Revamps World for Its Mid-Market "Express" Conquest
- July 29, 2004
Part Four: Challenges and User Recommendations
"inaugurated" as the No. 2 leading business applications provider after digesting
the former J.D. Edwards & Company, PeopleSoft,
Inc. (NASDAQ: PSFT), has been making decisive moves to deliver
a number of new, and refurbished solutions, in a great part by leveraging its
recently acquired product portfolio. Although the vendor has acted swiftly on
assimilating its former competitor (see PeopleSoft
Gathers Manufacturing and SCM Wherewithal), these recent initiatives
might show us that the vendor has moved even farther from the digestion stage
and into a full-blown execution and productivity phase.
announcements that reflect this are
World Express, one of the industry's most comprehensive solutions
for smaller businesses with annual revenues between $20 million and $100 million
(USD), on May 3, at COMMON 2004, the IBM iSeries
A new release of PeopleSoft World that included more than
280 new features and enhancements that span the product family's human capital
management (HCM), supply chain management (SCM), and financial management
(FM) applications, and a new web-based user interface (UI),on March 18 at
Further extensions of the longstanding partnership with IBM
(NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit
which expands their global alliance by enabling IBM's expanding SMB reseller
channel (see IBM
Express-es Its Candid Desire for SMEs) to offer PeopleSoft applications.
PeopleSoft on May 18.
details, see Part
the World Express product is aimed at new, prospective customers (estimated
50,000 in North America), there may be an indirect importance of assuring the
existing, still disheartened PeopleSoft World install base and channel of the
product's brighter future. The product has undergone significant enhancements
almost immediately after the merger, such as the integration with PeopleSoft
EPM and the above-mentioned annual cumulative update for the release
7.3. Further, given that the integration with PeopleSoft SRM
is slated for the end of 2004, and the next annual cumulative update should
take place early in 2005, these events should be the best testimonials of the
new owner's renewed commitment to the long neglected product line.
getting the market and the channel's mindset back into the more active
selling of the product will not be that easy given a protracted limbo (PeopleSoft
claims a few dozen new sales during 2003, without any significant orchestrated
marketing and sales effort). No wonder then that the most likely torch bearing
proponent at this stage will be IBM and its channel of iSeries resellers and
distributors. Even pre-merger PeopleSoft and IBM have had some history since
early in 2001. They announced a partnership to speed up the delivery of business
applications for small and medium businesses (SMB), as PeopleSoft had early
targeted IBM Business Partners to offer mid-market prospects
a rapid deployment program for former PeopleSoft 8 (now PeopleSoft
Enterprise) 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 an 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
it may still take some serious effort to produce a real magic bullet to attract
the vast majority of smaller enterprises even with these latest initiatives.
PeopleSoft needs to more efficiently mine its client base by doing a better
job of selling the broadened offering, by getting its affiliate channel both
excited about the product portfolio, and by upgrading the channel's ability
to sell. For new customers, the vendor will still have to resolve the predicament
of its association with the old, green-screen, AS/400 product.
Despite IBM's efforts to counter the platform's image of being proprietary (even
by renaming it into iSeries, i5, etc.), the market has been
slow in warming up to it for e-business implementations. Namely, the initial
price and the need for specially trained RPG development language administrators
that are not that ubiquitous in the market like Microsoft Visual Basic
(VB) programmers, have not really boded well for IBM's
massive acceptance within the space. Moreover, overcoming the Microsoft barrier
entry will likely be the major challenge, given Microsoft's ubiquitous
position within the small and medium enterprise (SME) segment, particularly
with products like Office, Exchange and SQL
Server. Time will only tell how the equivalent counterpart products
from IBM, such as Workplace, MQ Express or
Connect Express will help in that regard.
is Part Four of a four-part note.
One detailed recent announcements.
Parts Two and Three discussed the market impact.
as said earlier, the Microsoft-centric SMB application vendors understand this
market and in addition to product offering, they have long heavily invested
in recruiting, motivating, and supporting the resellers that service the segment.
There are also influencers like certified public accountants (CPAs)
and small and midsize accounting companies that make recommendations to their
clients which packages to deploy, and Sage and ACCPAC
have for decades been cultivating awareness and relationships within this community,
which can be neither easily nor quickly toppled. Some of them also offer "no-frills"
on-line or retail sold, entry level or "feeder" business-application
packages that attract small businesses early on, such as BusinessWorks
Gold, QuickBooks Premier, Peachtree,
or ACCPAC Simply Accounting Pro, then these vendors provide
more advanced functions and more scalable software as the small businesses grow.
in the case of an increased demand within the IBM technology-inclined prospective
customers, PeopleSoft is not the only one "in bed" with IBM. For
example, one will likely see on the standard menu a number of individual industry
solutions (at least from MAPICS and SSA Global)
that virtually offer similar solutions to World, ringing the similar rejuvenating
changes of a web-based UI, WebSphere portal, and so on, while these products
are also the incumbent veteran products in the segment. As some possible differentiation,
the World Express solutions include the essential steps of the core business
processes that almost any company in the targeted vertical markets would require.
The configuration is designed to adapt to special customer requirements when
needed, and expands to include additional functionality that is available in
World Software. Tailoring the configuration will require additional consulting,
but the PeopleSoft World management team believes that it will be faster and
more cost-effective to tailor the existing image than to configure the entire
system. This approach to implementation services gives the customer control
over the amount of consulting needed to implement the software, allowing the
customer to assess the relationship between cost and return on almost every
significant implementation decision.
not all powerful and possibly exciting PeopleSoft Enteprise/PeopleSoft
EnterpriseOne functionality that have been touted recently at the Leadership
Summit (e.g., customer relationship management demand-driven manufacturing,
diagnostics, predictive and prescriptive analytics, etc.) is available for World
and World Express solutions, which may be a serious drawback when competing
against the other vendors, which have long offered their entire suites without
any disparity between solutions for bigger and smaller customers. Although PeopleSoft
has been impressively moving quickly to create parallel products, transferring
functionality among PeopleSoft, former JCIT's Demand Flow
and former J.D. Edwards' products to fill existing gaps, many competitors
offer these now within more homogenous product suites.
Therefore, the World Express solutions, while enabling PeopleSoft and its channel
to offer a fixed price and fixed time implementation program in an "out-of-the-box"
way, may not necessarily offer total extended-ERP functional scope, but still
only a part of extended-ERP. By the time the customer puts together modules
to build a full collaborative enterprise system for a mid-market company, and
then adds up the multiple implementation time and cost, all the touted benefits
might have been annulled in some instances when incumbent mid-market vendors
cover all the bases with their well-entrenched offering. At this stage, the
company officials admit only a "wait-and-see" stance to assess the
need for eventual product enhancements in the above areas down the track. The
situation is additionally aggravated by the fact that the World install base
is still divided between the two different product releases, 7.3 and 8.1, which
feature slightly different capabilities and are on different annual cumulative
update tracks (e.g., the 6th annual cumulative update for 8.1 is slated for
Q3 2004, whereas the 16th annual cumulative update for 7.3 is slated for Q1
in the case of the top-of-the-range products, both PeopleSoft and former J.D.
Edwards have been somewhat remiss about their native product lifecycle management
(PLM) strategy, resorting rather to the alliance with Agile Software.
However, one could hardly imagine successful supply chain management without
PLM collaboration, particularly within the vendor's industries of focus.
Also, PLM is necessary for enabling the design for manufacture and assembly
(DFM/A) and concurrent engineering concepts, which help simplification of product
design as to enable smoother flowing processes, which in turn means easier production
scheduling. A flattened bill of material (BOM), as a result of the
product development and manufacturing processes being designed concurrently,
in addition to being much easier to plan and schedule than a non-flattened multilevel
BOM, has many other advantages—from reducing the production lead time
to fewer parts to be picked, kitted, and handled. Not to mention that the engineering
change orders (ECOs) management and the ability to quickly reflect product
engineering changes in the line design are also tightly connected with PLM.
to mention the ongoing alignment, cross training, and integration of geographically
dispersed former PeopleSoft and J.D. Edwards' sales forces, channels,
and professional services. Some consolidation will have at least happened throughout
the company's new global organization, while PeopleSoft wants users to
be able to choose both systems and platforms that best suit them, from the Linux
operating system (already generally available), via UNIX, Windows to IBM
OS/400, running whatever database and hardware they wish. At this stage,
the largest need for animating the likely disenchanted constituencies of World
and World Express still remains.
the challenges, PeopleSoft has raised the bar in providing solutions for smaller
enterprises, and tier two and tier three vendors should be in for a tough battle
to defend their turf, especially as they are concurrently trying to expand and
modernize their products. PeopleSoft is undeniably a tenacious and persistent
fighter able to endure the long hauls. On the other hand, the prospective customers
can only benefit from a wider choice, may it come from either a new product
like SAP Business One or a refurbished vantage product like
PeopleSoft World Express.
Interested customers within the above four particular industries
of World Express focus should certainly consider the PeopleSoft's lower-end
of the mid-market offering and carefully determine their needs and implementation
time framework, bearing in mind potential problems typical with any new product
large vendors offer their own version of SMB solutions with programs for rapid,
lower-cost implementations. While their endeavors in that regard are highly
commendable, the "caveat emptor" approach is still applicable.
Although some smaller companies would be well off with scaled-down versions
of rapidly implemented, tier one software applications, for many companies this
may not necessarily be the best solution, and they should make sure that they
do not sacrifice functionality or customizability for the sake of a quick implementation,
since that may cost more in the long run. As more "food for thought",
Implementations—Are They Good or Bad? and Should
You Modify an Application Product?
strongly recommend identifying your clear e-business strategy and conducting
thorough comparison-shopping, at least for the sake of information leverage.
Consider all options, regardless of the technological affinity. Most importantly
identify what needs are "must have" requirements and a timeline
for additional components. Once identified, comparison-shop and use the related
information to negotiate the best price for the solution. We are generally skeptical
about bold promises of speedy, trouble-free implementations and recommend that
users dig deeper and conduct detailed interviews with PeopleSoft and ask for
sample timelines and references from past clients who have achieved quick ROI.
Conversely, question other vendors in the contest to match some elements of
PeopleSoft's value proposition (e.g., a complete solution in the box,
ready to run without dedicated IT staff).
"watered down" or "dumbed-down" solution does not appear
to be the case with the World Express product, and, thus iSeries-centric, less-complex
make to stock, repetitive, assemble to order, and project-oriented manufacturers
or enterprises that need balanced capabilities across discrete manufacturing,
distribution and financials—and that have revenue between $20 million
and $100 million (USD)—should put PeopleSoft on their short list. Still,
existing users of PeopleSoft World product should be aware that the sexy CRM
and collaborative SCM modules will be interfaced to their product through the
AppConnect process-based technology, and should inquire about
a more detailed product integration strategy and coexistence. While business
process integration across products, data integration through a central data
warehouse, and content integration through portal technology are plausible concepts
that PeopleSoft has been leveraging to integrate its product lines, users should
discern the depth of the integration and whether the processes like "order-to-cash"
are truly working seamlessly across multiple, previously disparate applications.
At least, many manufacturers that are still "wedded" to the iSeries
platform should relax due to the plausible enhancements roadmap, although the
cost of maintenance is yet to be determined. PeopleSoft has managed to keep
itself profitable lately primarily by leveraging service revenues, including
maintenance, and by focusing sales efforts on mining its installed base. Former
J.D. Edwards' customers, therefore, should not be too terribly surprised
by increased maintenance costs or shorter release support cycles. Customers
and prospects should watch how PeopleSoft executes its product expansion plans
and its up-sell and cross-sell opportunities, given these will also affect its
services' viability. PeopleSoft Enterprise and Enterprise One products
are likely to experience the greatest capabilities convergence, given PeopleSoft's
apparent intent to broaden the capabilities of both product lines. Therefore,
question PeopleSoft's officials to obtain the firm delivery schedule of
the intended offering.