February 20, 2012
Its the end of ERP as we know it and cloud-based business services companies feel just fine. But what’s behind this new way of business sea change that has some referring to the shift as a ‘mass extinction event’ in technology?
In geology a mass extinction event is a dramatic decrease in the diversity and abundance of life. The one you’re probably most familiar with comes from the late Cretaceous period (K-T event) when a space rock a few miles across slammed into the Yucatan Peninsula around 65 million years ago. The resulting blast and global cooling led to the rather abrupt end to nearly 75% of life on Earth.
What you may know is there is a similarly profound mass extinction event underway involving the way businesses run themselves.
Only in this case, the Earth-changing asteroid is what you call the internet. To get a little more specific, it really involves increasing array of today’s subscription-based cloud management platforms that are changing the business landscape at the expense of the doomed dinosaur known as Enterprise Resource Planning (ERP).
“…Much has been discussed about SAP’s pending $3.4B acquisition of SuccessFactors, and now Oracle’s $1.9 billion deal to buy Taleo. Rightly, SAP and Oracle have been praised for trying to bolster their cloud offerings with these moves. But, in a few years, I wonder if it will really matter. Because, while SAP and Oracle are obviously trying to get with the times by offering their services via the cloud, it may be too late. Why? Because, in short, ERP – enterprise resource planning software – is on its deathbed.
That’s right. ERP’s days are numbered. And it is because of a fundamental shift that is taking place regarding how people consume products and services driven by the massive growth of the cloud itself.” – Tien Tzuo, Zuora CEO from “The End of ERP”
As succinctly stated in this post by Tien Tzuo (who spent time previously as Salesforce.com’s CMO) the very survivability of ERP comes into question based both on today’s challenging business environment and explosive expansion of cloud-based business management tools.
Monthly Subscription vs. Buy It All & Manage It Model
Consider the rise of today’s cable, satellite dish and video streaming websites. All of these bring the best content providers like NBC Universal, CBS, Disney ABC/ESPN, etc. have to offer and all you need for access is a simple monthly subscription fee. Many of these providers use existing hardware to get you connected and any hardware/software upgrades are done remotely and largely free of charge.
If you were ERP, you’d believe this model makes no sense. You would rather purchase a broadcast network for yourself and manage the costs of maintaining it, upgrading systems and managing all of its employees and related costs. If you wanted another service, then you’d simply go out and buy another (software box off the shelf) cable network and add on all of the aforementioned costs all over again. If no subscription based service were available and if no alternatives were out there, then this ERP buy-it-all-manage-it-all world is the only one we’d be living in.
But much like the era of the dinosaur in the days post-asteroid impact, the times have clearly changed and there’s now constantly evolving and improving lineup of subscription based cloud business management tools available for today’s SMBs.
From “The End of ERP”
“…Why does all of this signal the death of ERP? It’s because the rigid ERP systems from SAP, Oracle and others were designed specifically for the 20th century manufacturing era rather than the 21st century services-based world. Because ERP was built to track products that can be put on a pallet, versus offering services that are consumed over time, subscription businesses using this legacy technology struggle over and over again with the fundamental questions:
Who are my customers? Try asking SAP or Oracle how many active customers you have at any one time. The concept simply doesn’t exist. Orders, Accounts, and Products? Sure. Ask your ERP how much up-sell business you’ve done, or how many customers have renewed in the past year – and you’ll get a blank stare. ERP is simply not built around customer-centric transactions. In a Subscription Economy, unless you can monetize customer relationships over time, you’re dead in the water.
How can I price this service the way I want to? Subscription services run the gamut from simple monthly recurring charges, to usage based charges, to one-time charges, to “all of the above.” Unfortunately, ERP systems force companies to resort to hokey workarounds to get their pricing right, like creating different products for every month of the year. “February Service SKU” anyone? And simple cost-plus pricing doesn’t apply to services. Instead, businesses want to do rapid A-B price testing when trying to gauge appetite for a new service or offering. Meanwhile, a single price change in an ERP system can take weeks.
Where’s the “Renew” button? Subscriptions are all about an ever-changing lifecycle as customers sign-up, upgrade, add-on, and ultimately renew their service. At their core, ERP systems only give you a “Buy” button for tracking transactions. They’re missing the critical tools you need to process this lifecycle over time.
Why can’t I sell to everyone? Subscription Economy companies like Salesforce.com and Box have found success by selling their services to everyone from individual users up through very large enterprises. They need tools for managing things like high volume recurring payments in the B2C world, as well as tools for managing high-complexity invoices and contracts in the B2B world. And those tools need to manage customers that may come through different channels such as web self-service, mobile devices, direct or channel sales or even Facebook. Legacy enterprise technology makes you chose one or the other, when what you really need is the ability to sell B2Any.
What’s going on with my financials? Subscription businesses live or die by their ability to measure the ways that bookings, billings, cash flow, and revenue are inter-related. Unfortunately, this data lives in different software silos. Bookings fall into CRM, billings and cash flow live in your GL or ERP system, and revenue is too often calculated in a series of complex spreadsheets. Good luck stringing all of that together…” – Tien Tzuo, Zuora CEO from “The End of ERP”
At AnaTango we believe we have done just that.
The AnaTango solution: The Evolution Away from ERP to AMI
AnaTango’s Adaptive Management Infrastucture (AMI) is at the core of AnaTango’s Cloud Business Management Suite. To date this includes two powerful cloud-based SaaS applications including Anavation and the cloud-based enterprise platform known as Anavoy.
Both are offered fully malleable into the hands of our business partners who can choose from library of add-on features and enhancements which all are fully embedded within the system. Compatibility issues with old/new software products are never an issue unlike the older on-the-counter-box-top/ERP counterparts.
The CBMS doesn’t simply end with Anavation and Anavoy, rather these are the first two products in growing suite of products specifically targeted to the needs of different business environments and industries. The CBMS goal is to match the diversity of the SMB and multinational conglomerate marketplace and thrive in its new cloud-based environment.
SMBs: Should You Adapt or Have SaaS Adapt to You?
In this new era of Software-as-a-Service (SaaS) the landscape of offerings is literally changing by the day. From business intelligence (BI) to customer resource management (CRM) there’s no shortage of companies with stock ticker acronyms out there that all say the same thing, “we can help your business outperform and achieve immediate return on investment”.
In most cases this is true, yet many of these formerly innovative companies are now taking a move from ERP’s old playbook. They would rather you fit into their system of doing business without you having the ability to adapt, modify or optimize it for your own needs.
This is where the landscape of cloud-based businesses who do offer this level of adaptive management becomes suddenly much smaller. Its like going from a continent the size of Asia down to islands in the Caribbean. And this is precisely where AnaTango rises from out of the ocean.
You have the keys to the high performance car but do you really know how to drive it?
Powerful software no matter the vendor is only as good as the knowledge of that product in the hands of the people who are using it. Many companies are content to drop a software upgrade or service into their customers’ laps and wait for the phone to ring on the customer support side later. While some companies thrive with customer support such as Apple’s Apple Care for instance, AnaTango takes a different approach to this partnership.
Meet AnaTango Consult/Connect/Apps
Maximizing the software in ways that bring immediate results should require a method of strategy deployment (aka a Strategic Deployment Plan). This is where goal setting, key performance indicator tracking and realizing revenue gains become reality. AnaTango not only provides you with the firepower to achieve this, but also deploys the field generals (Six Sigma Master Black Belts and executive team with decades of software experience) to guide SMBs to reach their goals. This also includes an overhaul of branding/marketing/networking services to leverage the benefits that social media and main stream media offer growing companies.
AnaTango also has hardware and IT experts who can adapt and enhance existing infrastructure and improve the speed/accessibility of cloud-based management. Lastly, new to AnaTango is the forthcoming Apps division that has the ability to create topic and task specific applications for companies looking to expand into iOS and Android environments.
Any new client to AnaTango benefits directly from the monthly subscription model in ways not thought possible before. This complete optimization of a SMB sets AnaTango apart from many of its competitors, because we feel this is the next evolution to cloud-based business management – an Adaptive Management Infrastructure (AMI).
This way your business from day one won’t be tied to an aging platform, rather one that was built to your needs and growing with your needs as new products in the CBMS come online to expand your business possibilities.
By planning for nearly every possible outcome, even the sight of an asteroid plunging through the atmosphere won’t make your business tremble.
Instead you will see it and be the first to react to it as a new opportunity.
Take that, T Rex.
AnaTango’s Chief Marketing Officer Rob Mayeda brings nearly 17 years of broadcast news/media experience to AnaTango and is a multiple Emmy-winning meteorologist and multimedia producer. Rob is a self-described technology ‘geek’ constantly researching and testing new software and hardware designs. Rob also leads the user-interface design and implementation for AnaTango’s Cloud Business Management Suite under AnaTango Cloud. In his free time he likes to study and chase tornado-producing supercell thunderstorms. Seriously, he does that. Contact Rob @ firstname.lastname@example.org