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First Look: Peregrine Offers Cradle to Grave Procurement

Written By: D. Geller
Published On: February 1 2000

Product Background

Peregrine Systems Inc. (NASDAQ: PRGN) has been known for applications that automate the management of complex, enterprise-wide information and infrastructure assets. While staying in that general territory, it is building a new field with its "Get.It" application suite. The first team member is Get.Resources, an E-procurement application that is being pitched at companies that acquire capital assets. The company's existing products in this area, Asset Center and Service Center, are designed for professionals within the company.

Get.Resources is a self-service application that distributes capabilities and responsibilities to individual desktops. Functionally it rides on top of Asset Center and may optionally use capabilities of Service Center.

Capital assets, ranging from real estate to desktop computers, differ from such consumables in that their acquisition cost is typically only one-quarter to one-third of the total lifecycle cost. Additional expenses accrue from such lifecycle activities as configuration, installation, maintenance, monitoring, help desk support, redeployment and retirement. Peregrine's Get.Resources works with the company's existing Asset Center and Service Center products to manage assets through their entire lifecycle. It can also be used to purchase consumables.

Asset Center contains modules that, in totality, track the initial and ongoing costs, location, and status of assets ranging from industrial machinery to software licenses. Both purchased and leased assets can be accommodated, and cost tracking can include acquisition, repair, operations, related consumables, and disposal. Purchasers of Get.Resources need the core engine from Asset Center but do not need to purchase every one of the modules.

Service Center can add such capabilities as the automatic generation of work orders, tracking service levels provided by third-party service providers, and consolidated service desk management including trouble ticket and work order tracking.

Product availability was announced December 8, 1999. The product is currently in beta with two customers, although 1-3 more beta customers are expected. The formal launch of the beta program is planned for February 2000.

Besides the actual Get.Resources product, the initial launch is very likely an incremental step toward a new architecture. While the company is making no formal announcement of any architectural changes at this time, it is clear that its stated goal of providing an integrated suite of employee self-service applications requires such a move within the next year, because its current applications run on individual databases and servers. A truly integrated suite would have a single database for all products. This is clearly not a serious issue as far as Get.Resources alone is concerned .

Product Strategy and Trajectory

Peregrine's strategy for Get.Resources has both product and marketing components. The crucial marketing component is to avoid positioning the company as competing with either ERP vendors or such procurement vendors as Ariba and Commerce One. Figure 1 represents this strategy.

In this diagram Peregrine suggests that the lower half, especially the left quadrant, represents the products that are in the domain of the well-known E-procurement vendors and their marketplaces. The green triangle represents the procurement activities of ERP vendors.

With its emphasis on plant and equipment assets Peregrine hopes to find its sweet spot in the upper left-hand quadrant, largely avoiding battles with ERP vendors and the specialists in commodities like Ariba, Commerce One and Concur. It will not shy away from competing in the lower left quadrant but plans to develop its strength by selling to the nearly 5000 companies that have acquired Asset Center, to whom adding Get.Resources over their current Asset Center holdings will be a relatively easy sale.

Peregrine offers purchasers of Get.Resources a number of ways to create supplier relationships and to offer product catalogs to users. It has partnered with Commerce One, so that any purchaser of Get.Resources can offer products from Commerce One's MarketSite. It also supports point-to-point links with individual suppliers; these catalogs can be stored either by the seller or the buyer. Most organizations will end up with all three options.

An organization that has special relationships with sellers may wish to manage an internal catalog that reflects those relationships. Where it deals with sellers of highly configurable products, like desktop computers, it will probably link directly to the supplier. Peregrine has thus far created relationships with about half a dozen suppliers, including Compaq, Dell, Office Depot, and Software Spectrum, which should make catalog relationships easier. The vendor claims that its catalog tools are sufficiently flexible to support relations with any sellers a company wishes to work with - including both those that use any of the current variants of XML and those that still rely on EDI.

Peregrine's product strategy is to increase the breadth of its Get.It component offerings and to offer products through an ASP (application service provider) arrangement. For the latter it has already partnered with Exodus Communications. Peregrine has previous ASP experience with E.Fleet, the hosted version of the its fleet management software FleetAnywhere (which itself is not in the Get.It suite.) The ASP version of Get.Resources is expected mid-year in 2000.

Installation and catalog building will typically require a professional services engagement, either with the Peregrine's internal consultants or with one of the systems integrators with whom it has created relationships. These include KPMG, Anderson Consulting, and IBM Global Services.

The company intends to achieve breadth with a variety of offerings that will offer management of other corporate assets and services. Peregrine is not announcing any other products at this time, but there are three obvious drivers to future product development:

1. Bringing other existing Peregrine products to the browser; besides the glitz of making some these into E-commerce applications, this will have the benefit of providing a unified interface to its tools. For example, a facilities management offering, already available from Peregrine as a browser-based product, is a likely new member of the Get.It suite.

2. Taking advantage of its recent acquisitions for both its current products and its underlying technology. Thus we expect to see product offerings in the knowledge management area resulting from the acquisition of Knowlix, and in network management resulting from its equity investment in Loran Technologies.

3. Filling in offerings that competitors have. These might include functions such as travel and expense report management, travel booking, and time management.

Given Peregrine's aggressive history, we would expect to see these functions acquired by acquisition or by strategic alliance involving significant equity investment.

It seems safe to predict that with Peregrine's emphasis on Total Cost of Ownership (TCO), an early addition to the product or product suite will be some way for a company to realize revenue upon retirement of assets. This will most likely take the form of an auction-based marketplace.

Get.Resources is implemented as a collection of server-side Java functions (servelets). These deliver pure HTML to the user's browser; no downloads or plug-ins are required.

Product Strengths

Peregrine has a strong presence in its chosen market, and for its target customers its TCO approach to asset procurement will be a major advantage over procurement vendors whose product features stop at the receiving dock. While the consumables in the lower left quadrant in Figure 1 account for a large number of corporate purchase orders, trackable assets may account for as much as four times the dollar volume. Thus, a product to manage these costs will have a ready and willing market. Peregrine claims to have customers who can achieve payback for the product in as little as one month.

Get.Resources has a number of well thought-out features. It integrates with information about existing stocks and about lease vs. buy opportunities. While rogue buying, the scourge of the commodities quadrant, may be less of an issue in the asset space, the equivalent problem here is purchasing new equipment that may be already available in the back room. Preventing this is certainly on the most wanted list of many IS shops, where new employees get newly purchased desktop systems despite the fact that an equivalent system may be sitting unused in the next department. Get.Resources highlights these opportunities and can manage the transfer of assets between different cost centers. (It does not have any special abilities to manage the related issues of political turf and status symbol buying, however.)

The product has capabilities for supporting E-procurement activities that do not go through the Commerce One (or any other) network, for cases where a company wishes to deal directly with preferred vendors. It can, in fact, support non-electronic procurement; although this requires manual data entry, it is still important.

The use of server-side Java is a good technological choice. It should allow for a high level of flexibility in making changes to the product. It is a platform independent approach, is more efficient than older style CGI (common gateway interface), and is a technology that programmers want to work with, thereby helping the company to attract employees. Also, since it has no impact on the browser it will be less troublesome than an approach using client-side Java.

Peregrine will perform installation and integration with its own professional services staff, but it will also partner with a range of integrators, from behemoths like KPMG and Anderson to small regional systems integrators. The company is in the process of training integrators in preparation for the February launch. Although Peregrine partners with large firms, it certifies individuals rather than firms. This protects against an integrator accepting a contract and then putting inexperienced staff to work on it.

Product Challenges

According to Peregrine the user interface "is totally and easily customizable by the customer to meet their needs." The unconfigured interface is weaker than we would like. For example, a user signing on sees a screen with top-level functional choices, one of which is to approve requisitions. This choice is available even if there are no requisitions for this user to approve. Given Peregrine's workflow engine we believe that this and other weaknesses can be repaired by customization. However, we think that users really expect a more functional and personalized default than Peregrine provides.

The product interface is certainly functional, but is also somewhat simplistic. While not a major failing, once Peregrine sees competition from other asset management vendors who are moving into the E-purchasing arena it will find that the front-end pizzazz can be an important differentiator.

We also note that while Get.Resources offers asset management functionality not available with most other E-procurement packages. To fully utilize all of the features in those packages may require the user to acquire both Asset Center and Service Center (see User Recommendations). We believe that Peregrine will find this too steep an entry cost for users who do not already own its products.

By the time the product is released for general availability Peregrine will need to demonstrate successful implementations with high profile clients. Historically, Peregrine has been plagued with a reputation for complex and high cost integrations. It will be important for Get.Resources to reverse that trend.

Other vendors in this space are advertising, or even promising, relatively short implementation times. In some cases the time measured is to the first transaction or operational user, and a considerable amount of the implementation occurs after that announced date. Peregrine will do well to rise above that practice and achieve complete implementations in a short time.

Even so, prospective buyers will need to ask whether the companies with speedy implementations started with Asset Center in-house. Those without Asset Center can expect longer installations.

Vendor Recommendations

As a standalone product, Get.Resources promises to be a powerful product with some user interface concerns. Although Peregrine is obviously gearing up for a barrage of product announcements over the year, it should not neglect these issues. While simplicity is an admirable goal, especially for a company trying to expand beyond a product family that was targeted to power users, simplicity is only one aspect of usability, and we believe that a more functional interface should be the delivered default.

As noted above, we assume that Peregrine is working toward a new architecture. We see nothing wrong with bringing out the first product or even two while that development is taking place. If our assumption is not correct we would expect Peregrine to have some difficult problems as it continues to bring out new products in this suite. But we have trouble imagining that anyone would fail to see the necessity of uniform front ends and common back end components.

User Recommendations

If you own or expect to buy Peregrine's Asset Center, and want the kind of functionality that this product offers - employee self-service capabilities delivered to browsers -- we think that, with some cautions due to the fact that the product has not yet been released, Get.Resources would be an easily justified addition - probably a no-brainer. Its asset management capabilities will be quite attractive to many companies and should make a significant impact on both workflow and lifetime equipment costs. Since it works through Asset Center, it creates no significant additional problems in integration.

Note, however, the full potential of the product also calls for the installation of Service Center. For example, without Service Center the product cannot automatically act when, because a specified approver is unavailable, requisitions needing approval back up. This is a feature we would expect to see as part of a procurement package - and is available in most of the major competitors' products. Users should weigh their need for features like this against the estimated six figure cost for a Service Center installation.

If you are just coming out of the Y2K freeze and plan to implement asset management before Get.Resources is ready, Get.Resources makes Peregrine's Asset Center a more attractive choice. Is it attractive enough to make Asset Center an automatic first choice? We recommend that you make your decision based on the underlying functionality of the products you are considering. While other vendors may not yet offer browser-based functionality, all are working toward it.

If you find that another vendor offers functionality that meets your needs as well or better than Asset Center does, try to get them to reveal their Web strategy. You can compare both the functionalities and the schedules for Web enabling- and play the vendors off against each other during your negotiations.

Our first look at this product leads us to hope that it will fulfill its considerable promise, but remember that Get.Resources is just entering beta, and that the size and extent of the beta program has not been made fully public. The last step is sometimes a big one, and users should approach with caution.

 

 
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