Category: Packaged Services
August 14th, 2008
SAP: Transparent SME 'deep dive'
Following it’s Business Objects Influencer Summit, SAP held a small and medium enterprise “deep dive” event for bloggers, analysts, and press. Both SAP’s strategy and the company’s openness were impressive.
SME portfolio strategy. Jeff Stiles, SAP’s Senior Vice President for SAP SME Solution Marketing, articulated a coherent product offering that segments the market along several dimensions:
- Customer size
- Business and organizational complexity
- Growth rate and trajectory
- IT infrastructure capability
- Preference for on-premise vs. software as a service (SaaS) solutions
In a follow-up email, Jeff commented:
The other thing that should be considered is how an organization competes (do they need to deeply customize the solution to fit their unique needs?)
SAP’s offering to the SME market consists of the following:
Business One: SAP’s product for “small businesses that have outgrown their accounting only applications.” Appropriate customers will generally be under 100 employees with 30 users.
Business byDesign: SaaS offering for “fast-growing midsize companies, with limited software & systems, that don’t want to build a large IT backbone.” While the target market for byDesign appears to overlap Business One and All-in-One, the hosted aspect is one strong point of differentiation.
All-in-One: Aimed at “mid-size companies looking for a solution that meets their demanding industry requirements and helps grow and scale the business.” This product can handle much of the business complexity addressed by SAP’s large enterprise suite, but is designed for smaller companies.
The following graphic summarizes these points (adapted from an SAP-supplied slide):
The clarity and quality of SAP’s SME strategy has come a long way over the past several years. As Dennis Howlett commented on Business One:
My past experience with BusinessOne is of a solution that was relatively stagnant in the market, of less than competitive functionality and suffering from performance issues. That was two years ago. Today, the product is improved from every angle. Performance has been beefed up significantly, quality has improved but most important, smart VARs have figured the current iteration provides a genuinely viable alternative to Microsoft products.
Implementation innovations. From a project failures perspective, I want to highlight the SAP Best Practices component of All-in-One. Rooted in work started in the mid-1990s by SAP’s Simplification Group, SAP Best Practices advances the implementation state of the art.
Here’s SAP’s slide on this topic:
In my view, productizing knowledge represents one of the best opportunities for reducing software implementation time and expense. On a directly related note, I also believe that packaged services will ultimately form the basis for all but the most complex implementation consulting efforts across the enterprise software industry.
Software vendors and consultants can improve implementation efficiency through standardized implementation road maps, structured pre-configuration analysis, and consistent information sharing from pre-sales through go-live. However, given the organizational complexity around selling and deploying enterprise software, combined with technical configuration challenges, achieving these goals has been elusive.
It’s worth mentioning that some third-party consultants and system integrators resist implementation efficiency because it reduces billable hours. Although many consultants hate failure, I believe third-party billing churn continues to be consulting’s dirty little secret.
Although I haven’t spoken with SAP customers about specific Best Practices-based implementations, both concept and presentation pass the smell test. [Disclosure: For many years, starting in 1996, my company was deeply involved in developing the first generations of SAP's rapid implementation tools. I have no such relationship with SAP at present.]
What’s missing. While SAP’s small and medium enterprise positioning has become crisper over time, several points remain confusing:
- The positioning still needs additional focus and clarification. For example, overlaps between byDesign and and the other products need further definition. In addition, the line between All-in-One and the larger Business Suite product remains somewhat fuzzy.
- SAP’s statement of long-term commitment to byDesign needs reinforcement. Changes in byDesign’s product release strategy, combined with the company’s historical large enterprise focus, could make potential customers skittish about adopting this offering. If SAP is serious about byDesign, it must put a definite stake in the ground and make clear its intention to remain solidly behind this product for the long haul.
Transparency and openness. The SME deep dive raises the bar on communications by enterprise software vendors. Led by Jeff Stiles, SAP executives, partners, and customers accepted challenging questions from the small audience (30 people). To his credit, Jeff allowed the full-day schedule to drift based on audience interest in particular topics. While many of the questions were tough and analytical, the answers were straightforward and reflected confidence in the offerings.
SAP blogging. Many of the day’s most insightful questions came from Enterprise Irregulars attending as guests of SAP’s blogger outreach initiative: Vinnie Mirchandani, Dennis Howlett, Brian Sommer, Sandy Kemsley, and myself. Run by SAP’s Mike Prosceno and Stacey Fish, the program offers bloggers unprecedented access to SAP senior executives and information. With this program, SAP sets the enterprise software standard in providing transparency to bloggers.
Note to other enterprise software companies: transparency is a sign of confidence and demonstrates you have nothing to hide. Let’s see you step up and meet the openness challenge.
July 31st, 2007
Open- and Closed-Source Services Convergence
Recently, Peachtree Pro Accounting was given away for free, making this commercial software look open source, from a financial acquisition perspective.
Against this backdrop, I read comments by Roberto Galoppini, where he raises the issues of services in the open source world. Roberto makes this comment:
Open Source franchising is aimed at delivering to the market IT basic services using OSS, with a fixed-time fixed-price methodology meeting clearly defined performance criteria (SLA).
I see no difference whatsoever between open source services and traditional consulting services.
Once the license is obtained, whether through payment or free, the software must be deployed. At that point, the key issue becomes integrating the new software into an existing technical and business infrastructure.
While I agree with Roberto that fixed-price services are the right model, it’s not specifically an open source issue.
May 18th, 2007
Packaged Services in a Complex Environment
I’ve written numerous times about how packaged (or productized) services and can improve alignment between the interests of consultants and their clients. The New York Times reports that the packaged approach is now being tested by a hospital group in Pennsylvania. From the article:
The group, Geisinger Health System, has overhauled its approach to surgery. And taking a cue from the makers of television sets, washing machines and consumer products, Geisinger essentially guarantees its workmanship, charging a flat fee that includes 90 days of follow-up treatment.
Even if a patient suffers complications or has to come back to the hospital, Geisinger promises not to send the insurer another bill.
————————————-
Geisinger stands out as a group that has transformed the way it delivers care, said Dr. Donald M. Berwick, the chief executive of Institute for Healthcare Improvement, a national nonprofit organization whose goal is better patient care.
In almost no other field would consumers tolerate the frequency of error that is common in medicine, Dr. Berwick said, and Geisinger has managed to reduce the rate significantly. “Getting everything right is really, really hard,” he said.
—————————————-
In reassessing how they perform bypass surgery, Geisinger doctors identified 40 essential steps. Then they devised procedures to ensure the steps would always be followed, regardless of which surgeon or which one of its three hospitals was involved.
Geisinger has created a true packaged service: fixed-price, defined scope, and strict timetable for service delivery. They even have a well-planned process methodology to ensure consistent and efficient execution across their multiple locations.
Next time a services vendor says your project is too complex to define a fixed price, ask whether it’s more complex than heart bypass surgery. If packaged services can successfully be applied to surgery, they can be applied to enterprise software implementations.
October 25th, 2006
Packaged Services in ERP
Following up on a post about IBM packaged services, Prashanth Rai from the CIO Weblog asked me the following question in an email:
Yes, it looks like IBM is trying to do something that could really turn into tangible benefit for services customers. This seems to be a step in the right direction, but we need to see how it successful it turns out and how well they execute on the idea.Quick question: Do you see this working in the ERP/Business application implementation space?
Enterprise customers are weary of open-ended, hourly consulting arrangements. These deals often favor the vendor, taking advantage of the human tendency to slide toward complacency and the status quo. In other words, open-ended contracts frequently lead to bigger and bigger projects, scope creep, and a host of other ills. These projects eventually find their way into this blog.
The ERP market has broken into two categories: large, often complex projects executed for big companies, and simpler engagements for the SME segment. At the high end, large implementation customers demand flexibility and are willing to pay for it. Translation: big budgets and open-ended purchase orders. This means happy days for consulting organizations, whether standalone or inside a software vendor. Except, we all know the good times stop rolling when these big projects fall apart and the lawsuits start flying.
Smaller software customers are far more price sensitive than larger ones: they demand more software bang for the buck or they won’t buy. Therefore, to succeed in the SME market, service vendors must carefully circumscribe their offerings, packaging services into straightforward, fixed-price bundles, with clear input requirements and well-defined deliverables.
Productizing services in this way reduces both cost and risk to the customer. Obviously, reduced cost to the customer likely means reduced income to the service provider. Therefore, increased efficiency becomes a key survival skill for service providers. Packaged services involve leveraging and reusing knowledge, which means being efficient.
Packaged, productized, and standardized services are here to stay in the enterprise software market, including in ERP. Forward-thinking services organizations are already moving in this direction, and dinosaurs who ignore the obvious will be left behind.
Click here to see other postings on packaged and productized services.
October 25th, 2006
More Productized Services from IBM
IBM is really pushing the packaged services. Here is information from CXOtoday.com:
Information Lifecycle Management (ILM) Service Product: It is designed to classify data according to age and relevance to a company’s business. It applies best practices conforming to regulatory guidelines. It enables clients strategically adopt storage optimization, virtualization and archiving practices in a cost-effective and policy based manner.
Implementation Services for Storage Service Product: will provide skills to clients for disk, tape, network attached storage and storage software products that can improve data backup and recovery capabilities, reduce risk of adopting new technology and decrease time to deploy.
Migration Services for Data Service Product- For assisting customers plan and execute data migration by leveraging tools and disciplines to help speed migration time and enhance quality.
Commenting on the newly announced service products, Paul Fried, vice-president, IBM Storage and Data Services said, “IBM is deploying deep infrastructure experience and industry-leading best practices, methods and tools to help clients win now in the battle against information overload. These new service products help businesses reduce risk, get information to users faster and maximize the value of their existing servers, software and applications.”
Note the comment from the IBM vice president: “These new service products reduce risk…”. It’s clear to me that IBM is responding to customer dissatisfaction with open-ended consulting contracts. As I have said before, if you are a services vendor, get on this train. Your long-term success depends on it.
October 13th, 2006
Reducing Consulting Costs with Productized Content
High-priced, open-ended consulting deals often fuel enterprise software implementation failures.
As a result, a trend has developed among consulting companies and software vendors to package services into pre-defined, discrete units, decreasing risk and lowering costs for the customer. As examples, see here (pre-configured content shipping with software), here (packaged services), and here (more packaged services).
Pertinent to this subject, Jason Busch at SpendMatters writes, “In the consulting and software worlds, the lure of the billable hour or high margin application deals has traditionally trumped a content- or information-based sale. But perhaps things are changing.” Jason goes on to describe a newly-announced partnership between software company Procuri and consulting company AT Kearney Procurement Solutions.
Procuri will include AT Kearney’s Market Solutions tool content as part of it’s software product offering. The Solutions tool includes “templates and guides for RFPs and auctions, and supply market reports and insights for a broad range of sourceable goods and services.” In other words, AT Kearney has packaged its knowledge into productized form, which can then be leveraged and reused across multiple client engagements.
Of course, there is a place for open-ended consulting arrangements, especially on complex and strategic projects taking place in a changing, dynamic environment. However, open billing arrangements potentially create an incentive for the vendor to rack up hours beyond what is required to get the job done. In contrast, fixed-fee engagements tend to shift project risk away from the customer to the consultant. In many cases, this risk shifting forces the vendor to be more efficient.
For customers, the allure is obvious: lower project risk combined with lower consulting costs.
October 10th, 2006
Productized Services - AT Kearny
Jason Busch at the SpendMatters blog has a great post describing AT Kearny’s procurement-related consulting offerings. His description of AT Kearny’s services is instructive for anyone interested in packaged services:
Procurement Solutions is focused on creating repeatable, expert solutions to Spend Management versus a more traditional management consulting approach which looks at each new procurement and supply chain opportunity from a generalist, one-off analytical lens.
[M]ore sophisticated organizations are most likely to use their services to augment their own capabilities where there is a specific need. In contrast, the management consulting organization is typically a better fit from a sourcing and category basis with clients who are less mature and need greater process help and all around Spend Management expertise and guidance.
The exception to this are more sophisticated companies looking to solve abstract problems or those that demand industry specific expertise — these situations are also a better fit with AT Kearney’s more traditional management consulting services arm. But quite often, the two organizations cross pollinate on projects, joining forces to help clients. Management consulting type-engagements, however, such as a complex make / buy manufacturing analyses, which are large and transformational in nature, are more likely to be led by generalist firm resources than specialized Procurement Solutions ones.
Jason makes a couple of key points to which I want to call attention. First, he emphasizes repeatable vs. one-off solutions: productized services are all about defining repeatable activities, documenting them, and delivering them more efficiently. Second, he correctly notes that the packaged approach is not always a good fit; for example, on large strategic projects where the dynamics are unique and complex.
Packaged, productized services can substantially reduce software implementation time and cost, lowering the risk of project failure. If you are a consulting company or services group inside a software vendor, get on this train, as I have recommended here and here and here.
—–
October 9th, 2006
SAP Productized Services
SAP has announced the release of SAP All-In-One ERP for the Australian market. From ferret.com.au:
There are three main components to SAP All-In-One ERP Package:
- Detailed, step-by-step implementation procedures.
- Extensive, reusable documentation for scope evaluation, project team and end-user training.
- Complete pre-configuration settings that provide everything needed to run integrated key processes.
By packaging standard services, SAP is making it easier and more predictable to sell and deploy its product into the SME market. SAP really does understand packaged services and how they reduce time and risk on software implementation projects.
Clearly, the company also recognizes that simplifying implementation is key to success in the mid-market.
[Disclaimer: at various times I have served as a consultant to SAP.]
—–
October 2nd, 2006
Reducing Services Costs
Vinnie Mirchandani posts on IBM’s strategy to productize services.
Almost a year ago, Vinnie posed this challenge: “IBM’s SI/outsourcing groups do not think like its software group. They want to sell more bodies, not automation. If they allowed the same software team which is working on self-healing systems management to work on SI automation, I would be willing to bet they could develop significant labor saving tools.”
When I saw this quote, I had to respond.
First, Vinnie absolutely right in asserting the tension between the stated goal of reducing services costs and the way consultants are incentivized. This is a big deal, and productized services can only work in the context of a more fundamental shift in service delivery strategy, which includes adjusting the consultant compensation model.
Second, Vinnie mentions consulting automation tools. I say YES YES YES to that! Recently, I gave a presentation on exactly this subject; here are several approaches to consulting automation from that talk:
1. Implementation toolkits. Document the process, including roles and activities, and package it into a sharable tool. (Blatant self-promotion note: Cambridge Publications has worked with SAP, IBM, and others to create such toolkits. There is no one in the world better at it than we are.)
2. Reusable content. For example, developing pre-configured systems, along the lines of what SAP and Oracle have done.
3. Automation tools. Well-designed tools reduce hours spent on routine consulting tasks. For example (another blatant self-promotion note follows), Asuret has created a consulting tool to perform rapid pre-implementation risk assessments. We quickly gather data and then automate the reporting. There are also a variety of tools on the market to automate such things as data conversion and system configuration.
Consulting organizations that develop such tools will reduce their cost to customers, thereby improving their competitive position in the market. However, as a developer of such tools, I can say with certainty that consulting automation requires an investment that many services organizations will be reluctant to make.
If you are a services group, either standalone or part of a software company, then beware: now is the time to start thinking about automating your routine activities. Rest assured, your smartest competitors have already begun this process for themselves.
—–
October 2nd, 2006
More on Productized Consulting Services
IBM recently announced a new line of “standardized” service offerings. ComputerWorld has an article today expressing some concerns from customers, who wonder whether they will continue receive the same level of service from IBM as in the past.
From the article:
But [Christopher Smith, IT director for the Bath Central School District in Bath, N.Y.] questioned whether the school district — which has spent $1.5 million over the past three years on a converged voice and data network, with IBM as its systems integrator — would still get enough hands-on guidance from the IBM workers who know his specific needs.
“The beauty of working with IBM Global Services has been having the same main contact person the entire time,” he said. “I hope that wouldn’t change with the new system.”
_________________
IBM didn’t release pricing information on the two networking services. But Bob Djurdjevic, an analyst at Annex Research in Scottsdale, Ariz., predicted that overall costs will be reduced for customers and that projects will be completed more quickly.
“Rather than reinvent the wheel, you can put together the basics,” Djurdjevic said. He added, though, that the new approach will impose a large cultural change on IBM’s IT services workers and sales force.
Wu Zhou, an analyst at IDC in Framingham, Mass., said that IBM’s service product strategy appears to be the first on the market, although she added that “the idea is bubbling up in the industry.”
As I have written before, if you are a consulting company (or services group within a software vendor), now is the time to get with this program. Many (if not most) consulting engagements are based around a core set of activities which are similar across clients. Inefficient (i.e.: totally open-ended) consulting arrangements can be overly expensive for the customer, and productized services present an antidote to that problem. Simple English translation: if you are a services vendor, do this now or your competitors will beat you to it!
If you decide to productize services into discrete standard offerings, consider these three important issues:
1. How will you define the productized service offerings?
2. How do you get your internal staff on board with it?
3. How do you avoid alienating customers who demand open-ended (and expensive) engagements with no restrictions?
—–
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures. Click here to discuss this post with him on Twitter. See his full profile and disclosure of his industry affiliations.
Subscribe to IT Project Failures via Email alerts or RSS.
SponsoredWhite Papers, Webcasts, and Downloads
- Building the Virtualized Enterprise with VMware Iinfrastructure VMware VMware virtualization software has been adopted by over 120,000 enterprise ... Download Now
- Unrivaled support from Novell, now available for Red Hat Novell If Linux is going to power your mission-critical applications, you'd ... Download Now
- Email Security and Archiving - Clearer in the Cloud Google The time is NOW for businesses and organizations of all sizes to implement ... Download Now
Essential Topics 
Recent Entries
- Social computing in the enterprise, part two
- Social computing and the enterprise, part one
- Salesforce Chatter: Something to talk about
- Dreamforce: Quick first impressions
- Resistance to change: The real Enterprise 2.0 barrier
Blogs From Our Sponsors
Most Popular Posts
- 18 truths: The long fail of complexity
- Resistance to change: The real Enterprise 2.0 barrier
- Dreamforce: Quick first impressions
- Enterprise unplugged: Riffing on failure and performance
- Five definitions toward the maturing of Enterprise 2.0
- Seeking IT failure experts on Twitter
Top Rated
- 18 truths: The long fail of complexity+17 votes
- Learning from the weak signals of failure+6 votes
- Five definitions toward the maturing of Enterprise 2.0+6 votes
- Salesforce Chatter: Something to talk about+2 votes
- Resistance to change: The real Enterprise 2.0 barrier+2 votes
- Enterprise unplugged: Riffing on failure and performance+2 votes
- Social computing and the enterprise, part one+1 vote
- Amplifying 'weak signals' for IT success+1 vote
Premier Vendor Content Whitepapers, webcasts & resources from our Power Center Sponsors
- Learn more about tools to grow your business
-
The Business Essentials Guide provides you useful tools and templates to help grow your business and save you time with automated shipping solutions.
- Save time with the UPS Business Essentials Guide
- New Online Dashboard for IT Leaders
-
Read about top issues IT decision-makers face every day, plus get cost-effective solutions to real-life IT problems.
- Learn more >>
- Reduce risk. Reduce complexity. Increase reliability.
-
A simplified IT environment isn't just less complex. It's also more reliable. Standardize on a single Linux platform with SUSE Linux Enterprise from Novell, and get the world's most interoperable Linux
- Learn more >>
- The best support in the Linux business
-
If Linux is going to power your mission-critical applications, you'd better have the best support known to business. Novell was rated the top provider of Linux technical support.
- Learn more >>
Archives
ZDNet Blogs
- All About Microsoft
- The Apple Core
- Between the Lines
- BriefingsDirect
- Collaboration 2.0
- Dev Connection
- Digital Cameras & Camcorders
- Ed Bott's Microsoft Report
- Emerging Tech
- Enterprise Web 2.0
- Forrester Research
- Googling Google
- GreenTech Pastures
- Hardware 2.0
- Home Theater
- iGeneration
- Irregular Enterprise
- IT Project Failures
- Laptops & Desktops
- Lawgarithms
- Linux and Open Source
- Managing L'unix
- The Mobile Gadgeteer
- On Sustainability
- Rational Rants
- The Semantic Web
- Service Oriented
- Smartphones and Cell Phones
- Social Business
- Social CRM: The Conversation
- Software & Services Safari
- Software as Services
- Storage Bits
- Team Think
- Tech Broiler
- Technology and the Global Supply Chain
- Tom Foremski: IMHO
- The ToyBox
- Virtually Speaking
- The Web Life
- ZDNet Education
- ZDNet Government
- ZDNet Healthcare
- Zero Day
White Papers, Webcasts, and Downloads
- Virtualization: Architectural Considerations And Other Evaluation Criteria VMware Of the many approaches to x86 systems virtualization available in the ... Download Now
- Three Steps You Need to Know to Stop Data Loss Varonis Sensitive data exposed to misuse or loss... it is the stuff of nightmares ... Download Now
- Five Steps to Determine When to Virtualize YourServers VMware Server virtualization isn't just for big companies. Entry-level ... Download Now
Popular Sanity Saver Videos
