Sweet Spots and What-Nots: Enterprise Management Software Vendor Provides Notable Solutions
A Wealth of Offerings
Even though it was run for over two decades as a family business (at least, this was sometimes the public perception), Deltek Systems, Inc. has become North America's principal provider of enterprise software and solutions for project-focused organizations. In mid-2005, Deltek announced that New Mountain Partners II, L.P. would make a majority capital investment in the company. See Mountainous Investment Transforms Enterprise Management Software Vendor and Enterprise Management Software Vendor Welcomes Additions for more information about this investment and its implications. This move, while certainly enhancing Deltek's prospects in terms of strengthening its global position, should not deflect attention from its already impressive offering.
Part Three of the series Mountainous Investment Transforms Enterprise Management Software Vendor.
Deltek uses a wealth of standalone and bundled modules to target the following core markets:
- professional services firms (including the architectural, engineering, and construction [A/E/C] "sweet spot," both domestically and internationally)
- complex project-focused enterprises and large federal contractors in aerospace and defense (A&D), nonprofit organizations, information technology (IT) services, and systems integration and management consulting industries, both domestically and internationally
- small to medium project-focused domestic businesses and federal contractors in the government services industry
In a simplified manner, Deltek's vertical markets can be separated by both government and commercial business. On the government side, it scales from small government contractors up to very large contractors with billions in annual revenue. On the commercial side (which includes A/E/C and professional services firms such as management consultancies), it also scales up, from firms under fifty employees, up to the largest A/E/C firms in the world.
In fact, Deltek has recently benefited from penetrating the professional services market: the use of project-oriented and professional service business application software systems is expanding as a result of a number of economic trends. These applications go hand in hand with one another, since service organizations have traditionally used project accounting more than product manufacturing firms, due to the need to customize their services for each client and to properly allocate the associated revenues and costs. As the North American shift continues from a manufacturing-based economy to a service-based economy, the market for project-oriented organizations is expanding too. Furthermore, the trend towards outsourcing an increasing range of activities broadens the market for project-oriented organizations, as both customers and vendors need to track the costs associated with their projects.
Understandably, professional services firms that provide consulting, know-how, or other types of billable services (rather than tangible physical products), need to track billable hours and other intangibles. Also, a typical professional services business will often also have fewer fixed assets; but it must keep close track of staff billable hours to remain competitive. The true value of the business is actually determined by the quality of intangible assets, such as the staff roster (including the aggregate expertise roster), and the client list. For some time now, professional service automation (PSA) applications have tried to fill a gap that traditional enterprise systems such as enterprise resource planning (ERP) and customer relationship management (CRM) have failed to address. Again, that's to say that ERP vendors have traditionally built products that collect data and generate reports on widgets rather than people, whereas CRM vendor have provided solutions that help automate the process of selling these widgets and subsequent customer service interactions. PSA applications, conversely, provide information about staff members (consultants), tapping near real-time data from the sales pipeline, the project teams, and finance, and in the process enable professional services firms to improve productivity, efficiency, and profitability. Deltek is one of a few enterprise applications vendors that have largely managed to bridge this gap (see Enterprise Resource Planning for Services, and Professional Services Automation: Where Do You Draw the Line?).
The main product for this market is Deltek Vision, a "young" solution (compared to many sibling products, and in terms of modernity) that was designed from the ground up for professional services firms, enabling them to attain an up-to-date 360-degree view of people, projects, clients, resources, and business in action. The product, which was initially released in late 2002, reached a landmark 1,000 customers in early 2006. Using Web-based technology, Deltek Vision provides client relationship management, proposal automation, project management, resource management, project and financial accounting, time and expense (T&E) capture, billing, purchasing, multicurrency, multicompany, and performance management functionality in a single solution. Project-focused organizations and professional services firms around the world have apparently been deploying Vision, since it offers an exceptional business fit for such firms in a wide range of vertical markets, including A/E/C, accounting, consulting and planning, IT services, software, and integration. The product's Web services-based n-tier architecture is scalable, and its open foundation allows for reasonably rapid deployment as stand-alone modules or a broader tightly integrated solution.
Developed in close collaboration with some of Deltek's high-profile professional services clients, Deltek Vision aims at solving the business challenges of professional services firms, such as winning repeat business, improving project performance, and maximizing project margins. Contrary to the typical detrimental practice of detaching initial customer interactions from subsequent project management and delivery, this unified solution serves as a single source of project-related data, which can be used to track performance, make strategic business decisions, and measure individual project performance. To that end, accessing a client record in Deltek Vision from the CRM & Proposals module will, for example, also list the client's employees and former employers via a hyperlink, enabling users to keep tabs on industry movement and team turnover.
Another example of how a tight vertical fit works compared to generic solutions, in the construction segment, is the requirement of cost-plus contract accounting (one of a variety of methods for pricing and billing project work). A cost-plus project has a different set of requirements from a fixed-price contract, since in the first case, a services company wants to maximize billable hours, while in the latter case, the goal is to minimize them. While "bolt-on" features exist for generic solutions designed solely for fixed-price contracts, Deltek Vision uses the percentage of completion method for subcontract progress payment requests, including variable rate retention for work in place (WIP) and stored materials. In the architecture vertical, project planning requirements are traditionally handled via disparate spreadsheets for project planning, whereas Deltek's project planning is integrated with accounting, and supports multilevel work breakdown structure (WBS), and revenue and profit forecasting. Finally, in the engineering segment, the ability to automate the proposal process as a key CRM component is vital; traditional product-based CRM systems have no qualification-based proposal automation capabilities, whereas Deltek Vision features project-oriented CRM capabilities, which intrinsically include proposal automation.
Deltek Vision is a Microsoft .NET-based platform for the commercial professional services market. With its support for Web-native hypertext markup language (HTML), dynamic HTML (DHTML), and Java Script on the user interface (UI) tier; Microsoft SQL Server as database; and the Actuate reporting server, the product features extensible integration architecture that enables collaboration and mobile extensions through Web services. For these reasons, the goal is for Deltek Vision to become the company's primary offering to professional services firms, and will be targeted at existing Deltek Advantage, Deltek FMS and Deltek Sema4 customers, as well as at new customers in all types of professional services industries.
In mid-2005, Deltek announced the release of Deltek Vision 3, which provided significant upgrades and enhancements for increasing productivity and workflow, including Deltek's new Microsoft .NET-based VisionXtend platform. This technology enables real-time, transparent connections via Web Services and extensible markup language (XML) across multiple platforms and applications, allowing professional services firms to integrate and streamline key business processes in order to achieve performance and compliance management, as well as a collaborative view of firm-wide operations. Other significant enhancements in Vision 3 include a new workflow engine, a screen designer, audit trail reporting, a purchasing module, and document management capabilities providing secure Web-based collaboration for users to share, upload, review, and edit documents, regardless of location. In addition, Vision 3 introduced improved international (multicurrency and multicompany) functionality. For more information on the product release, see Niche Software at Its Best.
Early in 2006, Deltek and AppForge, the provider of enterprise multiplatform mobile and wireless application development solutions, announced a partnership that will eventually enable Deltek to deliver mobile applications via Deltek Vision across any major mobile operating system (OS) and device. Through this partnership, Deltek plans to deploy mobile applications to more than 450 devices across PocketPC, Symbian, and Palm OS platforms (with the addition of the BlackBerry OS in the second part of 2006) via AppForge's Crossfire product. This should allow users to choose from a wide range of mobile platforms and devices, while significantly reducing development time and resources. With AppForge, developers can write an application once, and deploy it to most major mobile and wireless devices, PDAs, smartphones, and industrial devices, using Microsoft C# .NET 2003, Visual Basic .NET 2003, and Visual Basic 6.0. This should save businesses time and money by eliminating the need to rewrite an application for a new or next-generation device or OS. Mobile applications for timekeeping and expense management have been available since mid-2006 as part of Deltek Vision 4.0, and future releases will include other functions such as CRM, and alerts and approvals for requisitions, purchasing, and resource planning.
In March 2006, Deltek announced the release of Deltek Vision Small Business, a preconfigured, out-of-the-box business solution that delivers Deltek functionality to small businesses. The product features a solid combination of core modules from Deltek Vision, such as CRM, proposal automation, project management, resource management, project and financial accounting, and performance management functionality. The solution is the result of Deltek's vast experience, combined with the recent acquisition of Wind2, which provided the vendor with a deeper understanding of the requirements of a small professional firm. With its core functionality and low-cost special pricing (an affordable start-up fee), the product offers a wide array of convenient options, including new hosting services, an out-of-the box configuration of critical core accounting, billing and time keeping functionality, licensing options, and a new self-paced training program called Vision Fast Start Implementation that should help reduce implementation time, and ultimately lower the total cost of ownership (TCO). The solution is also available through Deltek's expanding reseller network throughout the world.
Finally, as a result of increasing requirements for Deltek's analytics capabilities, and given Deltek's quest to capture new markets, the vendor has lately been exploring data visualization technology (analyzing historical data from similar projects to improve project profitability presents a different problem from optimizing current staff deployments). These tools of this technology originate from scientific applications, and are now being merged with statistical analysis software, with the goal of replacing reports and tables with powerful, eye-catching images that convey important statistical messages to even the casual user. To that end, through a partnership with Panopticon, Deltek has been embedding this technology into Deltek Vision 4 to allow a firm-wide view of the health and performance of project portfolios to executives, project managers, and other users.
Most recently, in mid-2006, Deltek announced the release of Deltek Vision 4, which, for the first time, integrates planning, tracking and project administration features with innovative functionality such as visualization and mobile access, to create a solution that streamlines all facets of the project-based business. It is available as a complete enterprise-class suite, or as a preconfigured solution designed to meet the needs of smaller firms. Visualization is a powerful management tool that empowers businesses to take control of their data and quickly turn it into actionable information. A mission-critical technology in the financial services marketplace for many years, Deltek has harnessed the power of visualization for the project-focused organization with the release of Deltek Vision 4, enabling engineering and architecture firms, IT services companies, and management consulting firms to instantly discover trends and opportunities across their entire project portfolio. Visualization provides a simple display that depicts mission-critical information about a firm's entire business—including project performance, status, trends, and risks—using color and shapes to alert viewers of any performance issues at a glance, and allowing them to focus on the most critical issues.
Deltek Vision 4 also introduces a new Mobile Applications Suite, significantly enhancing capabilities that allow field workers to collect and provide their project data more simply than ever before. For the first time, project managers and consultants can work offline or from their wireless personal digital assistants (PDAs) and smart phones, contributing to project reports and entering critical information (including time and expense data) when they are not connected to the network. Businesses can now streamline field reporting without requiring large hardware investments.
Deltek Costpoint (Deltek Enterprise)
The Deltek market which comes second in terms of strength consists of complex project-focused businesses and large federal contractors in A&D; nonprofit organizations; IT services; systems integration (SI); and management consulting industries, both domestically and internationally. For this market (Deltek's "sweet spot"), the vendor offers Deltek Costpoint, an integrated back-office or ERP solution. In late 2005, Deltek announced the release of Deltek Costpoint Smart Business Applications (also known as Costpoint web), a Web-based interface for Costpoint, which aims at increasing collaboration and productivity while providing the built-in project accounting functionality that currently nearly 1,000 Deltek Costpoint clients (mostly organizations having annual revenues in excess of $50 million [USD]) rely on. Other significant product features include enhanced reporting functions, a user-friendly "zero-client" interface, and improved navigation tools that increase ease of use.
Deltek began development of Deltek Costpoint in 1992, and commercially released the product in June 1995. While the Deltek Costpoint 4 and Deltek Costpoint 5 releases have traditional client/server architecture (meaning that there is no application server in the architecture, and that reporting is embedded in the client/server runtime), the upcoming Deltek Costpoint 6 release (expected sometime in 2007) is to be almost completely developed with Java architecture to feature native Web functionality, using Deltek Costpoint 5 as the basis for functionality. The vendor is using the Enterprise JavaBeans (EJB) application programming interface for Costpoint web, in conjunction with the WebLogic Application Server technology developed by BEA Systems, Inc. Deltek selected the BEA WebLogic Application Server technology because it supports the wide variety of server and database platforms used by Deltek clients, as well as UNIX, Microsoft Windows NT, and Linux. WebLogic also provides automatic load balance and automatic failover capabilities to minimize interruptions and server downtime.
Deltek Costpoint web is an elegant intermediate solution (between Costpoint 5 and 6), and is a result of Deltek's initial "staggered release" approach, in which selected Web-based applications would be delivered in segments. The release of the initial set of Web-based applications, which includes a number of input screens relating to key business practices such as project and employee setup, and vendor and payables processing, should enable users to configure the application and Web servers: once the initial setup is complete, users can update the application server at any time with the latest software enhancements or program corrections. However, the Deltek approach has since changed, and the vendor is now in the midst of holistically developing the Web-based version of Deltek Costpoint through a technology partner. During development, it became apparent that a better alternative to fully Web-enabling Deltek Costpoint was to Web-develop the entire software in one instance, using Mphasis as the on-site and offshore development partner. Deltek Costpoint 6 will be a scaleable Java 2 Enterprise Edition (J2EE)-based platform of "industrial strength," capable of supporting even organizations with over a billion dollars in revenues. The product is already standardized for integration with other technologies, and has the flexibility to support multiple OS platforms, with support for Web-native HTML, DHTML, Java Script, or rich client on the UI tier; Microsoft SQL Server or Oracle as databases; and the Actuate reporting server.
Deltek GCS Premier
The last of the three major product lines, Deltek GCS Premier, is targeted to small and medium project-focused businesses and contractors in the government services industry, and since its initial release in 2000 has reportedly contracted more than 1,200 clients, making it the leading government-compliant cost accounting and project and financial management solution designed specifically for small and medium businesses (SMBs). The product is optimized for compliance with US Defense Contract Audit Agency (DCAA) requirements, and is much easier to deploy than its two bigger siblings (Costpoint and Vision); not only is it built specifically for government contractors, but it is also a fully integrated system with a single-data source. GCS Premier's UI tightly integrates with its process-oriented design, while its pull-down menus are workflow-like in their functionality, and provide an intuitive capability that makes it easy for users to learn the application by navigating from process to process. However, the product's Microsoft Windows-based architecture is not the most modern or open, since it only uses a rich/fat client on the UI tier, a non-relational database, and a purpose-built reporting layer. Otherwise, Deltek GCS Premier, in addition to its Windows-based interface, features flexible, component-based software construction, achieved with Microsoft Visual Basic 6.0 and ActiveX controls. The solution was designed specifically to ensure that Deltek's System1 legacy customers could easily migrate to GCS without the necessity of data conversion, while preserving System1's critical processing programs, complex reports, and other time-tested legacy programs.
To put things in another perspective: of the three major products, Deltek Costpoint is the broadest, currently covering the realms of financials and accounting, human resources (HR) and payroll, material management, CRM, T&E, resource planning, and business performance management (BPM). In addition to its proprietary architecture and domestic (US-only) focus, Deltek GCS Premier eschews resource planning and material management capabilities, and has no need for project portfolio management (PPM) functionality down the track. On the other hand, Deltek Vision logically has no need for featuring material management capabilities, given its services industries target.
The two flagship products, Deltek Vision and Deltek Costpoint are the main offering for new customers in the respective professional services and project-based sectors, and possibly the migration path for most existing customers on legacy products—of course at the customers' own pace. For these products, Deltek has outlined the architectural foundations, which are based on the two primary standards-based (and partly platform-neutral) technologies: Microsoft .NET, and J2EE (for more information, see Understand J2EE and .NET Environments Before You Choose).
Despite some inevitable differences, both platforms embrace the service-oriented architecture (SOA) design philosophy that promotes internal benefits of code reuse, interoperability, and data integration (see Understanding SOA, Web Services, BPM, and BPEL). To that end, the vendor has adopted pervasive XML use, and created a prototype to describe licensing requirements for open source modules based on the semantic standards of Web Ontology Language (OWL) and the Resource Description Framework (RDF). SOA is also promoting the external (client tier) benefits of extensibility as standards are increasingly adopted, since XML-defined UIs allow for portlet use of pieces in a service model framework. Also, use of XML is pervasive in describing public schemas for key data. The ultimate benefits for business should include loosely coupled development schemas (which can be converted to multiple UIs), a foundation for active workflow engines, and open integration and extension of applications around business processes.
Some Standalone Notables
Other standalone products worth mentioning here stem from a key growth strategy for Deltek, post-2000, which is to provide additional front-office software applications to its vast back-office install base. Initially, the centerpiece of its front office strategy was the Deltek CRM & Proposals product, which is available as a standalone product, or via integration with Deltek Vision. Introduced in late 2000 (and currently at the 1,500 customer mark), this product provides the sales, marketing, and business development tools needed by professional services firms to produce rewarding proposals; win more business; and increase client satisfaction and retention (by tracking opportunities, historical data, and contact, employee, and project information).
Within its marketing and proposal automation product, Deltek supports an emerging CRM derivative known as client relationship management, which should help firms (such as accounting practices, law offices, and other professional service companies, as well as technical services and project-based organizations) track client relationships in a more sophisticated manner than (for example) referral or word-of-mouth, which were appropriate during the start-up phase. In other words, professional services organizations trade exclusively in intellectual capital, since rather than focusing on the manufacture, sale, and distribution of physical products, they sell their knowledge and domain expertise. Thus, they require different tools to manage the business development process and to differentiate themselves from their competition (see Professional Services Are Catching Up with CRM). In a project-based business, there are no dedicated remote sales teams chasing and securing new business, since most senior partners and project managers bring in their own business and look after their own client portfolio.
As the consumer Internet storefront ordering approach or traditional sales calls are quite inappropriate in this context, the critical element of the client relationship process is the development of proposals for securing new business. Trying to recall the details of relevant past jobs and who worked on them can be a nightmare (as is trying to gather documents that are stored in different places by different people). To that end, Deltek's proposal management system allows a contractor to organize projects by various categories (such as people, projects, designs, and expertise), so that the appropriate information (for example, resumes and document boilerplates) is easily retrieved when new proposals are prepared. Users can then track the progress of a proposal, share the information with other team members, review similar proposals, and analyze awarded jobs. The product offers both government and customized commercial proposal generators.
Leveraging the blueprint of Deltek CRM & Proposals, Deltek GovWin is a fairly new product (with about fifty customers since its release in 2004), which addresses the business development requirements of federal contractors. Featuring a Web-based UI, it aims at better management of the opportunity pipeline by generating performance metrics and enabling the "capture" process. It also aims at creating structure to formalize business development lifecycle, and at improving the ability for coordination between multiple business units, to eliminate redundancies.
Deltek GovWin includes a preconfigured database (a Web-based central repository where companies can enter, store, and access detailed client- and contract-related data) and tools that are tailored to government contractors so that no additional customization is required. Among the preconfigured data that it can track are competitive assessments, post-award debriefings, and team reviews. The system also handles contract specifications, such as contract values, modifications, performance information, and locations, as well as employee information, including affiliations, memberships, and clearances. GovWin can also act as a knowledge base for future opportunities, by tracking firm qualifications and personnel experience, approved text for consistent messaging, win-loss ratios, and updates on past and ongoing contract activities. Prospective users in many sectors increasingly demand embedded domain expertise in their applications, and federal contractor applications would be a case in point, since a significant portion of the bid evaluation process in this sector is focused on relevant past performance.
The above section could accurately contrast against the five major product areas Deltek specializes in (ERP, CRM, human capital management [HCM], BPM, and PPM), and Deltek's entire product portfolio can be viewed entirely through this lens. There have been numerous examples of companies that turn to stand-alone solutions to fix their broken processes.
The richness of Deltek's complete product line notwithstanding, the road ahead promises potentially wicked twists and turns. We'll explore these next, in the final note of this series.