Enterprise Software TCO Calculator – Infor Lawson

How it Works

Fill out the form below for a your project planning estimate. The form does not have a “beginning or end.” The form is constantly calculating, so feel free to make constant changes and the application will auto-adjust.

Details

  • Vendor Name: Infor (See for Vendor Rating)
  • Software Category: Big ERP
  • Company Headquarters: 641 Avenue of the Americas, New York, NY 10011
  • Site: http://www.infor.com
  • Contact number: 646.336.1700
  • Delivery Mechanism: On Premises

Finished With Your Analysis?

Once complete, goto this link to see other analytical products for Infor Lawson.

MUFI Rating & Risk – Infor Lawson

MUFI Rating & Risk – Infor Lawson

MUFI: Maintainability, Usability, Functionality, Implement ability

Vendor: Infor (Select For Vendor Profile)

Introduction

Info is another ERP software vendor, which has grown through mergers and acquisitions. Infor is the 3rd largest ERP software vendor in the world. Infor acquired the ERP software vendor Lawson in 2011. Infor actually has the following ERP products.

Application Detail

Infor10 ERP Enterprise, Lawson M3 ERP Enterprise, Infor10 ERP Business, Infor10 ERP Express, Infor10 ERP Process Business. And these are just the major ERP systems. Infor lists the following ERP systems on their website.

  • Info LN
  • Infor LX
  • Infor M3
  • Infor SyteLine
  • Infor System21
  • Infor VISUAL
  • Infor XA
  • Infor Adage
  • Infor SunSystems
  • Infor Lawson
  • Infor Distribution A+
  • Infor Distribution FACTS
  • Infor Distribution SX.e

However, we have decided to focus on the Lawson ERP system as this is the flagship ERP for Infor.

Infor Lawson has the best user interface of any of the older generation ERP systems. Infor Lawson uses a very inventive interface design where icons along the top provide navigation between the major areas of the application.

Infor Lawson DashboardInfor Lawson also has a decent dashboard that shows the user basic activity.

Infor Lawson Past Due Invoices

The application also has a very useful search bar along the top, along with a search modifier. Infor Lawson has the first application we have reviewed that has updates and alerts that really work well. They are listed per category along with the right side of the user interface.

Infor Lawson Red Ball

 

This is another view on the alerts – this allows the user to hover over the appropriate icon and see the list of vendors that are on hold.

Infor Lawson Chatter

Infor Lawson has copied the Chatter functionality in Salesforce, which allows comment threads to be saved and accessed. Infor Lawson has done a very nice job with this functionality.

Infor Lawson is an interesting alternative for large ERP buyers. Infor Lawson has the highest ERP worker productivity of any of the ERP applications, which are sold to large buyers. While most of the other large company ERP applications are increasingly dated, Infor Lawson is a borderline ERP system, which is simply a combined financial system with a strong human resources module. That is not necessarily a bad thing, as it is better to go into ERP procurement understanding that buying a single system, which would do everything, was never a feasible strategy. Infor sales will attempt to counter this argument by pointing to its multiple offerings which can be connected to Infor Lawson – however these are all acquired applications, and each one of these applications would need to be evaluated on their own merits. Attempting to allow Infor to perform your solution architecture by pitching all Infor products is a bad strategy.

However, that fact that Infor Lawson combined a finance system with a strong HR system is why Lawson was traditionally strong in service industries such as finance and healthcare. Buyers that fall into this category may want to give Infor Lawson a look, however, if no real supply chain management requirements exist, FinancialForce along with either its consulting service application an HR application would be another possible alternative.

It is certainly true that service industries do not require ERP suites, and in fact even for manufacturers ERP systems are not actually necessary as the rise of excellent stand-alone financial applications provides the flexibility to create flexible solution architectures. For more on this topic see our Solution Architecture Packages.

MUFI Scores

All scores out of a possible 10.

Vendor and Application Risk

Software Decisions Risk Defined: (See This Link for Our Categorization of Risk)

Infor Lawson is one of the better ERP systems in this category, and it is in many ways a well-designed system that just happens to be short on some functionality. However, Infor’s consulting is not strong, and few consulting companies specialize in Infor Lawson, although they can certainly be found.

Likelihood of Implementation Success

This accounts for both the application and vendor-specific risk. In our formula, the total implementation risk is application + vendor + buyer risk. The buyer specific risk could increase or decrease this overall likelihood and adjust the values that you see below.

Risk Definition

See this link for more on our categorizations of risk. We also offer a Buyer Specific Risk Estimation as a service for those that want a comprehensive analysis.

Risk Management Approach

Managing an Infor Lawson implementation means managing the risks related to getting consultants assigned to the project, and secondly to deal with rather limited functionality. This can quickly become a problem if the buyer takes statements made by Infor sales to heart and hold’s the implementation team’s feet to the fire to make all of them come true. And this, by the way, can easily happen, because as we explain in our Honest Vendor Rating of Info, Infor generally has a low accuracy level to the information it provides during the sales process.

Finished With Your Analysis?

To go back to the Software Selection Package page for the Big ERP software category. Or go to this link to see other analytical products for Infor Lawson.

References

Brightwork MRP & S&OP Explorer for Tuning

Tuning ERP and External Planning Systems with Brightwork Explorer

MRP and supply planning systems require tuning in order to get the most out of them. Brightwork MRP & S&OP Explorer provides this tuning, which is free to use in the beginning until is sees “serious usage,” and is free for students and academics. See by clicking the image below:

Software Selection Book

SELECTION

Enterprise Software Selection: How to Pinpoint the Perfect Software Solution Using Multiple Sources of Information

What the Book Covers

Essential reading for success in your next software selection and implementation.

Software selection is the most important task in a software implementation project, as it is your best (if not only) opportunity to make sure that the right software—the software that matches the business requirements—is being implemented. Choosing the software that is the best fit clears the way for a successful implementation, yet software selection is often fraught with issues and many companies do not end up with the best software for their needs. However, the process can be greatly simplified by addressing the information sources that influence software selection. This book can be used for any enterprise software selection, including ERP software selection.

This book is a how-to guide for improving the software selection process and is formulated around the idea that—much like purchasing decisions for consumer products—the end user and those with the domain expertise must be included. In addition to providing hints for refining the software selection process, this book delves into the often-overlooked topic of how consulting and IT analyst firms influence the purchasing decision, and gives the reader an insider’s understanding of the enterprise software market.

This book is connected to several other SCM Focus Press books including Enterprise Software TCO and The Real Story Behind ERP.

By reading this book you will:

  • Learn how to apply a scientific approach to the software selection process.
  • Interpret vendor-supplied information to your best advantage. This is generally left out of books on software selection. However, consulting companies and IT analysts like Gartner have very specific biases. Gartner is paid directly by software vendors — a fact they make every attempt not to disclose while consulting companies only recommend software for vendors that give them the consulting business. Consulting companies all have an enormous financial bias that prevents them from offering honest advice — and this is part of their business model.
  • Understand what motivates a software vendor.
  • Learn how the institutional structure and biases of consulting firms affect the advice they give you, and understand how to properly interpret information from consulting companies.
  • Make vendor demos work to your benefit.
  • Know the right questions to ask on topics such as integration with existing software, cloud versus on-premise vendors, and client references.
  • Differentiate what is important to know about software for improved “implement-ability” versus what the vendor thinks is important for improved “sell-ability.”
  • Better manage your software selection projects to ensure smoother implementations.

Buy Now

Chapters

  • Chapter 1: Introduction to Software Selection
  • Chapter 2: Understanding the Enterprise Software Market
  • Chapter 3: Software Sell-ability versus Implement-ability
  • Chapter 4: How to Use Consulting Advice on Software Selection
  • Chapter 5: How to Use the Reports of Analyst Firms Like Gartner
  • Chapter 6: How to Use Information Provided by Vendors
  • Chapter 7: How to Manage the Software Selection Process

Solution Architecture Package – Oracle Two Tiered ERP Calculator

Introduction

A two-tiered ERP strategy is where multiple ERP systems are used – most often one tier 1 ERP system is combined with tier 2 and tier 3 ERP systems. The ERP vendors and applications are typically categorized into the following “tiers.” The concept is that different ERP systems are to be used for different “tiers” of the business.

Gartner has the following definition of two-tiered ERP.

“Two-tier ERP is the use of different ERP systems at two different layers of the organization: One system serves as the global backbone, often for administrative ERP processes such as financials, human resources and procurement, which are able to be harmonized across all divisions as shared services. (bold added) In addition to the global backbone, one or more ERP solutions (or even reconfigured instances of the same system) are used in parts of the organization to support geographical subsidiary needs, usually for smaller operational requirements, such as sales, marketing, field services and local manufacturing.”

Gartner’s definition is a bit too rigid to describe how the term two tiered ERP tends to be used, and it also does not explain how the strategy differs from single instance ERP – where the entire entity is migrated to a single – typically tier 1 ERP system. In fact, this is rarely discussed in print, because most of the entities that write on ERP have for years been proposing that companies follow a single instance ERP strategy. Two-tiered ERP is the first public admission by ERP companies that a multi-ERP environment can be beneficial. Since the beginning of ERP in the 1980’s the consistent approach by large ERP software vendors has been to nudge their customers in the direction of centralizing their businesses to a single ERP system. However a broad scale transition to single instance ERP never occurred except for exceptions and for smaller companies, and there are a number of reasons, why, which are explained in detail in the SCM Focus Press book The Real Story Behind Two Tiered ERP.

Two-tiered ERP is an important concept, but not for a reason that many people exposed to the concept realize. It is important because two-tiered ERP represents one of the first cracks in the façade of single instance ERP. ERP has nowhere near achieved the objectives that it was predicted to achieve and many of the ERP systems have aged quite badly. ERP is on its way to being “just another system,” instead of the centerpiece of the solution architecture and overpaying for ERP is now one of the least effective uses of IT budgets.

Important points regarding two-tiered ERP are the following:

  1. Financial Bias: Most the entities that propose the two-tiered ERP have a financial bias. They tend to be tier 2 or tier ERP vendors that are trying to sell their software by any means necessary, and tier 1 vendors that are attempting to answer the logic for two tiered ERP by recommending that their ERP applications (either tier 1 or tier 2, as both SAP and Oracle have tier 2 ERP applications in addition to tier 1 ERP applications) by proposing that two-tiered ERP is a “fine idea,” as long as it means using their applications.
  2. No Attempt to Provide Evidence: There is some anecdotal evidence that this or that company saved money using a two-tiered ERP strategy, but no real research into the area. Academics have not researched the topic.
  3. No Reliability to Research: No entity that would be traditionally relied upon to perform research on this topic would be able to perform the research without financial bias affecting their research results. This is because they are all in some way financially dependent upon the large software vendors. For instance, even IT publications receive a disproportionate percentage of their advertising from either large software vendors or large consulting companies – both of which would push against any research which showed that two tiered ERP was effective. Entities do not publish research, which contradicts their own financial model.

The Comparisons

Our first comparison shows all using one single instance of Oracle JD Edwards EnterpriseOne ERP system to support 600 users. This is compared against a two-tiered ERP strategy that uses Oracle JD Edwards EnterpriseOne for 200 users, and then four other ERP systems (Epicor, Infor Lawson, Sage X3 and NetSuite OneWorld).

This is a very realistic scenario as the average company that uses ERP systems has five ERP systems within the company. This statistic combines with the statistic that the average ERP system has 60% of its modules actually operational.

Alternate One - 100% Oracle JD Edwards EnterpriseOne VS Multi Two Tier ERP

CategoryApplicationTCOUser #
Tier 1 ERPOracle JD Edwards EnterpriseOne$ 62,340,403600

Alternate One - 100% Oracle JD Edwards EnterpriseOne VS Multiple Two Tier ERP Part 2

CategoryApplicationTCOUser #
Total$ 50,579,450600
Tier 1 ERPOracle JD Edwards$ 23,712,250200
Tier 2 ERPEpicor ERP$ 7,493,575100
Tier 2 ERPInfor Lawson$ 6,308,375100
Tier 2 ERPSage X3$ 6,371,000100
Tier 3 ERPNetSuite OneWorld$ 6,694,250100

This analysis compares the use of five ERP systems versus the use of one ERP system, each serving the same number of users. The cost savings are significant at 19%.

Alternate Two - Oracle JD Edwards EnterpriseOne VS Tier 1 SAP + One Large Tier 2 ERP

CategoryApplicationTCOUser #
Tier 1 ERPOracle JD Edwards EnterpriseOne$ 59,957,378800

Alternate Two - Oracle JD Edwards EnterpriseOne VS Tier 1 SAP + One Large Tier 2 ERP Part 2

CategoryApplicationTCOUser #
Total$ 61,367,489800
Tier 1 ERPOracle JD Edwards EnterpriseOne$ 41,560,269400
Tier 2 ERPSage X3$ 19,807,220400

The next example shows a larger number of users, at 800. It also cuts down the number of ERP systems in the two-tiered ERP strategy to just two ERP systems – Oracle JD Edwards EnterpriseOne and Sage X3. This scenario provides no cost savings. However, it must be remembered that this is only a cost analysis. Having only two ERP systems, also cuts down on the flexibility of the company as there is much more variety in four ERP applications than one. When companies allow different divisions to choose their own ERP systems – that is follow a decentralized approach – they rarely settle on the same ERP system. This is logical because different companies and sub-companies have different requirements that are optimally met by different applications. 

Alternate Three - Oracle JD Edwards EnterpriseOne VS SAP for Both Tier 1 & Tier 2

CategoryApplicationTCOUser #
Tier 1 ERPOracle JD Edwards EnterpriseOne
$ 59,957,378800

Alternate Three - Oracle JD Edwards EnterpiseOne VS SAP for Both Tier 1 & Tier 2 Part 2

CategoryApplicationTCOUser #
Total$ 62,450,719800
Tier 1 ERPOracle JD Edwards EnterpiseOne$ 41,560,269400
Tier 2 ERPOracle JD Edwards World$ 20,890,450400

SAP and Oracle have responded to the tier 2 ERP vendors that is makes more sense to use their tier 2 ERP offerings rather than move to a different ERP vendor for the 2nd tier. This scenario above tests that hypothesis. In this scenario, there are again no cost savings. 

Conclusion

According to our research, one can save money by following a two-tiered ERP strategy, and we predict that the savings would be significant, but it greatly depends upon which tier 2 ERP systems are used, and if the company deploys multiple or a single tier 2 ERP system. There are scenarios where following a two tier ERP strategy will save no money. This only covers the the cost or TCO side of the equation. A major benefit of tier 2 ERP is to gain more diversity in functionality that can be attained by using just one ERP system.

It should be apparent from each of the examples provided above that the primary reason for this cost savings is that tier 1 ERP applications are considerably more expensive than lower tiered ERP systems. Of course, tier 1 ERP systems tend to be better fits for larger companies, although this generality should be questioned more now than ever as both SAP and Oracle have essentially “stabilized” their tier 1 ERP systems – which means little future development — and other ERP applications have closed some of the gap in functionality. Our Software Selection Package for Finance/Accounting explains this point in detail.

Both Oracle tier 1 ERP systems comes with a great deal of implementation complexity and maintenance and it is well understood that their tier 1 offerings tend to be overkill for smaller companies/divisions etc.. Therefore, the claims made by proponents of two-tier ERP strategies regarding costs savings are correct. However, with both Oracle the cost savings changes little whether non- Oracle tier 2 ERP applications are purchased, or if the ERP software from other vendors is purchased. However, our research also does not show that a buyer receives any cost benefit from using Oracle for all the tiers, although the buyer would lose flexibility if they chose to limit their options to purchasing and deploying multiple ERP systems from Oracle. As is most often the case, each application should be selected on the basis of its functionality fit with the business requirements. No other consideration is even close to as important.

Software Selection

  • Want Help with Software Selection for your Business?

    It is difficult for most companies to perform software selection without outside advice. It is impossible to obtain honest software selection support from consulting companies. We offer expert and unbiased remote software selection support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

Montgomery, Nigel. Ganly, Denise. How to Determine If a Two-Tier ERP Suite Strategy Is Right for You. Gartner. October 24 2012

Solution Architecture Package – SAP Two Tiered ERP Calculator

Introduction

A two-tiered ERP strategy is where multiple ERP systems are used – most often one tier 1 ERP system is combined with tier 2 and tier 3 ERP systems. The ERP vendors and applications are typically categorized into the following “tiers.” The concept is that different ERP systems are to be used for different “tiers” of the business. Gartner has the following definition of two-tiered ERP.

Two-tier ERP is the use of different ERP systems at two different layers of the organization: One system serves as the global backbone, often for administrative ERP processes such as financials, human resources and procurement, which are able to be harmonized across all divisions as shared services. (bold added) In addition to the global backbone, one or more ERP solutions (or even reconfigured instances of the same system) are used in parts of the organization to support geographical subsidiary needs, usually for smaller operational requirements, such as sales, marketing, field services and local manufacturing.

Gartner’s definition is a bit too rigid to describe how the term two tiered ERP tends to be used, and it also does not explain how the strategy differs from single instance ERP – where the entire entity is migrated to a single – typically tier 1 ERP system. In fact, this is rarely discussed in print, because most of the entities that write on ERP have for years been proposing that companies follow a single instance ERP strategy. Two-tiered ERP is the first public admission by ERP companies that a multi-ERP environment can be beneficial. Since the beginning of ERP in the 1980’s the consistent approach by large ERP software vendors has been to nudge their customers in the direction of centralizing their businesses to a single ERP system. However a broad scale transition to single instance ERP never occurred except for exceptions and for smaller companies, and there are a number of reasons, why, which are explained in detail in the SCM Focus Press book The Real Story Behind Two Tiered ERP. Two-tiered ERP is an important concept, but not for a reason that many people exposed to the concept realize. It is important because two-tiered ERP represents one of the first cracks in the façade of single instance ERP. ERP has nowhere near achieved the objectives that it was predicted to achieve and many of the ERP systems have aged quite badly. ERP is on its way to being “just another system,” instead of the centerpiece of the solution architecture and overpaying for ERP is now one of the least effective uses of IT budgets. Important points regarding two-tiered ERP are the following:

  1. Financial Bias: Most the entities that propose the two-tiered ERP have a financial bias. They tend to be tier 2 or tier ERP vendors that are trying to sell their software by any means necessary, and tier 1 vendors that are attempting to answer the logic for two tiered ERP by recommending that their ERP applications (either tier 1 or tier 2, as both SAP and Oracle have tier 2 ERP applications in addition to tier 1 ERP applications) by proposing that two-tiered ERP is a “fine idea,” as long as it means using their applications.
  2. No Attempt to Provide Evidence: There is some anecdotal evidence that this or that company saved money using a two-tiered ERP strategy, but no real research into the area. Academics have not researched the topic.
  3. No Reliability to Research: No entity that would be traditionally relied upon to perform research on this topic would be able to perform the research without financial bias affecting their research results. This is because they are all in some way financially dependent upon the large software vendors. For instance, even IT publications receive a disproportionate percentage of their advertising from either large software vendors or large consulting companies – both of which would push against any research which showed that two tiered ERP was effective. Entities do not publish research, which contradicts their own financial model.

The Comparisons

Our first comparison shows all using one single instance SAP ERP system (ECC/R/3) to support 600 users. This is compared against a two-tiered ERP strategy, which uses SAP ERP (ECC/R/3) for 200 users, and then four other ERP systems (Epicor, Infor Lawson, Sage X3 and NetSuite OneWorld). This is a very realistic scenario as the average company that uses ERP systems has five ERP systems within the company. This statistic combines with the statistic that the average ERP system has 60% of its modules actually operational.

Alternate One - 100% SAP ERP/ECC/R/3 VS Multi Two Tier ERP

CategoryApplicationTCOUser #
Tier 1 ERPSAP ERP/ECC/R/3$ 72,522,188600

Alternate One - SAP ERP/ECC/R/3 VS Multiple Two Tier ERP Part 2

CategoryApplicationTCOUser #
Total$ 54,762,200600
Tier 1 ERPSAP ERP/ECC/R/3$ 27,895,000200
Tier 2 ERPEpicor ERP$ 7,493,575100
Tier 2 ERPInfor Lawson$ 6,308,375100
Tier 2 ERPSage X3$ 6,371,000100
Tier 3 ERPNetSuite OneWorld$ 6,694,250100

This analysis compares the use of five ERP systems versus the use of one ERP system, each serving the same number of users. The cost savings are significant at 24%.

Alternate Two - SAP ERP/ECC/R/3 VS Tier 1 SAP + One Large Tier 2 ERP

CategoryApplicationTCOUser #
Tier 1 ERPSAP ERP/ECC/R/3$ 67,625,688800

Alternate Two - SAP ERP/ECC/R/3 VS Tier 1 SAP + One Large Tier 2 ERP Part 2

CategoryApplicationTCOUser #
Total$ 68,155,345800
Tier 1 ERPSAP ERP/ECC/R/3$ 48,348,125400
Tier 2 ERPSage X3$ 19,807,220400

The next example shows a larger number of users, at 800. It also cuts down the number of ERP systems in the two-tiered ERP strategy to just two ERP systems – SAP ERP/ECC/R/3 and Sage X3. This scenario provides no cost savings.  However, it must be remembered that this is only a cost analysis. Having only two ERP systems, also cuts down on the flexibility of the company as there is much more variety in four ERP applications than one. When companies allow different divisions to choose their own ERP systems – that is follow a decentralized approach – they rarely settle on the same ERP system. This is logical because different companies and sub-companies have different requirements that are optimally met by different applications. 

Alternate Three - SAP ERP/ECC/R/3 VS SAP for Both Tier 1 & Tier 2

CategoryApplicationTCOUser #
Tier 1 ERPSAP ERP/ECC/R/3$ 67,625,688800

Alternate Three - SAP ERP/ECC/R/3 VS SAP for Both Tier 1 & Tier 2 Part 2

CategoryApplicationTCOUser #
Total$ 64,823,695800
Tier 1 ERPSAP ERP/ECC/R/3$ 48,348,125400
Tier 2 ERPSAP Business One$ 16,475,570400

SAP and Oracle have responded to the tier 2 ERP vendors that is makes more sense to use their tier 2 ERP offerings rather than move to a different ERP vendor for the 2nd tier. This scenario above tests that hypothesis. In this scenario, there are moderate cost savings of 4%. 

Conclusion

According to our research, one can save money by following a two-tiered ERP strategy, and we predict that the savings would be significant, but it greatly depends upon which tier 2 ERP systems are used, and if the company deploys multiple or a single tier 2 ERP system. There are scenarios where following a two tier ERP strategy will save no money. This only covers the the cost or TCO side of the equation. A major benefit of tier 2 ERP is to gain more diversity in functionality that can be attained by using just one ERP system. It should be apparent from each of the examples provided above that the primary reason for this cost savings is that tier 1 ERP applications are considerably more expensive than lower tiered ERP systems. Of course, tier 1 ERP systems tend to be better fits for larger companies, although this generality should be questioned more now than ever as both SAP and Oracle have essentially “stabilized” their tier 1 ERP systems – which means little future development — and other ERP applications have closed some of the gap in functionality. Our Software Selection Package for Finance/Accounting explains this point in detail. Both SAP and Oracle tier 1 ERP systems comes with a great deal of implementation complexity and maintenance and it is well understood that their tier 1 offerings tend to be overkill for smaller companies/divisions etc.. Therefore, the claims made by proponents of two-tier ERP strategies regarding costs savings are correct. With SAP, the cost savings are higher if non-SAP or Oracle tier 2 ERP applications are purchased versus most other tier 2 ERP applications. However, we have several less known tier 2 ERP applications that have lower costs than SAP Business One. As is most often the case, each application should be selected on the basis of its functionality fit with the business requirements. No other consideration is even close to as important.

Software Selection

  • Want Help with Software Selection for your Business?

    It is difficult for most companies to perform software selection without outside advice. It is impossible to obtain honest software selection support from consulting companies. We offer expert and unbiased remote software selection support.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

Montgomery, Nigel. Ganly, Denise. How to Determine If a Two-Tier ERP Suite Strategy Is Right for You. Gartner. October 24 2012

Project Planning Package – Infor Lawson

How it Works

Fill out the form below for your project planning estimate. The form does not have a “beginning or end.” The form is constantly calculating, so feel free to make constant changes and the application will auto-adjust.

Details

  • Vendor Name: Infor (See for Vendor Rating)
  • Software Category: Big ERP
  • Company Headquarters: 641 Avenue of the Americas, New York, NY 10011
  • Site: http://www.infor.com
  • Contact number: 646.336.1700
  • Delivery Mechanism: On Premises

Finished With Your Analysis?

Once complete, go to this link to see other analytical products for Infor Lawson.

References

Risk Book

Software RiskRethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Better Managing Software Risk

The software implementation is risky business and success is not a certainty. But you can reduce risk with the strategies in this book. Undertaking software selection and implementation without approximating the project’s risk is a poor way to make decisions about either projects or software. But that’s the way many companies do business, even though 50 percent of IT implementations are deemed failures.

Finding What Works and What Doesn’t

In this book, you will review the strategies commonly used by most companies for mitigating software project risk–and learn why these plans don’t work–and then acquire practical and realistic strategies that will help you to maximize success on your software implementation.

Chapters

Chapter 1: Introduction
Chapter 2: Enterprise Software Risk Management
Chapter 3: The Basics of Enterprise Software Risk Management
Chapter 4: Understanding the Enterprise Software Market
Chapter 5: Software Sell-ability versus Implementability
Chapter 6: Selecting the Right IT Consultant
Chapter 7: How to Use the Reports of Analysts Like Gartner
Chapter 8: How to Interpret Vendor-Provided Information to Reduce Project Risk
Chapter 9: Evaluating Implementation Preparedness
Chapter 10: Using TCO for Decision Making
Chapter 11: The Software Decisions’ Risk Component Model

Software Category Analysis – Big ERP

Introduction

ERP implementations are high-risk affairs. Much of the ERP functionality difficult to implement, many of the vendors are offering dated technology – that if it were not for how the word “legacy” is controlled by software vendors and consulting companies would be called legacy. (Hint, legacy is a term of propaganda, and can only every be used to label a system one wishes to replace – never to a vendor’s software.) One of the major complaints of ERP clients is that their ERP vendors have stagnated while buyers keep paying high yearly service charges.

The unfortunate, if underreported fact is that many years after most ERP systems go live, it is difficult to demonstrate the return on investments from them. This story is of course worse if buyers buy expensive ERP systems. Of all ERP categories, tier 1 ERP are the worst values – and the common logic presented that only tier ERP systems have the functionality for the complexities of large companies is not true. The actual costs of ERP systems are covered in our TCO Estimation for ERP, as well as in our Solution Architecture Packages. Several up and coming ERP vendors are far more competitive along all the decision making criteria in which we measure and score ERP software, and the fact that it is now easy to find stand alone financial applications that are superior to the financial modules in any ERP system is taking the wind out of the shopworn “ERP is necessary” argument. Furthermore, some of the best applications are – while not the least expensive, are towards the less expensive end of the spectrum.

What the Research Says About Risk Implications of ERP

ERP implementations are generally known as risky, but this does not seem to influence the software selection process. This is unfortunate as the risks vary depending upon the application selected. Only rarely is the actual success rate of ERP implementations quoted. According to the publication The Critical Success Factors for ERP Implementation: An Organizational Fit Perspective, the success rate is roughly 25 percent. So, according to this source, 75 percent of ERP implementations are considered failures. But quoting just one study is misleading because the estimates are truly all over the map, as the following quotation attests.

“A study by the Standish Group estimates that 31 percent of projects are not successful (Kamhawi, 2007). Barker and Frolick (2003) suggest that 50 percent of ERP implementations are failures. Hong and Kim (2002) estimate a 75 percent failure rate, while Scott and Vessey (2002) estimates failure rates as high as 90 percent. Different statistics for the success or failure of ERP projects have been offered by researchers. In addition Bradford and Sandy (2002) reported that 57 percent of the companies they interviewed had not attempted to assess the performance of their ERP systems owing to a lack of empirically effective evaluation models.” – Measures of Success in Project Implementing Enterprise Resource Planning

One of the most ridiculous arguments we have heard is that (particularly from the tier 1 ERP vendors) ERP implementations are so difficult that companies that manage to pull them off gain a competitive advantage over other companies. In this incarnation, the ERP system is presented as something akin to the Ironman Triathlon where the implementing company proves its toughness by running the gauntlet. It is an interesting analogy, which as far as we aware is unique in the field of enterprise software where ease of implementation—rather than difficulty of implementation—is traditionally considered a virtue. And in fact, the argument is edging extremely close to circular reasoning: ERP is virtuous because it is difficult to do, and it is difficult to do because it is virtuous. It is also the only time we can recall that a high failure rate is presented as a positive attribute of a software category.

ERP as “Just Another Application”

This transition of ERP from the center of the IT solution architecture is almost never written about or discussed (one of the few exceptions is in an article from Tech Target, who’s reference is show below) however, ERP is not nearly as influential or critical to the IT solution architecture as it once was. After bringing about a period of relative centralization (we say relative, because many of the “legacy” systems that ERP was supposed to eliminate never went away because ERP systems lacked the functionality to replace them), solution architecture has decentralized. And every year the scope of ERP shrinks and companies bring up less ERP functionality, and look for better functionality outside of ERP systems.  In fact, CRM has been forecasted by Forbes to surpass ERP in revenues by the year 2017. This is the first time that any other category of enterprise software has even come close to ERP sales since ERP was introduced back in the 1980s.

Interestingly even when this issue has been brought to the surface, such as with the Tech Target article, the coverage is notable for what is left out. Curiously, they quote Gartner about the future, the firm that coined the term “ERP” — and has historically been one of the big cheerleaders on big ERP. Gartner was one of the pied pipers that lead companies to these bad big ERP purchases on the basis of what has turned out to lack a strategic and technological foundation. This leads to the next section. The question being which of the ERP vendors can effectively support the new reality of ERP not longer being the center of the solution architecture.

Finding Flexible ERP Software Vendors

Buyers should look at ERP systems as an a la carte menu. In our Solution Architecture Packages we compare the TCO of multiple alternatives.

Buyers have all types of options; each should be evaluated on the basis of its TCO as well as the functionality match to the buyer’s requirements. These estimators will be quite a surprise to the vast majority of buyers, because our analysis shows that the only losing strategy is to choosing the recommendation of all the major consulting companies and center their solution architecture on a tier 1 ERP system. Not doing this means the buyer comes out with a far lower overall TCO and with far better functionality – resulting in a much higher ROI.

Some ERP software vendors are comfortable not being the center of the IT solution architecture and other are not. This indisputable final outcome of ERP is the opposite conclusion to a the ERP trend as predicted by every authority on ERP (primarily SAP and Oracle, consulting companies, IT analysts). They were supposed to be the experts on this topic, but they all had a major flaw – they all had a financial bias, making their forecasts invalid. See our Software Selection Packages to learn all about the effects of financial bias on forecasting. This makes dealing with SAP and Oracle in fact dangerous for buyers because they are proposing the continuation of a strategy that calls for a large and expensive ERP system, which is the center of the IT solution architecture continually consuming a large percent of the IT budget.

This strategy has never worked as the evidence from research that has been performed shows a negative return on investment from larger ERP solutions. (Tip: any entity that proposes that ERP has a positive ROI, simply ask them to produce the independent research study) The evaluation of the research on ERP systems is explained in fine detail in the SCM Focus Press book The Real Story Behind ERP: Separating Fact from Fiction.

On the other hand, other vendors, examples being ProcessPro, Rootstock and ERPNext never operated from this point of view, and are happy to have their system implemented as part of any solution architecture strategy desired by their customers – they are not practicing account control by selling an ERP system. Instead they have always considered themselves providing low cost ERP, and just one system as part of an overall ecology than can be the center or any fit with their customer’s solution architecture that the customer desires. These are the types of ERP vendors that buyers should seek out, as they provide not only the best software in ERP, but also the best ability to partner with, rather than seeking to control their customers. Another major advantage of purchasing from a software vendor that only makes ERP software is that buyers will not relentlessly pitched other products by these software vendors sales reps.

Tier 1 ERP is in the Price Gouging Phase

Oracle and SAP have put very little back into their tier 1 ERP products for roughly 15 years, and as a result the applications are seriously dated. However, their support costs continually increase. This is the negative consequence of software “lock in.” In fact it is estimated that Oracle receives up to a 90% margin on its ERP service contracts. Many buyers have felt the pinch as the following quotation suggests.

“When you put in a $40 million or $50 million ERP package, it’s difficult to have an exit strategy without causing a lot of pain. They know that, and so they increase our costs every year,” he says. Therefore, Steinour says he would like to lay the groundwork for a more strategic approach.” – ComputerWorld

If buyers could wipe the slate clean, we have concluded it is unlikely SAP or Oracle could rebook a high fraction of the customers it currently is receiving ERP support revenues from. Interestingly, the fact that one makes oneself extremely susceptible to the power of their supplier when they concentrate their purchases with a single software vendor was not brought up by any of the supposed experts that were promoters for big ERP. Hold you breath, because one of the major logics presented by ERP vendors, consulting companies and IT analysts was that ERP systems would reduce IT costs.

The Growth of SaaS ERP

Something, which we see as a strong future growth trend, is SaaS ERP. Consulting companies and non-SaaS software vendors have been proposing that SaaS should not happen for “core” applications, however their arguments are simply conveniently connected back to their financial models. SaaS for ERP is bad for them, but it is a good idea for their clients. It’s just that they don’t have SaaS applications to sell. Because they have no SaaS applications, to sell, their advice to customers is to only use SaaS for “non core” software like CRM.

SaaS ERP should begin at the smaller end of the company size spectrum and move its way up. SaaS solutions are particularly attractive for smaller companies and even for midsized companies that have underperforming tier 2 ERP applications. There are several very good alternatives. One of our favorites being ERPNext. These systems are easy for both experienced and novices to use because the business process is clearly explained right in the application.

Software Category Summary

The complete story on ERP is quite clear, it is simply not communicated to buyers because it’s more profitable to promote big ERP, rather than communicating accurate information on the topic. ERP systems never provided much of an ROI to buyers, and our research provides a logic for why when accounted for correctly, the ROI for most ERP systems has actually been negative. This research cannot be presented in a few paragraphs, but is presented in its complete form in the SCM Focus Press book, The Real Story Behind ERP: Seprating Fact from Fiction. However, buyers don’t have to accept negative ROI ERP implementations, and the best way to control for this is to select better and less expensive ERP systems, which have better functionality, can be implemented more quickly, and are not so difficult to integrate to other systems that they create negative externalities on the overall solution architecture. There are several good applications to choose from that meet all of these criteria.

MUFI Rating & Risk

See the MUFI Ratings & Risk below for all of the applications we cover.

Vendor NameApplication
Big ERP
SAPMUFI Rating & Risk – SAP ECC
OracleMUFI Rating & Risk – JD Edwards EnterpriseOne
EpicorMUFI Rating & Risk – Epicor ERP
SageMUFI Rating & Risk – Sage X3
InforMUFI Rating & Risk – Infor Lawson
Small and Medium ERP
SAPMUFI Rating & Risk – SAP Business One
OracleMUFI Rating & Risk – JD Edwards World
ProcessProMUFI Rating & Risk – ProcessPro
RootstockMUFI Rating & Risk – Rootstock
ERPNextMUFI Rating & Risk – ERPNext
OpenERPMUFI Rating & Risk – OpenERP
MicrosoftMUFI Rating & Risk – Microsoft Dynamics AX
Financial Applications
IntacctMUFI Rating & Risk – Intacct
IntuitMUFI Rating & Risk – Intuit Quickbooks Enterprise Solutions
FinancialForceMUFI Rating & Risk – FinancialForce
NetSuiteMUFI Rating & Risk – NetSuite OneWorld
PLM
SAPMUFI Rating & Risk – SAP PLM
Arena SolutionsMUFI Rating & Risk – Arena Solutions Arena PLM
Hamilton GrantMUFI Rating & Risk – Hamilton Grant Recipe Management
Demand Planning
SAPMUFI Rating & Risk – SAP APO DP
TableauMUFI Rating & Risk – Tableau (Forecasting)
Business Forecast SystemsMUFI Rating & Risk – Forecast Pro TRAK
Demand WorksMUFI Rating & Risk – Demand Works Smoothie
JDAMUFI Rating & Risk – JDA Demand Management
ToolsGroupMUFI Rating & Risk – ToolsGroup SO99 (Forecasting)
Supply Planning
SAPMUFI Rating & Risk – SAP SNP
SAPMUFI Rating & Risk – SAP SmartOps
ToolsGroupMUFI Rating & Risk – ToolsGroup SO99 (Supply Planning)
Demand WorksMUFI Rating & Risk – Demand Works Smoothie SP
PlanetTogetherMUFI Rating & Risk – PlanetTogether Galaxy APS Superplant
Production Planning
SAPMUFI Rating & Risk – SAP APO PP/DS
DelfoiMUFI Rating & Risk – Delfoi Planner
PreactorMUFI Rating & Risk – Preactor
AspenTechMUFI Rating & Risk – AspenTech AspenOne
PlanetTogetherMUFI Rating & Risk – PlanetTogether Galaxy APS
BI Heavy
SAPMUFI Rating & Risk – SAP BI/BW
SAPMUFI Rating & Risk – SAP Business Objects
OracleMUFI Rating & Risk – Oracle BI
SASMUFI Rating & Risk – SAS BI
MicroStrategyMUFI Rating & Risk – MicroStrategy
IBMMUFI Rating & Risk – IBM Cognos
TeradataMUFI Rating & Risk – Teradata
ActuateMUFI Rating & Risk – Actuate ActuateOne
BI Light
SAPMUFI Rating & Risk – SAP Crystal Reports
QlikTechMUFI Rating & Risk – QlikTech QlikView
TableauMUFI Rating & Risk – Tableau (BI)
CRM
SAPMUFI Rating & Risk – SAP CRM
OracleMUFI Rating & Risk – Oracle RightNow
OracleMUFI Rating & Risk – Oracle CRM On Demand
InforMUFI Rating & Risk – Infor Epiphany
Base CRMMUFI Rating & Risk – Base CRM
SalesforceMUFI Rating & Risk – Salesforce Enterprise
SugarCRMMUFI Rating & Risk – SugarCRM
MicrosoftMUFI Rating & Risk – Microsoft Dynamics CRM
NetSuiteMUFI Rating & Risk – NetSuite CRM

References

http://searchfinancialapplications.techtarget.com/feature/Is-ERP-technology-going-nowhere-or-everywhere