by November 7, 2009 0 comments

For an enterprise to be competitive in its business, it has become imperative
to have business application software that can monitor the organization’s
workflow, connect people with each other between disparate departments and can
present relevant information quickly during critical business decision making.
Thus applications like ERP, CRM, BI, etc. have become the heart of functioning
for today’s enterprises. ERP, for enterprise wide information streamlining, and
CRM for streamlining the customer management business processes are a few
business applications that have helped enterprises to achieve success in the
competitive global marketplace. There are major product vendors like SAP,
Microsoft and Oracle to name a few in this enterprise application arena.

Since business applications like CRM or ERP touch almost every aspects of a
business, it’s advisable to investigate all options to arrive at the best match
that’s worthy to the investment you are doing for your enterprise. Also, now
there are other deployment modes available besides deploying applications within
the enterprise’s premises, which include SaaS and Cloud based delivery modes.
Today’s business environment is dynamic and forever changing, therefore
enterprise apps such as ERP and CRM must be flexible to adapt to the changing
business climate and capitalize on new opportunities. It is one that will have
long-lasting effects on enterprises’ overall performance. Thus, while choosing
any enterprise class application for your business, consider the following
aspects while evaluating a business application for your enterprise.

Aspects to consider when choosing business applications
for your enterprise:

  • Relevance to your business or vertical market
  • Industry or peer references
  • Total Cost of Ownership
  • Flexibility to customize or integrate
  • Vendors stability to provide long term support and maintenance
  • Industry recognitions
  • Technology platform
  • Technical resources availability
  • Alternate deployment models (On Premise or SaaS/Cloud)

Alternate Models: SaaS and Cloud
There are solution providers who provide business applications like CRM and
ERP over the Internet. This type of SaaS (Software as a Service) or on-demand
model offer savings for an organization as most of the hardware and solution
expenses will be borne by solution provider itself. Most businesses prefer
on-premise deployment of the business application software largely due to data
security concerns, and for customization needs and system control over the
applications. The SaaS based applications are more suitable for those whose
requirements can be met by standardized software. The benefits of opting for
SaaS based model are that you get fast-paced implementation and regular upgrades
and startup costs are low.

Downside is that, SaaS based solutions are not flexible enough for
customization. Microsoft and Salesforce are popular SaaS based CRM solution
providers, while SAP and Ramco Systems have initiated offering ERP solutions
over SaaS model.

Though Cloud based solutions are just an extension of SaaS based solutions.
The Cloud computing is based on more virtualized environment and there is no
resource constraint for an application. Therefore an application hosted on Cloud
platform will be able to harness the computing powers of the resource with no
constraints, i.e. if the requirement of application increases, the resource
allocated will also scale up dynamically, whereas in SaaS platform, the
resources allocated for an application are reserved and not dynamic. If you are
opting for a Cloud service you will have all the benefits as those of SaaS
services, while you can also have liberty to have scalability option for your
applications depending on the use of the resources or demand.

With increased rate of adoption of SaaS based or Cloud based services, there
are few considerations to be kept in mind while opting for a service. First you
have to decide what all information you can trust to be kept outside your
premise, and depending on that you can opt for applications that you can have
hosted on SaaS or Cloud environments.

Cost consideration while buying business applications
Mr. Shiv Kumar, Executive Vice-President, Business Development, Zylog

“In the ERP/CRM world, the software cost of a solution is usually less
than 20% of the total costs. The Total Cost of Ownership, therefore,
represents a very important way to compare one ERP/CRM solution to another,
because it captures the costs beyond the software cost. So the cost
optimization should be applied on the customization, servers, and storage,
training and support components. In contrast, Return on Investment (ROI)
largely is focused on measuring benefits to see if they exceed the costs of
implementing the ERP/CRM system. The major ERP vendors offer ‘Pay as you
grow’ pricing model for their hosted version which would minimize the cost
of licenses, infrastructure, maintenance and support though the
customization flexibility is limited.

The enterprises planning any ERP/CRM investment would be wise to complete
an ROI analysis first. The ROI analysis will determine the financial
significance of the project, and the speed of payback. Then, once you have a
good business case, conduct a TCO analysis on at least two solution
providers. A thorough TCO analysis will pinpoint where the differences are
in total solution costs, over a multi-year time frame. This two-phase
approach ensures that you will not only get a good return, but that you
ultimately will work with the most cost-effective solution provider.”

Secondly, since these services are to be delivered over the Internet you have
to ensure necessary bandwidth allocation for it. Also, while signing the SLA, do
ensure that the provider for SaaS or Cloud service is ensuring more than 99.9%
uptime. Because even a meager 0.1% downtime can be expensive for your
organization’s productivity.

Integrated suites
An enterprise comprises of several departments and for each department,
there are several business applications available. For instance, CRM is an
application for customer management and for HR and payroll, there are Human
Resource Management apps available. All these standalone applications referred
as ‘silos’, don’t talk to each other. The implementation of an ERP system to
overhaul and automate business processes is a strategic investment for any
organization. While the idea behind an ERP application is that, it is a suite
that works together to achieve seamless business processes, therefore while
evaluating any business application for your business needs, it becomes
essential that the application supports SOA architecture.

There are standalone solutions for each business activity, but for seamless
business environment you cannot achieve much through them. It’s good to have an
integrated ERP solution that can integrate all business processes of an
organization. It gives advantages like standardization, lowered maintenance
costs, and organized data integration. Coming to budgetary implications of
standalone apps vis-a-vis integrated ERP solution, with stand-alone apps an
organization has to purchase licenses for each of the application, train the
staff for every installed application and also maintain different teams for each
applications support and maintenance. While with an integrated ERP suite, an
organization gets a single suite that caters to all needs of the organization.
There is the single vendor who provides support as well as necessary
maintenance. While the employees have a single application interface they don’t
have to learn different applications to access information of different

Relevance to your Industry
The ERP market is dominated by the likes of SAP, Oracle, and Microsoft among
others who provide a complete suite for most industry verticals. Manufacturing,
finance and operations and logistics were a few of the industry verticals that
were primarily using ERP solutions. But with the advent of ERP being implemented
in almost every industry sector, these major ERP vendors have also incorporated
packages to support the new industry verticals, which include real estate,
agriculture, apparels and footwear industry as well.

Since solutions developed for generic businesses can’t satisfy the
specialized requirements of industry specific enterprises, it becomes imperative
to choose a solution that is designed or customized to meet requirements of a
specific industry. This becomes the second step while considering a business
application for your enterprise, because the industry specific business
applications are designed to comply with industry’s best practices, compliances
and government regulations. For instance, even though an apparel company will
fall under manufacturing industry, its requirements from an ERP solution are
very different. SAP offers a specific solution called AFS (Apparel and Footwear
Solution), that is targeted to meet the requirements of the apparel industry.
So, when you are choosing a solution like ERP, then go to vendors who have
products catering towards your industry vertical.

Open Source solutions
Enterprise solutions market once dominated by proprietary solutions from
Microsoft, SAP, Oracle, IBM or Ramco Systems, sees a tremendous flux in open
source domain towards business applications like ERP or CRM. On,
there are more than 400 ERP Open Source solution available for download, but if
you wish to opt for an Open Source ERP solution from them then it’s a tough call
as there are very few success stories. Compiere and Open-Bravo are the most
popular Open Source ERP solutions. In the Open Source CRM side, there are
solution like SugarCRM, Vtiger CRM, etc. available. For an enterprise which is
planning to implement ERP solution, but can’t find any solution that meets its
requirements, they can have their developers team work on Open Source solutions
to customize the solution as per their requirements.

The major hindrance that an organization can face in opting for an Open
Source solution package is that they will not be having any implementation
partners for the solution. Also support and maintenance are the major factors
that an enterprise considers before opting for a solution. With Open Source the
support isn’t guaranteed. Another factor could be that of customization, the
enterprise will have to do that on their own.

Costs involved
While implementing business applications like ERP or CRM, enterprises dish
out huge amount of money to expect greater RoI. The major part of such an
investment is not the software cost, but the cost involved in planning and
implementation of the application. Consultancy consumes the major part of ERP
implementation cost. Besides, the implementation will involve additional costs
as well. Training of employees across the organization, converting the existence
data and integrating that into the ERP system are few examples where costs would
be incurred. IT infrastructure cost and annual maintenance costs also add to the
expenditure bill. An enterprise should consider all these cost consideration and
devise strategy accordingly for their budget so as to maximize returns from
their investments.

Some Cloud Service Providers

  • Amazon EC2 : Web Application hosting platform
  • Google AppEngine: Still in beta phase for application hosting
  • SugarCRM: Offers their commercial version of open source CRM hosted on
    a Cloud
  • Microsoft: Offering their online suite of business applications
  • RackSpace: Provides Cloud storage as well as Cloud based application
    hosting facility

Business Intelligence
Business Intelligence (BI) in recent times has become a tool that has become
part of the ERP solution package. The BI tools helps an enterprise to take
better informed decisions by organizing, analyzing and reporting the information
generated as reports and summaries. But in an enterprise the information is not
confined to just an ERP or CRM application, rather there is mountains of
information in other datastores as well. Therefore, now organizations are
adopting third-party BI tools that could fetch data from all of enterprises data
repositories including those of ERP and CRM, and provide reporting and analytics
facility on them. To accomplish BI success, organizations should identify their
business pains and align their solutions to these issues.

Vendor selection
Choosing the right vendor or implementation partner is as important as
selecting the appropriate solution for your enterprise. Before finalizing a
vendor for the implementation, consider following aspects:
References: You can learn about vendor or even the implementation
partner’s credibility to successful implementations through their past
customers, through press releases and also from the peers in your business
network. This way, by interacting with other customers you can come to know
about the challenges faced during the implementation and also the reasons for
failure. The peers from your business network group can recommend you what
software or vendor to choose from their own experiences.

Implementation support: The success of the implementation lies in the kind of
support and services that the vendor provides for the software solution. The
implementation phase requires implementation partner to have domain expertise of
the industry vertical where the solution is to be deployed. M&B Footwear faced
challenge of not being able to find any vendor who had experience of having
deployed SAP’s AFS module for a footwear industry. If the implementation partner
don’t know the industry, kind of available solutions, then implementation is
bound to fail. The only way to ensure success is to involve partners having
knowledge of both, domain and solution.

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