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Posts Tagged ‘Microsoft’

There is understandable confusion in the marketplace today, whether among resellers or users of the product known as Microsoft Dynamics NAV (and formerly, so long ago… Navision).  Let’s see if we can clear things up just a bit.

For starters, the NAV to BC transition is one more of form than function, which is to say, the product features and robust capabilities that have long made NAV one of the world’s best-selling accounting and ERP software systems, are largely the same in Business Central.  What’s changing, at the forced behest of Microsoft, and quite rapidly at that, is the delivery system.  NAV is largely moving from what’s commonly known as an “on-premise” solution to one served up “in the cloud,” which is to say, over the Internet, using a web browser.  (Though current on-prem users will continue to be able upgrade those on-prem versions into the foreseeable future, we’ve been told.)

This is nothing more than the ongoing evolution of the product, and its underpinnings have been in the works for years.  But Microsoft’s all-in approach to the World Wide Web means that it’s intent on moving virtually everything to the cloud.  That’s why you see their recent de-emphasizing of Windows… the recent migration of the Office products (Word, Excel, etc.) into the O365 web-based products… and the more recent decision to make NAV its foundational product in the cloud, via the new moniker of Dynamics 365 Business Central.

Business Central has two specific modules — Essentials and Premium – that include all NAV’s ERP features:

  • Financial Management
  • Project Management
  • Sales and Service
  • Reporting and Analytics
  • Supply Chain Management

It’s then sold essentially in three price configurations:

For $8 per user per month you get the Team Member version, which includes Employee Self-Serve, the ability to run (but not create) all reports, and the ability to read and approve information.  As you can imagine from the price, it’s a very low functionality piece, but it’s ideal for serving the needs of folks like shop floor workers and very occasional “viewer” type users.

The next level up is the Essentials version.  This runs $70 per user per month, and includes a range of functionality including invoicing, purchasing, opportunity management, budgets, finance, fixed assets, P.O. management, resource management, workflow, contract management, simple inventory, advanced sales, advanced inventory and distribution.  That’s a very complete offering, ideal for many companies other than manufacturers or companies with extensive service management requirements.

Finally, there’s the Premium version which incorporates all the functionality noted above plus service management and manufacturing.  The Premium level pricing is still only $100 per user per month.

It’s all part of the inevitable crush to the crowd, and what Microsoft is really doing here is providing its users – both current and future – with a clear path to getting there that will satisfy the demands of even the most sophisticated business now, and for many years to come.

Or, as Martha Stewart used to say… “It’s a good thing.”

 

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Cloud storage services have become big business.  And a handful of familiar names are quickly grabbing up ownership of most of it.

For starters, Amazon is by far the largest cloud provider today, garnering (according to Amazon Web Services CEO Andy Jassy) “several times as much business as the next 14 providers combined.”

Microsoft is next largest in terms of sales of the infrastructure services that store data and run applications.  But at last read, they were still less than one-fifth Amazon’s size.

And Google places third, even though they are now by market value the second-largest company in the world, though with only about one-fifteenth of Amazon’s cloud business revenues.

Still, Microsoft and Google aren’t standing still.  Microsoft’s cloud unit, called Azure, has won over some large customers lately including Bank of America and Chevron.  They are said (according to a recent article in Businessweek) to have done it by focusing on salesmanship and relationship building skills, something not necessarily the forte of the Amazon business model.  Microsoft CEO Satya Nadella has pushed his sales force into “a roving R&D lab and management consultancy.”  They’re hooking up smaller startups with potential investors and giving larger prospects access to a sales team that helps them market their Azure-based apps to their own customers.  Win-win.

Microsoft is also increasingly moving its traditional Office suite to the cloud via initiatives like Office 365 and the new Dynamics 365 products and branding.  This makes it more likely that when companies consider moving off their own data centers they’ll consider Microsoft favorably, exploiting that existing relationship when it comes to migrating to a public cloud.

To step up its game, Google recently hired the co-founder of VM Ware, Diane Greene, to run its cloud business, starting with a cloud sales force they are building from scratch.  Google also recently announced a partnership with Salesforce.com to take advantage of its list of preferred cloud providers, according to Businessweek.

One big advantage both Google and Microsoft will try to exploit over Amazon is the fact that Amazon often competes fiercely with many of its own prospective cloud clients.  Wal-Mart and others are not keen on seeing their AWS payments benefit the very retailer they most compete against.

It’s still too early to say who will end up on top, but the battle is fierce, and you can expect all three of these tech titans to be in that mix for years to come.  It’s already a $35 billion market that’s projected to grow to about $90 billion within four years according to Gartner analysts.

As AWS’s Jassy notes, “This is the biggest technology shift of our lifetimes.”

 

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A combination of recent announcements by, and news reports about, Microsoft’s upcoming new offerings prompts us to write today about products you can expect to see – and may find yourself working with before long – for our business users.

It’s long been noted that Microsoft missed the smartphone revolution that today is dominated largely by Apple, Samsung and Google via its Android operating system.  At the same time, Google (and others) have released cheap versions of web-based productivity software to compete with the likes of Excel and Word, the mainstays of Microsoft Office — and also, by the way, its largest revenue source by product category.

Microsoft is attempting to correct these miscues with a slew of new products.

For starters, Hotmail recently became Outlook.com, immediately playing off the branding associated with Microsoft’s best-selling email offering.  Facebook, in which Microsoft owns a stake, will be integrated with Outlook.com, thus giving Microsoft a social boost.  As well, Microsoft acquired messaging service Skype awhile back, and promises to integrate that too.  Outlook.com promises not so much revenue, but to be a ‘sticky’ sort of ap that attracts users to other Microsoft products, and keeps users ‘in the family.’  It signed up a million users on its first day, according to the Wall Street Journal.

Meanwhile, Microsoft will soon unveil an updated version of Office that is more web-enabled, hoping to steal some of the competing Google office aps’ momentum. 

And of course, its new operating system, Windows 8, is bound to cause a splash.  It was specifically written to offer a touch interface that would be attractive to (and combine usage by) both mobile phone and PC users.  Naturally, though in a bit of a surprise move, it released its new tablet-style PC, the Surface, which will feature Windows 8 and give Microsoft a chance to show off its new operating system’s utility. 

Surface merges a laptop with a tablet, featuring a slick cover that doubles as a keyboard, provides Office productivity aps, and promises to be a more functional tool for business users than the more “passive” tablets from Apple and others.  Those devices, while optimized for receiving and streaming (think movies and pictures) are less than robust when it comes to actually working, a gap Microsoft hopes to fill with its new offering.

And then there’s Phone 8, the next mobile operating system from Microsoft, built on Windows 8 technology, which may please developers and corporate IT staffs, who can built aps that run on both office/PC and mobile/phone devices somewhat seamlessly.  Oh, and Windows Server 2012 is due this Fall, too. 

And if all that’s not enough, Microsoft Dynamics NAV 2013 (our flagship ERP product) is due for release in October.  It promises three user experiences: the standard client, the web-browser client and a new Sharepoint client too.

Tech changes: they’re like our Midwestern weather.  Don’t like it?  Relax, it will all change quickly enough.

 

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ERP is expensive, and the cost can vary greatly depending on the organization.

Obvious factors range from company size to number of users, from depth of desired functionality to what services a particular organization requires and, frankly, how savvy their users are.

According to an Aberdeen survey called “The Total Cost of Ownership of ERP in Mid-Size Companies” over half of the nearly 650 companies surveyed cited TCO as – not surprisingly – their number one concern.

TCO covers a broad range of expenses well beyond just the ERP software.  For example it includes hardware, services to implement, license costs and maintenance on all software modules.   Some companies may rightly choose to include certain staff costs in their TCO assessments as well.

The survey found that the cost for a $50 to $100 million company that included an average of 92 users totaled just over one million dollars of total investment.  In a company of $100 to $250 million revenues and just under 200 users, the figured rose to $1.7 million.  Of course, for larger companies, TCO rose accordingly.

In the Aberdeen survey, only Microsoft was willing to share cost information, and those included $2,250 per user for the Business Essentials version of its software, and $3,980 for its Advanced Management suite. 

[PSSI can confirm those remain the exact prices still being charged today for the Dynamics NAV solution.  Moreover, our analysis has been that the Advanced Management functionality is typically what’s required in the manufacturing and distribution environments.]

Our own experience teaches us that the $4K per user for license costs, plus an allowance of 16% for annual maintenance provides an appropriate cost estimate.  Greater functionality beyond the core software often requires additional investment in added functionality, or sometimes, third-party add-on applications. 

To the pure software license costs (est. $4K per user) we then advise clients to add one to one and a half times those software costs, on average, for deployment.  The cost varies depending on the number of users to be trained, as well as depth of training, experience of the users, and modifications required to processes or software.  Generally, the more users the lower the ratio of service costs to software license costs, as the costs of training and deployment are spread over more users.

Our deployments actually tend to cost considerably less than the Aberdeen assessments above, but they also don’t necessarily include their 92 user average either.  We’ve found for the small to midsize firm, say 25 users, that a budget of around $200,000 to $300,000 will get you the user licenses, annual maintenance and necessary training on a basic, full system.  Hardware will add to that, but if your hardware is fairly current, those expenses can be minimized.  Modifications would be quoted separately, where your needs diverge from base software functionality.  Associated costs for appropriate SQL licenses and servers can add to your costs, as can additional (third-party) functionality. 

Still, even at half a million dollars at the very high end, a company in the $20M to $50M revenues range, with say 25 to 50 users can be up and running in a few months, and expect to recoup those costs surprisingly quickly — IF they’ve put sufficient thought and effort into the planning stage upfront in conjunction with their ERP consultant 0r reseller.

So there you have it: our five-part latest wrap-up on the mechanics, benefits and costs of ERP.  Over twenty years, we’ve learned that the costs to clients in money, time and, yes, some short-term anguish, are mollified greatly over the ensuing years by the benefits of reduced business costs, greatly increased capacity with similar staff size, and the ability to compete effectively while you grow in your chosen marketplace.  As always, to those who persevere, i.e., the winners… go the spoils.

To aid you in system selection, we’ll present a “Mid-Market ERP Solutions Checklist” from InsideERP’s Buyer’s Guide, in our next post.

Meanwhile, the complete edition of the Inside ERP Market Buyer’s Guide is available here.

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InsideERP’s Buyer’s Guide  [available here] made special mention of three of what it called ‘advanced’ features of today’s ERP systems:

Lean Manufacturing Support – While “lean” is not so much a software module as it is a philosophy and an attitude, the fact is, with the information yielded by today’s better ERP systems, company managers can focus on analyzing more carefully the waste and redundant procedures inherent in their processes… and then set to work leaning them out. 

The best time to do this is before you deploy: a properly performed needs analysis (or gap analysis, or business process analysis) will allow you to flowchart your current processes, then map these to your new system, eliminating the duplications, waste and needless steps you may have built into your systems over the years for what may have been, in their time, perfectly good reasons, but which no longer suit today’s streamlined methods. 

This is often known as value stream mapping, and it’s a critical first step, before you even begin to deploy ERP.  Doing this early on will effectively help you ‘lean out’ your business processes in theory, before you even get started on actual deployment. 

The second advanced feature noted in the report is SOA (Services Oriented Architecture, or simply ‘web services’).  Web services deals in the notion that software should talk, up and down the chain, to other software.  It allows for software interconnectedness and reuse, especially in today’s object-oriented programming environment, where code objects (i.e., little bits of software functionality) possess traits like inheritance — commonalities that lets users exploit the code they have into further functionality. 

With SOA, businesses can adapt their processes to changes in their business, or even supplier components outside their business.  In many cases, the software doesn’t care whether it’s talking to another component of its own, or to an outside business process.  It’s simply passing relevant information, say about the completion of a work order, to another entity (or program set up to understand it via SOA), whether that be related to inventory or sales or order processing over the web. 

Microsoft leverages it’s “dot net” environment to support SOA, as do Java and other application environments that allow line of business application to connect in many ways to many other components.

The third advanced feature noted was called On-Demand Delivery.  This is more commonly known as SaaS (Software as a Service) – or thanks to all those irritating Microsoft commercials – the cloud.  The cloud is simply using the Internet as the repository for your software applications.  We’ve been doing it for years to store our pictures or backup our data or manage our sales force (see: Salesforce CRM for example).   This blog, in fact, is a perfect example of using the cloud — and perhaps an ideal application in which to use cloud resources.

Cloud application hosting simply provides another way to serve up and access our data, this one promising a reduction in on-premise hardware and infrastructure costs, and delivering on more of a rental model, as opposed to buying and hosting software on one’s own premises.

The landscape is constantly changing, but what’s remained truer than ever is that companies who utilize and leverage their ERP investments become more competitive, more able to think strategically and to grow, and more apt to reduce expenses in a competitive environment by having the right information, at the right time, and knowing how to use it.

In our final thread in this series up next, we’ll talk finally about costs.

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In this third post of our five part series, we look at the basic features common to most good ERP systems – the features that help make the cost savings demonstrated in our previous post a reality.

[The complete edition of the Inside ERP Market Buyer’s Guide is available here]

Most midmarket ERP suites encompass several common types of business functionality.  The can include:

– BI, or Business Intelligence: i.e., quick peaks at key business data; KPIs, or Key Performance Indicators, as well as ‘dashboards’, ‘drilldowns’ and other methods for quickly reading and assessing key business metrics.  These are the tools that are at the core of ERP’s purpose: to provide actionable data for managers to use to analyze and improve their business performance.

– CRM, or Customer Relationship Management: Just as accounting functionality via a PC or terminal was the lifeblood of many a firm the past few decades, today’s CRM systems are often the heartbeat, providing a repository for a wide range of critical data regarding customers, suppliers and the contacts we have with them.  From sales force automation to full-fledged, life-cycle management of all the intricacies of “knowing” our customers, these systems provide the ability for everyone in the firm to have a common knowledge base regarding our clients, and our various interactions with them. 

– Financial Management: i.e., the accounting modules, and not just accounting (i.e., General Ledger) but also receivables, payables, orders, quotes, invoicing, POs, inventory control… and often, a whole lot more.  This is where the core reporting for your firm is found, and where all transactions are entered, tracked, controlled and analyzed for business performance improvement.

– Manufacturing Operations: the ability to track the order on the floor, or more broadly speaking, production tracking “from quote to cash.”  Today’s ERP systems not only manage inventory flow and improve returns, but also provide work orders, routing, bills of material, shop floor scheduling, bar coding, and a host of other production functionality – and done right, it all flows back to the financial statements, quickly or, sometimes (but be careful what you wish for!)… in real time.  Want to take real cost out of your manufacturing?  This is where you start.

– SCM, or Supply Chain Management: Improving the flow of materials through your supply chain by managing, scheduling, procuring, and fulfilling optimum service levels for maximum profitability.  SCM is often a byproduct or subset of the Manufacturing pieces noted earlier.  Regardless of software configuration, the result is streamlined procurement and fulfillment, thus lowering costs and improving service and delivery times to your clients – and thus providing the competitive edge for manufacturers to secure even more business from their clients in the future.

The major midmarket ERP vendors offer some, most or even all of these five key areas of business functionality.  As we saw in our previous post, the savings can amount to a significant percentage of your overall operating costs – oftentimes, ten percent or more overall.  The extended savings that amount to, at least, hundreds of thousands of dollars per year (not to mention in many cases the mere ability to “stay in the game”) ensure that ERP investments will continue to pay dividends down the road – despite the often demanding and complex nature of their deployments.

Having here looked at some basic functionality, we’ll look at some of the more advanced ERP functionality to be found in some packages these days in our next post, and then follow it up with some final comments about costs in our fifth and final post of this series.

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In our previous post we noted the consolidation of ERP systems providers under big names like Sage and Microsoft, and how such consolidation has served to bring down the costs for those in the mid-market space looking to move into ERP.

[The complete edition of the Inside ERP Market Buyer’s Guide is available here]

Firms doing this have found benefits, after usually initial tough-sledding getting everything implemented.  According to Aberdeen Research’s report “2007 in the ERP Midmarket” companies reduce their expenses in three significant areas when they implement an ERP system:

– Inventory costs, where Aberdeen’s “best of class” companies saw an average decline in inventory carrying costs of 21 percent

– Manufacturing operations costs, which on average declined by 17 percent

– And administrative costs, which declined by 16 percent

Those were the “best of class” companies, as noted.  But even on average, companies saw cost declines attributable to ERP across the above three sectors by 11 percent, 8 percent and 9 percent respectively.

When you’re talking about reducing costs across the board by an average of ten percent, it’s easy to see why companies invest in ERP: while the cost to do so may run in the tens or hundreds of thousands, the cost-saving benefits from doing so extend can into the hundreds of thousands and even millions.

And as the InsideERP Buyer’s Guide explains…

  • Because an ERP solution has its fingers in all aspects of running a business, its benefits are myriad and go beyond tangible cost reductions. 
  • It can improve an organization’s customer service and response time when solving issues. 
  • It can solve issues of interoperability among multiple manufacturing locations. 
  • It can standardize and accelerate manufacturing processes in all of a company’s manufacturing sites. 
  • It can streamline a company’s order fulfillment processes. 
  • It can facilitate connecting with partners’ and suppliers’ enterprise systems. 
  • It can even help companies maintain compliance with government regulations.”       

In our third installment looking at the ERP Buyer’s Guide, we’ll take a look at which key features factored into some of these improvements in business efficiency and cost reduction.  That’s up next…

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