CIOs Plot a Path to the Future via Smarter Use of IT in 2012, Finds Oracle and PwC Report
Research finds 2012 priorities for Communications Service Providers include striking a better balance of in-house and outsourced IT and making better use of applications such as CRM
Independent research by PwC into the IT priorities of European Communications Service Providers (CSPs) has uncovered CIOs’ focus areas for 2012. The research found the majority of CIOs (60%) currently spend more than half of their opex budget on ‘maintenance’. Addressing this is going to be a major priority in 2012 and CIOs will respond with a more strategic use of outsourcing and standardization.
In order to reduce their own management overheads and combat an immediate shortage of specific skills in house, CIOs will increasingly outsource a number of areas of their business in 2012, including network and fault management, and provisioning and order management. 88% of CIOs plan an upgrade of their CRM systems in 2012. This will free CIOs to focus on more strategic requirements and revenue drivers such as portal and content applications.
Billing and mediation and reporting will increasingly be done in-house, keeping CIOs in touch with the activities and data that will shape their business.
CIOs will also push through a move away from bespoke applications, which typically carry a heavy budget overrun and require greater integration and more careful management.
More than two thirds (67%) of bespoke applications are delivered with a “substantial” budget overrun (74% have some level of budget overrun), according to the Oracle commissioned PwC research. This is compared to more than half (52%) of commercial-off-the-shelf (COTS) applications which are delivered under budget.
CIOs believe this move towards standardization (95% plan to increase their use of COTS in 2012) will create greater agility and make many of the partnerships they need to seek with content and media companies easier to switch on or off. It will also reduce the cost implications of maintaining restrictive legacy systems which can also prove a costly and problematic overhead in a business characterized by rapid mergers and acquisitions.
Increased use of COTS in 2012 and the associated lower total cost of ownership will allow CIOs to target more of their budget to growth activities.
Dan Ford, vice president, product marketing, Oracle Communications, said: “CSPs are at a crossroads. They face another year of budgetary pressure, at a time when the need for innovation and competitive differentiation has never been greater. CSPs need to increase customer retention and improve the provision of content and services such as media and applications. More CIOs are focused on simplifying and streamlining their core IT operations and focusing on the areas of their IT operation which can drive real efficiency and growth within the business.
“We are seeing renewed interest in business applications, such as CRM, Web Commerce, Self-Service, and Retail Point of Service, as companies look to better engage with existing customers. We are also seeing CIOs increasingly buying off-the-shelf applications to create a more standardized IT ecosystem, across their own business but also to tie in with standardization across partners.”
David Russell, UK Telecommunications Leader, PwC, said: “Through 2012 we see a dual challenge for CIOs as they come under increasing pressure to reduce both operating costs and capital expenditure, while meeting their organization’s desire to invest in improving customer experience to drive retention. With the squeeze on product pricing, the need to reduce operational costs, the requirement to simplify IT and increased competition, CSPs see improved customer experience as the key differentiator.”
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67% of ERP Users Want More Industry-Specific Functionality, IFS Study Reveals
The majority of enterprise resource planning (ERP) users in a survey of industrial executives say they need more functionality for their specific industry.
This need was most pronounced in the most complex and demanding industries, including engineer, procure, and construct contracting, service management-intensive businesses and those for whom management of capital assets for return on capital assets (RoA) are critical.
The study is based on a survey of more than 200 manufacturing and other executives, and the data was analyzed by Cindy Jutras of analyst firm Mint Jutras, Boston. The data indicates that 67-percent of respondents said industry-specific functionality was an important feature for them in enterprise software selection. Moreover, a near identical percentage, 67.1-percent, said they would like to have more industry-specific functionality in their enterprise application. Moreover, 60-percent of respondents said they struggle with functional gaps due to the lack of industry specific functionality in their enterprise solution.
The single group of companies with the most pronounced need for greater specialized functionality was companies where managing return on assets (RoA) is a core discipline. The need for ERP with enterprise asset management (EAM) functionality creates a “perfect storm” that many enterprise solutions do not handle well.
“IFS Applications is simply the strongest product on the market today that offers world class EAM functionality as an integrated part of an ERP suite,” IFS North America President and CEO Cindy Jaudon said. “If operation and maintenance of capital assets like production facilities, aircraft or even distributed assets like windmills is at the core of your business, you really need an enterprise solution that addresses asset management as a strategic discipline rather than an afterthought. It is also noteworthy that those companies that need greater industry-specific functionality are those with the most demanding and complex business models. And that is exactly the type of company for which IFS Applications is best-suited.”
A complimentary copy of the study, The Demand for Industry-Specific ERP, can be downloaded from http://download.ifsworld.com/Studies.
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Ninety Percent of Users Affected by M&A’s in ERP Industry Have Concerns, IFS Study Reveals
The majority of enterprise resource planning (ERP) users have been directly affected by heavy merger and acquisition activity in recent years, causing concerns for the ongoing desirability and stability of these products, a study released today by ERP vendor IFS North America reveals.
The study is based on a survey of more than 200 manufacturing and other executives, and the data was analyzed by Cindy Jutras of analyst firm Mint Jutras, Boston. The data indicates that the majority of respondents, 54 percent, say they are running ERP or other enterprise software from a software vendor that has been recently acquired. Among respondents with companies running products affected by M&A activity, 90 percent indicated that they had concerns over negative effects their business could realize of the products they were running. Concerns that the enterprise software product their company is running could be discontinued by the vendor that acquired it, or the new owner may not continue to invest in the enterprise software product going forward, were the most frequently reported concerns.
Most of these respondents – 31 percent – said they report they were already running their enterprise software when their software vendor was acquired, while 23 percent had selected an enterprise software product after the vendor had been subject to M&A activity. Acquired products were not necessarily viewed unfavorably by respondents as a whole, in part because when a small or struggling software vendor is acquired by a larger one, it may be viewed as a way for the vendor’s products to continue into the future. In some cases, when a vendor acquires enterprise software products that are complementary or can extend their current offering, customers may actually benefit.
“We found this study interesting as it reinforces IFS’s global acquisition strategy, as well as our devotion to a single enterprise software product with a solid roadmap for future development,” IFS North America President and CEO Cindy Jaudon said. “Our strategy has been to offer a single product that is our only focus for research and development efforts. Our customers can feel secure that there are no other application platforms that might cause us to divert resources that would otherwise be used to evolve IFS Applications to meet their future needs. Our recent and planned acquisitions are focused and complementary to IFS Applications, allowing us to better serve our existing customers and broaden our capabilities and markets. This makes us a stronger and more attractive vendor to do business with.”
A complimentary copy of the study, How M&A Activity Affects ERP Users, can be downloaded from http://download.ifsworld.com/Studies.
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The Trickle-Down Effect of IT Failures
As a follow-up to Monday’s post about ERP failure, we decided to take a look at some surprising data about the effects of such a failure on not only the companies who experience it — but the companies on both sides of the supply chain who also can be affected. After all, we work hard every day to protect our companies and their revenue streams. It’s why we return e-mails at 11 p.m., skip vacation days to ensure critical tasks are completed and spend our downtime reading blogs like this. But, according to a recent study out of the UK, if we don’t take the steps necessary to protect our companies from the effects of an IT failure in our supply chain, then all of our hard work might be for naught. The study found that sixty-percent of companies surveyed have lost access to their IT system following an unexpected incident and that forty-percent of these incidents lasted for more than six hours. If it happens to you or an organization that you depend on, than those are hours when your operations, communications and ability to access data can all be lost. And each hour that goes by in this state gives your customers another reason to doubt your organization’s abilities. It’s a sobering thought.
Even more sobering? The idea that the data you rely on to do your work can be irretrievably lost after an IT failure. As in gone. Forever. But even with that risk looming large, Symantec’s 2011 SMB Disaster Preparedness Survey of SMBs in Asia Pacific reported that 45-percent of companies would lose at least 40-percent of their data in the event of a disaster. Forty percent! Still, only half of companies back up at least 60-percent of their data and only 21-percent back it up daily. The survey goes on to show the enormity of an IT failure’s trickle-down effect on the customers of SMBs, who report that outages at their SMB vendors cost them $45,000 a day (compared to $14,500 of losses a day at the affected company). Not surprisingly, 59-percent of SMB customers have switched SMB vendors due to their unreliable IT and ERP systems.
None of us is an island. We depend on our supply chains to keep our own businesses running smoothly. These study results should not only lead you to question the security of your own organization’s IT systems, but also the security of your partners’ IT systems. Possible questions to ask include:
- What ERP software are you using?
- When was the last time it was updated or replaced?
- Are you considering an ERP implementation in the near future?
- What are the steps you’re taking to mitigate risk of ERP implementation failure?
- What are your disaster recovery plans?
- How often is your data backed-up?
- Who are you working with to ensure your operations and systems are safeguarded?
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New Report Identifies Best-of-Class Technology as a Key Component in Achieving Profitability and Cost Reduction
Finance executives must leverage the best features and functions to support underlying business processes
UNIT4, the world’s leading provider of business software for Businesses Living IN Change (BLINC™), today released an Analyst Insight report from industry analysts Aberdeen Group highlighting the importance of a best-of-class technology strategy in the new age of cloud computing. The report, titled ‘The Best-of-Class Strategy Makes a Return in the Cloud Era’ analyzes UNIT4 and how the company’s Coda Financials solution enables the finance executive to have a no-compromise approach to financial modelling and applications choice.
The key point raised is that finance executives should be able to add, keep or change business applications without losing control or increasing the risk of non-compliance, irrespective of how or where these applications are deployed.
“The latest Aberdeen Business Review of over 1,400 companies uncovered their top objectives under the finance function,” said William Jan, Senior Analyst, Financial Management and GRC at Aberdeen. “The two most notable objectives, as compared to the response from other corporate functions, are profitability/margin growth and cost reduction. Only by leveraging solutions with the best features and functionality that support their underlying business processes will they achieve this. Deployment of applications should be a secondary consideration.”
The report defines Best-of-Class as the freedom for an organization to integrate/interoperate with best-of-class financial applications, regardless of deployment method. Although many organizations are driven to leverage Software as a Service (SaaS) for cost saving reasons, it may limit their application choices and ability to adapt to a highly dynamic and competitive environment.
“We have said for a long time that our customers benefit from a wide choice of applications and deployment options enabling them to remain versatile in their strategies and operations and able to manage change factors easily,” says Ton Dobbe, VP of Product Management at UNIT4. “The ability to embrace change as a result of organizational restructuring, mergers and acquisitions, a change of strategy, regulatory requirements and so on will provide the competitive edge organizations require today.”
Coda Financials provides finance executives with Best-of-Class enterprise accounting features and functions delivered via a choice of deployment methods including on-premise, hosted and SaaS. Its unique Link Architecture is designed to support interoperability between private cloud and on-premise deployments as well as connectivity to other key business applications, however they are deployed.
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UNIT4 Maintains its Position as ERP Market Leader in Sweden
Survey of almost 4,000 businesses ranks Agresso number one by market share with high levels of customer satisfaction
UNIT4, the world’s leading provider of business software for Businesses Living IN Change (BLINC™), today announced that its position as the leading ERP supplier in Sweden has been confirmed in an independent survey based on responses from 3,773 IT and finance officers from companies and organizations in Sweden with 50 employees or more.
The research, conducted by market research firm DataDIA, illustrates the 25 most popular systems in terms of user satisfaction and the 15 largest by market share in Sweden. The report is available to download in Swedish. It shows that Agresso Business World is the most popular system, with 8.54% market share, with its nearest rival SAP taking 6.98%. Agresso also scores highly on customer satisfaction with a rating of between 3.8 and 3.9 based on a satisfaction scale of one to four. Only systems that scored between three and four are ranked. Most organizations that scored one, had decided to replace their systems in 2011. The survey also shows that Agresso implementations account for 11% of new systems installed in Sweden in the last 16 months.
UNIT4 has signed a number of large Agresso Business World deals in the past 16 months including data center expert Enaco and counts some well known Swedish organizations among its clients, including The Swedish Church, Bonnier, Viking Line, Onoff, PRI Pensionstjänst, Skogskoncernen Södra, and Världsnaturfonden WWF.
“We chose Agresso from UNIT4 because we felt confident it was a system that would grow and change with us to support our Nordic expansion,” said Tom Ekevall Larsen, CEO, Enaco AB. “It is important to us that we implement systems with a low total cost of ownership that we can easily maintain for the foreseeable future to deliver competitive advantage, and Agresso is at the centre of that strategy.”
“UNIT4 is the global ERP market leader in solutions for Businesses Living IN Change,” said Stig Kjønstad, Managing Director, UNIT4 Agresso AB. “Agresso Business World’s unique Vita architecture sets it apart from competitive ERP solutions as it is widely acknowledged for delivering ongoing, post-implementation changes without the typical external IT costs and services that cost firms huge sums of money each year. Our customers in Sweden cite this business agility as a distinct competitive advantage and continue to recommend us.”
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The Effects (and Inevitability) of IT Failure
With all the recent news about IT and cloud failures, it’s no surprise to see new research (and sales pitches) coming out about the effect of such failures on affected companies’ bottom lines, customers and employees. An interesting study from software vendor CA Technologies, which gathered data about the effects IT system failures have on personnel from 2,000 North American and European organizations, came across our news-feed the other day. Findings included:
- Businesses collectively lose more than 127 million person-hours annually—or an average of 545 person-hours per company—in employee productivity due to IT downtime.
- Each business suffers an average of 14 hours of downtime per year, during which employees are only able to work at 63-percent of their usual productivity.
- After systems are back up and running, organizations lose an average of nine additional hours per year to the time it takes to recover data. During these times, employee productivity only climbs to 70-percent.
Yet the study also shows that companies are still slow to address the inevitable ramifications of an IT failure with a protection strategy. Indeed, “56-percent of organizations in North America and 30-percent in Europe don’t have a formal and comprehensive disaster recovery policy,” yet 50-percent of organizations said IT outages damage their reputation, 44-percent believe IT downtime damages staff morale, and 35-percent said it can adversely impact customer loyalty.
So why the disconnect? Why do organizations recognize the great damage IT failure can wreak yet fail to take proactive steps to prepare for it? Perhaps it is the same “it won’t happen to me” gamble we all take when participating in risky behavior — from smoking a cigarette to speeding down the highway to swimming in the ocean. Or perhaps it’s a lack of resources or a lack of initiative or a lack of knowledge about how to even begin to address the issue that contributes to this troubling inaction. Regardless, our advice to organizations struggling with their IT failure strategies is the same as our advice to organizations about to embark on any major IT project (including ERP implementations): focus on the aspects that protect and serve your business. Communicate with your staff so that they know what to do (and what’s expected of them) in the event of a failure. Plan, prepare and execute. And don’t forget to develop schemes for both disaster recovery and business continuity; one can’t exist without the other.
Read more about our ERP and IT services and how we can help your company develop an IT strategy to address both successes and failures.
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Panorama Consulting Solutions Issues Call for Participants in 2011 ERP Benchmark Survey
Panorama Consulting Solutions, an independent ERP consulting firm, today announced its annual ERP benchmark survey to compile qualitative and quantitative data regarding actual results from across the globe.
The survey is designed to collect information relative to project scope, ERP implementation cost and duration, and considerations related to ERP vendor selection. Survey participants are asked about their experience with traditional ERP software packages, software as a service (SaaS) ERP solutions, and open source providers. Results will be analyzed and published in a series of upcoming reports.
“We take our role as the industry’s leading independent source for companies selecting and implementing ERP software very seriously,” says Eric Kimberling, president and chairman of Panorama Consulting Solutions. “Our research gives our clients, colleagues and other interested parties statistical insight into the health of the industry on a whole and how their upcoming ERP projects might fare. The data also provides benchmarks against which to judge implementations.”
The survey is available at http://panorama-consulting.com/resource-center/erp-diagnostics/. Prior survey results and analyses are available in Panorama’s online resource center at http://Panorama-Consulting.com/resource-center/.
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Come One, Come All: Participate in Our 2011 ERP Benchmark Survey
The time has come once again to solicit participants for Panorama Consulting’s annual ERP survey. You’ve known and loved our analytic research in the past (such as the 2011 ERP Report), and now’s your chance to have your voice heard in a series of upcoming reports. It just takes a few minutes to share your experiences with ERP implementations and help others looking to benchmark their estimations and progress.
The survey is designed to collect information relative to project scope, ERP implementation cost and duration, and considerations related to ERP vendor selection. Survey participants are asked about their experience with traditional ERP software packages, software as a service (SaaS) ERP solutions, and open source providers.
Click to access the 2011 ERP Benchmark Survey today.
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Decision Making ‘In the Dark’ a Major Worry for Large Companies
Eighty-two percent of large organizations admit to not having complete visibility into profits leading to impaired financial performance
Research released from Oracle, and conducted by Dynamic Markets, reveals senior business and IT managers across Europe, U.S., Middle East and South Africa’s large organizations struggle with a lack of visibility into profits that is impairing financial performance, morale and business success. The research, entitled “Performance Management: An Incomplete Picture,” also highlights the significant issues with the data-gathering processes that is central in creating a dangerous ‘four-month’ data lag. The research, conducted by Dynamic Markets, surveyed 1,499 managers in large organizations in 13 countries across the world.
For full findings and research data, please go to: bitly.com/kJuDzc.
Research Highlights
- Profit Myopia: Eighty-two percent of businesses admit to not having complete visibility into profits by line of business. Furthermore, 46 percent believe this creates potentially erroneous business decisions, 40 percent feel this can impair financial performance and 38 percent believe it results in flawed business planning that will hamper business success.
- Spreadsheet Spaghetti: Managers typically spend over a third (36 percent) of their week number crunching in spreadsheets. In fact, 82 percent of those involved in scenario planning use spreadsheets to manipulate and investigate data during this task. Vintage Data: Handling data this way means it becomes outdated quickly — on average, data used to make decisions is more than four months old, worse still is that 28 percent of managers do not even know the age of the data they use.
- Outdated Planning: Scenario planning fares little better, with data being typically six months old, with almost a third (30 percent) again not knowing the age of critical data, it is no surprise that 95 percent of respondents involved in this process encounter problems.
- Poor Agility Creates Consequences: It can take nearly a year-and-a-half to identify and amend a failing business process or initiative and 83 percent of companies admit to suffering consequences because of this. One third (33 percent) see plans become obsolete, 55 percent incur unnecessary costs and 43 percent witness a negative impact on employee morale.
- Silo-Mentality: Eighty-seven percent of businesses managers criticize their inter-departmental data sharing and communication, with 71 percent describing the links between strategic goals, operational plans and budgets as “fragmented.”
John O’Rourke, Vice President EPM Product Marketing at Oracle, said: “Management is clearly struggling to cope with the vast volumes of data being generated by their businesses, which is manifesting itself in a serious lack of visibility into profitability across the entire company. Without enterprise business planning systems to give organizations an end-to-end planning process that links strategic, financial, and operational planning to profitability and cost management, they are going to continue to struggle with fragmentation and have no option but to continue ‘making decisions in the dark.’”
“According to the research, most businesses appear to have a fragmented approach to performance management often underpinned by spreadsheets. This piecemeal approach to planning rather than opting for a holistic view can lead to dangerous inaccuracies, human error, and serious time lags. To combat this, leading edge companies are implementing common enterprise performance management systems that take the time and complexity out of ensuring all relevant information is delivered in a timely fashion, supporting more agile planning and decision-making,” said O’Rourke.
Professor Andy Neely, Deputy Director, AIM Research, said: “Organizations today face significant challenges in extracting accurate information on profit and performance. As the volume of available data increases, so does the complexity of organization structures. The shift to shared services, accompanied by the tendency to outsource and partner, makes it more difficult than ever before to allocate costs and apportion overheads. As this research shows, the consequence for executives is a partial picture of performance.”
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