As a both a supply chain industry analyst and technology product marketing expert, I’ve seen my share of various software demonstrations that were designed to either be incorporated in the product marketing toolkit or help prospects and analysts understand the depth of functionality in a given software suite.  From my experience, these demo utilities can tend to be either too complex or detailed, to being too scripted and non-impressive.

As product marketing professionals, we can sometimes tend to concentrate too much time cycles in being impressed with the latest demo technology vs. spending time reflecting on the objective, cost and design needs of what a demo is suppose to accomplish.

When I occasionally come across a web-based demo that is impressive, I take notice.  That recently occurred when I viewed the latest demo featured on the MCA Solutions web site.

I was impressed with this demo because:

It is clear, concise and easy to understand and follow.

The length is just-right, between 4-5 minutes

It provided me an essence of the company, its capabilities, and the overall capabilities of the technology.

It included animated visuals which are pleasing to the eye.

It ended with a call to action and where to find additional information.

After viewing the MCA demo, I made it a point to speak with Tim Andreae, the very able Senior VP of Marketing of MCA.  Tim informed me that the demo itself was designed and implemented in less than four weeks, and the overall cost was rather reasonable, quite reasonable I might add.  Considerably less than the cost of designing, sponsoring and delivering a webcast to a broader audience.

The demo itself comes from Autodemo, and a visit to their website uncovers quite a list of technology-oriented customers.  If you need more specific information regarding the design and delivery of the demo, I’m sure Tim would be willing to share information.

Bob Ferrari

Disclosure: Neither MCA Solutions nor Autodemo have any financial association with this author, the Supply Chain Matters blog, or its parent company.

Industry analyst firm Gartner (acquirer of AMR Research) issued its worldwide supply chain management (SCM) revenue forecast this week. (Gartner client subsription required for report details)  This is the first instance where there is no alternative AMR view of the market.

Total SCM worldwide revenues were reported as $6.2 billion, a 0.7 percent decline from 2008.  That’s not bad considering the state of the overall worldwide economy in 2009.  The report notes that although the first nine months of 2009 had contraction, the final three months experienced a 6 percent growth, which is an indicator of increased optimism for investing in SCM software.

Scanning the report highlights, I noted a few observations.

While new license sales declined 7.4 percent, recurring revenue associated with subscriptions and maintenance grew 10.8 percent.  That in my view is a clear indicator that most firms are dealing with the applications they have already acquired, or adopting process centered versions of hosted, subscription based applications. It also reinforces other published quantified data that most IT budgets today are allocated to just keeping existing applications operating.

The top ERP focused players, SAP and Oracle, did not grow as fast as specialty SCM software players.  SAP experienced a near 9 percent decline, and Oracle grew a meager 0.2 percent. SAP should not be a surprise, since little of SCM technology has emulated from Walldorf, but Oracle’s flat performance is a bit of a surprise.  The report also notes that software suites segment of SCM declined by 3.7 percent, yet the category of vendors beyond the top six, grew 3 percent.  Sourcing and procurement vendor Ariba’s growth of nearly 9 percent reinforces that firms still have cost reduction as an ongoing need.

These results are another indicator that firms have been seeking specialized applications which can be implemented in a rather short period of time.  Research Director Chad Eschinger notes that “competition between enterprise suite and specialist best-of-breed vendors has heightened.” Best-of-breed vendors are obviously serving a need in today’s market so let’s not count them out of the game. Gartner expects the SCM software market to consolidate, but over a longer time horizon.

A closely related point of information is Gartner’s annual supply chain study, Supply Chain Digest provides its mailing list to Gartner for a series of annual survey questions.  In his summary of the highlights of this year’s survey, Dan Gilmore notes some key observations regarding the pain points and motivations of today’s technology buyer.  The majority of respondents describe their companies as ‘mainstream’ in their approach to technology adoption.  We can take that to mean that the predominate perception it is best not to risk your career on unproven technology.  Yet, the number one business imperative was cited as ‘improve efficiency and/or productivity’, surpassing ‘reducing operating costs’, which was the top motivation for the prior three years.  Dwight Klappich of Gartner attributes this finding as an observation that firms are now looking to participate in business recovery without having to add back previous headcounts.  That in my view, is a bit of short-sighted thinking.  Technology can certainly boost productivity and speed decision-making, but it doesn’t eliminate the need for highly experienced SCM talent.

One final observation relates to the described top barriers toward achieving supply chain goals. The top three obstacles were responded as:

1. Forecast accuracy/demand variability
2. Supply chain network complexity
3. Lack of internal cross functional collaboration and visibility

My impression is that the first two are known realities, lack of forecast accuracy has continuously proven to be a reality in most supply chain settings.  Instead of focusing of accuracy, the focus needs to be on best ways to sense and respond to demand.  Supply chain complexity is a reality today.  Technology, when implemented correctly, helps overcome complexity and latency of information.  Lack of internal collaboration is a question of what your firm elects to measure and reward.  Technology plays a role for all three, and I urge readers to influence a broadened horizon of needed change within your organizations.

We will share more observations regarding today’s SCM technology adoption in later Supply chain Matters postings.

Bob Ferrari

Note: The following posting can also be viewed and commented upon within the Kinaxis Supply Chain Expert Community.

Dan Gilmore, editor of Supply Chain Digest recently wrote a column about the concept of the probability of supply chain ROI.  In a nutshell, Dan’s friend, Doug Hubbard has come up with a concept to calculate project ROI, not as just a single number, but rather a range of potential outcomes that can be communicated to management. Dan’s premise, in his column, is that the way most of us have thought about calculating ROI on major supply chain process or technology enablement projects as a finite number is simply all wrong.  Our community, in essence, should be communicating ROI as a probability curve demonstrating a probable range of outcomes.

In all deference to Dan and his friend Doug, sounds great in theory, but not so sure about the practicality. How many of us have had to deal with hard-headed CFO’s or CEO’s in clearly articulating the benefits of a major supply chain initiative, particularly if it involves a rather large investment in enterprise software? Placing one’s reputation or management bonus on the line relative to achieving an ROI metric is daunting, and the process tends to drive to specificity really fast, I wonder how these same executives would respond to a “range of ROI’s”.  CFO’s seek clarity in numbers and results, not probabilities. No doubt, incidents of investing fairly large sums of money in multi-year ERP or enterprise software implementation initiatives have soured the CFO view of ‘range of probabilities on return’.

A better and less painful approach, I feel, is to partition projects in measurable, specific phases, where project scope and outcomes become much more measurable.  The end-goal can remain a long-term transformation of a supply chain or supplier management processes, but phasing the implementation into a series of measurable, self-funding, pay-as-you-go savings provides far more credibility in the merits of a project. In my consulting and briefings, I continue to observe that more companies and organizations, even those who are implementing components of supply chain functionality within a broad ERP backbone, have found that limiting scope of implementation to what can reasonably be managed in 6-12 week results has been far more credible, especially in today’s uncertain business environments.

The management adage of results speak louder than words are as true today as they always were.  Managing scope and implementation to a definitive, measurable time period where project savings have to fund subsequent phases are a much more creditable approach when justifying ROI with senior management.  Even when CEO’s become more confident with the need to invest in renewed supply chain capabilities, they have now discovered that self-funding projects provide far more meaningful results for the business. This also helps to explain why technology that has faster implementation and savings phases has become more attractive in various industry settings today.

Bob Ferrari

ERP software customers have gained a renewed sense of power with last week’s announcement from SAP AG that the company would step back from its previous plans to move all customers to Enterprise Support contracts priced at 22%.  According to an article featured in InformationWeek, SAP will instead adopt a two-tiered system that reintroduces a Standard Support option priced at 18%, which is 1% higher than 2008 rates. 

This move is a victory not only for SAP customers, but others as well, including Oracle’s ERP customers.  The issue of increased maintenance fees concerning SAP dates back to a July 2008 decision to increase software maintenance fees to 22% over the next five years.  SAP’s European customers, specifically Germany and Austria were the first to cry foul, and ever since, more and more of the worldwide SAP customer base have been pushing back.  The revised plan is to gradually increase support rates starting in 2011.

The current challenging economic times have forced many companies to slash costs and preserve cash.  While most employees and suppliers were often asked to give concessions, the major ERP providers persisted in raising overall software maintenance fees.  As most IT professionals would explain, software maintenance is double-edged. Companies must not only pay the annual fee, but must also expend efforts to remain current with new software releases or upgrades, or upgrade IT headcount and infrastructure to maintain current release levels. What can be even more frustrating is when the ERP supply chain module is not even being used, or lies “on the shelf” because functional teams have lost interest or focus in the application.

To present both sides of the issue, the ERP providers argue that maintenance revenues provide the means to keep new enhancements and technology flowing to installed base customers, along with insuring that the software will be supported when a problem occurs. Those arguments do not hold much value with today’s more empowered customer base.  To no surprise, companies are also turning to other non-ERP technology alternatives including hosted or software-as-a-service providers, or even third-party maintenance providers.

I agree with the consensus that credit should be given to SAP for biting the bullet and finally listening to the voice of its customer base. 

In April of last year, Supply Chain Matters called attention to an open letter blog entry penned by Bob Evans of Information Week, which at the time was directed to Oracle CEO Larry Ellison.  That letter challenged some fresh thinking regarding Oracle’s 22% maintenance fee.  Evans correctly noted that rather than a fee, the name should be changed to “innovation and development funds“. Others chimed in, utilizing other terms such as “M&A capital raising activities” or “user tax”. With this development concerning SAP support, Oracle customers should feel more empowered to exert their voice of protest as well.

A lot of commentary regarding the new decade reflects on the notion of “reset”.  In the case of ERP and perhaps the entire installed customer base of enterprise-level software, that reset is underway.

Bob Ferrari

As this and other blogs noted last week, Bruce Richardson, an icon in the world of industry analysts has joined ERP provider Infor in the role of Chief Strategy Officer.  To state that this announcement is quite significant to the industry analyst world, and to AMR Research and Gartner, would be an understatement.  It is literally the “earthquake that rocked” the industry analyst landscape in 2010.

I have personally known and admired Bruce for many years.  As a veteran in the software and information technology industry, I often looked forward to hearing Bruce’s predictions and summations of industry trends and developments.  His interviews of industry executives always garnered the interest of competitors, and having Bruce write or mention your firm or software application was highly sought after. Bruce’s First Thing Monday was required reading every Monday morning for information technology executives.  AMR’s salespeople could always count on the mention of Bruce as the catalyst to close a research services deal, especially the world of ERP and supply chain technology.

When I joined AMR Research as an industry analyst, I came to enjoy the other side of Bruce, his quirky ability to be the literal rock star of any industry event.  Bruce has many gifts, but the most important in my view was his ability to gain access to all levels of the executive suite, or to literally be able to work any room to garner key information.   Bruce was the essence and fabric of AMR Research, and no AMR or other major vendor conference or event was complete without having his presence. I sincerely wish Bruce all the best in this new chapter of his career. Bruce has already launched into a new View From the Inside Newsletter which is published on the Infor web site.

Now that Bruce has decided to move over to “the dark side”, many technology marketing professionals have asked my opinion on this move. 

Well, here it is. 

Bruce was not going to conform to the culture and mannerisms of a Gartner, and he obviously knew that.  Bruce is a freestyle, he says what he thinks and is often not shy about calling out something for what it is.  Existing AMR Research clients, especially those with supply chain interest, will now have to figure out the implications of this move to their needs in research and advisory services.  Kevin O’Marah seems to be the chosen executive to fill in the void.

Kevin is an able analyst and industry observer. Kevin’s management attention will be torn between insuring a smooth transition as a boutique research arm of Gartner, while trying to fill the void of industry geru and desired speaker.  Just rationalizing and overseeing the AMR Research Top 25 Supply Chains research process is a task unto itself.

Bottom line, AMR Research will not be the same without Bruce Richardson.  Its like the Boston Red Sox losing David Ortiz, “Big Papi“.  Regardless of how he plays or what he does, he fills the seats.

 Bob Ferrari

No sooner had the dust begin to settle on the December blockbuster announcement that Gartner would acquire supply chain industry analyst firm AMR Research, (you can read all about it at this Supply Chain Matters link) the word comes forth that Gartner has also acquired industry analyst firm Burton Group for the tidy sum of $56 million.

As you can note from the Gartner press release, Burton is a well respected research and advisory firm that provided in-depth technical advice to front-line IT professionals.  Somewhat different than the AMR announcement, Gartner has actually completed the acquisition of Burton, and apparently chose not to announce the deal when originally consummated.  I suppose one could speculate that Gartner did not want to take away from the news on the AMR Acquisition.

You can view some interesting perspectives on the Burton acquisition on both Carter Lusher’s Sage Circle and Phil Fersht’s Horses for Sources blogs.   The bottom line consensuses on the implications for these series of announcements are further consolidation of the industry analyst world and limited choices for alternative opinions.  Phil Fersht’s also hits the nail on the head with his statement: “While Big G has picked up some superlative minds from its latest acquisitions, its new challenge is going to be maintaining those edgy opinions, and not having them toned down under the glossy corporate veneer of the billion-dollar brand.”

As for AMR Research, I learned today that Gartner completed the acquisition just before Christmas, ahead of its original schedule.  Gartner is obviously moving rather quickly to solidify the new AMR business model.  Kevin O’Marah, former Chief Strategy Officer will now report directly to Peter Sondergaard, Senior Vice president of Research for Gartner, and direct all AMR research activities under the Gartner umbrella.  Contrary to what was announced in December, Gartner supply chain analysts Dwight Klappich and Tim Payne have moved over to be part of the AMR research team, which in-effect leaves limited supply chain research coverage if you are an existing Gartner supply chain research customer.

From my perspective, Gartner’s strategy and motivation in these moves is to expand its reach and make a major push towards dominating more end-user and practitioner advisory needs.  So far, these efforts indicate coverage for supply chain and IT communities.  Of course, if you seek all of these services, be prepared to pay-up for all three.  No doubt, the Fortune 100 types will have the clout to negotiate their own deals, but not so for others.

As far as I’m concerned, I am more than willing to fill the existing supply chain advisory void and provide a second supply chain voice when needed.  If you are in need of such services, you can check out my consulting website, since we just added advisory services package options.

Bob Ferrari