deal architect

The Real Deal: Bob Ferrari on The Industrialization of Technology Supply Chains

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

This time it is Bob Ferrari, a top notch supply chain and enterprise software industry analyst. He is the Founder and Executive Editor of the Supply Chain Matters blog and managing Director of the Ferrari Consulting and Research Group LLC.

“When we met recently, we discussed Vinnie’s recent book The New Technology Elite, and in particular, Chapter 2, The “Industrialization” of Technology. Vinnie discusses the global supply chain fulfillment capabilities of high tech and consumer electronics providers like Apple and Hewlett Packard. Vinnie asked me to elaborate how demand forecasting and supply chain execution in the high-tech industry differs from that of traditional supply chain leaders as in the CPG industry that I have tracked for years now.

In the past four fiscal quarters Apple shipped over a 177 million iPhones, iPads and Mac computers. That is an average of over 485,000 device fulfillments per day, 7 days a week. That volume represents extraordinary global supply chain management strategies and capabilities. A global supply chain can further present many opportunities for disruption or glitches, but firms like Apple and HP have invested in supply chain processes that are response oriented and risk aware.

Some of the answers were touched upon in the book. The mastery of both physical and informational capabilities related to the global supply chain with an expectation that there is never a static plan, but rather constant proactive response to whatever the business and the supply chain requires. High tech industry players were the first to dive into global outsourcing and the establishment of an elaborate global network of suppliers and contract manufacturers. This is an industry with a long history of continuous, high-frequency product innovation cycles. This translated to the need for the supply chain to be highly connected and able to support agility, flexibility and responsiveness to constantly changing business needs.

These companies learned that planning the supply chain based on traditional supply chain planning and demand forecasting techniques, namely historic data and plans driving future plans, was not going to be sufficient. Achieving upwards of 50 percent forecast accuracy would be the best one can expect given the constant cycles of new product introduced in the market. More importantly, the clock speed of the business does not allow for a sequential demand planning process, but rather a continuous, net change planning process A holistic strategy of demand-driven supply chain response, supported by highly interconnected planning methodology, was essential.

Supply chain design shifted toward what is commonly described as combination push-pull supply chain models. In the push component, the most critical long-lead components, such as semiconductor laden devices are secured by longer-term, annualized purchasing agreements where capacity and flexibility needs are negotiated in a long-term planning window. Certain high tech companies invest large amounts of up-front cash to secure both a steady supply stream and a contingency upside or downside to accommodate whatever the market brings. In the case of Apple, this amounted to billions of dollars. Procurement supply teams continuously manage the overall supply flow based on both dynamic production schedules and continuous information received from product demand channels. One the other key benefits of this long-term supply commitment strategy is that in times of major supply disruption, such as the 2011 tsunami in northern Japan, and later, the floods that impacted Thailand, these companies were not as highly impacted as other industry players.

The “pull” aspect essentially involves a network of contract manufacturers that assemble, package and ship the final product. The world’s largest, Foxconn, is a partner to many high tech companies including Apple. Contract manufacturers have invested in high volume production capabilities that include the ability to ‘flex” up or down rather quickly based on market demand, and in some cases, have built vertical manufacturing capabilities that can accommodate the production of metal casings and other components. They have established robust B2B information connectivity and supply chain application connections with their OEM partners and fostered processes with agility in-mind. It is not uncommon for many of these contract manufacturers to be able to respond to changed product output requirements overnight. There have been published stories of Foxconn responding to Apple last-minute requests by literally calling back a complete shift of workers, or responding to a requested product change in a matter of a day. Dynamic CRM and online fulfillment capabilities constantly monitor both on-hand, in-transit, and planned product inventories, dynamically offering promotions for those products on-hand, as well as predicting fulfillment needs based on actual buying activities.

Underpinning high tech supply chain business processes are highly interactive sales and operations planning processes that bring together the many cross-functional and B2B supply chain teams in daily, weekly and monthly reviews. Supply chains are highly connected with B2B networks and highly collaborative information technology. The overall planning, synchronized execution and information intelligence of these super-agile supply chains are designed with principles of demand response, supported by deep informational intelligence, real-time scenario-based planning and what-if business intelligence capabilities. The demand fulfillment plan is a continuous flow of information supported by a combination of response-based planning and synchronized execution processes.

In summary, the answer to Vinnie’s question is that you and I take for granted that our smartphone, electronic tablet, laptop and other cool product fulfillment needs are instantly gratified because extraordinary supply chains have in reality, married advanced supply chain practices, planning and fulfillment response within the “industrialization” of information technology.”

Bob can be reached via Twitter @bob_ferrari

The Pursuit of Employee Delight – Part 5

The last part in the series from Sukumar Rajgopal, CIO at Cognizant.  The kick off column was here. Part 2 is here. Part 3 is here and here is Part 4

“We started envisioning the Meeting Concierge app to streamline the process of booking of a multi-site Tandberg meeting. It would have been quite straightforward to create a conventional app with scheduling screens to solve the problem. But that wouldn’t meet the 500% productivity gain constraint as well as the no change management constraint.

The team brainstormed a breakthrough idea – the user who is scheduling a meeting using Microsoft Outlook will continue to use the same method with a small change. The meeting organizer will add Meeting Concierge as an additional participant into the meeting. Once this is done, the Meeting Concierge uses the associate’s current location from the Global Seat Management System of Record and finds the nearest Tandberg room automatically from the conference room inventory database. And by using the Tandberg APIs, it also schedules a bridge for the duration of the meeting, automatically.

Wait, it gets better, the Meeting Concierge also automatically updates all participants’ Outlook calendars with the conference room details.

Boom. This whole process now takes a few minutes instead of the previous few hours. Massive productivity gain and delight for users was achieved.

As you can see, the Meeting Concierge is a great example of the social design techniques we use to create new kinds of apps.

With such apps, the OneCognizant platform was gathering momentum rapidly. In Feb. 2012, we hit 85% employee coverage on Oneclick tasks. Accolades started coming in.

In March 2012, OneCognizant was recognized as a “Top 5 Innovations of the Year” by the prestigious NASSCOM Innovation Awards program. We were a tad disappointed that we didn’t make the final Top 2 list.

We requested Geoffrey Moore, the innovation guru who coined the term “Systems of Engagement” to provide his impressions on OneCognizant for the CIO 100 Awards nomination. He had this to say about One Cognizant:

“What is impressive is how deeply an enterprise IT initiative has embraced the design rules of user experience design and social design. The ideas around Systems of Engagement have been circulating for some time, but few CIOs have been able to enact them, most still being held back by the pull of the past."

We are very pleased to see that OneCognizant has been chosen as a CIO 100 honoree.

On May 7, 2012, just 372 days since global availability, we hit the 5 million app launches milestone. We now have 251 Web apps in the App Store, releasing 10 new apps every month on an average. The “Like” count on the platform has reached 50,000.

Clearly, these kinds of stats, tell us that the program is headed in the right direction and has gathered significant momentum, though it is still early days.

But given that we are an organization of 140,000-plus people, these stats could be called vanity metrics (as Eric Ries calls them). We need a more direct measure of the platform’s value creation benefit. Fortunately, we were able to add a question on the OneCognizant experience in our annual internal satisfaction survey. We were very pleased when 75%-plus associates gave OneCognizant a rating of 4 or better on a scale of 5.

Obviously, this sort of accomplishment doesn’t come without a massive team effort. We are indebted to all our internal customers (process owners) who collaborated with us closely to make this happen, our executive team that is fully behind this program and our partner teams to whom a lot of the work was insourced. I would also like to place on record a special mention of the Microsoft Consulting Services team that worked with us closely on this program. Last, but not least, our gratitude goes to every member of my team who toiled long and hard to make this happen. “

The Pursuit of Employee Delight – Part 4

Part 4 in a 5 part series from Sukumar Rajgopal, CIO at Cognizant.  The kick off column was here. Part 2 is here. Part 3 is here and here is Part 5

“Early adopters really liked the key features of the MVP – web apps in an app store, “Like” buttons, game mechanics, the oneclick timesheet, etc. Approval by email for key transactions was a big hit with senior management. But we had hit a big roadblock.

One of the core promises was the 500 msec response time. We were able to approximate that target after a lot of struggle. However, when the SoE (System of Engagement) layer handed control to the back-end SoR (System of Record), a delay was introduced. This delay was as high as 40-50 seconds. Due to this we had to introduce an intermediate screen called “Waiting for backend”. This became a big concern for early adopters because it completely violated the 500 msec promise.

If we didn’t solve this problem, our core promise of a speedy application was out the window.

Again, the team rose to the challenge. We engaged experts from our Oracle Solutions Practice, Microsoft CoE (our CTO’s team), Performance Engineering CoE (Testing Practice) and Data Architecture CoE (Advanced Solutions Practice). We also engaged Architects from Microsoft. The cross functional collaboration worked. We completely eliminated the “Waiting for backend” screen by bringing the handoff delay to a few msecs.

After much back and forth within the team, we launched the platform to a global audience on April 30, 2011, just nine months after we started the program. As per our self-imposed constraints, we didn’t send any blast emails or any marketing communication.

We were all feverishly tracking the usage statistics with bated breath. On Aug 10^th, the 100^th day after the global launch, we reached 100,000 unique users. That was a significant milestone in our journey and confirmed our faith in the overall strategy.

So far, we have only covered the platform aspects and not the web apps. I want to highlight one app that is the exemplar for the 500% productivity gain strategy. At Cognizant, we have been rolling out the Tandberg Telepresence system (now part of Cisco) over the last two years. It has had a significant impact on how we collaborate as a globally distributed organization. The popularity of the system introduced a new problem for us – a typical Tandberg meeting is a multi-site meeting cutting across sites distributed around the globe. Video conference call organizers had to talk to the conference room admin in the respective locations (only a few have Tandberg facility) and then talk to the Tandberg admin and schedule a bridge for the call. This whole process required numerous calls, emails and back/forth if rooms were not available, making the process of booking a Tandberg meeting a frustrating chore. Our pain point surveys showed that on an average it took two to three hours of a person’s time to book a multi-site Tandberg meeting.

We decided to tackle this problem. See how later today”

The Pursuit of Employee Delight – Part 3

Part 3 in a 5 part series from Sukumar Rajgopal, CIO at Cognizant.  The kick off column was here. Part 2 is here and here is Part 4 and Part 5

As described in the previous post, our goal was to produce a OneClick timesheet. This proved to be a tough challenge because the foundational software was a third-party application. But our team persisted. We brought in experts from various parts of Cognizant and solved the problem.

Now we had the germ of the idea proven. But where do we begin? There were so many application systems on myriad technology platforms. One of our teammates suggested that we do an ethnographic (or anthropological) study to understand our users better. That was a great idea. We pursued it.

We conducted this study by identifying the top 25 tasks that associates perform using corporate IT applications. We decided that the minimum viable product should be to OneClick-enable the top 25 tasks.

Is this sufficient to produce associate delight? We went over the five major problems, which we outlined in the first post, again and decided that we needed to a few constraints to guide our designers. We came up with five that would enable us to produce delightful designs:

1. 500 millisec response time for the applications.

2. 500% productivity gain from the previous way of performing tasks.

3. No change management effort – no mail blasts, no marketing campaigns, no training/elearning, etc.

4. No email alerts from the platform.

5. Apps should be rolled out in a few weeks instead of the typical several months or years.

I am sure you see that all five constraints are “seemingly impossible.” When we first mentioned the 500% productivity gain, the response was eye-rolling skepticism. Though the OneClick timesheet proof-of-concept did improve productivity significantly, the team found it hard to accept that 500% gain was feasible or even attainable.

We needed some inspiration. We scoured the history of software development, history being one of our favorite sources of inspiration. We struck pay dirt with CDDB  . Understanding CDDB’s brilliant solution is key to understanding how to produce 500%-plus productivity gain and it was a very simple idea. CDDB’s designers figured out:

1. A unique signature for a CD can be created by concatenating the track number and track length of all the tracks on the CD.

2. When a CD is ripped for the first time, the ripper enters the title, composer, singer information, which is stored in CDDB with the CD’s unique signature.

3. The next time someone else rips the same CD, CDDB furnishes the title, composer info which means the second and Nth ripper of the same CD need not key in the information.

4. Combine this with the fact that the music industry is hits-driven, so the CD collections of people have remarkable similarity.

5.Since title and composer information is stored in the database after the first instance is supplied, productivity gain, for mp3 music listeners, is incalculably high.

This design of CDDB, we believe, is the essence of social design. In case you are not impressed by CDDB, consider the fact that it was sold for $260MM to Sony in 2008 .

CDDB inspired us sufficiently to build apps that delivered similarly significant productivity gains.

Over the next few months, the team built out the MVP for OneCognizant and we rolled it out to a few thousand select associates. We were in stealth mode, another lean startup technique. Since there was no launch mailer or any marketing communication, only those few thousand associates knew of the existence of OneCognizant.

Feedback was slowly trickling in and it was quite positive overall. But we hit a major roadblock that threatened our 500msec goal which we will cover in the next installment of this series tomorrow.

The Pursuit of Employee Delight – Part 2

Part 2 in a 5 part series from Sukumar Rajgopal, CIO at Cognizant.  The kick off column was here. Part 3 is here and here is Part 4 and Part 5

“We were really intrigued when we heard Cognizant’s Malcolm Frank and industry guru Geoffrey Moore discuss the enterprise/consumer IT divide. They liken it to the Sunday night vs. Monday morning experience.

It goes something like this … on a typical Sunday night, we use our iPhones/iPads and interact with our friends via Facebook/Twitter etc. It is a delightful experience. Malcolm and Geoff call these environments “Systems of Engagement”. Then Monday morning arrives and we show up in the office and are subjected to applications like the Timesheet I described in the previous post. Adding to the misery is the landline phone, a gadget clearly from the previous millennium (and alien to most millennials who came of age with mobile phones).

We then asked ourselves this additional question – did any of us attend a training program, seminar or e-learning program to use the iPhone, iPad, Facebook, Twitter, etc? The answer, obviously is NO. Why then, we concluded, do users need training to use corporate IT applications!

We researched the Systems of Engagement concept further. Here are a couple of useful ones:

1. Future of Work [PDF] by Malcolm Frank & Geoffrey Moore.
2. A Sea Change in Enterprise IT by Geoffrey Moore [PDF]

Clearly, the Systems of Engagement concept as described by Malcolm and Geoff revealed a ray of hope that it is indeed possible to achieve associate delight. But it meant that we had to completely overhaul how we developed and deployed corporate IT applications.

Given that we already had invested hundreds of millions of dollars in our Systems of Record over the last 18 years of existence, we couldn’t really make the case to reengineer all production applications without massive new IT investments. In today’s cost-conscious world, that approach is a non-starter.

To dramatically reduce the scale of the investment needed for such a project, we decided that we will build a Systems of Engagement Layer on top of our existing Systems of Record.

Based on the additional research we did on Systems of Engagement, we realized that we needed a new method to design software which we internally call Social Design. Social Design leverages the idea that we all work “socially” today, thanks to the advent of Facebook, Twitter, Linkedin, Cweets (internal Twitter). It goes further by weaving “social” deeper into the design of the application as opposed to “social” being a separate layer. We also adopted Eric Ries’ “Lean Startup” method as a way to reduce the risk of rolling out an entirely new class of software that had few precedents in the enterprise IT arena in which we operate. “Lean Startup” was also a great fit for the extremely quick turn-around we were looking for – 6 months, instead of the usual multi-million-dollar IT program with a 3 year schedule.

Before we did anything, we needed to prove the concept to ourselves. That meant we needed to demonstrate that we could tinker with existing Systems of Record without major new investments and make them behave like Systems of Engagement.

We decided to tackle the timesheet app for the proof of concept. The task: Convert the entire timesheet scenario (a 6-step process as outlined in my previous post) into a OneClick timesheet.

Our goal: When the user clicks on the link to launch the app, s/he should be taken directly to the Timesheet screen (Step #5 in the 6 step process mentioned in the previous post). Moreover, the app should copy over the associate’s assigned projects from the previous timesheet.

Given that the timesheet software was part of a third-party ERP package, this would not be easy. Our thinking: If a OneClick timesheet could be accomplished, why didn’t the third-party developer design it as such to begin with?

Several internal experts said it wasn’t doable. Oops. What do we do now?

Stay tuned for the next part in this series tomorrow”

The Real Deal: Sukumar Rajagopal on a CIO’s Pursuit of Employee Delight

When I interviewed Sukumar, CIO at Cognizant for my book last year, he teased me with his vision of  “social design,” and his quest to deliver 500 percent productivity on Cognizant projects. I wanted to profile a lot more in the book on his initiative, OneCognizant but he modestly wanted to wait and I have bugged him every few months since to write a guest column on it.

Well, in the week where OneCognizant has made it to this year’s CIO 100 nominees, he finally sent me a book’s worth! I will run it in 5 segments starting with the first below.(Part 2 is here. Part 3 is here and here is Part 4 and Part 5 )It is an invigorating story of a driven  CIO who is not happy merely with tech buzzwords and on-time/on-budget performance.

“Sometime in 2010, June to be precise, I became CIO of Cognizant (Nasdaq:CTSH). Soon after starting on the new job, I checked with our top management (CEO, President, Group Chief Executive) on the primary goal of IT (Information Technology) at Cognizant. They unanimously said, IT should strive to produce “associate delight” (we call our employees associates). On behalf of the team, I accepted this goal as a key element of the IT charter – blame it on my newbie naïveté :)

When I checked with other CIOs on this, they were highly skeptical. They said it is impossible for a corporate IT department within a Fortune 500 firm to produce associate delight through software applications. It seemed impossible indeed, but we were not deterred. My team and I began our odds-against journey by discussing with associates across the globe about the state of Cognizant’s IT systems and identified five major problems:

1. Confusing navigation. There were just too many steps to reach the target screen. Developed by different groups, each application had its own multi-level menu structure. Lack of a common taxonomy further complicated usability.

2. Each screen had too many fields which frustrated users. Users had to go through several hours of training to use the key applications.

3. Some applications were slow, especially when accessed from locations far away from our data centers.

4. Each application had its own URL and required a separate login. Sometimes, one application had many URLs. Bookmarking could never keep up with this. Most importantly, new associates could never easily figure out which application was available at which URL.

5. All applications were generating huge volumes of email alerts to keep the workflow going. This resulted in tremendous e-mail overload.

Our timesheet application is a good example that illustrates the set of problems we identified. Every fortnight, associates have to fill out their timesheets.

In order to do that, they had to:

1. First log in to a URL that housed timesheet functionality.

2. Select a timesheet option from 25 alternatives listed on the landing page.

3. Then, on the next page, click on the “Create Timesheet” button, which is the only field on that screen.

4. In the next page, use a calendar control to select the period end date for the timesheet and then click “Add”.

5. Then, navigate to the “Timesheet” screen, select the projects to which they are allocated and then enter the time logged into the fields for each day of the week.

6. Hit “Submit”.

It is easy to see why associates were frustrated. Unfortunately, cumbersome usage like this was at one time common across almost all applications used by our associates.

The problems seemed insurmountable and really made us question whether associate delight was something worth chasing.

When we analyzed usability challenges more deeply, a surprising pattern started to emerge - obstacles like these were consistent across third party on-premise enterprise software and third party SaaS-based enterprise software, as well as home-grown applications.

We realized that the root cause is the fact that most IT systems were “Systems of Record” - carry-overs from the era of paper forms. What was originally a paper-based form became a software form with the same set of fields. Obviously this is an oversimplification, but you get my drift.

Our application rollout experience showed that change management costs (training, elearning, meetings, roadshows, etc.) far outweighed development expense, due to the fact that we are an organization of 140,000 people. This seriously affected our ROI forecasts, which were based on near 100% effective adoption of the software we rolled out.

Obviously we were in a pickle, big time. Around the same time, thought leaders Malcolm Frank (EVP Strategy & Marketing, Cognizant) and Geoffrey Moore (IT industry/innovation guru) were asking some provocative questions regarding the Future of Work, and the systems that power it.

My next blog post (tomorrow) will discuss how we applied their thinking to the problems at hand”

The Real Deal: Thomas Ryan on the evolution of Warehouse Management Systems

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

This time it is Thomas K. Ryan, a high impact manager and consultant in the fields of logistics, supply chain, and the solutions that fit those markets.

“Once upon a time, I was the first Gartner Group Research Director to dig into the Warehouse Management System (WMS) market place and vet the different vendors and articulate what this market was all about. I remember over the time that I was doing this for Gartner that there were a group of WMS vendors that tended to hover around the leadership square of the Magic Quadrant; once in a while they’d be in the square and the rest of the time they’d be on the edge. I used to call them the Gang of Nine. Besides them, there were upwards of 100 to 150 other WMS vendors or companies with WMS modules. Of course, all of them were on-premise providers. The challenge then was how productized and standard were their implementations vs. each was heavily customized from a solution framework/backbone.

Today things are similar, yet different too. The current push is SaaS based WMS vs. the on-premise model. In the past we had mainframe (or some other “big iron” like an AS400) vs. the client/server apps which was the “new” push. We still have heavily customized solutions, but not many. We still have ERP modules which may have more functions/features but lag behind the on-premise stand-alone solutions, just as they used to. There are probably 100 WMS vendors still around; some are new, some are just new names, and some have been absorbed by M&A activity. There are a few SaaS based WMS offerings around; some are from tier 1 on-premise vendors, some are new companies focused exclusively on SaaS, and others are marketing SaaS and delivering ASP (application service provider) hosted “in the cloud” solutions (see my article SaaS WMS Solutions – Modex 2012).

So in this situation today, you have to be focused on the fundamentals of vendor selection, just like the “old days”. You need to understand their vision for their product and its future evolution. SaaS WMS is new, not just a rehash of on-premise stuff. Is the company you are looking at serious about what it is doing as a SaaS based solution or is it just doing some marketing hype of its products to enter a new market segment on the cheap (see my article So What if my Vendor isn’t a True SaaS Provider? )?

You can’t ignore their technology and how they deliver their SaaS WMS solutions. Are they offering something that will really provide you and them the benefits that SaaS promises? Will they truly be able to grow the product without killing you with the updates as SaaS promises? Are they able to accommodate the bona fide reasons for having components on-premise, if those bona fide business needs match your requirements (see my article SaaS and WMS, is SaaS enough? )?

The technology drive brings forward key differences between SaaS WMS and the current crop of new on-premise WMS solutions vs. the older generation of on-premise WMS solutions. Specifically, there is a trend to a more configurable, application model based solution. This is virtually true of all the SaaS WMS and some of the new on-premise WMS solutions. What this brings us are tools that allow more business rule or work flow based modifications/customizations. These data driven changes and are easier to execute during the initial installation as well as add later as new functions become available or are required. High Jump software is leading the way in this respect with their App Station modules. These are modules that exist outside of the core WMS solution but can be added by download from the App Station and then simply configured. The core code is not altered. It is thus possible for FedEx or UPS shipping functionality to be available but only to those who need it. Most of the time, this kind of shipping function is implemented in the core code leading to a “code bloat” in the base solution.

Other new features driven by the technology platform are dash boards and graphical presentation of the key performance indicators (KPIs) for the warehouse. Again, this capability is most prevalent with the SaaS WMS but can also be seen with the newer on-premise solutions. Deposco, Snap Fulfill, High Software, and Smart Turn are all good examples.

Functionality is what meets your needs today. This is no different than how it has always been. Most SaaS based WMS solutions are new so expect functionality to be less than the tier 1 on-premise solutions. Thus, you really need to be sure that they have what you can use. Don’t just look for how your processes work today in their new solution, look for your real REQUIREMENTS and learn how you can use their functionality to meet those requirements.

The WMS software offered today vs. what was offered back at the dawn of today’s tier 1 on-premise vendors has its differences more in how they are delivered, versus what is delivered. The SaaS technology that underlies some of the new WMS offerings is the real change and that is not going to be attractive to everyone. What really hasn’t changed is software selection. The fundamentals remain. This is true for SaaS WMS as well as any other software solution. Be clear about what you need, what your requirements are. Do some thinking outside of your “how I do it today” box. Vet your options and choose the best fit for you based on vision, technology, function/feature, cost, and service and support.”

Tom can be reached at tomryan AT tkrconsulting DOT com

The Real Deal: Stan Swete on Business Value from SaaS multi-tenancy

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

This time it is Stan Swete, CTO and VP of Product Strategy at Workday. Besides being one of the best technologists in the enterprise world, he is also one of the nicest and most articulate.

“This week at Workday we have our auditors in to review the internal processes and controls related to development and delivery of our Software-as-a-Service solutions. This time around, the review includes an audit of how we implement multi-tenancy on the application and database server layers of our architecture.  Prepping for this review as I’m trying to write this column makes me smile, because it reminds me of how little Vinnie and other analysts want to discuss the merits or importance of multi-tenancy.  It took me more than one presentation to analysts to realize that while having a multi-tenant architecture is essential to being able to do what we do, my analyst friends would rather focus on delivered value.  So I have made it a New Year’s resolution to focus my 2012 comments away from our approach to SaaS and toward the value it delivers. 

The way to think about the value SaaS delivers is to step through all phases of the enterprise solution lifecycle and compare the old on-premise way of doing things versus the new way things happen with SaaS. Some of the obvious differences have been identified for these phases:

· Implementation. The ability to start a SaaS implementation as soon as the contract is signed because you don’t have to wait for hardware and software to be delivered and installed.

· Upgrades. Getting more frequent and cost-effective access to new functionality because the vendor manages updates and data conversions.

· Integration. Moving the execution and monitoring of integration to the cloud with solutions such as Workday’s Integration Cloud.

Two other areas of differentiation for the support and implementation phases get less attention, but data has emerged with more SaaS experience:

· Implementation. All mechanical tasks to support the implementation team are performed by the SaaS vendor’s operations staff that does them in production. This eliminates the risk and variability of having customers or their implementation partners figure out how they are going to do it themselves. It takes huge time and cost out of setting up, copying, and taking down the various environments needed during implementation.

· Support. Incidents that are fixed for one customer are fixed for all customers at the same time, allowing customers and the vendor to avoid more calls on the same topic. Also, since there is only one environment, neither the customer nor the vendor has to spend time trying to describe and replicate the customer’s specific environment.

Still, even after six years of experience, we continue to find additional ways the new model delivers greater value to our customers.  The most recent example relates to how performance enhancements and performance benchmarking happen with SaaS vs. on-premise software. In recent months, we’ve developed enhancements to how Workday processes payroll for customers with large workforces. This work resulted in significant performance and scalability improvements, which we published in a benchmark featuring payroll processing for a 35,000-person workforce.

Consider how performance enhancements and the resulting published benchmarks happen in the on-premise software world. The vendor creates a new version of its software with performance enhancements, designs a benchmark to measure improved performance, and then executes it on very high-end equipment provided by its hardware partners. The benchmark is published, and existing customers get the information in a report.  In order to achieve (or even get close to) the benchmarked performance, customers must upgrade their software to apply the performance enhancements, and/or update their hardware to benefit from the newest and fastest equipment used in the benchmark, and/or tune their database.

In the SaaS world it’s a little different.  We benchmark on the same hardware and network configuration all our customers use.  It wouldn’t make sense to speed things up by getting a higher-end box just for the benchmark.  Also, we make the performance enhancements developed for the benchmark available to customers in our production environment.  Our customers don’t get involved with upgrading software.

In the case of our work for large payrolls, the main capability we added was the option to run a single payroll across multiple servers for improved speed and scalability. The enhancement was tested with one of our customers on Workday 13 (the update all our customers went live on in April 2011). Our benchmark testing the enhancement was completed in July.  The performance enhancement was made available to our production environments team starting in Workday 14 (live in August 2011). The customer that tested the enhancement began benefiting from it in the production environment in August.  The customer’s investment in the process consisted of running payroll and observing that it completed correctly and much faster with the enhancement.

Interestingly, our customer let us know that members of its IT team were watching the initial test runs of our payroll optimization at the same time they were waiting for the arrival of a DBA consultant to help them begin a tuning project for an on-premise enterprise application they use.  In their minds the contrast was striking.

It’s too bad “PaaS” is taken as an acronym.  It could also stand for “Performance-as-a-Service.””

Stan can be reached at stan dot swete at workday dot com

Paul Turner on the “New” Two-Tier ERP strategy

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

In the 90s as AS/400s and LANs took off, many multi-nationals adopted two-tier ERP strategies – a mainframe based application for corporate and domestic subsidiaries, decentralized versions for international subs.

Paul is currently a Senior Director at NetSuite, but has spent a lifetime in and around financial systems at Hyperion (now Oracle), Callidus Software, Xerox, Electronic Data Systems, Citigroup, Standard & Poors and more. And done so around the world with a fine start with a first class honors BS in Computer Science from Lancaster University, England.

He writes about a new wave of cloud based two-tier ERP implementations.

“In the first wave of two-tier ERP you ended up with solutions like Microsoft Great Plains – but often with tens, or even hundreds of separate GP instances, and you had to hire local IT resources to manage each one. Or more recently, we are seeing warmed up on-premise solutions repackaged as hosted/cloud solutions.

I see seven ways cloud ERP redefines the term “two-tier”:

1. Accelerates entry into emerging markets and products. Fast-moving “companies within companies” can’t wait. Cloud ERP paired with global language, currency and regulatory support make it the ideal platform for supporting emerging and growing businesses.

2. Quickly deploys to meet the needs of M&A, divestitures and joint ventures. Cloud ERP provides a fast, flexible, cost-effective and repeatable ability to run the new business while shedding the infrastructure complexities typically inherent in the prior applications, avoiding lengthy ties and financial commitments to the prior parent.

3. Faster consolidation and better corporate visibility. Two-tier ERP doesn’t mean less visibility—it means more. Cloud ERP solutions like NetSuite OneWorld support all subsidiaries’ charts-of-accounts within a single instance. Consolidated financials can be pushed or pulled into the corporate ERP’s financials for final consolidation.

4. Eliminates the need to put IT boots on the ground. Cloud delivery enables deployment of mature, full-featured ERP without having to hire local IT resources. The whole subsidiary deployment process can be managed from the division or from corporate—cutting costs, speeding deployment and reducing your infrastructure footprint.

5. Customizes while staying up-to-date. True cloud ERP supports extensive customization that enables subsidiaries with different go-to-market needs to tailor to their requirements without being forced into deploying a separate instance or saddling the subsidiaries with version-lock.

6. Integration to corporate systems. It’s key for any cloud solution to integrate with on-premise systems in a two-tier model - so it ties back to the corporate Oracle and SAP instance. Done right, cloud ERP solutions provide an always-on web services based platform that can be accessed 24/7 by enterprise integration tools like Informatica, IBM Cast Iron, Dell Boomi or Pervasive Software to provide on-demand access to subsidiary financial data.

7. Elastic growth. Cloud ERP solutions like NetSuite enable dynamic growth as divisions and subsidiaries demands increase—there’s no need to provision resources in anticipation of demand.”

Paul can be emailed at pturner at netsuite dot com

The Real Deal: Steven Skinner on Moving towards an Intelligent Store

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

This time it is Steven Skinner who is VP of Cognizant’s Retail and CPG Practice.  Previously, Steven served as a Strategy Partner in Accenture’s Retail practice, VP at Home Depot, and GM for Microsoft’s Global Industry Strategy Practice – so an entire career in the retail industry. Here he writes about how the physical shopping experience needs to evolve.

“We’ve seen it coming. We’ve known its coming. It is now here…so why are we so surprised and unprepared inside of the Retail Store by the rise of the new-age, smart, technology-driven shopping?

This wasn’t one of those trends like social media that came out of left field and hit retailers. We have seen the step-by-step progress of mobile technology in Retail, which began in the late 20^th century and accelerated in the last decade (see Microsoft’s Smarter Retailing strategy circa 2004). Now we have seen full bore the rampant “consumerization” of IT at the shopper/consumer level. We have seen the power shift from store associate to shopper in terms of product knowledge, usage, substitutes and price points. Research tells us how “Generation Y” is influencing all other generations in the mass adoption of mobile technology, social media, and Internet-based commerce, along with the continued erosion of the mass media’s ability to influence shopper decisions. In other words, online/mobile/social shopping is no longer an emerging trend and the impact of this on physical shopping experience is increasing as you read this. Technology is changing the way consumers shop and the expectations of the new-age intelligent shopper will lead to make-or-break moments at the store. What now? Here are five ideas we have to extend the experience outside the store to within:

1. Retail must expand the concept of the store. The store must become “without boundaries.” We call it “Taking the store to the shopper, regardless of location”. Why is the shopper in aisle three treated worse than a shopper in a check-out lane or sitting at home? Think about that. The shopper making a purchase decision, but at the point of decision-making is given less information by retailers than any other channel. Why can’t the shopper receive store navigation maps with shelf assortments on his/her mobile so the shopper is guided through the browsing process while at the store? Better yet, why can’t the shopper have his “shopping recommendations” integrated with his online account and delivered to his mobile device or have access to time-based or location-based offers?

2. To enable number one, IT must embrace the shopper’s IT environment within its own retail store architecture. This “shopper architecture” must leverage cloud-based services to augment basic mobile device services to provide a rich and contextual shopping experience. Our shopper in the previous point would need the store’s Wi-Fi network and IT ecosystem to support the technology on his/her mobile device.

3. Retailers must embrace the mantra of “death to all fixed POS devices” (well, perhaps not all of them as they will have their appropriate place). But to the extent we can get more associates out from behind the POS and into “aisle three” to provide an improved shopping experience, we all know the positive impact on basket size and conversion rate with a shopper-assisted sell.

4. Why must coupon redemption (the third highest source of shopper irritation in the store according to our research) be manual? Wouldn’t it be great if the shopper showed up at the check-out counter (which, by the way, should be a mobile one) and the coupons from different manufacturers were applied automatically; and processed all the way through settlement? Retail should Automate and digitize everything. Similarly, why must return processes be so manual? Make it easy (they’ll love you for it. Sometimes your best customers are the ones who return the most!). Have the shopper log into a account on a returns ecommerce site, schedule a return , choose a credit or refund option and have them ship it to you from their nearest UPS or FedEx center.

5.  Think of how Generation Y consumes technology with friends via social media and then how they consume it as a POS associate Monday morning (POS doesn’t mean “Point of Service,” by the way). We have seen evidence that high associate attrition is driven by this technology environment dichotomy. Retail needs to Embrace the Sunday evening experience on Monday morning. A cash register with a big-screen PC isn’t half as exciting as the cool gadget that fits into the palm of their hands and it doesn’t keep them behind the POS (and it helps manage attrition through a better work environment also). Generation X and older shoppers are also fast embracing what technology has to offer. After all, who wouldn’t like a faster, better and easier way to do the weekly grocery shopping or hunt for that elusive perfect gift for a special occasion?

Like other channels (social, mobile and the Internet), the new “Intelligent Store” is equipped to fulfill the expectations of more empowered consumers. Getting there requires at the very least the CIO, the Chief Marketing Officer , the SVP of Store Operations and the SVP of Ecommerce to determine how to best treat increasingly techno-savvy, data-driven shoppers. Most importantly, it allows for the CFO to keep the store as an asset on the balance sheet, not a liability. We think that is a good thing.”

Steven can be reached at Steven.Skinner@cognizant.com