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Exact Software--Working Diligently Towards the "One Exact" Synergy Part Five: Market Impact (Continued)

Written By: Predrag Jakovljevic
Published On: March 2 2004

What Differentiates Macola ES

Exact Software, a Dutch-based provider of integrated accounting, payroll, customer relationship management (CRM), enterprise resource planning (ERP), and business process management (BPM) software solutions, and a division of Exact Holding N.V. (EURONEXT: EXACT) continues to expand its products footprint and operations worldwide, lately with a particular emphasis on the expansion in North America. Two thousand and three was indeed a busy and transitional year for the vendor with the acquisitions of certain resellers, the subsequent openings of new US offices, and a launch of new products to the market.

Still, after nearly two decades of prominence mainly within the mid-market for financial and accounting, HRM, project management, and logistics administration solutions with its flagship Exact Globe 2000 back-office product, Exact begun making big strides to extend its reach into North America and into manufacturing segments, and in the early 2000s, it turned into a full-fledged comprehensive e-business software provider for small to medium enterprises (SMEs). The first major step in that direction was the 2001 acquisition of former Macola Technologies Inc., which almost instantly made Exact a $200 million (USD) player in the mid-market enterprise applications segment. For details on the Macola acquisition see Part Three.

Consequently, Exact's experience with Macola has so far been a case of a successful merger and assimilation effort. Despite the tough economic climate, the company has since closed a number of deals partly because it is a bigger organization with a broader geographic sales and support coverage. A weaker demand for enterprise applications worldwide has also been compensated through an increase in add-on, up- and cross-sales revenue from customers that have migrated to Exact Globe 2000 and Macola ES, and by brand new users of e-Synergy. For additional information on e-Synergy see Part One.

Once the proof of concept had been made, Exact realized that the technology could provide an edge to its ERP product lines, Exact Globe 2000 and Macola ES, extending the user enterprises reach beyond the traditional, selected few power users within financial or manufacturing departments.

As for Macola ES, its particular differentiating trait compared to most peer ERP products might lay within its native "closed loop" workflow management capabilities, which preempt events and tasks from falling through the cracks. In other words, while most traditional ERP solutions are task-driven, Macola ES is process-driven, by adding structure to processes that are typically handled inconsistently or manually. A truly integrated workflow and BPM tool allows users to achieve long coveted IT objectives the paperless office, management by exception, and workflow as electronic framework to guide employees. The software lets users define business rules, processes, and exceptions as an integral part of their distribution, manufacturing, and other operational activities. The Exact Event Manager engine is not a mere alert producing application, since users can define both the event and the outcome (action), whereas prescribed actions that are not taken within defined guidelines will be escalated so that no crucial tasks are left undone nor left unattended (for example, due to the well-known phenomenon of e-mails ending up in a cyber-haven).

Some worthwhile examples of how Macola ES defines business rules would be alerting the buyer when goods do not arrive on time from the supplier and even escalating alerts to the higher instances if the proper corrective action has not been taken by the buyer (alerting the VP of purchasing, for example). Examples how Macola ES manages exceptions include generating a workflow task or step to a sales representative when a customer stops buying, or alerting a customer service representative, via a workflow task, when credit is rejected on an order so that a cash on delivery (COD) or prepayment can be arranged. This real-time exception reporting eliminates the need to generate costly and time-consuming batch paper reports that are typically after the fact.

The above examples of the easiness of creating workflows and mapping core business processes may distinguish Macola ES from its SME peer ERP products. While secure role-based portals, single sign-on, service automation, HR self-service, front-office functions, event management, document management, and BPM features are increasingly becoming a "matter of course" of tier-one ERP solutions, most smaller ERP providers have yet to introduce these into their software suites, particularly in such an integrated and closed-loop manner. On the other hand, workflow and BPM are highly complex and difficult systems to implement within most tier-one solutions, which as shown earlier, is not the case with the Exact Software's offering.

To be fair, however, these large 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, process modeling, process monitoring, etc., which naturally creates a complex environment. For a discussion of BPM, see Mid-Market Getting the Taste of Some Emerging Technologies.

Exact Software seems to be focusing quite less on complex routing and invoking automated processes across disparate systems, instead focusing on the BPM's aspects of handling exceptions and automating simpler processes. With Exact Event Manager, Exact has been entering the nascent area of business activity monitoring (BAM), a software category that triggers alerts and exception reports on both events and non-events, and both within and outside the four-walls of the enterprise (for more details on BAM's provision of "stock ticker" view of key business operations, see Business Activity Monitoring - Watching The Store For You). Actionable information is the key to the success of (near) real-time enterprises (for example, sharing up-to-date information with employees, customers, and partners in real-time), which would entail not only accessing data, but also pushing it to the right person and ensuring that person knows what to do about the real-time, sizzling hot information.

This is Part Five of a six-part note.

Parts One and Two detailed the event summary.

Parts Three and Four began a discussion of the market impact.

Part Six will cover challenges and make user recommendations.

Exact Targets SMEs

Thus, Exact targets small and medium enterprises (SMEs) with up to $250 million (USD) in annual revenues and with up to 500 employees that are in need of enterprise application solutions that are intuitive, and consequently, easy to use and implement. Indeed, the company has often met this market's requirements of competitively and scalable priced, functional products, ease of modification, relatively short implementations, and dependable service and support. Exact has traditionally been offering its customers just needed (neither overwhelmingly comprehensive nor meager and insufficient) functionality they can easily digest but still deploy to its beneficial use. The modules can be implemented in a gradual fashion to tackle the most burning issues first. Also, the simplicity and flexibility of the product, bundled with the experience within financials and accounting and manufacturing and distribution, often do not impose serious business process reengineering (BPR) but still produce benefits like pervasive information sharing and process efficiency.

SME customers continue to increasingly realize the importance of seamless integration between front-office and back-office applications, and to consequently look for one strategic vendor (i.e., "one throat to choke") to fulfill and be solely accountable for the vast majority of their business application needs, particularly in the lower end of the segment. To that end, in addition to SQL Server, e-Synergy requires Microsoft Windows 2000 Server with Microsoft IIS (Internet Information Services) enabled. The system, which is tiered priced, often costing $1,000 (USD) per named user plus 20 percent of the total cost annually for maintenance and support, can be accessed via Microsoft's Internet Explorer 5.01 or above. The equivalent price for Macola ES would be $1,250 (USD) per named user. Thus, having a broad, impeccably integrated horizontal offering with selected vertical enhancements via original equipment manufacturer (OEM) partnerships or via value-added resellers' (VAR) add-on products, on top of nurturing resellers networks, providing well-attuned pricing, and catering to the evolving scalability and migration needs of customers are all necessary tenets of the success in the market segment that Exact will have grasped.

Aside from the flagship Macola ES and Progression Series lines, there are three other ERP choices in Exact Software North America's assemble, owing to the Kewill acquisition. These packages that cover a range from job shops to mixed-mode discrete manufacturers are

  • JobBOSS. A reasonably priced and uncomplicated but functional ERP product aimed at the specific needs of small job shop environments. It has been in the market for nearly two decades and is installed in more than 3,000 sites, which are job shops and make-to-order (MTO) manufacturers that place high priority on the ability to track actual cost and labor

  • Alliance/MFG. A low-cost manufacturing-only solution for small and mid-size repetitive manufacturers. The product comes from former Kewill's acquisition of former Alliance Manufacturing Software. A provider of ERP solutions to fledgling manufacturers with annual revenues of $1 million to $15 million (USD).

  • Max. A client/server ERP package designed for lower-end of the discrete repetitive manufacturers market. It has a broader-based appeal, by offering integrated applications that include MRP, APS, product configuration, and CRM.

Elsewhere in the world, Exact offers its SME customers local brands with varied industry solutions ranging from manufacturing, retail and distribution to trading, accounting, payroll, and service environment. Some of these branded products in certain countries include CUBIC in Belgium, Exact Pro and Exact LOHN XL/XXL in Germany, Grote Beer and Paymate in the Netherlands, Dimoni in Spain, Soft 2000 in Austria, and SIIGO in Peru and Colombia.

In the foreseeable future, Exact's strategy in North America will be the sales of e-Synergy through all sales groups to both installed bases and new markets. Further, the vendor will pursue ongoing new sales to selected ERP targets, but particularly add-on solutions to all installed bases, whereby the Exact Event Manager would be the best example thereof. There have been enhancements to the product since its initial introduction that now allow for tighter integration with both e-Synergy and Macola ES. This integration includes the ability to generate workflow items in e-Synergy to begin corrective actions to predefined "events" in a manner described earlier on. The upward migration path to Macola ES at customers' pace and needs will also be high on the list of priorities. On a global scale, the vendor will also continue to focus on migration of its customer base, cost control, and profitability, while setting forth its investments in products, the support and service organization, and expand its global network of offices, especially in the Middle East, Latin America, and China.

This concludes Part Five of a six-part note.

Parts One and Two detailed the event summary.

Parts Three and Four began a discussion of the market impact.

Part Six will cover challenges and make user recommendations.

 
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