports. On its hand, IFS targets automotive suppliers; aviation and defense (A&D); energy and utilities; high-tech, industrial manufacturers (general engineer-to-order [ETO]/make-to-order [MTO] manufacturers); infrastructure and facilities management; batch process industries; rail and transit; and telecommunications. The common thread throughout these is complex, multisite engineering and manufacturing, bundled with a specialization in the more asset-intensive industries, particularly for the maintenance repair operating supplies (MRO) services management.

However, after a strong performance throughout the 1990's, both vendors suffered a sudden stall in total revenues growth upon entering into the new century (see figures 1 and 3). This was due, in part, to the soft market after the Y2K over-hyped phenomenon and followed by the global economic downturn. This brings us to some differences between the two vendors. For example, Intentia had an IBM-based platform centric approach in its Movex software until 1999, when it released a multi-platform version of Movex which was written in Java and included an optional web interface. For more detail, see our article Intentia's Movex for Food and Beverage: Gaining a Foothold in North America. Also, Intentia remains the larger and possibly a functionally better vendor of the two (in terms of multinational financials/consolidation, budgeting, HR/payroll, distribution/transportation, marketing campaigns, and other capabilities). However, at the same time, it is somewhat stodgier and only recently started to open up to the concept of selling into multi-vendor environments.

Figure 1

Figure 2

Conversely, back in 1994, IFS began a development project to transfer its flagship IFS Applications suite to object-oriented technology. The project was completed in 1997 with the launch of the IFS Applications 1998 product suite. The IFS' business concept has since focused on increasing the freedom of action and competitiveness of companies by enabling customers to either apply IFS solutions as a complete enterprise system, or as a complement to other vendors' applications within a specific part of the business process.

This is Part Three of a four-part note.

Part One defined EAM and CMMS.

Part Two discussed integration concerns.

Part Four will continue the analysis of two major vendors.

IFS Strategy

For over a decade, the cornerstone of IFS' strategy has thus revolved around its component-based architecture and vertical market focus, which thereby became part of its identity and a key ingredient in its ability to deliver an even deeper vertical industry functionality.

While specific astute modules within the IFS Applications Suite have contributed to IFS' success within certain verticals, one thing that IFS has long had going for it is its product architecture, which is highly component- and standards-based. Also recognizing its scalability limitation, in addition to the rigidity of its erstwhile two-tier client/server architecture, IFS first embarked on creating an n-tier product architecture in the mid-1990s. This n-tier product architecture separates presentation, business logic, and data storage layers, and also render IFS independent from the Oracle development tools and the use of stored procedures in the Oracle database. IFS Applications 2001 was heralded as a fully Internet-enabled and componentized five-tier architecture suite (with the data source, business entities, business activities, business processes, and presentation layers). It covered most of the traditional horizontal ERP functionality via a mandatory IFS Foundation layer, on top of which one can build in a pick-and-mix-type functional module stacks that are needed to satisfy needs of more specific businesses. These have been built through the company's own research and development (R&D) and through some of its acquisitions. Both endeavors use the industry's commonly accepted standards.

By splitting functionality across over sixty independent modules and by having a five-tiered, object-oriented logical product architecture, which separates the presentation layer from business process, and the business process from the underlying required business logic, database access, and the database itself, IFS demonstrates a possibly unique epitome of flexibility, both in terms of product adaptability to defined (and ever-changing) business processes and the ability to "cherry pick" required modules.

As they see fit, companies can select modules to co-exist with other legacy applications and databases, or select modules to simply avoid the "big bang" monolithic approach to enterprise application implementation—a practice that has long since been overcome. They can add components at their leisure and pace, which allows for user adaptation to the new tools and allows companies to begin receiving return on investment (ROI) quickly by staging their implementation scope in order of criticality. Built-in extensible markup language (XML) support and the external availability of all internal application programming interface's (API) mean that integration between IFS components and other companies' software should be a reasonable endeavor. For more details, see IFS To Be At Customers' (Web) Service.

Furthermore, owing to the component architecture, customers can, for example, even install the latest version of a certain IFS component while still using an older version of IFS Applications. Therefore, IFS' foray into web services has much credibility, since the company has likely dealt with the pieces of the concept before the latest industry buzzword has been coined. Namely, using web services objects, IFS Applications components are driven by business processes, which by the nature of encapsulation (i.e., making functionality known only by the interface it exposes), bode well for the ongoing product's instance agility.

Hence, in today's market where IT budgets remain extremely tight, IFS has a potential of offering customers highly specific modules to immediately address their specific pain points. Moreover, since the component architecture has been further enhanced within IFS Applications 2004 with Java 2 Enterprise Edition (J2EE) interface (dubbed IFS Service Oriented Component Architecture), and thereby further bases IFS' modules on open standards, they should more readily be integrated into a company's existing IT ecosystem.

Challenges to Both Vendors

Looking ahead, both vendors are moving to web services and composite applications. IFS' first composite application has recently been developed with partner ABB for process and energy industries and is currently available. On the other hand, having moved from the IBM iServer confinement, Intentia nowadays offer a much wider choice of platforms to the user, whereas IFS remains confined to Oracle database, which limits opportunities in the lower-end of the market. While the IFS Web/Applications/Connect server is ready to run on Microsoft SQL Server in the laboratory, given that some of the application logic has been migrated to be database independent (which should include the IBM DB2 database as well), there is still a lot to do before everything has been migrated and ready for commercial use. Given IFS' ongoing R&D investment scrutiny, that work will not likely be completed in the foreseeable future.

Namely, although not unlike other ERP and SCM software vendors, Intentia and IFS need to string together several quarters of profitability to restore consumer confidence and long-term stability, which is yet to happen (see figure 2 and 4). Recent reports have, however, indicated that both vendors have lately had many bitter pills to swallow in their attempt to stem the tide of poor consumer confidence in order to increase revenues and return to profitability, while, at the same time, developing the internal infrastructure to increase and measure efficiency and reduce costs.

Figure 3

Figure 4

Cost cutting, layoffs, certain divestitures, and so on have lately been associated with these two mid-market vendors that not that long ago seemed to have been getting everything right—technically, functionally, and geographically. Their mixed blessing performance—the delivery of new exciting product features on one side while being plagued with losses and an eroding financial situation on the other—have been the main theme for last couple of years. Nonetheless, both have had to shift their emphasis from an astronomic high growth and an entrepreneurial spirit of previous years to its current focus on profit.

The vendors have realized and addressed the seriousness of their protracted poor financial performances by focusing on the following: profitability and positive cash flow, balanced growth by relying on strategic partnerships for growth and product enhancements, and product development costs tied to new sales. Still, flawless execution and repeat delivery of profits and positive cash flow are yet to happen.

Also, both vendors have lately tightened their respective ownership shares as to preempt any hostile bid activity similar to what was launched against PeopleSoft by Oracle. Because Intentia's challenges and consequent moves have been analyzed at more length in our earlier article series entitled Intentia's Movex for Food and Beverage: Gaining a Foothold in North America, we will focus more on the IFS's current state of affairs. To that end, IFS might be showing some signs of recovery during the last couple of quarters (see figure 4), given that despite such a tough market, IFS was able to announce that it continues to gain traction with 158 new customers in 2003, of which 32 contracts were valued at over $1 million (USD). The company continues to improve internal operations and is generating positive cash flow, something it has struggled with in the not so distant past.

Several vertical markets and partnerships are contributing to this growth. In North America, IFS is seeing particular success in the A&D industries, where it has been leveraging the broad and deep solution in EAM and MRO. While IFS has been well-known for providing ERP applications to medium-to-large organizations that make complex, highly engineered products with project-based manufacturing processes and asset intensive operations, it has long tried to crack the US A&D industry across all company sizes. It has apparently achieved some success in that regard, by setting up these partnerships: BAE Systems-IFS, for the global defense sector and GE Engine Service for commercial aerospace.

IFS seems to have cemented its position in the market since setting up a joint venture with BAE Systems over two years ago and declaring A&D as one of its key target markets. IFS has been successfully developing functionality specifically for the sector with some of its principal customers, such as BAE Systems. As a result, IFS' customers in the sector also now include Lockheed Martin, General Dynamics, Saab Bofors Dynamics, Saab Aerospace, GE Aircraft Engines, and so on. Products that have been the result of the endeavor include integrated project tracking and product data management (PDM) capabilities, which, when combined with other IFS Applications modules, work well with government regulatory requirements in the sector. They also fit well with the requirement to manage assembly design; manufacturing and ongoing spare parts logistics; and MRO support of complex products throughout their life cycle.

Likewise, IFS plans to expand by repeating the model of developing global and local partnerships with well-known companies in niche industries in different countries (such as ABB, IBM, Beijing IFS UFSoft, Det Norske Veritas, etc.), while product development focuses on deepening its functionality to retain IFS' position in its chosen markets, while broadening its scope to capture more industries in the future. IFS also expects to offer more specialized best-of-breed solutions with the aforementioned partners, where appropriate. A perfect example would be the alliance with ABB to deliver IFS Enterprise Asset Management (EAM) solutions, which could possibly render IFS a leading EAM player in the future. Other partnerships and alliances have reportedly developed as well, resulting in greater market penetration and an increase in the number of prospects. In other words, 8 percent of license revenue was derived from partnerships and alliances.

In its outlook for the rest of the year, IFS expects continued cost containment rationalization and to that end, product development will be sharply focused on refining functionality, particularly within specific industry segments that are of strategic interest for IFS and its premium partners.

The problem has been that the company had invested heavily in product development to deliver more than sixty modules, including localization for many countries. Having done so, it had suddenly ended up with too much a burden, given it did not required the same level of staffing for future development. Thus, lately IFS has seriously reduced its Sweden-based R&D team as part of an intensive cost-cutting exercise to save several dozens of millions of dollars per year. An increasing amount of its R&D activity has since been created in Sri Lanka, where it currently has approximately 300 employees, and where it can gain a five-to-one increase in labor for the same amount that it costs in Sweden. This has reportedly reduced IFS' R&D expenditures by 21 percent for 2003 while not really affecting its capacity. One should expect similar moves from Intentia, given it has recently axed 10 percent of its worldwide workforce under the influence of the very recent investor Symphony Technology Group, which will likely prompt Intentia for more gutsy moves than it has been prepared to do in the past.

SOURCE:http://www.technologyevaluation.com/research/articles/eam-versus-cmms-what-s-right-for-your-company-part-three-analysis-of-ifs-and-intentia-17213/

When most people think of enterprise systems they imagine huge racks of server, large memory banks, and an IT department of hundreds of employees or they picture project plans that can fill a three-ring binder and has implementation time that spans years. Customer relationship management (CRM) systems are thought to be the domain of large international corporations and considered overkill for mid-market companies.

Nothing can be more wrong. Enterprise systems are only as complicated as the enterprises they serve. Mid-market companies can especially benefit from a CRM system because they have the agility of a small business and are resource-rich enough to tackle sweeping changes. Take advantage of all the assets a mid-sized company has and implement your CRM systems now, when you have less people to train, less data to convert, have less challenges to deal with, and more to gain.

CRM is not just a system. It is a total business strategy that recognizes the value of customer relationship and engages the entire company in improving profitability. It helps growing companies manage their customers, promote their products, and service their client base. Most importantly, CRM systems prepare companies for growth, aid in customer retention, and build brand. Midsize companies cannot afford to ignore investing in a CRM system. A properly implemented system can achieve all this and more by consolidating customer information, standardizing data collection, and centralizing customer intelligence. By better understanding customer behavior patterns, companies can facilitate front-office processes, and integrate all the touch points in customer relationships.

This is Part One of a four-part note.

Part Two will discuss implementation strategies, and Part Three will describe achieving and maintaining the competitive edge.

Part Four will conclude with specific CRM strategies and a hypothetical case study.

Creating Your Strategy

According to a 2002 report from the META Group, since 2000, more than 80% of CRM programs are initially run as ad hoc operations rather than formally constructed corporate agendas. Rising economic pressure could force mid-market organizations into embarking on quick-win initiatives, but enterprise-wide investments are seen as unnecessary expenditures and seem inappropriate given the strained economic conditions.

Therefore, comprehensive planning and organization-wide strategy is key to realizing a better return on your CRM investment. Ask yourself, what are my company's goals for this year? For the next five years? How do we get there? What steps needs to be taken? What are the sales targets? What are the target markets? How much should be invested now to save later? How should growth be dealt with? No one company can be everything for everyone. Is your goal to increase sales or reduce call volume? Do you want to produce quality products or sell more units per deal? After setting your goals and objectives create a strategy to meet or exceed them.

A successful strategy has three attributes:

• Support and communication
• Realism
• Definable success and failure

Support and Communication

Customer-related activities must gain top preference in prioritization discussions. When planning a CRM system, include the whole company and create buy-in from your organization. Management must be convinced of the value proposition of your strategy. Also promote your strategy continuously throughout your project. Update senior management on your progress or setbacks. Make sure the rest of the company understands that the leadership supports your initiative because management might have to reinforce the company's goals. Set up regular meetings with select users to discuss issues, gather requirements, and get feedback. Engage the users in the planning stage. Employees need to have ownership or feel like they are stakeholders. This will ensure commitment to the project and will later facilitate the transition and implementation phases.

Of the 500 companies examined by InfoWorld CRM, 49 percent cited lack of widespread cooperation as "a major bump in the road to CRM".

Realism

Your strategy must be realistic. Clearly identify and outline the steps that your organizations must go through to achieve its goals. Make sure you have the resources, time, and money to accomplish what you set out to do and create realistic timelines. Don't rush a project because of some arbitrary timeline. Consider the speed of technology but don't give in to pressure to deliver band-aids solutions At the same time, make sure you do not allow too much time and freedom for your project. Ideas get stale if bounced around too many times.

Next check the market climate. In the late 1990s, IT personnel were more precious than gold. The US had such a labor crunch that the Immigration Department exceeded its H-1B visa capacity for the 1999 fiscal year by 115,000. However, in 2003, the US Immigration and Naturalization Services (INS) decreased the number of H-1B visa by half. Ultimately, these moves affected many companies in their decision to build or buy.

In 1999, Enron set its goal to be the world's largest energy company and by spring of 2002, Enron stocks were trading at over $90 (USD) a share. Ensuing scandal and the downfall of other giants such as World Com and Health South caused the public to lose faith in large corporate organizations. In the end, the economic landscape changed drastically.

Define Success and Failure

Define success or failure by establishing metrics. Calculate your return on investment (ROI). Your metrics could be monetary, market share, or productivity. Measure your strategy through milestones or when certain deliverables are accomplished. Use multiple metrics to gauge success and define and quantify your objectives. Let's say your goal is to increase sales: determine by what percent, state the threshold for failure, and give yourself a range to shoot for. Track your CRM performance not just through the project lifecycle but also over an extended period of time and give the process a chance to mature and bear fruit.

Only 30 percent of companies that implement CRM systems have a measurement strategy, while 15 percent don't have any type of plan.

Be sure to separate your CRM metrics from other company initiatives. That is to say, try to differentiate the effect of your CRM program from other influences, such as new technology or market conditions. How much of the 45 percent increase in sales is due to customer relationship management as opposed to the holiday season? Coordinate your efforts. Integrate your systems and look for reusability. More value can be added when you prepare how you are going to use your CRM system. Let it work for you by design not by accident. Set attainable objectives. Set metrics and checkpoints. Companies succeed because of achieved goals.

SOURCE:http://www.technologyevaluation.com/research/articles/customer-relationship-management-strategies-part-one-changing-your-approach-17781/

Technology Business Research (">www.tbri.com) just completed its First Quarter 2000 Corporate IT Buying Behavior and Customer Satisfaction Study, part of a quarterly tracking service measuring corporate end-user satisfaction with desktop, Intel-based server and laptop/notebook systems vendors. This quarter's study is based on the opinions of 550 IT managers at large U.S. corporations from interviews conducted between mid-January and early April 2000. The principal shifts in rankings this quarter involve Compaq moving up two positions in the desktop segment and up to second position in the notebook segment, in both cases displacing IBM to No. 5 in desktops and No. 3 in notebook satisfaction.

Market Impact

No news is good news for Dell [NASDAQ:DELL]. Dell retains its position at the top of the TBR rankings.

Sometimes, you try and you try, but you do get satisfaction. Compaq [NYSE:CPQ], with its recent efforts toward improving customer service and satisfaction, has pulled away from the rest of the pack and stands alone with rival Dell. Dell & Compaq are also virtually tied in the number of sample respondents, as one would expect given their close position in the U.S. desktop PC market. This is good news for Compaq - it continues to build market share, growing at "only" 19% annually. [For a broader overview of the desktop market, please see TEC's article Desktop PC's: Meet the New Boss.]

Gateway [NYSE:GTW] & Hewlett Packard [NYSE:HWP] continue to trail U.S. market leaders Compaq & Dell. HP has been red-hot in the desktop market lately, pulling away from Gateway in unit sales. HP's lead over Gateway in customer satisfication, while not as significant, is gaining momentum. HP also continues to win market share from IBM [NYSE:IBM].

TEC U.S. Desktop PC Market Forecast, 2000

Vendor	2000 Shipments	Market Share
Dell	9,770,668	19%
Compaq	8,615,120	17%
HP	5,450,922	11%
Gateway	4,840,129	9%
IBM	3,218,890	6%

Source: TEC

Finally, IBM trails the rest of the Big Five in customer satisfaction. This is consistent with IBM's ongoing scale-back of retail desktop PC operations. IBM needs to stabilize its remaining customer base if it intends to remain a force in the market.

SOURCE:http://www.technologyevaluation.com/research/articles/dell-tops-in-customer-satisfaction-15825/

Given the examples of the changes in human resource (HR) management discussed in Thou Shalt Manage Human Capital Better, and the mushrooming number of point solution providers, many enterprises have realized the significant shortcomings of traditional HR (in terms of technology, beliefs, processes, and practices) that require a strategic-level mind-set change. This is particularly relevant during times of economic sluggishness and low investment capacity (which typically translates into layoffs or hire freezes, cost containment, and stalled innovation), when most enterprises and their employees are left wondering if they can (or should) rely on each other for their future.

Part two of the series Thou Shalt Manage Human Capital Better.

In the early 2000s, with the economy in a downturn, HR administration delivered some organizational value by outsourcing an increasing number of HR business processes, either wholly or in part. In many cases, outsourcing to some trusted technology vendors that have already demonstrated their HR domain expertise may help companies achieve additional efficiencies and functionality, reduce head count, and cut costs.

Of the many solutions in the HR realm, the most predominantly outsourced have been payroll processing, employee assistance programs, payroll tax filing, and background screening. The most appealing and achievable benefits of outsourcing are streamlined operations, access to better HR capabilities and industry expertise (when it is not a core competency of the user enterprise), freeing up of internal staff, reduced labor costs, and accurate and predictable monthly costs.

However, the returns from layoffs (often undertaken without much thought to who should really go, potentially resulting in the hasty release of the lynchpins of the enterprise's ongoing performance) and relentless cost-cutting have proved to have only a limited (if not negative) effect. While some organizations have tried to cut labor costs to be competitive in their markets, the most progressive companies have embraced their labor forces and used them as a strategic differentiator.

As products and technologies become commoditized in this information-based economy, companies are beginning to realize that the best way to differentiate themselves and create long-term strategic advantages over their competitors might be through their people. It is no longer what one owns that counts, but rather what one knows, which is particularly critical in information technology (IT) and similar professional services organizations (PSOs), because it is the technical expertise and experience of knowledgeable staff that means the difference between success and failure.

In fact, according to Forrester Research, more than 85 percent of the market value of a typical Standard & Poor's (S&P) 500 company today is the result of intangible assets. For many companies, the bulk of these intangible assets is their people (or human capital), and such companies spend as much as two-thirds of their overall costs on labor. Thus, they should focus on business processes, using technology to more effectively manage employees and improve their productivity. Combining training, incentive management, and compensation management tools delivered through a role-based dashboard, emerging people-centric software category aims to transform each individual in the workforce into an enterprise asset.

Best-of-breed HR Technologies

The most progressive of companies have been using best-of-breed HR technologies for attracting, hiring, training, motivating, and managing their people. Software applications are becoming more and more sophisticated to help companies with these tasks, and as these solutions continue to evolve and communicate with one another, user companies will have a more seamless access to methods and data for managing their employees throughout the employee life cycle.

On the other hand, the laggard companies that do not embrace these technologies will likely fall behind in their quest for market dominance. For instance, by implementing a holistic employee performance management process across the enterprise, corporate strategy can be aligned (and properly communicated) with individual goals and objectives, whereby actual performance against those goals can have ramifications for individual compensation and rewards. This should drive behavior and attitude toward executing on the corporate strategy, with improved employee satisfaction and loyalty as a result.

This certainly comes in handy when the economic downturn ends, when employees begin to feel that they have more employment choices. Enterprises will again need clear, credible, and reliable strategic sourcing strategies and management in order to plan for and engage the competencies (people and companies) needed to accomplish their business strategy (by building the required effectiveness and increasing efficiency). For instance, with the economy improving and IT budgets rising, competition for IT talent—especially in key skill areas—is bound to intensify. At the same time, an improved hiring picture in IT will most likely mean higher turnover, as many unhappy IT staffers who saw workloads increase while compensation and benefits stagnated (during the economic downturn of the early 2000s) will put even more pressure on IT management.

Hence, there is a true need for much tighter integration between performance management and compensation (regardless of the economic milieu), so that exemplary employees can be rewarded more often (and feel truly special to the enterprise), as opposed to the outmoded, blanket-regulated, across-the-board annual basis (which typically produces mediocrity).

Analyzing the workforce and strategically managing the company's human capital has become the focus of human resource management systems (HRMS), as a way to transform these from dull functions to those that greatly affect corporate performance. Integrated business information warehouses, to that end, enable multidimensional analysis on information aggregated from internal and external resources (salary survey, for example), performance indicators (as in turnover), and views on strategic HR information with powerful drill-down features. Some surveys indicate that almost a third of businesses are already using data warehouses, a quarter of them are using workforce performance management or analytics, and one-eighth of them are using workforce planning.

Workforce analytics have become a core of talent management systems. This is because they focus not just on "time" (or who has clocked in and who has not), but also on such strategic business issues as overtime and turnover trends that impact a business's bottom line profit, equal employment opportunity (EEO) or ethnicity-based hiring trends, compensation patterns, relative recruitment effectiveness and sourcing costs, cost per hire, etc..

Human Capital Management

This brings us to the notion of human capital management (HCM), or talent management, which Gartner defines as a set of HR practices that focus on acquisition, management, and optimization of the enterprise workforce. These practices include such processes as competency and skills management, succession planning, and team management. The key tenet of HCM is that companies must change the mind-set of viewing employees as an administrative cost, and instead see them as a strategic investment and a key enterprise asset, with a resulting focus on aligning workforce capabilities with business strategy. This more strategic view of the workforce will gradually become less an HR function and more a management discipline.

HCM should be about value and not cost, since people should be regarded as value-adders, and not overheads and liability. It should measure organizational outputs (such as profit, revenue, and service levels) related to better management of people rather than focusing on input measures (such as recruitment costs) and the HR “best practices” of earlier days.

According to studies by the Brookings Institute, in the early 1980s, tangible assets amounted to over 60 percent of firms' total assets. This ratio has now been reversed, with over 80 percent of assets being intangible, most of which is represented by human capital. Yet, while decades have been spent investing in automation technologies for better use of tangible assets, only recently have enterprises begun to invest in optimizing human capital.

Moreover, many non-HR business processes can benefit from leveraging HCM strategies, such as project portfolio management (PPM) processes (see Project Portfolio Management for Service Organizations: Bridging the Gap between Project Management and Operations), which can be improved via incorporating competency and skills data and by leveraging the team management capabilities of HCM applications. Similar examples of business processes that should benefit from “picking the HCM brains” include production planning, job costing, scheduling, training, compliance, budgeting, and field service. In fact, any people-centric business process should benefit from integration to HCM, whereas traditional administrative HR applications and processes will hardly support this integration at all.

This leads us to a broader notion of employee relationship management (ERM), business-to-employee (B2E) management, or whatever the three-letter acronym (TLA) du jour might be (see BLM—Buzzword Lifecycle Management). In any case, these acronyms try to depict a business discipline that focuses on optimizing the employee's total employment experience—including both the human and technology aspects of that experience.

ERM espouses a comprehensive and unified view of the processes and technologies that support the workforce and their workplace, including manager-employee interactions, the formal business tasks required to manage employee relationships, and the technology used to manage the employee experience. To that end, ERM encompasses the full suite of B2E services needed by employees, managers, and others, including knowledge management, e-learning, self-services, community and collaboration support, travel and expense (T&E) management, indirect procurement, and so on. Thus, ERM is most closely aligned with the HCM focus area of workforce management.

While traditional HR and payroll management may not seem to provide a significant competitive advantage in the same respect that the aforementioned emerging technologies do, some ERM systems, like Extensity or Apptricity, help reduce cost, simplify administration, and promote a more connected company-employee relationship. What customer relationship management (CRM) solutions do for customer intimacy, today's ERM packages (replete with employee self-service and manager self-service functions) do for employee intimacy—provide all concerned parties (executives, managers, employees, government, and so forth) with immediate access to a wide array of vital information.

SOURCE:http://www.technologyevaluation.com/research/articles/tactical-human-resources-evolves-into-strategic-human-capital-management-19578/

At the beginning of 2001, PeopleSoft Inc. (NASDAQ: PSFT), one of the largest enterprise applications providers, ebulliently indicated its continued interest in rounding out its product portfolio through favorably priced acquisitions. Instead, the company recently unveiled a number of new products developed either internally or via alliances. It is likely its recently tamed new revenue generation has played a part in the company backpedaling its bullish attitude on acquisitions.

Recent announcements include:

New Products

• PeopleSoft eSettlements Part of PeopleSoft's Finanacial Management Solution
  
  
• General availability of PeopleSoft Enterprise Service Automation (ESA) 8.4
  
  
• Expansion of Human Capital Management (HCM) solutions
  
  
• Supply Chain Management Solutions Strategic Sourcing and Trading Partner Management (TPM)
  
  
• Next generation Enterprise Portal
  
  
• CRM solutions for Government, Insurance, Energy, and High Technology

Alliances

• Vigilance Supply Chain Event Management
  
  
• Agile Software Company Comprehensive Product Life Cycle Management

Financial Results

This is Part Four of a four-part report on recent PeopleSoft announcements. Part One detailed the announcements. Parts Two and Three discussed the Market Impact of these announcements.

Challenges

A tall order still remains PeopleSoft to convince the market that its domain expertise in manufacturing-oriented environments should be taken seriously. Although PeopleSoft has already achieved a strong presence in the supply chain space, owing to its ongoing commitment to this sector and due to focusing its solutions on only a handful industries such as: CPG, High-Tech, and Wholesale-Distribution, it still possibly occupies the Top 5 place (at best) in the supply chain marketplace as a whole. While the product still lacks depth in complex manufacturing, it may lend itself well to the lean/flow and mixed-mode manufacturing. To that end, as the company is apparently keen to change the competitive landscape, and having a huge pile of cash, it still has to do a much better job at disseminating the message and making the market aware and serious about its manufacturing expertise.

It appears that a real magic bullet to attract smaller enterprises is yet to be produced, although the company has successfully addressed marketing and selling to both large and smaller enterprises lately (see PeopleSoft Supply Chain Is Music To Mid Market Ears). PeopleSoft sells directly into accounts above $500 million revenue, and partners with consultancy and technology partners (e.g., KPMG, PricewaterhouseCoopers (PWC), Compaq, HP, IBM, Microsoft and Sun) in the mid market.

Still at this stage, one cannot find many compelling reasons for a small or midsize enterprise to go for PeopleSoft as opposed to, e.g., Lawson, Microsoft Great Plains, or Navision and an army of manufacturing-oriented smaller ERP vendors. While fixed time and cost solutions delivered packaged from pristine laboratories do have their appeal, SMEs are becoming increasingly savvy to ask for more than just these cookie-cutter implementations. And there is a number of obliging smaller vendors with immaculate vertical focus and knowledgeable channel. Recent SAP moves to deliver more than accelerated watered down solutions (see SAP Tries Another, Bifurcated Tack At A Small Guy) and its quandary to recruit channel partners and overcome the barrier to entry will not pass PeopleSoft either.

There are still a number of smaller vendors with impressive broad functionality and an easy-deploying product owing to their original focus only on manufacturing, IFS and QAD being only two. These vendors do not burden a small manufacturer with any unneeded functionality or with a complex, spaghetti-like code base, as a non-manufacturing ERP vendor would likely have had to produce after deciding to expand into manufacturing, likely via a number of acquisitions. The example that PeopleSoft has recently combined the code lines for its commercial and Education and Government (E&G) financial and HRMS products may be great news for these customers as they will benefit from getting some previously unavailable best of both worlds functionality. It is completely a different case for small manufacturers having to figure out how to disable that irrelevant, bamboozling stuff.

All in all, although on the right track, PeopleSoft has to be careful that it does not overstretch itself and lose focus going forward. While it has yet to execute the assimilation of a slew of software products, which it recently acquired and/or partnered in order to fill the gaps in its SCM, CRM and collaborative e-business infrastructure offering, it also remains under pressure to fill other outstanding product functionality shortcomings such as transportation management, data mining/Web analytics, complex discrete and process manufacturing, and/or private trade exchanges (PTX). Additionally, the earlier acquisitions/alliances still represent only improvement rather than complete solution filler.

As a summary, while one cannot find flaws in PeopleSoft's recent moves, and while one can rest assured of the company's delivery of its endeavors, it is also not very likely that the stellar 2001 will be repeated in style this year 2002 will likely be the year of staying in a good shape.

User Recommendations

PeopleSoft will be a fierce contender in a number of industries, and is generally worth considering in HRMS, financial, CRM, PSA, and supply chain enterprise applications realms it offers an attractive product portfolio, with dedicated ongoing service and support. Existing PeopleSoft customers should certainly consider the new offering, but bearing in mind the nascence of the offering and with looking at what the other vendors have to offer. We recommend identifying your clear e-business strategy and conducting a thorough comparison-shopping, at least for the negotiation leverage sake.

As for potential customers, PeopleSoft remains a very strong contender in enterprise application selection processes within the following industries: utilities, healthcare, service providers, financial institutions, public sector, insurance, higher education, high-tech/electronics, wholesale distribution, and consumer packaged goods (CPG). It should be on a short list in any selection where HRMS system, financial modules, CRM, and e-business/self-service are the main pillars of an enterprise application. However, since the company has been touting the significant manufacturing and supply chain product enhancements within its new release, current and potential users are advised to inform themselves about these, particularly in the above-mentioned industries of focus. Enterprises, both existing and prospective PeopleSoft customers, should include PeopleSoft on their short list when evaluating SCM packages featuring strong collaborative B2B e-commerce features.

PeopleSoft's current users should react positively to the company's recent acquisitions and to future prospects, in principle, as the product expansion should allow them to address many of their outstanding needs. Existing and prospective customers should evaluate the add-ons emanating from the acquisitions/alliances as a way to add value to their existing applications whether with an interim integration solution now or by waiting for PeopleSoft to supply a generally available seamlessly integrated solution. Therefore, question PeopleSoft's officials to obtain the firm delivery schedule of intended offering.

As with all new releases, users should employ a critical approach in their evaluation of PeopleSoft 8.4 in light of still unproven technology (e.g., mobile CRM synchronization) and request the company's written commitment to promised functionality, length of implementation, and seamless future upgrades, particularly for recently announced offerings. In any case, reckon with a significant increase in technical skills of your IT department, particularly in XML, HTML, Internet security/firewalls, LDAP, JavaScript, etc. As for the recent alliances, insist on long-term commitments to product integration and/or guarantees of replacing equivalent software in case the partnerships dissolve for some reason in the future.

SOURCE:http://www.technologyevaluation.com/research/articles/peoplesoft-building-muscles-to-overcome-the-rough-patch-part-4-challenges-and-user-recommendations-16688/