Global Software Aspirations
Written By: Predrag Jakovljevic
Published On: January 10 2006
Exact Globe for Global Aspirations
To address the multinational needs of enterprises and to create "one face for each customer", Exact Software, a division of Delft, the Netherlands-based Exact Holding N.V. (Amsterdam: EXACT.AS, http://www.exactsoftware.com), has taken steps to offer Exact Globe, the latest generation of back-office enterprise resource planning (ERP) software to North American customers. This effort, which began in 2005, should enable customers to benefit from an extensive range of ERP solutions.
Part Two of the Exact Software Continues with Its Share of Judicious Acquisitions series.
Early adopters of Exact Globe have mainly been divisions of companies that have long been using the product elsewhere. However, the vendor is planning to use early 2006 to prominently roll out its flagship product Exact Globe Enterprise across North America. Exact Globe Enterprise is a multinational ERP software suite that offers manufacturers multilingual, multicurrency capabilities that local offerings of Exact lack. Throughout 2005, Globe has been in controlled release in North America and there have been about fifteen test sites for the product. The goal is to reach twenty sites in 2006. General availability (GA) of the product is also expected in early 2006.
For background information on Exact see Exact Software Continues with Its Share of Judicious Acquisitions.
This is Part Two of a multipart note. This series will explore Exact's strategic groups and global aspirations; its BPM strategy and products; and its acquisition of Vanguard. It will also present challenges and make user recommendations.
Single Product Strategy
This initiative signals the start of a long-term migration to a single ERP platform, but by no means will users of systems other than local Exact ERP be forced to undergo any type of conversion soon. Still, for some time now, Exact has been focusing its research and development (R&D) efforts on a "single product" strategy, leveraging its so-called One-X (meaning one Exact) architecture framework. One-X means there is a single database (i.e., Microsoft SQL Server) and transaction table between the respective back-office products of Exact Globe or Macola ES, each with the e-Synergy front-office or business process management (BPM) product.
Initially, both product combinations were to provide customers with the full integration of back- and front-office solutions, albeit with different focuses, strengths, and markets. For example, the Exact Globe and e-Synergy combination targets non-manufacturing markets outside North America; Macola ES and e-Synergy is geared towards manufacturers. The idea is to eventually converge these three product lines into a unified global product some time in the distant future.
In the meantime, new versions of all the acquired product lines have been developed on the same architecture, which should ensure long-term economies of scale. It should also ensure the product integration of acquired brands, and product continuity for customers. To that end, Exact is using a common object repository to simplify development across its products, so that Exact Globe and Macola ES could "borrow" modules from each other accordingly, such as the warehousing, electronic data interchange (EDI) or shop floor control components from Macola ES. For more information, see Exact Software—Working Diligently Towards the "One Exact" Synergy.
However, because Exact Globe has superior multinational and process management (including grant-based) functionality, it will likely be given the "right of way" to become Exact's strategic product for its global base. It is an especially promising product since it is the first product with multinational capabilities to be offered to the North American market. As such, it should ultimately help attract new clients. In particular, while all four of the North American packages have the ability to interface with e-Synergy, none have particularly strong multilingual and multicurrency capabilities. In Globe, this functionality was built from the ground up, which is critical in addressing the needs of North America-based multinational manufacturers.
Exact Globe has extensive functionality, including financials, distribution, light manufacturing, manufacturing resource planning (MRP), a product configurator, and project management. Exact has typically targeted small and medium businesses ranging with $10 million to $50 million (USD) in revenue, as well as manufacturing and distribution companies and divisions of multinationals. This is a great potential market because parent companies often use a tier one product from SAP or Oracle (including PeopleSoft), but these systems often have unnecessary functionality for the various divisions.
Globe, which has solid, but not excessive functionality, was built to integrate with other systems using extended markup language (XML), which has become the standard for integration. The product is also appropriately priced. The configuration includes e-Synergy, general ledger (GL), accounts receivable (AR), accounts payable (AP), distribution, order processing, inventory control, and purchasing and costs about $20,000 (USD) plus $1,200 (USD) per named user (any employee who would access the system). Ongoing annual service and support costs typically average an additional $20,000 (USD). Users can also buy e-Synergy as a standalone system for $10,000 (USD), plus $1,000 (USD) per named user.
Thus, as part of the multinational push, Exact North America has also created what it internally calls the International Parenting Group, a sales team dedicated to the needs of companies operating in multiple countries, since these enterprises need to be sold to, serviced, and supported in a different way. Though these companies want to run their North American headquarters office from the same database, they still operate in different countries and have different payroll, tax law, and distribution problems. Currently, Exact has roughly 30 salespeople in the International Parenting group, which services about 1,000 multinational clients. Value added resellers (VAR) can also benefit from these services. This group will also take care of all the logistics, communications, proposal writing, and implementation. At the same time, it will protect the partner's profit margin and all of this will be done in a process that is seamless to the prospect or customer.
Ironically North American prospects might consider Globe to be a brand new product; however, Exact built it twenty years ago for companies in the Netherlands that needed an accounting package that could handle multiple currencies. It focuses on automating traditional back-office ERP processes containing structured information (transactions), such as financial, human resources (HR), sales, marketing, logistics, and manufacturing processes. Furthermore, it is fully localized, so that all legislative, fiscal, and judicial obligations are met.
Typically, the product is used by a select number of users who are responsible for transactional actions, such as moving goods, buying, selling, budgets, etc. While the number of users may be small, they have to be well-trained in the application and require a powerful environment with all the functionality that Microsoft Windows can offer in terms of ease of use. Therefore, Exact Globe is developed in Microsoft Visual Basic 6.0, with a basic technical framework in Microsoft Visual C++ 6.0 to ensure programming efficiency and consistency. All data is stored in the Microsoft SQL Server 2000 database, whereas the supported client platforms are Microsoft Windows 2000 and Windows XP. Key functional strengths of Exact Globe include
- support for fiscal, legal, and commercial regimes of more than twenty legislations;
- provides financial accounting, cash flow management, asset and contract management, project management and service management, all seamlessly integrated into a financial management system that is not traditionally general ledger centric;
- provides industry templates for manufacturing and distribution businesses;
- streamlines international payroll and improves document management;
- uses one central database for recording transactions, documents, and activities;
- uses classification of documents, making access relatively simple and easy; and
- reduces steps (data entries) needed to process a closed-loop transaction from the quote via order capture and fulfillment and shipping to payment.
Hence, Exact Globe Enterprise targets multinational companies running within global markets by offering multiple international legislation compliance, and strong project accounting and product management (in terms of R&D and intellectual property-intensive environments) capabilities, albeit mainly light manufacturing/assembly and distribution ones.
Candidates that are likely to use the solution are document-centric companies, including businesses in consulting, engineering, biotechnology research, intellectual property management, and software development companies. Also, these are project-based organizations, where a high percentage of employees require access to the system, and where trading partners require access to projects in back-office ERP systems. Also, many other Exact products worldwide have "borrowed" the Exact Globe architecture and functionality, such as Exact Macola ES in North America, Grote Beer for Windows and Exact Compact in the Netherlands, Exact Pro and Exact Pro Lohn XL/XXL in Germany, Cubic Pro in Belgium, and Exact Globe 2004 Enterprise in the Netherlands and in the International Group.
Therefore, another potential strength that Exact may have against some of its competitors is its developing global nature, given that the convergence of Exact Globe with e-Synergy could produce a single product line that operates internationally. The company's strategy makes sense, and is similar to those of Microsoft, Epicor, and Sage. As a result, they have gained some products that are more global and multinational, including Exact Globe, Microsoft Dynamics AX (formerly Microsoft Axapta), Epicor iScala or Sage ACCPAC. They have also acquired a bunch of local brands, like Macola, Microsoft Solomon and Navision, Epicor Vista and Avante, or Sage Line and MAS.
As for whether carrying these different ERP offerings might hinder Exact's ability to create a truly integrated offering similar to that of Microsoft or Sage, this doesn't appear to be Exact's immediate goal. Exact does not want to hastily converge these into a single product and force users to migrate. Therefore, Exact Globe might suffice for many new customers that do not have very heavy manufacturing and distribution needs. Other products will keep their identities and be enhanced accordingly. Macola ES will always be good for North American companies with repetitive manufacturing and distribution requirements, whereas JobBOSS is better suited for order-driven job shops. Exact Globe does not yet cover complex manufacturing functionality for order-driven shops—it is oriented more towards service and light manufacturing or assembly, and distribution sectors, but it has strong multinational capabilities, project management, embedded e-Synergy, etc. for corporate headquarters.
Certainly, while future development might eventually create a temptation for a common migration path for packages with similar target markets, such as those from the Macola and MAX divisions, the timetable for that has not been set yet and when it happens, it will be user-driven. Although the company will subtly direct multinational North American customers to Exact Globe, it will not force the issue, since the plan for 11,000 or so North American customers of Macola, JobBOSS, MAX, and Alliance/MFG is to keep them on those products and moderately evolve. While Exact might be able to offer a "promised land" of the concept of delivering a single product that does encompass all functionality, it is admittedly several years away.
Furthermore, although the expanded functionality of Exact Globe provides a good foundation for customers around the world that are making the transition to a more process-oriented enterprise, the future for prospective and existing customers, as well as for Exact itself, lies in Exact e-Synergy. e-Synergy is the Web-based front-office product that promises to deliver integration with virtually any ERP back-office, and collaboration through knowledge sharing with trading partners. All three Exact strategic groups share this vision, and to realize it, they are supported by Exact's extensive global network of fully-owned subsidiaries. As a matter of fact, if one has to pick anything unique that would set Exact apart from other mid-market ERP peers, it could only be e-Synergy, which has document management, workflow, project management, CRM, HRM, financial consolidation, knowledge-based collaboration (like IBM Lotus Notes), portals, etc., all at one place and is Web-enabled.
One might even say that e-Synergy was a virtue made out of necessity, given it was originally developed by Exact to enable its globally dispersed offices to better collaborate and share information in near real-time. Therefore, Exact has established a global infrastructure and network of offices offering direct support, sales, and services, with the aim of providing customers a consistent level of service. This was effectuated by ensuring that all employees within Exact's international organization use e-Synergy both as an internal automation and information system for monitoring customers and for sharing real-time information about each of these multinationals.
By increasing its global network, and its standard front- and back-office solutions and a real-time infrastructure, Exact has bolstered its position to acquire new multinational customers creating further opportunities for cross-selling to the affiliates of its customers in other countries. Toshiba, Culligan, Siemens, Phillips, Alltech Biotech, Hitachi, PADI Worldwide, and so on, are examples of these types customers. They are a bunch of scattered, international, "small fish" divisions, with "big fish" issues at the corporate level. Exact's local mid-market products like Macola can appropriately serve such divisions, whereas e-Synergy and Globe can give headquarters control and visibility into every individual instance. This approach has reportedly allowed Exact to build up a central knowledge base of potential international customers and their subsidiary networks. Currently, Exact International supports more than 8,000 international companies.
Exact's Business Unified strategy, as described in Exact Software Continues with Its Share of Judicious Acquisitions, outlines Exact's belief in integrated solutions, since optimizing only at a company or departmental level is no longer sufficient to succeed in today's highly competitive environment of integrated supply chains. For more information see Business Process Management: A Crash Course on What It Entails and Why to Use It.
This concludes Part Two of a multipart note. This series will explore Exact's strategic groups and global aspirations; its BPM strategy and products; and its acquisition of Vanguard. It will also present challenges and make user recommendations.