Exact Faces Challenges

But, No One Is Perfect

Exact e-Synergy features a multitude of clever capabilities. Geared towards a multitude of manufacturing and non-manufacturing businesses, e-Synergy is essentially a Web-based front-office product from Exact Software that promises to deliver integration with virtually any enterprise resource planning (ERP) back-office, and collaboration through knowledge sharing with trading partners. It is an Internet-based integrated suite for CRM, financial, workflow, and resource control. It has broad, rather than deep functionality, including business process management features and enterprise asset management tools.

The solution gives employees Web-access to information from one central information source allowing them to plan, track, and initiate collaboration, and search and retrieve content, documents, and transactional data. By making Exact e-Synergy the platform of communication and collaboration, no data should (in principle) ever be lost, because information is stored for quick retrieval. Because of its ability to align employees, information, and processes across the enterprise, users of Exact e-Synergy should be able to view the health of the entire value chain, help employees manage time more effectively, and execute business processes more efficiently.

Yet, despite the strength of e-Synergy, there are some inherent limitations that companies will need to work around. For example, the workflow engine supports only four steps within a process. While most workflows have a single start and end step, complex workflows may have multiple end steps (or dispositions), and very complex workflows can even have multiple start steps for entering a workflow. For complex processes, users will have to divide the process into a couple of separate sub-processes. However, this might be inadequate for some complex workflows that involve many steps and routes that cover all the possible scenarios that can occur within the process. Furthermore, the product does not feature a visual modeling engine, and it only provides a linear view of workflow steps. However, it is process design and modeling that drives what the complex business processes will look like; how the user will interact; and what underlying IT services are required to support and deliver that process.

For details on Exact e-Synergy see A Single Software Solution That Enables Business Process Management. For background information on Exact Software see Exact Software Continues with Its Share of Judicious Acquisitions.

Part Six of the Exact Continues Its Share of Judicious Acquisitions series, which began January 9.

Another feature required in modeling is the ability to perform "what-if" scenarios, which is the ability to simulate changes in processes (using inputs from the business activity management [BAM] side) and project the impact on performance. Business process modeling tools chart out the information flows that support key business processes. Ideally, once these models are created, they should be dynamic, meaning that they are relatively easy to change without programming. Process modeling is typically the first step within a BPM system, especially when the models are used to remove variability from specific processes. Also, simple workflow focuses on routing approvals and documents, while a full-fledged BPM tool builds and executes workflows using the same "meta" model generated by process modeling. These tools, which are currently lacking in e-Synergy, are common in dedicated business process management (BPM) packages such as Ultimus or IDS Scheer.

However to be fair, many true BPM vendors offer much more comprehensive BPM solutions, given the myriad of interconnected components that underpin a full fledged BPM system, such as workflow, enterprise application integration (EAI), middleware, user interfaces (UI), rules engines, process-centric workflow, document-centric workflow, data transformation, connectivity services, access management, process modeling, process monitoring, etc., which naturally creates a complex environment. For more discussion of BPM and its components, see Business Process Management: How to Orchestrate Your Business.

Exact Software seems to be focusing less on complex routing and automated processes across disparate systems, and instead is developing BPM's ability to handle exceptions and automate simpler processes. Users should watch for Exact's forays to enable e-Synergy to launch native or third party applications based on selected information objects, and its ventures to define business processes (workflows) across multiple systems. Despite e-Synergy's lack of modeling and composite applications capabilities, the best results often come from deploying other BPM components that execute, manage, and analyze business processes. e-Synergy is very capable in this area.

This is Part Six of a multipart note. Parts One through Four, published January 912, explored Exact's strategic groups and global aspirations; and its BPM strategy and products. Part Five presented Exact's acquisition of Vanguard.


Though it has notable strengths, Exact is not without hurdles. In addition to brutal competition from both above and below, the vendor has lower stature and brand recognition compared to its foes, Microsoft, and Sage. Exact also has a smaller channel because it has fewer resellers, and with revenue of close to $300 million (USD), its revenue from the enterprise applications market is small compared to these competitors. In this market segment, a vendor's size certainly counts, and so does its research and development budget. While Exact's solid cash position and cash flow operations are impressive, they are dwarfed by the its competitors. In fact, the possibility that it may be acquired by one of its competitors to remove it as a major competitive hurdle cannot be discounted.

Additionally, Exact's value added reseller (VAR) channel strategy seems to be unclear at this stage. Like its competitors, Macola (which is now a part of the Exact family) made a conscious decision to distribute its products solely through partners and VARs. At one point there had been over 400. They have since dwindled to 75, largely through Exact's conscious effort to screen partners and vendors to ensure it had real quality partners across North America.

Leveraging VARs has often proven advantageous for vendors targeting small and medium enterprises (SME) because it can keep costs down. Selling through partners requires a higher quality of product support, and accompanying documentation. However, Exact has seemingly decided to weed out resellers that have not been fully committed to selling its product portfolio. To do this, it imposed a $12,500 (USD) annual fee for its Total Partner Support Plan, which provides participating partners with complete product accreditation and support, and access to corporate lead generation and marketing programs. This move is still causing shockwaves in its reseller base. Exact also has to be more focused in its offering and how it translates into vertical messaging and positioning in order to better leverage its products.

Further, the acquisitions of some of Exact's best performing VARs have caused speculations about Exact Software reverting to a direct model (although this is not an uncommon practice), and even its inability to attract new resellers. One will have to see if these mixed-signals will nurture Exact's relationship with its VARs, boosting their morale and make them more successful (profitable); and how it will play against Microsoft's and Best's enticing financing arrangements for their own VARs and customers, particularly during these days of cash scarcity. Consequently, one should not forget about SAP's ongoing channel recruiting for its SAP Business One product, which has been attracting the disgruntled VARs of its competitors. This will also impact Exact's VAR relationship.

Additionally, although Exact has a notable worldwide presence, it does not have market leadership in many crucial mainstream regions or in certain vertical segments, largely because of the fierce channel competition from more aggressive, better known, and wealthier competitors. There are still some geographic regions where the vendor has neither reseller nor direct presence as of yet, especially in the Southern Hemisphere.

Exact also faces challenges from customers interested in its solution areas. For example, many prospective customers have long outgrown their entry-level accounting solutions l QuickBooks, DacEasy, Peachtree, and ACCPAC Simply Accounting, and are looking for an original provider for functional expansion opportunities in contact management and sales force automation (SFA); customer relationship management (CRM); human resources (HR) and payroll; electronic data interchange (EDI), and warehouse management system (WMS). These are all areas of which Exact has tackled. However, users often turn to a trusted adviser, such as their accountants for advice. Unfortunately, in this case, Exact has not made major strides to increase its clout and entice accountants to its accountant referral program. Exact also does not really have a so-called "feeder" entry accounting product, with the exception of minor products for some local markets. Sage and Intuit, on the other hand, have long been successfully in this area, while Microsoft is working feverishly to deliver a similar product, Microsoft Small Business Accounting (SBA).

Moreover, other North American product brands have some material management and manufacturing functionality overlap with the Macola ES product, one of Exact's key products. Thus, in addition to the always-inevitable efforts of integration and migration paths, and despite the complementary nature and somewhat different target markets of the product lines, the pain of appropriately positioning its products cannot be discounted. It is likely that there will be conflict between the direct sales forces and channel partners due to market overlap, and there will be problems due to longstanding associations with certain product lines, regardless of best fit.

Consequently, the management team will have to determine a narrow range of key markets for each product, clarify positioning, and segment and target the sales channels. It will also have to vigorously deliver an assuring message to current customers about its plans for support, enhancements, and migration, such as upgrading Macola Progression Series to SQL Server transaction tables, so it becomes One-X compliant.

Exact also acknowledges the challenge of properly positioning and marketing e-Synergy. At a strategic level, the product has the same features of a BPM solution. Modules can be configured to handle specific business processes in a particular way. On a tactical level, the system also offers built-in document management, collaboration, and visualization of all requests related to a particular business process. Last but not least, the product offers modules for a plethora of diverse functional areas, with a scope so multifaceted that it is almost impossible to categorize. These elements range from workflow or BPM in sales force automation (SFA), call center/help desk modules, professional services automation (PSA), HRM to Web publishing.

Ultimately, a product that is a mile wide in scope, but an inch deep in individual functional modules 1) makes it difficult to identify likely buyers, and 2) disadvantaged when competing against best-of-breed packages that have prospects' deep functional needs. In a nutshell, Exact's product is not easy to describe and thus will not likely be easy to sell.

Prospects are generally interested in e-Synergy because it meets a pressing need, or because a particular area of the product is attractive. They are not necessarily drawn to its overall capabilities. As demonstrated, this is not because e-Synergy's functionality is not without merit, but because there is a gap between user knowledge and the product's functionality. Not many users are fully aware the product's full capabilities. For example, as seen during a recent e-Synergy users' event, CRM users were not fully aware of the product's collaborative forecasting capability. Exact should work to emphasize its product's features among users, such as e-Synergy's support for synchronizing the user's Outlook calendar and e-Synergy calendar, or its document integration capabilities with Microsoft Word, which allows employees to create and upload information from a customer account directly into a Word document.

This knowledge gap may be further exasperated by erstwhile Macola's unclear marketing image, which Exact has likely inherited. In Macola's case, the market was often uncertain whether Macola provided accounting or manufacturing and distribution solutions. This had occasionally hurt sales because the VARs of accounting specialists would "accuse" Macola of being only a manufacturing specialist and vice versa. Consequently, Exact may have a similar conundrum with e-Synergy and Globe 2003.

Not only may perception issues plague Exact, but there is also the issue of retraining its VARs. Its VARs have long been accustomed to deploying accounting and manufacturing solutions, and it will take much effort to retrain them to become full-fledged implementers of the broad, and difficult-to-categorize e-Synergy. Current Exact VARs will not have many CRM experts and lack CRM implementation experience.

The same holds for e-Business, PSA, document management, and many other add-on applications that the company has recently delivered. Thus, one of the biggest challenges for the company has been helping traditional accounting VARs get up to speed on the new offerings' paradigm shifts, and teaching them how to sell, market, and implement them.

As a matter of fact, the full fledged BPM area is not easy to compete within either, with wealthy and viable competitors coming from enterprise asset integration (EAI) specialists, infrastructure (platform and tools) providers, and packaged applications vendors. Therefore, Exact Software has to position itself more clearly to avoid competition that is coming from many directions, such as the intrusion of best-of-breed BPM providers, business modeling players, infrastructure providers, and tier one enterprise vendors in the BPM arena.

User Recommendations

Despite these challenges, Exact Software remains a stalwart vendor within the small and mid-markets of accounting, manufacturing, and distribution software and is becoming a unified global provider of complete business applications, due to its recent forays.

Exact Software's target market consists of single- and multi-site, multinational accounting, light manufacturing, and distribution companies, and their satellite subsidiaries. Rapidly growing and agile companies with limited IT budgets and staff, conformist IT strategies (a staunch Microsoft shop), and solid accounting, payroll, distribution, CRM, and business to business (B2B) e-commerce collaboration requirements should consider Exact's value proposition, especially pertaining to Exact Globe.

The e-Synergy product might not make a lot of sense as a standalone solution unless the user organization is focused on services and has no need for an ERP system. For manufacturers and distributors, the biggest advantage lies in working off a single database for both customer-facing and back-office systems. Thus, for enterprises that need a tightly integrated back-office or are currently using one of Exact's ERP systems, e-Synergy just might come in handy.

Existing and prospective customers should evaluate the new products' add-ons as a way to add value to their existing applications. Enterprises should nevertheless monitor the consistency between Exact's announced strategy to continue to support acquired legacy products, and Exact's actions. While we believe that Exact's blueprint should be beneficial in the long run, some outstanding integration issues, intra-company organizational alignment, and the discontinuation of redundant products are always to be expected.

Consequently, users evaluating these products should keep themselves informed, and consider generally available (GA) functionality only. They should insist on a firm delivery schedule of the migration strategy for all of Exact's major back-office applications. But ultimately, being actively involved in user groups and voicing their ongoing needs is be the best way to ensure the current product's future, since the vendor listens carefully to users' voices.

Through the Vanguard acquisition, existing and future Exact customers now have access to an analytics product owned by Exact, and they should expect continued enhancements and tighter integration. Those companies using or looking at e-Synergy should see this acquisition positively as GPS will add further value to the product. Existing Vanguard customers, including non-Exact product users, should also look at the acquisition favorably.

Vanguard has a proven reputation of customer support and product enhancements and it now has greater resources to provide both. Vanguard's ERP partners, however, need to discuss the future of their relationship with Exact executives, and former Vanguard executives. Exact has stated that its objective is to support, enhance, and expand these relationships, and Vanguard partner executives need to be reassured by Exact management that this is indeed the case and that continuing and growing the existing relationship is best for their business.

Enterprises looking for broader functionality beyond traditional ERP boundaries (including more intricate CRM and supplier relationship management [SRM] functions, product lifecycle management, direct materials procurement, plant maintenance, or complex project management/engineer-to-order [ETO] functionality), from a single vendor may benefit from evaluating other products at this stage. Moreover, global enterprises that have integration needs outside of the Microsoft environment, and have multiple-platform and strong scalability requirements, should earnestly evaluate other providers with on premise or hosted deployment options.

Potential clients should research the industry expertise of Exact's regional offices or affiliate service providers, and get references. The vendor targets vertical sectors, including manufacturing, distribution, retail, and service organizations via third-party add-ons and resellers' functional additions. Existing customers with products based on proprietary technology, custom systems, or products from other vendors should review the affiliate's development capabilities to see what can be gained in terms of data integration between their various systems.

Finally, Exact needs to communicate its value proposition for e-Synergy and Exact Event Manager in business terms, using realistic examples to demonstrate what BAM and BPM are and how they generate additional business value.

This concludes Part Six of a multipart note. Parts One through Four, published January 912, explored Exact's strategic groups and global aspirations; and its BPM strategy and products. Part Five present Exact's acquisition of Vanguard.

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