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VR-BUG-WEBIn recent years line-of-business applications including accounting, human resources, manufacturing, sales and customer service have appeared in the cloud. Cloud -based software as a service (SaaS) has replaced on-premises applications that were previously part of ERP and CRM environments. They have helped companies become more efficient but have also introduced interoperability challenges between business processes. Their advantage is that cloud software can be rented, configured and used within a day or week. The disadvantage is that they don’t always connect with one another seamlessly, as they used to and when managed by a third party there is limited connectivity to integrate them.

Smooth interoperation is critical for business processes that use ERP. The hybrid computing approach to ERP was assessed by my colleague Robert Kugel, who identified the challenges in these early approaches to ERP in the cloud. As on-premises ERP, these applications were fully connected and integrated with process and data integration wired together through additional technologies. This configurability of ERP has been a large challenge and has led to failed implementations, as Robert noted.  Understanding the complexities of ERP today is key to coming up with a solution.

One of the most fundamental business processes in organizations is tracking an order to fulfillment. That needs to be connected without manual intervention for transactional efficiency and to ensure data, analytics and planning are available. In fact our next generation of finance analytics benchmark research finds that ERP is the second-most important source of data being analyzed, after spreadsheets, and is the first-ranked source in almost one-third (32%) of organizations. In the transition to cloud computing this has become more complex. Applications that support the order-to-fulfillment process, for example, are increasingly being used individually in cloud computing, and many are being mingled with on-premises applications that require integration and automation to avoid manual intervention.

To start, orders are created by sales. Sales opportunities are created and closed with products and services purchased by contract or electronically. These must be placed in an order management system through which the record can be used by a multitude of systems and processes. Purchasing and fulfillment details are moved into an invoice as part of a billing application, then entered into accounting and accounts receivable where it is managed to payment. Finance takes orders and consolidates them into reports, typically in a financial performance management system. The order is then provided to manufacturing or fulfillment applications which build and deliver products, then fulfilled through warehouse and distribution management. The customer name and order number is also placed into an application that handles support calls or deploys services.

This is the reality of business today. Many departments and individuals, with different applications, are needed to support orders, fulfillment and service. If these applications are not connected organizations have to perform manual intervention, re-enter data, or copy and paste, which not only wastes time and resources but can introduce errors. Half (56%) of organizations do the integration through spreadsheets or exporting data, with custom coding being second-most popular (for 39%), according to our business data in the cloud research. (I will leave HR applications and the supporting people component out of this process though they play a critical role as an enterprise resource to support the order-to-fulfillment process and are part of many ERP deployments.) In addition performing any level of business planning is not simple as data is needed to determine past performance and plan for the future.

There is no simple way to make all this efficient. It has historically been managed by ERP, usually through a single vendor’s application suite. Now businesses want it done in the cloud, either on-premises or through other cloud applications. Proper attention must be paid to the needs and competencies of the departments and business processes involved. Thus migration and transition to ERP are not simple, nor is building an application architecture that supports process and data efficiently. Assessment and planning are necessary to ensure that risks are addressed. Switching to a new ERP system in the cloud will still require an application architecture to maintain proper operations across departments and existing applications, whether they are on-premises, in a private cloud, in the public cloud or in a hybrid combination. This integration among sales force automation, customer service and other systems is outside the scope of most cloud ERP deployments who have not provided the most robust integration points for the applications and data.

Robert Kugel writes that ERP must take a giant leap in order to operate in the cloud. I agree. Our firm often gets requests for assistance in finding the right approach to ERP and business process. While midsize companies find ERP in the cloud increasingly attractive, there are significant challenges to adapting  and integrating such applications as part of business processes, which many customers overlook in their desire for a cloud-based solution. The majority of cloud ERP vendors have not provided integration and workflow of information from their applications to others in an open and seamless manner, complicating deployments and adding unexpected costs for customers.

vr_fcc_financial_close_and_automation_updatedERP suppliers moving from on-premises to cloud computing have acknowledged the complexities. Many of the legacy ERP vendors have struggled to enable application interoperability and the differing management requirements of IT and business. This struggle has resulted in a lack of confidence by organizations wishing to migrate to ERP in the cloud and makes them wonder whether to look at alternative approaches with individual applications using integration across them and data to support business processes. Automation is another major concern. The lack of it across business processes has impeded finance groups in closing the books efficiently; our research on the fast, clean close shows many organizations losing four or more days.

In the meantime technological advances in integration technologies that operate in the cloud computing environment can interconnect with on-premises systems. The ability to simultaneously distribute transactions and data across systems makes the ability to architect business processes and workflows a reality. For some organizations the use of business process management and other integration technology approaches are being adopted. The new technologies are able to blend into many applications, so that users do not know they are working on applications from different vendors, nor do they need to know. These advances enable application architecture to interoperate and automate the flow of data from on-premises and cloud computing environments, providing new opportunities to interoperate from ERP or other applications. Many organizations are doing this today, and more than one-third of companies are planning or need to move data from cloud to cloud, cloud to on-premises or on-premises to cloud, data according our business data in the cloud research.

No matter whether a company is in manufacturing or services, they must address the integration complexities to gain efficiency and support growth without adding more resources. While many new ERP providers in the cloud are taking simpler approaches from the applications interface to how it processes transactions, most have not learned the importance of integration to other systems and the need for accessing and integrating data for transactions and analytics. Having consistency of data across applications and systems is a major obstacle in more than one-fifth (21%) of organizations and a minor obstacle in two-fifths (43%), and they find similar difficulties in the complexities of accessing data, according to our business data in the cloud research. In addition they lack effective planning (which of course is the P in ERP), and reporting is less than sufficient and often must be complemented by third-party tools.

All this introduces yet more complexity for business and IT in determining how they can move forward with ERP in the cloud, adapting existing and new applications to interoperate.  The outlook for ERP in the cloud is thus uncertain. If these vendors do not adapt to the reality of what their customers want (as opposed to what they want their customers to do), it will remain cloudy. Responding to pressure to take an open approach that is easy to integrate, however, ERP providers could see a sunny forecast.

Regards,

Mark Smith

CEO & Chief Research Officer

Greetings, everyone, and best wishes for a great start to 2014. In this new year, utilizing best practices and skills learned in 2013 will be critical for optimizing the use of efforts to support both business and IT. In 2013 many organizations made progress in balancing technology decisions across business and IT as the lines of business continued to take leading roles in investment and prioritization. Major investments were made in business applications using software as a service,VRLogobug400x400 business analytics and mobile computing applications. In some other areas of innovation, particularly big data and social collaboration, deployments are just beginning to happen and a significant amount of projects are in experimental and proof of concept than enterprise use.

As usual, there was no shortage of diatribes from technology suppliers. Gamification and virtualization were loudly touted, but the most exaggerated were variations on the “Internet of things,” which at times seemed to include, well, anything found anywhere on the Internet. Beneath the hype, however, is something very real: the need to interconnect people across the Internet and the enterprise more seamlessly and in ways that would have seemed futuristic not long ago. All this is having an impact on the IT function. As many of these technology innovations are becoming part of business, IT is beginning to be become more aligned to what the business needs now and in the future, backing off from making assumptions about what is needed. Savvy IT pros, from the CIO down, realize that If business decision-makers are not convinced IT will make such an alignment, they will insist on going their own way and not only spend what they believe is required to improve operation of the business processes they are held accountable for, but also invest in areas that they believe will give them a competitive edge and lead to the best outcomes for their areas of responsibility. This sets the stage for our focus in the new year.

Building on our work in 2013, we have set our 2014 research agenda, which is geared toward helping you figure out what makes most sense in the new landscape. Using our market research approach based on proven methodologies, we will provide a new generation of insights on how to get the best use of technology to support business and IT. I hope that you will look to us for the research facts and analysis that inspire you to make decisions based on a balanced perspective for both the business and IT sides. Don’t let your direction be skewed by advice from only an IT or a technology perspective; instead, make sure it is based on perspectives that are relevant to your business areas and the demands of your industry. Without this balanced approach you risk taking the wrong path, wasting time and valuable resources and lengthening the time to value in your markets. To get a balanced perspective on a variety of critical business concerns, you can dive into our research agendas and through our announcement of them. Here’s a snapshot of them.

In the overall area of technology innovation for business and IT, our research agenda for 2014 provides guidance to help organizations realize the potential of technology in the critical areas of big data, business analytics, cloud computing, mobile technology, social collaboration and social media. Our benchmark research shows that in each of these areas organizations made significant strides in 2013 in terms of maturity in their deployments and use; we recognized a number of them in our annual awards program for top technology suppliers and organizations across business and IT. The most powerful outcome of these technologies is when they are blended together to meet specific business needs in innovative and transformative ways.

For the Office of Finance, new research in long-range planning and finance analytics will provide a strategic guide on what it needs to drive the best success from its efforts. Not only does Finance maintain a leadership position for its own processes, but it increasingly provides leadership and guidance for human resources and IT as well as assistance to sales, marketing, customer service, the supply chain and other areas that are key to the operations of a corporation. With a full review of financial management vendors in our Value Index, we will bring a deeper assessment of applications for finance and business planning. Our Office of Finance research agenda for 2014 not only focuses on some key points in the areas of financial management and next generation of business planning but also on pricing, profitability and even taxation, areas that are sometimes lost when suppliers talk about ERP solving every business problem – which it does not. New research on the overall direction of the office of finance will bring a reality check to what finance is investing upon in regards to technology and business processes that meet their specific needs. Be sure to follow the astute analysis of trends and markets by Robert Kugel, our senior vice president of research.

Another top priority is utilizing people effectively, a critical aspect of every business requiring investments in human capital management that enable organizations to effectively recruit, engage and retain quality workforce with the best possible employee experience. Organizations cannot just overhaul traditional HR technologies – they must also integrate talent management for salary workers and workforce management for hourly workers to ensure that the entire workforce operates efficiently and that the investments made reach their full potential. HR, an early adopter of cloud services, is now in a transition period in which it needs to unify the myriad applications it has rented. In many cases this means consolidating suppliers to get a more cohesive and streamlined view of employee performance and simplify employees’ access to systems. In our 2014 Human Capital Management research agenda, more capable HR systems and advances in mobile and social technologies that support learning management are key priorities; this agenda builds on newly released research on workforce management and human capital analytics, and upcoming payroll management. If you haven’t already had a chance, check out the market and technology analyses of Stephan Millard, Ventana’s vice president and research director, as you go forward with your human capital management efforts.

Other areas of continued refinement are sales and marketing, which of course are critical to achieving successful business outcomes and optimal financial results. Improving sales performance requires a concerted effort, and over the past decade we have been refining a blueprint to ensure that sales teams have the proper applications and technology to support their activities. To provide that support, it is essential to determine if the right level of investment is being made. Many professionals now realize that customer relationship management and sales force automation meet only part of what a sales organization needs, from executives and management to the sales operations required to manage the hierarchy of sales and account representatives and their managers. One key activity is sales forecasting; many organizations do not have sufficient visibility and knowledge of the sales pipeline to adjust their focus to reach the best possible outcomes, and today they need not just quarterly data but also monthly and weekly views. In addition, the compensation and incentives that motivate sales leave much room for improvement, needing data to determine not just variable pay but how well sales people and group are reaching the full potential in their quotas and territories. Our 2014 Sales and Marketing research agenda will bring forward research and facts to help Sales make the right investments in these areas and others to focus on efficiency and execution. Those leading sales teams will need to determine whether and where they need to make improvements, which includes creating a better alignment with marketing to generate sales demand using new techniques and to educate prospects to help ease the sales process. This can’t be done without having the right information about products and services that can be used in marketing as well as in commerce, sales and the supply chain; product information management is essential, and we will continue to track and write about it. These areas of focus, along with examining the role of sales analytics, will uncover new potential in what Sales can do to meet its mission.

Engaging customers and providing a great experience is essential for best-in-class organizations, but that requires effective technology in all aspects of customer interaction and service. This is excruciatingly important, as the ability of customers to comment on a customer experience (negative or positive) is instant via social media. Our research agenda for customer applications and technology shines light on a range of helpful tools, from customer engagement applications to the use of analytics and cloud computing in optimizing multichannel contact centers, as well as subscription billing and recurring revenue. Building on a foundation of research on customer service agents in contact centers and other areas of the business, it reveals that much must be done to retrofit the archaic telephone call centers of the past to meet the interaction needs of today and the future. If you have not had a chance to examine the analyst perspectives of Richard Snow, Ventana vice president and research director, I encourage you to do so.

Further, the energy in business analytics continues to increase as organizations begin to see a return on  insights that help them more confidently lead and manage business initiatives. Business analytics is moving beyond business intelligence efforts that are typically managed in IT, and organizations are starting to make big data investments that bring a new generation of tools to analysts and business users, enabling them to utilize more self-sufficient discovery and exploratory methods, including predictive ones. Providing visualization of data will only meet a small set of the business analytics needs of organizations though much of the focus in 2013 was in this area of focus. However, in the shift to empowering businesses with analytics many organizations have gotten caught up in the excitement around the technology without rationalizing the needs and skills of their users; they need to develop a clear set of what we call personas to align the right technology with the right individuals. We also address the issue of most organizations still being challenged by a lack of automation in assembling and integrating data for business analytics, functionality that can save time in realizing the value from analytics. The processing of events for real or right time needs are critical as found in our operational intelligence research that will also assess and rate the vendors in 2014. Also at the beginning of this year will be the release of the most comprehensive rating in our hands on evaluation of mobile BI products in our Value Index that will cover products that operate on smartphones and tablets. A new version of the business intelligence value index will come in 2014 too. New research in location analytics and information optimization (finding value in information through big data) set the foundation for upcoming research in big data analytics that will reveal insights from early adopters and enable others to benefit from their efforts. We have found that there is a skills and process gap in most organizations, and we’ll conduct new research on the next generation of business analytics to help organizations fully utilize analytics and exploit the insights. Tony Cosentino, our vice president and research director, has a robust Business Analytics research agenda for 2014 that will help organizations build a foundation and roadmap.

Not to be overshadowed by the momentum of business analytics, big data is becoming less mysterious for organizations, many of which love the conversation but have not investigated how they can actually step forward to seize innovations in the storage and processing of data. Getting past the market diatribes about the four V’s of big data – variety, velocity, volume and veracity – is critical; we see a new generation of value characteristics described as the four W’s: who, what, so what and now what, which are address the classic when, where, who and why. Our big data and information optimization research agenda for 2014 examines the growing portfolio of big data technologies including databases, in-memory processing, appliances and Hadoop, all of which have distinct characteristics and require different skill levels. As we enter 2014 a new generation of converged technology is unifying these capabilities in appliances that bring hardware and software together, making big data initiatives easier to implement and deploy. Just as organizations continue to deploy new types of big data technologies to gain a competitive edge, we have entered a new age of requirements for big data integration that can help utilize data across the enterprise in an architected manner, which is part of the background for new research in this area. We will also have a new Value Index in data integration for 2014 that will cover the needs across the department, enterpris and big data. Our new research on finding information value from big data will help business and IT set a more balanced focus on big data.

We have now publicly unveiled the research agendas for 2014 to whichValueIndexLogo we provided early access for our clients. We post research agendas publicly to provide depth on the themes and plans for our research in the year including benchmarks and Value Indexes. Unlike us, most IT analyst firms do not publish their annual plans and have dropped the process, ignoring the rigor it takes to ensure an independent level of research is conducted. This is part of the challenge I laid down to the IT analyst industry, in which too many just go along and “wing it with nothing” or refuse to publish with access at no charge. We have a passion for research and a laser focus on the best practices and insights related to the applications and technology that help business and IT be successful. I believe our firm plays a meaningful role in helping organizations improve their use of technology.

For more than a decade Ventana Research has been providing fact-based perspectives, from our analysis and guidance to our best practices and insights. Such perspectives are not available from any IT analyst or consulting firm that is aligned to a particular vendor’s technology and resources. We demonstrated our commitment to public dialogue in two great events held in 2013, our business technology leadership and technology innovation summits. To see what I mean, look at the video replays available online, as well as presentations on business technology leadership and technology innovation. This year also will include summits that will help provide the guidance and insight you need to be successful in utilizing technology effectively across business and IT. Equally exciting was the recognition of recipients of our Technology Leadership and Technology Innovation awards, furthering our commitment to celebrate technology pioneers and leaders in organizations and suppliers. Please follow us on social media at Twitter or LinkedIn to get the latest updates on our events and research.

On behalf of the entire team at Ventana Research, I wish you a prosperous and innovative 2014. We hope you derive full value from technology in 2014, and we look forward to hearing from you through any of our channels, including research, blogs and social media. Taking heed of best practices and benefits realized by others is critical, but aspiring to be ahead of your competition through the best possible business and IT results will require innovative approaches in use of technology. Refer to our research agendas to ensure that you don’t miss the big ideas and practice methods in your efforts, and count on us to help you build further assessments and benchmark comparisons to reach your full potential.

Best Regards,

Mark Smith

CEO & Chief Research Officer

Mark Smith – Twitter

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