Agresso Bucks the Slump (and Fights the “ERP Madness”) - Part 2

Part 1 of this blog series revisited Agresso’s post-implementation agility capabilities as a major tenet for the vendor’s continued growth in a hostile and depressed environment. The continued organic growth has been complemented by in-house developments, acquisitions, and/or partnerships.

More important, however, is the issue of whether Agresso has become a legitimate force to replace larger (and better known) competitors’ installations.

Namely, Agresso has for many years been trying to get people to feel that paying continuously for necessary ongoing changes (modifications) to their enterprise resource planning (ERP) systems will hurt them. Thus, it must have been frustrating for the vendor to, time and again, learn that companies are loath to switch ERP systems. As a justification, some users will cite the analogy of switching ERP with a brain surgery: it should be performed only if the patient is dying or is in a coma.

A recent IDC survey unveiled that a staggering 83 percent of interviewed midsized companies said that they would still buy from the same ERP provider, regardless of suffering from rigidity when the need to make changes occurs. Not only does this complacence and inertia resemble a true addiction (or at least feeling hopelessly stuck like in a bad relationship), but also, so do the symptoms of this irrational behavior. Namely, these companies constantly face many hidden costs and tend to repeat making the wrong decisions based on a lack of actionable information, to name but a few.

The problem (based on the above-mentioned supporting IDC survey data) is that current ERP buyers are continuously going through painful and costly business changes that they seem oblivious to – and have become sort of masochists.  Yet, when you outright ask them to make a switch to something else and more nimble (like Agresso Business World [evaluate this product]), they scream blue murder about how they don’t like change, and then stay put. Therefore, those businesses keep on spending huge amounts of their annual IT budgets on expensive consultants just keeping their ‘Big ERP’ systems current.

According to Cal Braunstein from the analyst firm Robert Frances Group (RFG):
“83 percent of companies stick with their current [ERP] supplier mostly because: 1) it costs too much to switch, 2) they cannot afford to invest the time to switch, 3) it’s not the biggest pressing problem, 4) the end user training costs or other elements make the return on investment (ROI) too far out…”

The Change (of Guard) is in the Air?

Still, Agresso believes that ERP buying habits are changing at long last. The downward trend we see in SAP or Oracle licensing revenues might suggest that organizations are unwilling to invest in a solution that hooks them into a never-ending cycle of “need-spend-need-spend.” With a recession already here (and who knows for how long), unnecessary IT spending is no longer an option. This is especially true for Businesses Living IN Change (BLINC) such as organizations in the people-centric or services sector, where change is frequent and inevitable for the multiplicity of reasons mentioned in Part 1.

At Agresso’s webpage, one cannot help but notice the provocative ERP health-check link. A prospective customer can then combine this health-check with TEC's study (yes, we do occasionally conduct tailored surveys for clients via our large readership and client base) on the impact of ERP platforms on an organization’s perceived ability to make changes. The study found that 70 percent of ERP users feel notably disadvantaged by their existing systems.

Last but not least, Agresso’s BLINC survey among 120 customers at Agresso User Group 2007 in Dublin (Ireland) showed over 70 percent of customers saying that they are making over 80 percent of all systems changes themselves. Furthermore, all of the system modifications are being done at the graphical use interface (GUI) level versus the more intricate application programming interface (API) level.

The “no programming required” message could be quite powerful. As global economic conditions have lately worsened, changing business demands are providing a much larger business opportunity for Agresso who offers a total cost of ownership (TCO) that can be a fraction of that of the multi-billion-dollar ERP giants.

Realizing the Bigger Picture

As economic circumstances further deteriorate and as C-level executives move from a view that “things aren’t so great” to pure “desperation” (either internally induced desperation or as a by-product of angry boards, stockholders, or equity partners) there is likely going to be a change in corporate/organizational philosophies from short-term quarter-to-quarter thinking to “how do we keep the body alive and warm in the long-term?”

For too long organizations have been short-term thinkers and the good old-fashioned “long range strategic planning” process has gone by the wayside. Given the adage that “fish begins to stink at the head” it is enough to observe the US energy policy of last decades: i.e., take, take for today, with hardly any plans for the future (would one count “drill, baby, drill!” as a comprehensive strategic policy plan?).

You can draw many parallels in people’s spending on homes they couldn’t afford, credit card purchases that will never be paid for, etc. Need I mention a much larger-scale greed and the ongoing Madoff Ponzi scheme fraud scandal media frenzy?

The point of my rant here is that the combination of the economy, the collapsing financial infrastructure, and so on will force the mindset and paradigms change (whether we can or want to believe in that change or not). This will be a painful process of deliberately replacing leaders of both established blue chip institutions (with those that dust off their “how to plan for the long term” books) and lynch mob firings by outraged investors.

As for the public sector/government area, outraged citizens will not sit idly by while we run out of heat, lights, power, water, gasoline, etc. Those that are still doubtful might want to talk to irate Central Massachusetts, US residents that had no electricity for two weeks after the devastating ice storm in mid-December.

In a nutshell, it is this: the global economy will either “correct itself” or “collapse.” Leaders will be forced to find operational alternatives and take the long view on what they can do with their organizations to make the shift to longer-term progress versus short-term results. The needed mindset change will make it less feasible to default to old choices than it will be to seek alternatives for change.

Think of how well the unknown MINI Cooper cars and new unknown alternative energy cars are progressing globally – and even in the traditionally gas-guzzling (and gas price oblivious, if not even careless) US market. Luxury, statement-making vehicles like Hummers, Escalades, and sport utility vehicles (SUVs) are out – and the Big Three US automakers are dying on the vine as we speak.

By the same token, difficult economic times are forcing ERP users to increasingly look at the value from many angles and to consider other, better value options as they look to controlling and minimizing costs. With Agresso, organizations can enjoy post-implementation agility, where ordinary business users are able to change and update their system themselves, long after their implementation phase is complete.

Going Viral to Fight "Mad ERP User" Disease

There is thus an opportunity for Agresso if it gets aggressive (no pun intended) with marketing of its lower total cost of change (TCC) capabilities. This ongoing agility can help companies make not only this round of course correction (from the traditional unattractive need-spend-need-spend ERP models), but to also become more nimble in adjusting to unforeseen circumstances that cause an extensive and onerous amount of the system’s change.

But I still have to confess my surprise when I recently saw Agresso’s viral video ad that wittily presents a human relationship parody of how exactly the ERP market is still behaving.  Namely, in order to attract the “Ms Right” (whom the main protagonist meets by an accident, i.e., by being literally “bowled over” by her car) the dufus dude keeps on doing many stupid and painful slapstick antics, and going through major changes that cause enormous costs and emotional humiliation and pain to him.

Despite all the suffering, he still smiles, proposes, and eventually marries the girl that is not particularly nice and considerate to him (a reflection on a Tier One vendor and its big consulting partners). Yet, when confronted to try something else of a minor nature (i.e., to change the side of the bed in the video) he begins to panic and hyperventilate. Many unhappy ERP users will act in a similar vein when suggested a change of the system (albeit maybe they will not cut their heads off by the ceiling fan, like the bozo in the video).

We should note that Agresso has been a quiet company for nearly 30 years and this was an atypically bold move for the vendor, compared to its US counterparts. So for example, when you ask someone in Europe (particularly the British) how they are, they typically reservedly say “not too bad” (i.e. instead of ebulliently “very well, thank you!”). Having lived for several years in South Africa (which is oriented towards the British culture and language dialect), I can testify to still getting weird looks in the US after replying with “not bad at all” to perfunctory “how are you?” questions.

Thus, European businesses deem in-your-face viral marketing like this one in poor taste at worst and “unnecessary” at least. But Agresso begins to finally understand that you must behave differently in the US where Hollywood-style marketing sets the benchmark of what works and what doesn’t work. This would also include things like glamorous and splashy user conferences that are not the norm in Europe, but are very necessary in the US.

Why did Agresso finally take this bold approach? Well, like the Obama '08 campaign has shrewdly harnessed the Web 2.0 technologies to disseminate its message and collect the record amount of donations, vendors can benefit too if they do it well (also, there is the “fortune favors the bold” saying). Some pundits might still want to belittle Facebook as CRM (Child Relationship Management, rather), but I think they might also still be living in the 20th century and not getting the messaging, collaboration, advertising/data mining, recruiting, and whatnot potential from these social network platforms.

A year ago I analyzed Lawson Software’s similar viral video ad attempt. Lawson had the right idea to go for humor and counter-positioning against the ERP giants, but the execution came a bit short to my mind. Namely, there was not much cleverness in that video from an art, production, predictability, or any other standpoint. Conversely, Agresso's ad comes off like a real commercial and you just never know what’s going to happen to that poor guy who doesn’t like a minor change (despite all the major lifestyle changes he’s gone through to please his chosen partner).

Agresso wants the ERP buyer to identify with this inexplicably besotted guy who keeps earnestly trying and getting bloodied for his love effort. Sure, Celine Dion’s song “Love doesn’t ask why” (yes, Celine is one of my guilty pleasures, to the chagrin of my hard-rock loving wife and my macho friends) might explain the unconditional love phenomenon, but even that can reasonably only go to a degree.

The real mission for Agresso is to get people to feel that paying continuously for necessary ongoing changes to their ERP solutions will hurt them like any other unreasonable infatuation. After all, there is the classic “Love Hurts” song that has been performed by countless artists.

Dear readers, how did you find the video ad, and what are your comments and opinions about post-implementation agility and Agresso’ growth strategy? Do you think that Agresso has been ridiculously quiet in its marketing thus far? Has the time come for the likes of Agresso to siphon off research and development (R&D) expense and product/feature function building over to some serious noisemaking?
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