Internationalizes Its Mid-Market Forays
- September 26, 2002
August 26, at its annual user conference, Connect 2002, PeopleSoft Inc.
(NASDAQ: PSFT), one of the leading business applications providers, announced
the expansion of its mid-market offering, PeopleSoft Accelerated Solutions.
The solutions will be available in France, the United Kingdom, the Netherlands,
Australia, New Zealand and Canada. PeopleSoft also announced an expanded relationship
with IBM Corporation (NYSE: IBM) to offer customers rapid implementation
services and pre-configured hardware and database solutions.
Accelerated Solutions are designed to be rapidly deployed and affordable for
small- and medium-sized enterprises (SMEs). The fixed-price solutions include
PeopleSoft's Internet-based applications, technical and end-user training and
implementation services. PeopleSoft offers Accelerated Solutions for Customer
Relationship Management (CRM), Supply Chain Management (SCM), Enterprise Service
Automation (ESA), Financials, and Human Capital Management (HCM), all which
have been localized for the language, currency and regulatory requirements of
each country. The company claims its comprehensive Accelerated Solutions can
be implemented in eight to 12 weeks.
will offer pre-configured eServer infrastructure solutions that include
the highly scalable DB2 database software, and a eServer xSeries
or pSeries. IBM Global Services (IGS) and its network of
business partners will deliver fixed-scope, fixed-price implementation services
for PeopleSoft applications. The first preconfigured bundled solution to be
delivered will be PeopleSoft Accelerated CRM for the financial services,
discrete manufacturing and wholesale distribution industries.
is Part One of a two-part analysis of recent announcements by PeopleSoft. Part
Two will continue to discuss the Market Impact and make User Recommendations.
the small-to-mid-enterprises (SMEs) open season started over four years ago,
the last two years have seen a growing awareness of this market segment as a
more fertile ground than the upper echelon, and PeopleSoft is no exception.
However, PeopleSoft deserves commendation for achieving notable milestones (i.e.,
1,100 mid-market customers so far, or 24% of all customers, whereby one out
of every three new PeopleSoft customers reportedly also comes from this segment),
while still evolving and perfecting its offering.
also for a continued evolution of these applications, as this is by no means
the company's first attempt to penetrate the still untapped lower-end of the
market, neither has it been the only Tier 1 vendor that has ever attempted it.
Quite the contrary, since over the last several years the market has seen a
plethora of fixed-scope and fixed-price applications, pre-packaged vertical
solutions, attractive support programs and hosting services with catchy names
(e.g., Fast Forward', Select', Accelerated', Genesis', etc.), all aimed
at making it faster, simpler and cheaper for enterprises under a few hundreds
$ million to use them. However, all of these typically have also implied some
form of trade-off in the name of expediency. The features forsaken will have
been functionality, customizability, platform options, solution scalability
for both vendors and users, SMEs, like their bigger brethren, generally operate
in a dynamic, competitive environment and have global, multi-site operations
that are either wholly owned or that function in a complex supply chain relationship.
Consequently, all these companies need some level of support for advanced functionality,
scalability, SCM, CRM, e-commerce, and distributed computing environments. And
they have to accomplish these feats with less (or completely without) IT staff
and a much more limited budget compared to their bigger counterparts. For these
reasons, the first generation of Tier 1 vendors' offerings for smaller enterprises
has had only a limited success. In that regard, it is still not very clear from
the above typical PR announcement what the killer' value proposition differentiator
for PeopleSoft might be, and the company will have to do a much better job of
fleshing it out elsewhere.
for the first time vocally launched an orchestrated effort to target smaller
enterprises back in 1998. At that stage, the company had only two offerings
named PeopleSoft Select, for human resources (HR) and financials, while
its notion of what represented mid-market was also quite fuzzy then. During
2000, it created its first Accelerated Solutions for HR and Financials,
while a new MidMarket Division was formed and Accelerated SCM product
was launched at the beginning of 2001, by which time the company had acquired
450 customers. During 2001, the company launched a formalized product line called
the Accelerated Solutions, which were expanded by solutions for CRM and ESA,
all aimed at customers with $500m or less in revenue then (see PeopleSoft
Joins The Hunt For SMEs). A number of vertical solutions delivery and the
launch of Accelerated Alliance Program have taken place early in 2002.
PeopleSoft has further polished both its definition of the mid-market (which
now limits it only to enterprises with less $300m in revenues given its average
mid-market customer size has been ~$105 million, which is much more focused
definition compared to some of its peers still referring to companies with even
over $1 billion revenues as the mid-market) and its Accelerated Solutions offering.
To that end, it now offers the following ten distinct Accelerated Solutions:
Sales & Marketing
Enterprise (combined HR + Financials)
seems to have conducted a due diligence, learned a few lessons, and grasped
the key factors for greater success in the coveted low-end market segment. Its
mid-market strategy may consist of the following three informal steps:
- Identify an
opportunity and focus on it
- Build a solution
that best fits that opportunity
- Deploy channel
for the first step, the company estimated enormous opportunities in the market
segment consisting of companies with less than $300 million in revenues. The
company estimated a vast, largely untapped market of potential customers, with
over 62,000 like companies in the US alone. The opportunities have, therefore,
the second step, PeopleSoft identified its target customers' characteristics
and needs, as to tailor the most appropriate solution. To that end, other than
being the companies with less than $300 million in revenues, and, as already
indicated earlier on, these companies have complex business requirements similar
to their up-market brethren, they value integration and a one-stop-shop' provider's
capability, but with modular components, and, as a rule, they have smaller IT
budgets and project teams, creating the "do more with less" mantra as the order
of the day. Furthermore, these enterprises typically look to scale both horizontally
(i.e., to extend business processes across departmental silos, e.g., to achieve
customer order capturing integrated with order management) and due to growth
(organic or through acquisitions).
research also indicates that cost, complexity, and risk are the key considerations
for these targets, with a distinction that the first time buyers (so called
green field plants') put the highest importance on price, best-of-breed modular
but integrated functionality, speed of implementation and quick return on investment
(ROI), whereas experienced (repeated or follow-up) buyers value the vendor's
reputation & support and integrated software & services solutions the most.
the company has made genuine attempts to provide value proposition for both
profiles of mid-market customers. Each Accelerated Solution bundle selected
PeopleSoft 8 product functional components, which have being sold to
larger enterprises too, but with preconfigured implementation, training and
support services, resulting therefore with accompanying rapid, fixed-time and
fixed-price implementations. The company has come up with each solution after
a painstaking process of analyzing its first ~400 mid-market customers, identifying
the functionality that each customer had found critical to be implemented first,
identifying the highest ROI impact component, and finally, developing a pre-configured
product set, integrated business processes and fixed-price implementation scope
for each particular solution.
to exceed the notion of dj vu offering from its peers in the past, PeopleSoft
has attempted to offer a few differentiating extras' in its solutions, which
are often neglected (or intentionally omitted) by many competitors and often
come as unpleasant extra cost' surprises for the customer after the fact. Some
of these lie in a pre-configured modular integration, as the modular product
structure enables customers to cherry-pick what they need and when they need
it, thereby avoiding the proverbial overkill factor' of large applications.
To that end, each available solution can be combined to create extended business
processes, and, alternatively, any number of available add-on modules can be
supplemented, and each solution and/or add-on module has a pre-configured fixed-price
no frills implementation scope.
have been developed from PeopleSoft's own Compass Methodology, which
uses accelerated tools to pre-define the planning & strategy phases of the implementation,
and thereby avoid all-too-commonly dreaded "scope creep" (the company touts
estimated average 37% reduction in time and cost so far). The methodology also
caters for optimized best practices, as necessary workflows, interfaces, and
data conversions have been mapped out by each solution beforehand. Although
PeopleSoft, like every other vendor, frowns at customizations, these are not
prohibited, as a built-in change control allows for customizations' tracking,
but these implementations will logically carry a different price tag.
delivers Accelerated Solutions both via its eCenter hosted and customer
owned options. For users who want the security of an in-house application with
implementation assistance, PeopleSoft will work with their IT departments onsite
to integrate the suite with existing legacy systems. Users with more resources
may want to opt to have PeopleSoft perform the set-up, quality check and installation,
but let internal resources make desired customizations and enhancements. Finally,
for users interested in a truly "hands-off" deployment, PeopleSoft hosts Accelerated
Solutions through its eCenter. As always, prospective clients should choose
the option that best suits their business environments and IT skill base.
the project scope has been agreed upon and the appropriate solution has been
pinpointed, PeopleSoft touts its no frills' complete solution delivery purported
with unlimited user license number for an upfront flat rate, fixed price implementation
and training, pre-configured hardware, rapid but full implementation rather
than with a stripped-down' scope (i.e., standardized data conversion maps,
developed testing scripts across all products, and pre-defined configuration
data baseline best practices come delivered as a part and parcel of the implementation).
by delivering projects (full-fledged implementations rather than only pilots)
via its 35 mid-market implementation centers across North America (an implementation
server is hosted in each centre), the company believes to have eliminated on
average up to 50% traditional on-site delivery costs, as it eliminates hardware
and database administrator requirements well until deployment on site, as well
as consultants' travel and other expenses for the customer, it creates a non-invasive
environment that removes on-site distractions by a daily grind business, customers
gain access to the highest skilled PeopleSoft consultants that are not burned
out by extensive traveling, and these resources can be leveraged across multiple
third pillar of success in this target segment lies in the delivery channel,
for both implementation services and localized regional and vertical industries
expertise. To that end, all of a handful of selected partners were made privy
to the same above-mentioned implementation tools that PeopleSoft's own mid-market
consulting group uses for deploying the accelerated applications, along with
the usual marketing, sales and technical support.
in 2001, IBM and PeopleSoft announced possibly a marquee partnership to speed
up the delivery of business applications for SMEs, as PeopleSoft had early targeted
IBM Business Partners to offer mid-market prospects a rapid deployment
program for PeopleSoft 8 accelerated applications. The companies then announced
Architecture Jumpstart, an ISO 9000 certified, rapid eBusiness deployment
program designed for the fast implementation needs of mid-market customers.
The pre-packaged turnkey solution included a workstation and a Windows NT
application and database server, all pre-bundled and offered with fixed pricing
to deliver a completely installed and configured environment which includes
demo, testing, training and production databases.
recently extended deal with IBM makes further sense, as powerhouses like IBM
can concurrently provide hardware, database, middleware, and systems integration
services, particularly with IBM's recent purchase of PricewaterhouseCoopers
Consulting (PwCC), which is possibly the biggest PeopleSoft implementing
practice worldwide (see Enterprise
Applications Battlefield Mid-Year Scoreboard). The new enriched alliance
expands a preconfigured offering that now includes a broader server options
(either the xSeries or pSeries) and the DB2 database, while IGS will be offering
the fixed-price implementation services for the three above-mentioned targeted
segments. IBM's domain expertise in many aspects of enterprise infrastructure
and in these vertical markets, combined with PeopleSoft's increasing capability
and visibilities within the realm of CRM, should be a compelling value proposition
for mid-market enterprises.
concludes Part One of a two-part analysis of recent PeopleSoft announcements.
Part Two discuss the Challenges and makes User Recommendations.