Does your favourite START-UP need an ERP to become SMART-UP?

Most start-ups start lean with big ideas but small teams. Also, since most of the successful start-ups are based on innovation and industry disruption, the focus is always on planning, execution and launching the idea instead of starting to think about keeping track of capital raised from multiple investors and reporting operating results to those investors.  Technology is THE most important enabler for a start-up today and cash management is one of the less liked functions in most techies. They normally hate to be involved in financial management and would rather spend their whole time on fine tuning the ideas, finding buyers and doing software development to launch their ideas. An ERP is not only about accounting or managing finances but for a start-up the challenges start from here. Some of the challenges related to handling of finances and accounting can be:

• Compliance with complex accounting rules
• Handling deferred sales & revenue generation
• Chronological recording of financial transactions including investments
• Potentially rogue team members stealing data from their machines
• Long-time taken by team to determine revenue for a month
• Inability to accept money from customer in case of payment through credit card

Well, this article is not only talking about F&A challenges that Start-ups face. If we start talking about the challenges, they will be much more in the areas other than F&A and will present a much stronger case of having an ERP for a Start-up organization so that they start in an organized manner and are equipped to handle larger size of operations as and when they grow. It is more about the impact an ERP can make to a start-up to make it a Smart-up as fast as possible.

I know a founder (Ashish – name changed on request) of a start-up who started their business around 18 months back and are doing pretty well till now. Having acquired initial funding for their venture, they started growing and within a year, they reached a top-line of $6.5 Million. Ashish shares with me that they took an early decision to go for a cloud based ERP (believe me there are large number of ERP products available today which are being marketed as only for start-up and GOD some of them are too good) and feel pretty good about that. Ashish told me that small businesses like them are benefitting from ERP because of its ability to manage flow of information. The decisions that they were able to take quite early in their cycle were all because of ERP they selected and implemented (unlike traditional ERPs, these new crop of ERPs for start-ups take 4-6 weeks to implement bringing lot of value).  Streamlining back-office (procurement, supply chain, inventory, finance, human resources etc.) helped them focus on sales, improving market reach and measure customer satisfaction. You will be surprised to know that they doubled their revenue this year and in last six months, they have already crossed $7 Million revenue already and Ashish gives lot of credit to the ERP they implemented.

 When I asked him what he looked in the ERP product before deciding, he gracefully shared good insights such as:

 

• Availability on public cloud – mostly software as a service rather than infrastructure as a service
• Ability of the product vendor to guarantee security of data
• Cost Effective, easy to use and good support model (24X7)
• Ability to meet industry specific needs
• Own analytics dashboards
• Extent of availability on mobile devices
• Easy licensing norms & availability of exit clauses (with data return)
• Fast implementation period
• Ability to integrate with host of other systems

This is not an exhaustive list but since it has come from a real user (Ashish also acts as the CIO for their start-up), it has lot of value.

 

It would be nice to hear more comments and voices from other start-ups and ERP evangelists on whether ERP plays a definitive role in growth of a START-UP into a SMART-UP or it is just another software which brings some value to any company, be it start-up or not. Shoot!!

ERP Trend: Integrate clouds based applications with on premise applications

Clouds are here to say as they offer quite a bounty of benefits over on-premise enterprise applications. Cash is and will remain as one of the scarce resources with the organizations in coming days and that will remain as one of the major contributory factors to encourage these organizations towards clouds based applications. While moving all the existing applications from on premise model to cloud based SaaS model might not make sense for these organizations as the investment has already been made in licenses, hardware and internal team’s development, it makes perfect sense to go for the SaaS model for the new best of breed applications or business intelligence systems. This means that now the CIOs need to take care of two architecture models separately which is not a big issue but the major pain is that these systems are not on talking terms.

The need today is to have seamless integration between the on-premise applications and the cloud based SaaS applications. While there's a noticeable increase in application deployment in the cloud, much of the integration between on-premises and cloud is done in a point-to-point manner. Some of the connections that cloud based providers like NetSuite are now making are cloud solutions (e.g., Salesforce.com, NetSuite or OpenAir products) connecting to on-premise products. That’s a bit more challenging than the old-fashioned integration of two on-premise applications together. Those static ‘interfaces’ were gold to systems integrators. Those ‘interfaces’ consumed a lot of implementation time and, once set and tested, were hoped to last the life of the application. They rarely did as one application or another would get an upgrade that changed the interface needs. So customers and their vendors need to rethink their integration strategies and remove the artificial barriers between internal integration and B2B integration, since the hybrid deployment model will be a reality for the majority of large companies.

One of the best practices is best practice is to harmonize the Information architecture of the SaaS and on-premise applications and make sure the data formats are aligned or translated properly. One might have to deploy an MDM hub. Before that, one should verify that key processes and transactions will still work, end to end, over the distributed Cloud applications. Aggregation Cloud brokers may be used to combine multiple existing services into one, taking the burden of data and process integration from the client. A broker means both a provider and a distribution technology. The broker would also take care of revenue sharing between Cloud Providers if any. For integration between multiple Clouds and on-premise applications, a clean SOA architecture simply eliminates the internal integration fur-ball spreading in the Clouds. For a single application, outsourcing to SaaS without SOA may be still all right.

Let us look at what Open Connect is doing. It is not only connecting these very dynamic cloud based apps to on-premise apps, it is also doing cloud-to-cloud connectivity. Imagine your accounting application running on one firm’s cloud environment, interacting with another cloud’s CRM solution that’s also interacting with another services automation solution on a third cloud environment. Now, to make it more complex, imagine that all three of those cloud applications are changing, simultaneously and continuously. Each system will need the awareness of the other solution’s changes. Interfaces will become fluid and very dynamic. Finally, consider that the user may be unaware that these background changes are even occurring. Now that’s a big jump in integration. That’s a jump the on-premise vendors can’t complete.

The questions is that when many on-premise vendors cannot even create a multi-tenant version of their product line (most can only offer hosting services), how can they deliver the level of cloud-to-cloud integration that the market will demand? This means that the next ERP solution that you are evaluating, you should check for two new features:

• The solution can do on-premise to on-premise, on-premise to cloud, and, cloud-to-cloud integration
• The solution can, independent of end-user interaction, dynamically update interfaces and system-to-system integration

Check them out for sure!

6PWXGU8TT4X7

Leverage Clouds and Best of Breed Solutions to Improve Innovation

This week, I wrote for Coupa Software on the same topic and wanted to share the same with my readers. The topic focuses on how the features of cloud computing translate into actual improvements in tackling day to day challenges for the client organizations. It also highlights that how clouds are a big facilitator in improving your organizational innovative abilities.

Read on the full article at http://www.coupa.com/general/leverage-clouds-and-best-of-breed-solutions-to-improve-innovation/

7 Benefits that will help you bringing clouds down to earth

Enterprise applications has started moving to a new concept of cloud computing more than a couple of years back and though unfortunately this could not pick up immediately after come to fore, due to recession but as the economic situation is becoming better, they are sure to grab a large pie of enterprise applications. The current scenario is such that the top management is still insisting on justifying new IT investments in terms of return on investment and total cost of ownership and that is completely fare. We still have to weigh a proposed solution’s advantages and disadvantages and convert them, where possible, into quantifiable benefits and costs and in the process need to evaluate on premise application services versus cloud based application services.

I am a big fan of cloud computing and one of my strongest feelings is that the time is not far when all on premise applications will start moving to clouds and will in turn bring the clouds down to earth. I am not saying that clouds only have advantages and are a sure shot case for everybody to start moving towards them as soon as possible. Looking at the current scenario, there seems to be more than handful advantages that on premise applications hold over clouds so it is a fair game where each technology style will strive for improvement and evolution in next years (or shall I say quarters?). Let me list down the major advantages that cloud offer over on-premise or applications:

• No Capex: The most obvious one is zero capital expenditure in clouds as compared to heavy capex in on-premise applications. With clouds you pay a monthly fee to the service provider and you need not buy expensive servers, earmark space for keeping the servers, hire database administrators to maintain servers etc.
• Move from License to Subscription: With clouds, you do not need to buy expensive licenses from enterprise product vendors as it is normally done by your service provider and hence the ROI increases for you. It is seen multiple times that even after buying licensing for multiple modules, organizations are not able to use all of them due to multiple reasons and that license cost becomes an overhead for the organization. Whereas, in clouds you subscribe the service as you subscribe to a magazine or a cell phone service which can be started anytime and can be stopped anytime
• Flexibility of change: How many times, it happened that you thought of shifting to another ERP because it offered a few functionalities that have become critical to your business but these are not available in your current ERP? In my experience, I have seen this more often than not but since it is not easy & cost economical to move towards the other ERP, we keep on sticking to the existing one and instead work with the product vendor for fixing the issues which either include customization or workarounds or changing the process. Sometimes, this takes you away from the best practices in those areas and hence reduces the organizational efficiencies. Clouds ensure that you do not have to worry about this any more and if you want to shift to a new and better product from another vendor, just close your subscription and move to the new one almost immediately
• Full functionality available: Unlike on-premise application where you need to buy separate licenses for modules and functionalities which you want to use, you get the full functionality available to you by most service providers in case of clouds. Then, it does not depend on whether you have just 20 users or 200 users. Not only this, you organizational size does not decide the level of scalability, reliability and the performance. You get the same features. You get the same features and the same global solution that the larger organizations get
• More data security: Yes, contrary to the myth that your data will not be safe in case of clouds, it is in much more safer hands most of the times. All organizations are not experts in safeguarding their data. If you think that since it is sitting in your servers, it is safer than sitting in somebody else’s servers – you might be wrong. In today’s world when hacking is not a new word, data security and storage expertise is something that is best left at the experts. The on demand service providers ensure that they follows the highest safety standards on data security and storage and hence you can rest easier knowing that your data is in the cloud and well protected
• No support infrastructure required: Normally, after ERP implementation at your premise, you would engage a product support team that will help resolving the bugs in the application and helps users to get over them. This incurs lot of cost and often it is difficult to retain the talent in this high demand category. If you engage a vendor’s team for this purpose, even then you will to bear huge cost in this area. In the case of clouds, the service provider will not only provide you all the functionality but also will support your application so that the operations are seamless and without break. Your expenditure on business continuity and disaster recovery moves to the service providers and you just a monthly fee to them for ensuring this for you. You will be least worried about any unscheduled outages that can hamper your business as major service providers are experts in managing these on their own
• Ease of implementation: On-premise implementations take long time and involve the business as well as IT resources completely for a substantial period. In addition, the customizations those creep in after the discussions on the requirements and subsequent fit gap analysis, consume decent size of resources. With clouds, the level of difficulty as well as period of deployment is reduced considerably and the main thing is that the pain that business goes through while on-premise application implementation is missing in case of on demand application based on clouds.

The list is not exhaustive and I am sure that entry of world class service providers in this area will bring more and more benefits and the clouds will come down to earth.