I am attending Dreamforce 09 in San Fran and trying not to get too caught up with the hype. And I don’t really have the expertise to “get” a lot of the technology stuff behind the “cloud” anyway. But it is really great to hear Marc Benioff, the CEO of salesforce.com, make fun of the current software business model, especially amongst the ERP vendors. He referred specifically to the idea of charging 24% maintenance as a “tax”. Marc’s keynote from Thursday morning is well worth watching. You might ask “So what, Marc has being saying this for years?”
What is new is the development of enterprise applications on force.com to satisfy a variety of processes, including an ERP solution. And these are being developed in 3-8 months from initial concept to go-live. Vetrazzo developed production planning, inventory management, order management, returns, warrantees, and ton of other ERP capability in 4 months!! At a fraction of the cost that would have been required to purchase let alone implement SAP or Oracle. Even better, the CEO of Vetrazzo used to implement SAP systems, so he knows the full (in?) capabilities of SAP. OK, OK, so it does not have any accounting capability. But who cares, accounting packages are a dime a dozen and not related to your operational effectiveness. Plus there are any number of applications available on AppExchange for linking salesforce.com to accounting packages.
I can only imagine how SAP and Oracle execs are sweating. Even if we discount the technology story, the change in the business model is profound and is going to rock them to their foundations. In our own customer base, customers that a year ago flatly refused to go on-demand are now discussing the option with us. And these are companies over $20B!! Yes, that is a B as in billion, not an M as in million.
What do you think? What is the timeline before we see full ERP systems developed native to the cloud?
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Tags: Enterprise resource planning (ERP), On-demand (SaaS), Supply chain management software
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Trevor…The old business model is not dead but it’s dying and needs to. Totally with you on SAP/Oracle Execs sweating…well not really…as they are big Companies and they will just be figuring out how to buy/acquire the Cloud and Shadow companies that are emerging/evolving as is the way. What needs to change is Business plural and how company’s lead/manage changes to in my opinion focus more on Customers, Environments and Employees with a view to global success and positive contribution in the medium to longer term. So much “just today” focus is hurting everyone…good job posting. Nigel
I received a response on one of the LinkedIn groups that I belong to, which I though worth sharing: “I have been in the retail/supply chain/ERP consulting business for over 30 years. The referenced article lost me when it stated: ‘Vetrazzo developed production planning, inventory management, order management, returns, warrantees, and ton of other ERP capability in 4 months!!’. I have written programs in multiple languages and developed systems across several platforms. I have a hard time believing that you could develop the specifications for a MRP system in 4 months, let alone an ERP system. I’ve done MAPICS and ORACLE ERP installations and development. You couldn’t even test the interactions of the various applications in 4 months. ”
Iresponded in the following manner: “Looking at your photo, we must be from roughly the same ‘vintage’, so I have a lot of natural empathy with your pespective. But I think our perspective is from an earlier generation of applications.
One thing that spending time with Salesforce over the past 4 years has taught me is that their approach is very much aligned to the KISS principle. And this works.
Vetrazzo is a 40 person company that needs many of the capabilities of an ERP, yet it was quicker and cheaper to build an ERP in force.com that buy and deploy one of the brand names, such as Oracle.
Without a doubt the solution is not as full a set of capabilities as Oracle ERP or MAPICS. But what if it does what is required and does not add a whole lot of additional overhead that is not needed? And is a fraction of the cost, does nto require a truckload of hardware, and a busload of integration consultants? Why should Vertrazzo pay for functionality it does not need? But don’t discount this approach. Afterall it has been syccessful in getting Salesforce to a little over $1B in revenue.
I can only encourage you to watch the keynote. Even if for marketing reasons there has been some exaggeration, it is still very impressive.
BTW, we are a CRM user of saleforce.com. We have no other commercial interests in the company.”
And then I came across this blog today (http://www.cio.com/article/501656/Why_ERP_Is_Still_So_Hard) which I think completely validates my point not only for SMB, but for larger enterprises too.