Scala Shows Far More Than A Bit Of A Backbone Part 3: Challenges and User Recommendations

Scala Shows Far More Than A Bit Of A Backbone

Part 3: Challenges and User Recommendations
P.J. Jakovljevic - August 8, 2002

Challenges

At the beginning of July, Scala Business Solutions (ASE: SCALA; www.scala.net), an Amsterdam, the Netherlands-based provider of collaborative ERP software for mid-size enterprises and subsidiaries of global corporations, launched a number of initiatives to defend its turf by providing a counter value proposition to users of its larger competitors, especially SAP.

Although the value proposition covered in Part One and Two should bode well to creating increased demand and acceptance of the Scala offering in the global SME market, nevertheless, there will be many challenges to overcome in order to continue to thrive in this ferocious competitive environment.

The fierce competition comes both from the multiplicity of its peers and the Tier 1 vendors storming down the market. Likely the biggest challenge, however, lies in the concurrency of iScala with SAP's Business One offering for SMEs, the result of SAP's move earlier this year when it acquired TopManage (see SAP Tries Another, Bifurcated Tack At A Small Guy). SAP Business One is targeted at companies with less than 250 employees, and includes financials, sales, procurement, banking, inventory management, costing, multi-national, and some basic CRM functionality. It also includes the impressive "drag and relate" functionality available in SAP Enterprise Portal aimed at alleviating the proverbial SAP R/3's complexity and functionality that has become a liability rather than an advantage in targeting (and appalling as well) SME's in the past. Given declining revenues, SAP is likely to be hostile rather than agreeable to Scala's symbiotic' (likewise the Plover Bird cleaning crocodile's teeth) relationship in penetrating and servicing SAP's global customers' remote divisions.

Room for functional enhancements and product delivery work-in-progress remains too. To that end, iScala Developer has been slated for the near future enhancements including the Web deployment Server and Portal Deployment Server, while iScala still has to match Scala ERP's language capabilities (24 vs. 30). Also, Scala will have to build or acquire CRM (currently limited to Service Management and Customer Information Management, without any Sales Force Automation capability), supply chain planning & execution (SCP&E) and product lifecycle management (PLM) functional enhancements to round out a complete collaborative extended-ERP suite, readily available by many of its peers (see Mid-Market ERP Vendors Doing CRM & SCM In A DIY Fashion and Epicor Claims The Forefront Of CRM.NET-ification and SalesLogix and ACT! Officially Branded As Best Software) let alone the likes of SAP, Baan, Oracle, Intentia and IFS. Not to mention the need to bolster strategic supply chain planning, manufacturing operational capabilities and shop-floor execution, well beyond a mere order management.

Also, Scala's market awareness might possibly be aggravated by somewhat non-cohesive marketing of its product brand names (iScala 2.1 and Scala 5.1). Despite thought out transition between the products (the upgrade path from Scala 5.1 to iScala 2.1 is reportedly no more complex that that between service releases of Scala 5.1), Scala does not intend to immediately withdraw Scala 5.1, as there are still existing customers who are in the middle of a roll out of the product and as not all languages have been implemented in this initial release of iScala 2.1. Further, the company has to build the Hospitality and Pharmaceutical functionality into a forthcoming new release of iScala 2.x. Some of the confusion that may exist over whether the company has two product lines may have arisen because it did release some of the collaborative functionality as "add on" capability to Scala 5.1 and at that time (in 1999) it named these add-on modules "iScala" products. The functionality in these products has either been replaced or will shortly be replaced by the fully integrated iScala 2.1.

Outside of its product's globalization advantage (which is not a small thing though), its genuine collaboration' message lacks much of differentiation traits given that many other Microsoft-centric vendors like Ramco Systems, Syspro, and Made2Manage to name but a few, offer like value proposition of collaboration and visibility across the entire supply chain. Ironically, the relationship between iScala and Scala ERP resemble the one of mySAP.com collaborative platform and SAP R/3 ERP systems, and Scala will have to be careful not to fall in SAP's former trap of confusing the market with the product's genealogy, future migration path, licensing, service & support discontinuation, etc. Scala should thus try to more clearly articulate the message that true collaboration can only be achieved if the core product is an ERP system which by its very nature enables intrinsic collaboration (such as iScala), rather than a product which has to have modules added on to achieve the collaboration

This is Part Three of a three-part note covering recent initiatives by Scala. Part One covered the initiatives. Part Two discussed the Market Impact.

User Recommendations

Scala's target market, general multi-site and multi-national enterprises with up to $1 billion in revenues and their divisions with up to 200 concurrent users per site, should consider the company's value proposition, and we generally recommend including Scala in the long list of vendors considered for an enterprise application selection by the upper-end of mid-market companies that are a mixture of regional business, divisions and semi-autonomous operations, each with its own autonomous requirements and business processes. These companies generally are rapidly growing and agile, but have a limited regional IT budget/staff, and less intricate discrete or batch process manufacturing, CRM and B2B e-commerce collaboration requirements.

Technologically, the product may be the most suitable as a solution for global mid-size enterprises, worldwide dispersed, with strong requirements on distributed infrastructure, security and with private trade exchange (PTX) and/or collaborative role-based portal solutions strategy and delivery. The industries that would most likely benefit from using its products are those from Scala's proven core target sectors—including telecommunications, hospitality, pharmaceutical, and food & beverage.

Scala 5.1 users should position iScala 2.1 central to their collaborative B2B and B2C e-Business strategies although being informed about competitive products cannot hurt. They should also question the company's future two-pronged product strategy, the timeline for the products' language and other capabilities convergence, product migration path (upgrade licensing arrangements and ongoing service & support, and/or ramifications for not opting for iScala). Non-Scala users may as well benefit from evaluating iScala product for their collaborative needs.

Large global corporations with a centralized management philosophy looking for strong global corporate financial and HR modules, for a highly scalable cross-platforms solution, and for much broader functionality beyond traditional ERP boundaries (e.g., more intricate CRM, PLM, or complex project /engineer-to-order (ETO) functionality) from a single vendor may benefit from evaluating other products at this stage. For more on the pro et contra of unified corporate-wide enterprise solution deployment, see Standardizing on One ERP System in a Multi-division Enterprise.