ERP Selection Seminar RHI Sept-2010 · Exact, QAD, Oracle Accelerate, SAP Business One, SAP...

ERP Strategy & Selection SeminarERP Strategy & Selection Seminar

September 2010

Ronan O'Shea, Managing Director

Siamak Razmazma, Director

Agenda

Part I: ERP Background and General Concepts

Part II: ERP Classification

Classification of ERP II by Customer Size

Classification of ERP II by Design Strategy

Historical View of ERP Evolution

© 2010 Protiviti Inc. CONFIDENTIAL: This document is for your company's internal use only and may not be copied nor distributed to any third party.

Protiviti CPE Seminar SeriesERP Strategy & Selection

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Part IV: ERP Licensing Models – SaaS Focus

Part III: ERP Selection Approaches

Integrated Solution Design and Selection

Elements of Solution-Design Approach

Classification of ERP II by Business Process

ERP Selection Methodology

Part I

ERP Background and General Concepts

Historical View of ERP Evolution

2009

PresentMRP II (Manufacturing

• Manufacturing Planning

• Financial Management

• Order Management

• Human Resource

ERP (Enterprise Resource Plan)

• XRP (Cross Resource Planning)

• cERP (Collaborative ERP)

• CRM (Customer Relationship Management)

• SRM (Supplier Relationship Management)

• SCM (Supply Chain Management)

• GRC (Governance Risk Compliance)

• EAS (Enterprise Applications Suites)

ERP II (Extended ERP)

Web Technology

SOA (Service Oriented



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1980

1990

2000

• Inventory on-hand

• Inventory Shortages

• Material Planning

MRP (Material Requirement Plan)

• Inventory Movements

• Financial Transactions

• Cost Management

MRP II (Manufacturing Requirement Plan)

Mainframe Computing

Client / Server Architecture

SOA (Service Oriented Architecture)

Virtualization

Open Integration

SaaS

Part II

ERP Classification

Classification of ERP II by Customer Size

Company Size Small Lower Mid-Size Upper Mid-Size Large

Annual Revenue Range

Under $50M $50M to $250M $250M to $1B Over $1B

# of Staff Less than 100 101 to 300 300 to 500 Over 500

# of ERP Users 5 to 20 20 to 150 150 to 250 Over 250

Organization Characteristics

Single location, country-specific, PC or LAN based, off-the-shelf systems with lower cost and complexity

Multinational, very limited scalability, limited complexity, sold thru ERP resellers

Multinational, less scalability, some complexities and sophistications, sold through ERP resellers

Global, infrastructure and transactions scalability, sophisticated reporting and analytics



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and complexity through ERP resellers and analytics

Representative ERP Brands

MAS 90, Microsoft GP, NetSuite, Intuit, ACCPAC, MS Small Business, Epicor, Expandable, IntAcct

Microsoft, NetSuite, Expandable, Epicor, Exact, QAD, Oracle Accelerate, SAP Business One, SAP All-in-One, SAP ECC

Microsoft, Lawson, QAD, Oracle, SAP, Oracle JDE, Oracle Peoplesoft, SSA Global

Oracle EBS, SAP, Oracle Peoplesoft

• The classification by customer size including annual revenue, number of employees and number of potential users is the most common way to compare the ERP packages.

• The dominant ERP packages in the small and mid-size market are specifically designed for this market.

• Oracle EBS and SAP ECC use special pricing models for small and mid-size market. The core ERP components are the same for all the companies regardless of their size.

Services

Industries

Basic

Industries


Each ERP is designed to support and

automate the most common business requirements across



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Project

Industries

Process

Manuf.

Discrete

Item

Manuf

Production

Industries

requirements across different industries having similar strategies and execution

environments


ERP Primary Design

ERP Secondary Design

ERP

Industries ERP Design Scope

Services and Distribution

ProjectsProcessManuf.

Discrete-Item Manuf.

Horizontal VerticalMixed with

Solution Partners

1 IFS ��

2 QAD ��

3 Epicor Vantage ��

4 Oracle JDE ��

5 SAP All-In-One ��

6 SAP ECC ��

7 SAP Business One ��

8 Oracle Peoplesoft ��



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8 Oracle Peoplesoft ��

9 Ross ��

10 Infor LN (Baan) ��

11 Oracle EBS ��

12 Microsoft GP ��

13 Microsoft AX ��

14 Microsoft SL ��

15 Microsoft NV ��

16 NetSuite ��

Horizontal - ERP primary design is for various industries

Vertical - ERP primary design is for a specific industry

Mixed with Solution Partners - ERP is designed to leverage preset third-party solutions

Classification of ERP II by Business Process

Operating Processes

Market & Customers

Vision & Strategy

Product & Services Design

Marketing & Sales

Production & Delivery

1

2

3

4

5

4

55

4



8

Production & Delivery

Customer Invoicing & Services

Management Processes

Financial Resources

Human Resources

Information Technology

Environment, Health, Safety

External Relationship

5

6

7

8

9

10

11

7

7

8

8

Part III

ERP Selection Approaches

Integrated Solution Design and Selection

Business Requirements

Solution Design ERP Selection Phase 3

Define target business applications

landscape

Business process optimization &

automation

End-to-end

ERP Selection Phases 1 & 2 Initial

Roadmap

Final Roadmap



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End-to-end integration of target

business applications

System of Records design for target


Integration cost and plan with existing


Roadmap

Benefits of Solution Design Approach

• Process Models for complex business needs

• Goes beyond the capabilities of a specific application

• Leverage of existing business applications

• Assessment of the leading technologies such as SOA

• Comparison of different IT infrastructure models (SaaS, Outsource, Hosted)

• Calculation of Total Cost of Ownership

• Process Optimization

• Process Automation

• End-to-end data integration for the target biz apps landscape

• System of record to create a lean data environment and efficient data governance

Purchasing Sub-Ledgers

Sample High Level Architecture

Entity: A Entity: B Entity: C

Quote/Contract

Billing

Building Mvt

GL, AR, AP

Asset Mgt

Purchase

Quote/Contract

GL, AR, AP

Billing

Purchase

Asset MgtQuote/

Contract

GL, AR, AP

Billing

Purchase

Inventory

RFQ Supplier Vendor Accounts Accounts Credit

Source Data

External Data

TBD

Mixed Data Source



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General Accounting

RFQ Management

Purchasing

Supplier Management

Receiving

Vendor Master

Accounts Payable

Accounts Receivable

Collections

Credit Management

Project Accounting

(TBD)

Asset Accounting

General Ledger

Cash Management

BudgetingReporting

Managerial Reporting

Financial Statements

Consolidation

Vendor Billing

Enterprise Financial Systems (EFS)

Sample Solution Design Model



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Calculation components for allocations are

not supported by ERP packages

Sample Solution Design Model



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



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Elements of Solution-Design Approach: Systems of Records

• Product and services catalogs

• Technical Documents

• Customer Service Information

Data Inside & Outside of Firewall

• Material Requirements Planning

• Lead Times

• Sourcing Data Attributes

• Demand Data Attributes

• Production Schedules

• Available To Promise Data Attributes

• Available To Build Data Attributes

• Stocking Strategy Data

System of Record in Exact

Web

Services Supply

Chain

Package



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• Statutory Reports

• Management Reports

• Analytical Data Source

• Consolidation

• Inventory Valuation

• Billing

• Cash Management

• General Ledger

• Payables

• Receivables

• Assets

• Item Master

• Price Master

• Customer Master

• Supplier Master

Systems of Records in MS GP

• Marketing Campaigns

• Prospect Management

• Contracts

• Quotes

• Sales Organization

• Sales Compensation

System of Record in SFDC

Microsoft

GP ERP

Salesforce

Automation

Package

Elements of Solution-Design Approach: Example of Business Process Automation

NetSuite

Softrax

MS GP

Sales Process Business Rule

Complex configuration

Simple configuration

Simple configuration



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Revenue Recognition Source

Billing Automation

Maintenance Bill annually a month in advanceRecognize revenue 1/12 per month over next 12 months

Software & Hardware Sales

Bill customer in advance

Recognize hardware & software revenue as installed

Recognize revenue separately / differently for each line item on the invoice

System SalesGive away maintenance for first year

Allocate recognition to maintenance

Recognize revenue over the next 12 months to allocate corresponding par of revenue to relevant maintenance

Service, Installation, Training

Bill for services renderedRecognize revenue as objectives are achieved and services are rendered

Sample of Information Package Document

Enterprise Resource Planning & Professional Services

Automation System Strategy and Selection

Enterprise Resource Planning & Professional Services

Automation System Strategy and Selection



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ERP Selection Methodology

Identify key business requirements

Identify initial list of

Analyze key business processes in the scope of new ERP

Create a Solution Design

Create schedule for Vendor activities

Validate the scope, Solution Design and Demo Scenarios

Phase 1: Initiation Phase 2: Evaluation Phase 3: Selection



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Identify initial list of ERP packages

Provide rough estimate of Total Cost of Ownership (TCO)

Refine scope of Phases 2 and 3

Create a Solution Design based on ERP

Refine and validate list of initialERP packages and TCO

Send selection package Infoto vendors

Design and Demo Scenarios with Vendors

Demo Sessions

Reference Checks

Final TCO

ERP Selection Decision

Elements of Solution-Design Approach: ERP Selection Criteria

Functional Features

• Transactional

• Batch

• Reporting

Technology

• SOA

• SaaS

Scalability

• Database

• Applications

• Network

Intangible Elements

• Strong negative perception

• Strong predisposition

• Process leads experience

• Executive opinion / preference

Security

• Role based

• Data attributes level

Total Cost of Ownership

• License / Subscription



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• SaaS

Adaptability

• Ease of configuration

• Navigation

• New processes or business

Integration

• Internal

• External

• Data conversion

• Workflow

• Data attributes level

ERP

• Market position

• Product strategy and roadmap

• Classification match

System Integrator

• Market position

• Solution design match

• Implementation methodology

• Resources and skills availability

• Software support

• Implementation

• System integrator adoption

• Hardware

• Full time employee (FTE)

Part IV

ERP Licensing Models –SaaS Focus

Definitions and Technology

• Distinction between SaaS and Cloud Computing:

– Cloud computing is the computing power characterized by:

� Disembodied computing power (based on internet technology) that is consumed where and when it is needed

� Loosely coupled services running on agile, scalable infrastructure

� Network access to a shared pool of configurable computing resources (networks, servers, storage, applications, and services)

– SaaS refers to the software applications using the cloud computing power



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• SaaS is not:

– Grid computing which is the usage of several computers to process a specific instruction

– Thin Client which is a computer or computer program in the client-server architecture

• Most established SaaS solution models are:

– Software as a Service (SaaS): Providers offer business applications using cloud computing power (for example: NetSuite ERP, ConstantContact, Salesforce)

– Platform as a Service (PaaS): Customers add their own applications to an associated SaaS platform (for example: Salesforce Appxchange, NetSuite SuiteFlex)

– Infrastructure as a Service (IaaS): Rent the infrastructure and the related components (servers, storage, networks)

SaaS Economics

• From economics perspective the main differentiation of on-premise model and SaaS is a shift from capital expense to operating expense.

• The cost saving related to upfront capital expense does not systematically lead to save costs in operating expenses:

– The SaaS model might not make fiscal sense in the following situations:

� Relatively small capital budget

� Organization's flexibility in the capital budget rather than the operating budget

– Other factors impacting the scale of any potential cost savings include:



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– Other factors impacting the scale of any potential cost savings include:

� The efficiency of a company's data center as compared to the cloud vendor's

� The company's existing operating costs

� The level of adoption of cloud computing

� The type of functionality being expected from SaaS applications

• Economics of SaaS for large scale companies is not there yet.

• Small to mid-size companies might benefit from SaaS economics if they have the right model for the operating expenses vs. capital expense

SaaS Current Trends

• Current trends show high rate of adoption of SaaS solutions.

• SaaS ERP is following the same trend in SMB market.

• SaaS ERP in the large organization market is lagging behind the SMB market trend.

36%

28%Currently Considering



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32%

32%

9%

63%

0% 10% 20% 30% 40% 50% 60% 70%

Not Considering

Currently Using 2008

2007

21%

22%

22%

30%

36%

Marketing automation software

Web 2.0 technologies, such as bolgs, wikis, and RSS

Human capital management

Customer service and support

Sales force automation

SaaS Current Adoption

Figure 2 SaaS Adoption By Application

Growing number of SMB companies are using SaaS business applications

"For which of the following software applications is your firm using SaaS?"



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6%

5%

8%

8%

9%

15%

16%

17%

18%

20%

21%

Other

Product life-cycle management

Software supporting a specific industry process

Supply chain management

Spend management or supplier relationship management

Project-based solutions

Enterprise resource planning

Order mangement

Content mangement

Collaboration software

Marketing automation software

ERP

Base: 103 US packaged application software decision-makes that are currently using SaaS

Source: Enterprise And SMB Software Survey, North America And Europe, Q4 2008

Source: Forrester Research, Inc.

SaaS Dynamic Evolution Waves

• Optimized business Ecosystems

• IT-targeted Ecosystems

2001-2006

Cost Effective

2005 -2010

Integrated

Business Solutions

2008 -2014

Workflow-enabled

Business Transformation

AD

OP

TIO

N

SaaS integration

SaaS tipping points



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• IT-targeted Ecosystems

• Inter-enterprise Collaboration

• IT Utility / SaaS Infrastructure

• Customized, personalized

workflow

• Focus on business transformation

• Stand-alone Apps

• Multi-tenancy

• Limited configurability

• Focus on TCO / rapid deploy

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

AD

OP

TIO

N

• SaaS integration

platforms

• Business

marketplaces and

SaaS ecosystems

• Customization

capability

TIME

Q: Rate the benefits commonly ascribed to the Cloud / SaaS model (1=not important, 5=very important)

Why Choose SaaS?

77.9%

81.5%

83.6%

Low monthly payments

Pay only for what you use

Easy / fast to deploy



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Source: IDC Enterprise Panel, August 2008 n = 244% responding 3, 4 or 5

67.2%

73.3%

77.0%

77.5%

77.9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Sharing systems / information simpler

Encourages more standard IT

Offers the latest functionality

Less in-house IT staff, costs

Low monthly payments

Why Not Cloud / SaaS Services?

Q: Rate the challenges / issues of the 'Cloud' / on-demand model (1=not significant, 5=very significant)

Availability

Performance

Security

84.8%

88.1%

88.5%



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Not enough major suppliers yet

Bringing back in-house may be difficult

Worried Cloud will cost more

Not enough ability to customize

Hard to integrate with in-house IT

74.6%

80.3%

81.1%

83.3%

84.5%

65% 70% 75% 80% 85% 90%

Source: IDC Enterprise Panel, August 2008 n = 244% responding 3, 4 or 5

Contacts

50 California Street, 17th Floor

San Francisco, CA 94111

Direct: 415.402.3639

Mobile: 650.678.0260

Fax: 415.402.6955

[email protected]

Ronan O'Shea

10 Almaden Boulevard, Suite 900

San Jose, CA 95113

Direct: 408.808.3258

Mobile: 408.406.1461

Fax: 408.808.3363

[email protected]

Siamak Razmazma



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Confidentiality Statement and Restriction for Use

This document contains confidential material proprietary to Protiviti Inc. ("Protiviti"), a wholly-owned subsidiary of Robert Half International Inc.

("RHI"). RHI is a publicly-traded company and as such, the materials, information, ideas, and concepts contained herein are non-public, should be

used solely and exclusively to evaluate the capabilities of Protiviti to provide assistance to your Company, and should not be used in any

inappropriate manner or in violation of applicable securities laws. The contents are intended for the use of your Company and may not be

distributed to third parties.

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