Cloud offerings are starting to make an impact on the ERP market, but traditional solutions still prevail. In part two of this special Computerworld feature Ulrika Hedquist talks to a cloud provider, a large enterprise user and a SME user about ERP solutions.
ERP in the cloud
Ninefold is an Australian IaaS cloud provider, offering customers demand-based computing power and storage. The company, which is backed by Macquarie Telecom, was founded in 2011.
The company is based on the self-service business model – customers go to Ninefold’s website, sign up using a credit card and instantly get access to the virtual servers, storage and the networking they require. There are no plans and no minimum spend requirements and customers only pay for what they use, says Warren Bain, program manager and co-founder of the company.
“Customers can scale up or down from a smaller to a larger server, or add more servers,” he says. “At the end of the month, the bill is computed based on whatever you use.”
The customers are typically non-corporates, Bain says. They are primarily entrepreneurs, web start-ups, developers and digital agencies.
“We also have some more traditional companies that want the flexibility associated with not having to run their own hardware, and who don’t necessarily want to sign up for the kinds of long-term contracts that are required for traditional hosting.”
This all sounds very flexible and modern, but how to manage billing? One of the options was to use parent company Macquarie Telecom’s internal, self-developed billing system, he says. But the young company decided not to.
“We needed something that was going to be highly scalable; multi-currency; and multi-gateway,” he says.
Ninefold decided to adopt cloud-based platform Zuora as its billing and payment engine. This cloud service automates and manages all customer billing requirements from sign-up through to Payment Card Industry Data Security Standard (PCI DSS) compliant management of credit card data, invoicing, payments and reporting, says Bain. This means Ninefold doesn’t store any credit card information in its own systems – it’s all stored in Zuora.
“We’ve got several gateways plugged in to handle different currencies, and you can swap out a payment gateway provider if you come up with a better deal or if you are entering a market that requires someone else,” he adds.
Every month, Ninefold uploads its usage into Zuora and the process of getting a couple of thousand invoices out to customers is “very smooth”, says Bain.
Another benefit of the Zuora system was set-up speed, he says. It took about a month to set up the integration and for the billing system to be up and running.
Ninefold has a lot of infrastructure and software systems to manage, and this is one area the company doesn’t have to put too much time into, in terms of running another server or another set of software, he says.
“Building systems is not where we want to spend our time and effort. We don’t want to be maintaining billing software,” he says.
Customers want to get their bill and understand it, he says.
“The fact that you’ve put a lot of time and effort into making it groovy doesn’t really help them. You want to put your effort into customer-facing features and Zuora has allowed us to do that.”
But there have also been a few lessons learnt along the way. If you are considering adopting this kind of subscription model, take the time to think through how to structure the product catalogue, Bain says.
“We didn’t spend enough time designing our product catalogue.”
If they were doing it again they would spend more time and engage some people with expertise to better understand the best way to design the product catalogue and how subscriptions would work, he says.
“We’ve gone through that exercise now, trying to come up with a much more flexible way of combining different sets of products into bundles.”
Ninefold is using Salesforce.com as its CRM solution, which integrates with Zuora. Only certain people in the company can access Zuora because it holds sensitive information, he says, but the ability to push billing status information from Zuora to Salesforce means that support team staff can look up details like current balance and last invoice in Salesforce.
Ninefold has two datacentres in Australia and one in the US.
Communicate with the business
Construction company Fulton Hogan is in the middle of an upgrade to JD Edwards 9.0. The project kicked off in February and is expected to be completed in October, says group CIO Brian Northern.
The main reason for the upgrade is that the current version, Xe – which has been in place since 2001 – goes out of support at the end of the year.
Fulton Hogan is part of SCIRT (The Stronger Christchurch Infrastructure Rebuild Team), an alliance that is responsible for rebuilding horizontal infrastructure in Christchurch following the earthquakes in 2010 and 2011.
“The risk of running an unsupported system is too great,” Northern says. Through the Oracle “Giving Program”, Oracle has “substantially” reduced the licence costs to help rebuild the community, he says.
The main reason for choosing JD Edwards back in 2001 was its job costing functionality that fitted the construction business well, and that is still one if the main benefits of the solution, he says.
The organisation did investigate a few other options before going ahead with the upgrade in February – one of them was SAP – but the cost of going to anything new was too significant. Fulton Hogan also had a tight timeframe.
“It would have had to have been a very compelling reason for us to change,” Northern says.
So the company decided to do a “light” upgrade to the latest version of JDE and then gradually look at adopting new functionality, he says.
Another advantage of the upgrade is replacing a number of legacy systems, which means reducing cost, he says.
Northern’s advice for a successful ERP implementation is to concentrate on communication to the business. It’s important that it’s seen as a business-led project rather than IT-led.
“Get the business to drive the requirements and the investment into the ERP system,” he says.
Also, put a lot of time and effort into change management, Northern advises.
“Make sure there are no surprises,” he says.
Fulton Hogan has an application reduction strategy to extract as much as possible out of its ERP system.
“In order for us to get additional value out of it we try to rationalise our other applications,” he says. “So we would look at a bespoke application and redesign the processes and fold that into our ERP system.”
Heavily customised works for SMB
Imake, a supplier of equipment and ingredients to make alcoholic drinks, cheese and yoghurt, is using a Sage ERP system.
Headquartered in Albany, Auckland, the company has operations in Australia, US, UK and South Africa, and has additional distributors across Europe and in China, says imake’s CIO Victoria Eastwood.
The company started using the Sage solution in 2000 after investigating a couple of different options.
“Accpac had an international reputation, which was reassuring, and once we saw the product demo we were hooked,” Eastwood says. “Other packages can compete with their financial packages but for full ERP, Accpac’s Inventory/Order Entry modules really outperformed anyone else when we were looking.”
The company has invested heavily in customisations, she says. Even though it’s a relatively small business it has “a lot of complexity in our production and manufacturing processes”.
“We make stuff,” she says. “We start from scratch, make up a batch of flavour and bottle it. We are also buying different products from overseas and then assembling them into another type of kit [here].”
There are so many levels of bill of materials, and suppliers from all over the world with varying lead times, terms and minimum buy quantities, she says.
However, customisation around its material requirements planning became a challenge, she says. But with the help of business software consultants Enabling the company was able to create a solution with “better visibility of information than we have ever had before”, Eastwood says.
* See also Can ERP transform your business.