This morning I took some time out to visit with friends in Boston and a quick tour of beautiful Rhode Island with the family. My friend is a Finance Transformation leader at one of the leading Consulting firms. We got into an interesting conversation around Transformational Programs. This blog is a continuation to my series on “The Tsunami of Transformational Programs in the JD Edwards ecosystem.” In this new post, I want to talk through the topic – “Defining Business Transformation Implementations and Upgrades.”
Few years ago, I was introduced to the concept of ERP Transformation. Corporations were catching up with the new buzzword. What it meant to me then was like a drop in the ocean of what I ended up experiencing since then.
It started with Shared Services concepts in 2005. Slowly graduated to building “Globally Integrated Enterprise” (‘GIE’). There was a phase in between that integrated futuristic concepts of Shared Services to GIE.
Where we stand today is well defined characteristics of What Transformational Leadership should look like? In this next Series, I am going to reflect on various topics that defines Transformational Leaders particularly within the JD Edwards ecosystem.
- Defining Business Transformation Implementations and Upgrades
- Developing Executive Alignment through Value Maps
- Enabling Rapid Design through Visualization Technology
- Building Global Model Templates using Component Business Models
- Effective Program Management in Transformational Projects
- Transforming the JDE IT Enterprise through Smarter Application Development & Maintenance
- Transformation in Infrastructure through the Cloud
- The Future of IT through CAMS – Cloud, Analytics, Mobility and Social
While I will address these topics on priority, the order in which I deliver the content need not be in the same order as defined above. Here’s the first one in the Series: “Transforming the JDE IT Enterprise through Smarter Application Development & Maintenance.”
The year started out with a big news flash for the JD Edwards community. Forbes Magazine had done an article on JD Edwards titled – “Why JD Edwards Wins the Battle for ERP Leadership?”. Clearly it was a tribute to the phenomenal leadership being provided by the JD Edwards Product teams led by Lyle Ekdahl and John Schiff.
This news came on the back of a report from Wall Street Journal – Avon’s failed ERP Order Management Solution. A Colossal implementation sunk cost of $100 Million to $ 125 Million. And in the same month, Nucleus Research had released its Technology Value Matrix Second Half for ERP. The report unequivocally crowned JD Edwards as the leader in the pack of ERP’s.
Coincidentally one of the best kept Big Blue secret would be that IBM is JD Edwards longest standing partner (since 1977 when the product launched on the IBM platform). With over 1000+ implementations across 375+ customers, IBM has reinvigorated its affability and commitment to JD Edwards customers over the last 3 years. IBM recognizes that JD Edwards is winning the ERP Leadership Battle and sees itself as one of the only players that can bring IBM Software, Services, Hardware, Cloud and Managed Services to the JDE ecosystem.
Here are some interesting updates from the JD Edwards developments at IBM.
- IBM recently launched its new JD Edwards Website. The only company that can offer a full portfolio of end to end offerings to the JD Edwards community
- IBM had a full-fledged participation at Collaborate 2014
With 14 educational sessions, a Key Note on Big Data & Analytics, Well attended Surround events like Quest Reception, JD Edwards Upgrade Breakfast and IOUG Lunch, IBM’s presence was all over the Collaborate event.
There were some key handouts also that IBM was giving away to offer its overall thought leadership for the JD Edwards community. Here are a few of the links and documents.
- CIO Insights into the Global C Suite Study
- JD Edwards Customization and Upgrade Analysis
- IBM Cloud Managed Services for Oracle Applications
- Executive Summary: Converged Infrastructure and Big Data Analytics with Oracle
- IBM PureFlex System and the Oracle Database Virtual Appliance for AIX
In addition to all of this IBM made a ground breaking announcement of its latest offering for IBM i customers – “Upgrade into the iSeries Cloud.”
At Collaborate 2014, Oracle also made some exciting new announcements around the GA release of E1 9.1.4 and EnterpriseOne In Memory Planning Advisor
The renewed investment and Success Stories of JD Edwards Transformation goes to show that IBM is back in the game with JD Edwards. This in turn is an affirmation of what Forbes magazine outlined in their article that JD Edwards is winning the ERP leadership battle.
We were dashing through the snow – on our way back from the show……Quite literally the trip back from INFOCUS was uneventful but interesting drive through a snow blizzard and black ice. But thinking back, it was all well worth the trip and the drive. Compared to INFOCUS 2012, this year the show was several notches up in terms of quality and content. Here’s why I feel INFOCUS is turning into a must attend show for the JD Edwards community.
- Oracle’s Commitment: Over 70 employees from Oracle participated to make this event successful. Oracle also provided over 13 hours of content on the latest and greatest within the JD Edwards frame of reference.
- Educational Content: Quest offered over 180 in-depth educational Sessions digging into JD Edwards product modules like financials, HCM, Manufacturing & Distribution, supply chain, Real Estate, technology and Upgrades.
- Learning from JDE SIG leadership: The JD Edwards Special interest Group (‘SIG‘) was in full attendance and provided unparalleled opportunities to engage in round table discussions, network and share experiences with similar users and connect with Oracle representatives. You also need not be a SIG member to attend these sessions. If you are considering a SIG membership or participation, here’s a quick list that you can pick and chose from for future reference:
- Networking with Vendors: With a full house in the Vendor exhibit area it gave customers the opportunity to network and learn about the unique and diverse services that the vendors offer. There were 60+ vendors who participated as exhibitors or sponsors of the event.
- IBM Dinner at Ocean Prime: Without sounding biased I have to say that the IBM dinner at Ocean Prime was one of the best I have experienced at a recent event. For those of our customers that made it, would vouch with me that it was a memorable cuisine of food and drinks.
Most importantly it was a getting together of the JD Edwards community. Those who have been around these events for some time would know that the JD Edwards community is a growing (with 700+ attendees) yet intimate community. It was a great coming together of relationships and sense of community.
From the IBM side we had a good representation of our teams from GBS (Services), STG (Hardware), Software and our Oracle JDE Competency Center. A great testimony of the ONE IBM that we stand for in the JD Edwards Community.
Let me leave you with a JDE customer comment on Why INFOCUS is a must for the JDE community !
“INFOCUS is the true place for technical and functional users where ‘save 4 clicks by doing this’ training can occur.”
IBM’s Market Insights study on Mid Market Dynamics indicates that the North American IT Market shows strong growth. The expected 2013 IT mid market size is at $94 Billion growing @ 4% p.a., the study predicts the growth story to continue through 2016 at 6% p.a. with market size at $111 Billion.
According to U.S. Census data, middle market companies take in more than $6 trillion in revenues and employs more than 30 million people annually. The middle market executives who led these companies are expressing renewed optimism in their business prospects compared to a year ago (based on study by CIT: ‘Voice of the Middle Market’).
Here’s a perspective on three key metrics (market drivers, market overview and Channel Trends) that presents unprecedented opportunities in the emerging mid market growth.
IT Market Drivers: The key IT spending drivers as we see it hinges around the economy and adoption of newer technologies like Cloud.
The economy is clearly on the rebound with unemployment, housing, retail sales, improving. The Mid market has bounced back from recession but is still conservative on IT spending. Cloud adoption is the biggest disruption as we see mid market move faster towards adoption of these scalable and utility value technologies.
IT Market Overview:
- Hardware is 10% of the market and forecast to grow 4.5% from 2013 – 2014
- Software is 17% of the market growing at 4.2%
- Services is 73% of the market and growing at 4.1%
- Solution Spend is 77% of the total IT market and growing at 3.2%
- Five Industries (Industrial, Wholesale, Banking, CSI & Retail) account for about half of Mid Market IT spend
- Health Provider, Life Sciences, Telecom and Utilities will grow the fastest in 2013 for total market and mid Market
Channel Trends: The large IT product vendors have started to derive more than half of their revenue through indirect channels. We are also seeing a trend of Hardware Commoditization driving down margins and motivating business partners to shift mix to higher margin software and services with a focus on consultative industry selling.
The implications of these limits are that customers will look to business partners to give integrated services for solutions. Business Partners will also have to differentiate themselves on investment, education and enabling solution areas like Cloud.
The opportunities that these throw up are self-evident. We see an opportunity for every business partner to leverage market shifts and emerging trends to displace incumbents. For the agile business partners there is opportunity to exploit on competitors missteps As with any IT Product Vendor, there is opportunity for Business Partners to sell the totality of offerings by the Product Vendor (e.g. Oracle EBS, JD Edwards with full suite Fusion applications), by delivering integrated Industry Specific Solution.
Source: IBM Market Insights, QMV3Q12, July 2012, measured, plan rate
IBM or the Big Blue, has always fascinated me as the 100 year old company of innovations (watch – a century of achievements) more so when I competed against it as a JD Edwards vendor.
To think about it, JD Edwards started with IBM 36 years ago. Historically speaking, JD Edwards started as a custom programming shop in the late 70s, writing software utilizing the IBM System 3X as its foundation. JD Edwards evolved as IBM evolved and eventually branched out into other platforms. Even today IBM is the only company with an International Competency Center based out of Denver (HQ of JDE), where every new release of E1 and World goes through detailed performance testing on IBM hardware.
From green screens of JDE World on IBM platform to the present day, Cloud enabled virtual software, JD Edwards has come a long way and so has IBM. Last year JDE grew 21% YoY in the ERP market with global transactions in 60 countries and new customer acquisition up by 14% YoY. It has been an exhilarating accelerated story of growth compared to its peers and some of Oracle’s own stack of ERP products. To its credit IBM:
- Has more JD Edwards implementations through its history compared to most other players with 40% of JDE customers still running on an IBM platform
- Is the only company that offers the scale of offerings from advisory (blue printing, software selection, health checks), implementations, AMS, hardware and even financing to structure the right solution for our clients
- Is one of the leaders in its SMARTCLOUD offering for JD Edwards customers. It offers unparalleled scale and depth of expertise based on its traditional business in managing data centers. This is a very relevant and viable option for customers in need of moving to OPEX based IT spend versus CAPEX
- Is the #1 player in AMS globally. It’s sheer breadth of offerings and competitive pricing makes a compelling case to global JDE players considering Managed Services
At the end of the day IBM is the leader in enabling strategic TRANSFORMATIONS within an organization at Process, Technology and Application levels. And JD Edwards customers are experiencing major transformations thrown at it through business disruptions:
- Be it global consolidations due to acquisitions and global expansions into emerging markets
- Necessity for developing Shared Services Models
- Upgrading to a Cloud based platform
- Need for a single view of the customer globally and enhancing customer experience
- Or Optimization of Supply Chain environments
Reflecting back on the long historic relationship that IBM has had with JD Edwards, it almost feels like the journey of innovation has just begun.
Reflecting on the last two and half months Post Oracle Open World (2012), I cannot think of a single week that I have not discussed the concept of “Transformation,” with our clients. Three questions that usually stands out in these conversations are:
- Is Enterprise Transformation, the new jargon for “Business Process Re-engineering (BPR)?”
- How is Business Transformation different from IT Transformation? Is it the same?
- Can companies expect short-term ROI from their investments in Business Transformation projects?
Let me get some quick thoughts out. Enterprise Transformation is not the new jargon for BPR. Though BPR could form part of an Enterprise Transformation project. BPR in the past was primarily a concept that existed to highlight automation of business processes from a manual environment. In today’s world almost all systems are IT enabled but Enterprise Transformation is still being driven by returns that equity partners promise the shareholders, or an internal drive by corporations to go lean, or even to keep pace with the growth the business is experiencing.
Transformation encompasses both business & IT. It could even extend to Business Process Outsourcing areas that requires standardization. And Yes, companies should expect vendors to offer a model that make sure both short-term and long-term returns to their project investments.
Here are few pointers that I would list as critical for global companies embarking on a Transformation Project within the ERP landscape.
- Considerations around Financial Structure: The core of any ERP application is its financial structure design. Can the Chart of Accounts scale to meet the existing and future business needs? Are the key reporting requirements correctly mapped?
- Local and multi-basis accounting considerations: This is particularly important because of different accounting standards globally like US GAAP and IFRS. The goal is to transact once and report as many times as required. When you look at reporting at a country level, you need to have resources that understand both local basis of accounting and parent basis of accounting. Other issues that could be part of this consideration would be multi currency, multi calendar, rationalization of intercompany transactions, etc.
- Best Business Practices: For any Transformation program’s success, you need to have the program driven by best business practices. These business practices should work within the 80:20 model of system driven versus customization. Further, the customization should primarily be in areas of competitive differentiation for companies and the base processes should always be system driven. These business practices should also be tightly aligned with the business units KPI’s.
- Deployment Considerations: One size does not fit all. For some clients, singe instance strategy is the way to go. Whereas for others multiple instance strategy fits best into their organization. Companies that see themselves as operating in a single Global Business Unit (GBU) model often gravitate towards the singe instance strategy. Often these deployment includes Global Template build followed by Rollouts. The Rollouts could be Big Bang, Geographical, Functional or a Hybrid model.
- Interface Options: Interfacing is critical part of the stitch required in larger companies that need to collaborate between different systems. A Services oriented architecture is the best practice in developing the interface strategy.
- Data Conversion Strategy: Why do Transformation Programs fail? The same reason they succeed. One of the key elements being Data. In any transformation program setting up a Data Governance architecture is critical. This includes Data Mapping, Data Cleansing, Data Validation and Data Quality.
- Program Governance: The success of any Transformation program rests on the shoulders of how the PMO was staffed.Today companies are moving from a Program management concept to a Portfolio Management Concept. The reason being that these projects increasingly look like managing a Financial Portfolio. While being engaged in the main ERP transformation project, there are other projects happening in parallel that needs to stay synced up for complete Transformation. Change Management with the 3 pillars of managing Change, Communication and Learning within the organization is imperative. This leads to Program Governance and Risk management as two critical activities of the PMO.