ERP

I watched Dave Duffield and Aneel Bhusri kick off this year’s Workday Rising conference yesterday morning, and their stuff was spectacular.  While unfortunately I can’t give you all the cool details (I’ll let them break the hot news, and trust me, there’s some good stuff coming), I’ll take a few moments and share some high-level notes.

Dave Duffield

• Stressed keeping Workday’s commitments despite economic slowdown.  Workday continues to invest and hire.
• Drew parallel between the emergence of SaaS/on-demand and the client/server revolution that pushed big iron away from computing’s leading edge.
• Spoke about how the SaaS business model is particularly relevant in today economy.  This comes from the obvious cost savings, but also the not-so-obvious shifting of datacenter and IT operations to specialized companies.
• From a study with current customers, showed data illustrating that Workday is 50% less expensive versus legacy on-premise applications.
• 67 customers and rising steadily.
• All four updates this year have been delivered on-time to customer population.
• Reasons Dave is optimistic (but realistic) about 2009: (1) shift to SaaS gaining momentum; (2) Workday is financially stable; (3) dedicated focus on customers’ continued success; (4) experienced management team; and finally (5) customers, who are the best salespeople Workday has (seems Workday truly understands the power of word-of-mouth).

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The Story

As we approach the year-end preparation season, we’re getting asked a lot about how to close the gap in 1099 reporting compliance.  From what we can understand, there are several factors at play that you need to know about and that might re-prioritize 1099 reporting from whatever system you’re using.

More specifically, the landscape looks a little like this: the IRS is putting stronger enforcement efforts in place to close the compliance delta between self-employed/independent contractors (who, the IRS suggests, only report ~80% of their income) and W2-earning employees.  This will be done by increasing enforcement of 1099 information reporting rules.

The IRS has been hiring aggressively after a relatively tight lockdown on new personnel, and we understand that some of these people will be 1099 auditors.  While additional auditors really doesn’t mean much in the larger IRS scheme, it does serve as a call to action to 1099 workers and their associated employers.

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What is the cost of a fumbled upgrade?  For J. Crew it was $3MM in unanticipated costs which, according to J. Crew, contributed to their recently announced earnings miss of 4 cents a share.   How did Wall Street respond?  Typical overcorrection seems to be the response with shares trading 15% down in after hour activity.

Ben Worthen highlighted J. Crew’s stumble in his business technology blog in the Wall Street Journal, mentioning that J. Crew isn’t the first company to blame poor earnings results on technology.

There was a wave of businesses blaming poor results on tech-projects-gone-bad in the early part of the decade. We haven’t seen it much lately, though.

One difference: Nike, Hershey and others that had problems in the past went out of their way to blame the tech vendor. J. Crew never once tried to pass the buck. The company didn’t respond to our requests for comment, which also means we don’t know which company sold the offending technology. You can search the Web for “J. Crew” and “systems” and find the names of several companies J. Crew buys software from, but there’s not enough evidence for us to point a finger.

What strikes a chord in me in the report is that Worthen assumes that the poor upgrade is the result of “offending technology.”  Our experience however, leads me to be much more suspicious of the implementation/upgrade approach, executive sponsorship, project budget and timeline constraints, and ultimately the implementation team itself.  All too often we see companies approach an upgrade as a routine activity that can be performed easily by their staff (all while their staff stays on top of their regular day-to-day responsibilities).   Supplemental staff is reluctantly brought in via simple commodity broker staffing firms that can only provide bodies and not real experience from both a people and process standpoint.

Obviously, this doesn’t fly too often.

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Businessweek recently published a surprisingly negative article about SaaS, saying that its hype can be largely undeserved for a number of reasons.  Now, I like BS-calling as much as the next guy (maybe a bit more, actually), but I found Gene Marks’s reasoning to be too generalized and all-encompassing.

Marks says:

Myth 1: SaaS is cheaper. No, it’s not. In fact, it can be a lot more expensive. Most service providers charge each user by the month. If you’ve got 10 people using a product, and they’re costing you 50 bucks a person each a month, that’s $6,000 a year. Most in-house systems have one-time licensing fees and optional support agreements. Spreading out the payments is nothing new, either; tons of software leasing companies will finance your purchase and spread out monthly payments over time. When you look at SaaS over the long term, it’s usually not a cheaper option.

Considering that on-premise enterprise software for a large firm can easily run into the millions just for new license acquisition, this argument pales quickly.  And support (maintenance) agreements for such systems are not “optional” — they’re mandatory.  Seeing how I’ve seen annual maintenance bills upwards of $400K/year, we’re not talking spare change, either.

And really — let’s not get into the costs associated with new hardware investments or modifications to existing infrastructure.  Let’s not get into new servers, new application security policies, network provisioning, desktop client modifications, and permissions.  Let’s not get into end-user performance issues and the time and expense needed to troubleshoot and remedy them.  And let’s also not get into aggregate IT staff allocations on a man-hour basis, because the numbers get crazy quickly.  Suffice to say that all of these get figured into the equation when trying to calculate the TCO of on-premise enterprise software.

SaaS may not be cheap, but it certainly might be cheaper.  And there is value in having fewer on-premise headaches with trashed servers, corrupt databases, and angry end users that the internal helpdesk must deal with.  It becomes an intangible quality-of-life discussion for the enterprise.

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In our recent newsletter, two of our senior principal consultants wrote a quick bit about the differences in PeopleSoft invoice matching functionality from 8.9 to 9.0.  We get asked about this a lot, and for most users, the differences can be somewhat arcane.  Because of this, I’d like to share the article.

Differences in PeopleSoft Invoice Matching from 8.9 to 9.0: A High-level View

by April Black and Jack Kochie, Sr. Principal Consultants

From PeopleSoft 8.9 to 9.0, some of the invoice matching and processing rules changed significantly, and we find many of our clients don’t know about the changes in any sort of detail.  At a high-level, here are the biggest-hitting changes:

• 9.0 includes all features of prior releases
• Expanded document association included (e.g. receipt selection)
• Expanded rules engine (contexts: summary, tolerance, global), which provide:
  • More flexibility
  • Flow control (allows matching – i.e. check all or check first)
  • Summary rules
  • Rule tolerances
• Auto-matching with debit memos
• Configurable matching workbench
• Expanded workflow

As for what we get asked about steadily, it’s the intricacies of the rules engine.

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Phil Wainewright:

Enterprise software giant SAP has lost one of its brightest software-as-a-service stars to SaaS titan Salesforce.com, I can exclusively reveal. Steve Lucas, who spearheaded the development of SaaS at Business Objects, acquired by SAP last year, left the company at the end of June and began work straight away at Salesforce.com, where his job title is (bear with me, it’s quite long): senior vice-president of platform marketing, AppExchange and Force.com.

Salesforce.com arguably has the most impressive collective vision of where SaaS will go from here.  This is particularly validated by all-star pickups like this one, as well as Erin TenWolde, who also recently started at SFDC.

It will be interesting to see how SAP adjusts its SaaS roadmap in the wake of Lucas’s leaving.  If this is true:

Lucas is proud of what has been achieved at Business Objects, but he said that SAP’s ability to make broader progress with SaaS is stymied by the lack of a central vision for the model. “SAP doesn’t have a SaaS strategy,” he told me. “They don’t have a single piece of paper that states what their SaaS strategy is.”

…then SAP might be rudderless in terms of SaaS for quite some time.