Shared Services 2.0?

My good friend and colleague, Jeff Williams, and I are guests on a webinar mid-day today re: shared services.  In preparing for the webinar, we talked a lot about how shared services has been changing the last few years. Moreover, we discussed how the economics and technologies that defined so many shared service initiatives in the 1990s are now in need of review.

While neither of us is enamored with the name, we used a short-hand term, shared services 2.0, to describe the differences between the older generation of shared services and the newer one. One area we intend to discuss on the call is the ability of cloud technologies to change the work location, economics and process designs of shared service work.  Please feel free to listen in on the call.

Dr. Katherine Jones has been working with the Vital Analysis team here for the last 18 mos. or so. If you don’t know her, she’s quite an expert on HR and ERP technologies. Recently, she penned a research report on building a great talent management business case.  Katherine’s posted this announcement on the Vital Analysis website and has graciously offered to make it available to others. Simply complete the request form on this website or send us an email at contact@vitalanalysis.com .

Here is a small quote from this report:

“The most successful business cases are tight in their focus; rather than promising to do everything that may relate to corporate goals at a specific time, narrowing the intent of the technology to the most important and attainable objectives. Map key business needs to learning and talent improvement requirements, then focus on the results expected: for example, improved customer engagement through better trained sales and service personnel, or retaining skilled workers with hard-to-get skills through a better rewards system. “

Jeffrey L. Williams (Jeff), good friend and colleague, and I took a fairly good look at Intacct recently.

If you don’t know Intacct, they’ve got a solid SaaS (software-as-a-service) Accounting solution that integrates with many best of breed solutions to round out an entire suite. We’ve interviewed top management, participated in product demonstrations, and more to develop this report.

Here’s an excerpt from our Market Prognosis section of the report:

We particularly like the following about Intacct and its products:

• The company is very focused on its product line focus (financials) and its sales strategies.
• The company’s distribution channel is quite enviable. Moreover, the solution very elegantly solves a number of business needs that accounting firms (and their clients) have.
• We also liked the team at Intacct and believe them to be motivated, sharp and focused on the right priorities for the company

We believe additional focus may be required in these areas:

• Intacct does not currently offer a PaaS. We believe this could be a limiting factor in its attractiveness to other software firms, systems integrators and other potential partners. Clients would benefit from a PaaS as well.
• Supporting multi-nationals may force Intacct to develop more skills, more product capabilities and more local sales/support personnel. Rolling this out will need to be carefully metered if the company is to maintain growth rates cost effectively. Multi-lingual support is just one need here.
• We believe the products could go even further up-market. The functionality may already adequate to do so for many prospective customers. However, Intacct will need more applications/application coverage to improve its penetration in larger accounts. This may also require an upgrading of Intacct’s service partner ecosystem, too.

Overall, Intacct should exhibit better than average growth in the SaaS financial software space. As long as the company continues to serve customers well (e.g., no material system outages) and develops more product and architectural capabilities in a timely manner, they should do quite well.”

Next week, on July 27, 2010 at 2 pm Eastern/1 pm Central, Jeff and I are the featured speakers on an interactive Business Finance webcast titled: “Has Procure-to-Pay Become Problems to Pay?”  During the 1 hour event, we will explore the risks and associated issues with the Procure-to-Pay cycle in many organizations.  We will also demonstrate how Enterprise Content Management solutions can complement your ERP to solve many of these problems and give you a framework to ensure your meetings with ERP and ECM vendors about these issues are productive and focused on your business issues.   Information about the webinar can be found at:

 http://w.on24.com/r.htm?e=227039&s=1&k=3CD2A84368067BBA8D80A5A3D061E0C7&partnerref=vitalanalysis

 Jeff and I are also developing a companion white paper on the same subject. 

 We hope many of you can attend

If you don’t know Plex, they’ve got a solid SaaS (software-as-a-service) ERP solution. We’ve interviewed customers, top management and more to develop this report.

Here’s an excerpt from our Market Prognosis section of the report:

“Currently, Plex Systems is enjoying significant market uptake in spite of the general economy. Why? We believe software buyers are becoming ever more attracted to the favorable economics behind true SaaS products. For those customers who are in the verticals that Plex Systems supports, Plex Systems has very limited competition.

The competitive landscape may change soon as RootStock, a NetSuite based MRP solution, may be gaining ground in the SaaS space. Likewise, we anticipate SAP making new moves with its Business ByDesign product suite. Mark Symonds, CEO of Plex Systems, remarked that SAP’s announcement of Business ByDesign in 2007 was a positive for his firm as it showed a major ERP vendor embracing software as a service.He added that SAP’s decision to slow down or halt sales of that product was an even
bigger favor.

VisionPlex, the Plex Systems PaaS, may benefit from additional utilization by Plex partners. Product line extensions by these partners will only extend the market uptake of Plex applications.

We believe that Plex has market awareness, customer credentials and market momentum going for it now. It will need to embrace more service partners, strengthen the relationships it has with current partners and aggressively position its SaaS credentials
before prospects as competition will undoubtedly increase.”

Instead, we found big, really big firms, adopting SaaS applications. These firms told us about their plans to implement more and more SaaS applications. More amazing were the numbers they shared with us regarding how much less these applications cost than on-premise products.

This is a big report with a lot of surprises. And, more than anything, it showed us that SaaS is no longer the domain of early adopters and innovators. It’s now well within the realm of Geoffrey Moore’s Early Majority.

- SuccessFactors

- Workday

- Financial Force

- Plex Systems

- Taleo

- NetSuite

- and many more firms

We’ve been furiously interviewing companies with great cloud/SaaS stories and we’ve even been canvassing the marketplace talking to SMB and large enterprise users of cloud applications.

We’ll be posting lots of new information re: these very shortly.

Jeff and I will get quizzed regarding our views on the content management space.  This area remains of great interest to Jeff and I as we both drove a lot of work in back office processes in our careers. We’re still seeing a lot of bad processes in businesses. Some of this is due to rushed mergers, over-reliance on spreadsheets, etc. to solve problems. But, sadly, we’re still seeing a lot of talented individuals in all manner of companies struggling with error correction activities, fighting fraud and other fire-fighting activities when they should be doing something far more strategic for their employers and their careers.

Last week, in preparation for this, Jeff and I did a conference call. We’ll likely discuss:

- how prevalent document and process problems still are in many businesses

- how expensive these problems can be

- what the range of solutions are in the marketplace

- the upside some companies reap with better content solutions

- how the cloud (i.e., software as a service) brings better economics to this space

- and whatever else the folks at CFO want us to discuss

If you’d like to listen, there’s no fee but you’ll need to register on CFO magazine’s site:
http://www.cfo.com/webcast.cfm?webcast=14499018&pcode=SPR060310_Vital_Analysis

I hope a few of you can make it

Brian

A lot of service firms would like to chat with you about your integrators and outsourcers. They want to know if they can have some of that business. Some of their efforts are premature, some of it self-serving and some of it is fear mongering. We don’t doubt that their are problems out there. We beleive you need a solid risk assessment/management plan before you leap into bed with another service provider.

The economy presents some other opportunities for service buyers. With utilization and backlog dropping in many service firms, deals can be had now for the savvy services buyer.

Take a minute and click on the attached pdf.the 2009 Services Market - An Opportunity or Risk Nightmare?

If you’d like to chat about the opportunities and risks your firm faces with its third party service providers, give us a ring at: contact@vitalanalysis.com .

Recently, Brian Sommer of Vital Analysis was interviewed for a brief article on software contract negotiations. The article was for the AirTran in-flight magazine Go. You can peruse the online version of the magazine here. The article is on page 59.

Here’s what Brian originally pitched to the reporter:

It’s critical for your readers to fight for these changes before they sign the contract. Once signed, negotiating leverage goes to the vendor or goes away altogether.

Here are some of the clauses I like to fight for:

material change of control - Few software companies or their products are the same after they’ve been sold to another firm. Sure, you can (and should) ask for software source code escrow but you need to carefully word the deal so that you get license, maintenance and implementation monies returned/reimbursed if the vendor is sold (or sells the software product line) to another firm during the first year or so of licensing the product. Be sure your material change of control covers asset sales, acquisition, divestiture, loss of founder and insolvency.

entitlement to any and all ’similar’ products - Too frequently, software vendors will use the maintenance monies you’ve dutifully paid them year after year to build an all-new product line. The problem comes up when they want you to pay a new licensing fee to get access to the new product that you helped fund. This one’s a no-brainer - you paid for it and you should get it.

discontinuance of application product lines - Vendors will cease to support old product lines. Make sure you know what this vendor’s policy for sunseting old products is and make sure your upgrade capabilities can afford or work as fast. 

true enterprise license - No one can accurately predict what will happen with their user count, hardware configuration, technology innovations, etc. over the next few years. However, many firms own a piece of application software for ten years. If you agree to a CPU pricing deal, what happens if you want to use virtualization technology or a new multi-CPU server? Make sure the license does not tie you to an onerous cost structure or a pricing model that becomes obsolete in a couple of years

lock in price escalation for maintenance and service rates - Signing a software license agreement that ties annual maintenance payments to an unknown cost is unwise. Vendors typically tie maintenance to a fixed percent of the “then current list price of the application software”. If a vendor raises their list price 10% annually but your business didn’t grow, are you getting value for the extra money you’re being charged? No. Likewise, if a vendor’s prior price escalations have frequently exceeded the CPI (consumer price index), what does that say about their operating (in)efficiencies or greed? CPI should be used as the escalator for most deals.

Brian has negotiated a number of deals lately for clients including recent negotiation for a large software suite for one client and a manufacturing plant acquisition for another. He has also been on the road a lot lately (e.g., Korea) conducting negotiations training for major corporations.  

 Looking to make or re-negotiate a deal? Drop Brian a line at contact@vitalanalysis.com . 

cross-posted to www.servicessafari.blogs.com