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1 2955 Campus Drive, Suite 100 San Mateo, CA , USA (650) The services sector has come into its own as an economic force in the global economy. Manufacturing no longer dominates the market as it did from the onset of the industrial revolution. The trend toward a services economy is evident in all developed nations. It has brought both opportunities and issues, as the workforce transitions to a services focus. No industry is exempt from the requirement to improve their capabilities in the delivery of services. The service market is broad and dynamic, existing within every company, both large and small. In manufacturing enterprises, services have become a core differentiator and profit center at a time when many products are sliding toward commoditization. In the billable Professional Services sector, the ability to optimize the services delivery lifecycle with all of its attendant business processes is a core competency and critical success factor. Changes in the economic dynamics of the Professional Services sector mandate improvements across talent and client (acquisition and retention), service delivery, and financial management. Fortunately, information technology has become a key enabler of those organizational improvements. Figuring prominently in professional services organizations (PSOs) ability to optimize operational effectiveness is the increased integration of information systems that comes through implementation of Enterprise Resources Planning (ERP) systems and processes. The movement to ERP represents a fundamental shift in the way that PSOs conceive of and execute their day-to-day business. Going well past the traditional Financials, ERP solutions for the Professional Services sector cover the management of Human Capital, Client Relationships, Procurement, Project and Service Delivery, and Business Intelligence. For the growing and highly competitive Professional Services sector, nothing less will do. Major ERP solution providers have spent decades developing solutions for manufacturing enterprises. While earlier versions of Materials Requirement Planning (MRP), Manufacturing Resource Planning (MRP II) and ERP focused on assuring materials and manufacturing resources were optimized, newer releases have come to market with a laser focus on doing the same for the workforce. In the past decade these suppliers have set their sights on the Professional Services sector. The Professional Services sector differs from the manufacturing sector in many ways, not the least of which that people are the raw material and the core production assets. For all the reasons that people are more complex than machines, workforce optimization is much more difficult to attain than optimization of industrial assets. Page 1

2 ERP solutions bring a range and depth of benefits to PSOs, some of which include: streamlined opportunity management, increased project and service delivery, enhanced collaboration, and improved financial management and governance. The secret sauce here is the integration itself. ERP s ability to manage all core business processes and do it from one standardized application makes it less expensive to implement and support over the long-term, than several non-integrated, disparate applications and much more effective in the bargain. There are many ERP solution providers for the Professional Services sector. While each differentiates itself in its own way, what they all offer is integration, visibility, and transparency into the operational processes of the organization. With this integration comes the ability to see and manage disparate functions with specificity and the PSO enterprise as a unified economic organism. Executives in PSOs who plan to deploy ERP must make certain that their organization is fully provisioned for the move committed to and ready for the solution. They need a strategic vision of what the ERP solution will provide and be able to share that vision with the organization. For, no matter how beneficent a change may ultimately prove to an organization, people resist change and resistance sinks systems. A clearly marked roadmap complete with road hazards and rewards will increase the likelihood of ERP success in any PSO. The process of selecting an ERP solution requires the PSO to narrow its list of potential suppliers down to a few contenders based on a wide range of evaluation criteria. A pilot program or proof of concept should be conducted prior to solution selection. While the implementation can take a prolonged period, it should be staged in a phased process so that benefits can be clearly demonstrated within the first 6-12 months. The deployment of ERP provides PSO executives with a good time and good reasons to evaluate processes and initiate change across the enterprise. SPI Research recommends that organizations conduct pre- and post-deployment benchmarks to derive real metrics for determining how well the solution benefits the PSO. These benchmarks also form a solid basis for fine-tuning processes and systems over time. Training too is an important aspect of implementing a new solution. It should be factored as well as an ongoing support cost because ERP solution providers will always continue to further enhance their solutions to adapt to a changing economy, business-processes, and new technology introductions. Because of the ongoing enhancements, the ERP solution provider should be perceived as a strategic, long-term partner of the PSO. And that long term view should be part of the selection criteria. After all, it is in both the customer s and the supplier s best interest for the solution to succeed a destination that requires planning and collaboration over time. The market continues to evolve marked by a brisk pace of merger and acquisition activity at the upper end of the market. SPI Research saw new license sales grow 20.6% in 2006, and expects sales of ERP in the Professional Services sector to increase by 14.4% in 2007, and 14.2% in The market does have its challenges. Smaller application/process-specific ISVs are not going away. They serve a distinct purpose and there are PSO executives who choose to Page 2

3 integrate different applications or avoid purchasing additional functionality at all. Small PSOs continue as long as possible with the spreadsheet being their best friend. Cost and deployment time will always be a significant consideration in approaching ERP for PSOs as well will be dealing with change management in their workforce. Some executives have hedged their bets by choosing providers that offer Software as a Service (SaaS) solutions, that can be rented and operated for less up-front cost and commitment. The ISVs must also provide greater differentiation to assume a leadership position in their give target markets. They must also offer an action-based partnership with their customers to assure the solution meets its stated goals where partnership is much more than a tagline beneath a colorful logo., founded in 1998, provides on-demand business solutions to midsize and large professional services organizations, with a software solution designed to integrate critical business processes. The supplier is truly a pioneer in on-demand ERP, and continually improves its solution, almost offering updates on a monthly basis. was formed in part on an initial investment of Larry Ellison, the CEO of Oracle. It has rapidly moved up the ranks in terms of name recognition and reputation for delivering scalable solutions that provide visibility and performance improvements to professional services organizations. It has also spent its marketing dollars wisely, keeping itself in the news and educating the market on the benefits of on-demand solutions. ERP Solution offers tightly integrated ERP functionality within a collaborative environment where executives, team members, clients, and partners gain real-time visibility into the entire services delivery lifecycle. It enables professional services organizations to automate and manage work through modules that include client relationship management, opportunity management, and financial management.. s customizable dashboards offer real-time access to key performance metrics, and help support timely business decision making. It offers self-service portals that enhance collaboration across the service value chain. It also provides full visibility into client history. Users can see a client s payment history and automatically know where that client stands in terms of on-time payments. also provides a template that is prepopulated to enable faster project initiation. SPI Research is impressed with the s ability to move from data to trend graphs. The solution s ability to open recent documents (similar to Microsoft Office applications) also improves its ease of use. Market Position The company s strategy and core development philosophy centers on three main principals for improving operations in professional service organizations (PSOs): 1) A unified, integrated code base with one system of record for all its applications, based on Web Services and industry standards; 2) Delivery through Software-as-a-Service (SaaS0, on-demand model via subscription; and Page 3

4 3) Innovative technology that provides real-time access and visibility to all end-to-end business processes in the PSO s business. competes at the high of the market against Oracle and SAP, which are moving into the midmarket, and Microsoft Dynamics and Sage, which are moving up to the mid-market. There are also other ISVs that concentrate on midmarket PSOs, two of which include Epicor and Deltek and both have been around several years and are established leaders in the midmarket. While the competition might seem to be formidable, has carved out a niche for itself due to its fast release schedule and on-demand solution, which many of the others dabble with, at best. Key Differentiators provides a new dynamic for midmarket PSOs. With its completely browserbased, on-demand solution, coupled with a rapid release cycle, the supplier is like nothing the market has ever seen in enterprise-class solutions. It has also developed an impressive array of built-in, customizable dashboards that push role-relevant information out to specific end-users. also figured out, earlier than many, that the integration between CRM and ERP was critical for improving sales, project delivery, and support. With interesting features that include an intelligent up-sell wizard, is adding a new level of innovation to the ERP marketplace. SPI Research also considers s extensive CRM suite to be a key selling feature, and one that will further propel the supplier in the marketplace. Currently there are limited out of the box project management capabilities, however, robust customization tools allow most PSOs to create the type of resource management tools they need.. For to become a market leader, it must develop these and other capabilities soon. The solution also currently lacks integration with Microsoft Project, often another critical need for PSOs. But offers enhancements faster than any other ERP supplier covered by SPI Research, and there is little doubt that it will be making these additions in the near term. offers competitive pricing and an accelerated implementation schedule improving both the return on investment (ROI) and total cost of ownership (TCO) of the solution. The supplier also provides professional services and educational programs to ensure and efficient implementation and ongoing success with the solution. Professional Services Vertical Markets is an eight-year veteran in the competitive ERP solution market, and has committed resources toward the development of industry-based solutions the Professional Services sector being one of their primary markets. The following table lists where the supplier concentrates in the Professional Services sector. Supported Professional Services Markets Professional Services Market NAICS Market Focus Legal 5411 Low Accounting / Tax / Bookkeep / Payroll 5412 High Page 4

5 Professional Services Market NAICS Market Focus Architectural, Engineering 5413 Low Specialized Design 5414 Low Computer Systems Design 5415 High Mgmt., Science and Technical Consulting 5416 High Scientific Research and Development 5417 Low Advertising 5418 High Other Professional, Scientific, and Technical 5419 Medium Construction 23 Low Source: Service Performance Insight, July 2007 Core Modules builds its solutions on one code base, and has developed specific core modules for each of the markets it serves. In the Professional Services sector, the ISV has developed four core solution models to optimize the delivery of professional services. These modules include: Customer Relationship Management, ERP (Financials), Procurement, and Employee Management & Productivity. has specialized in creating very configurable modules and workflow making these applications more intuitive for individuals to utilize. It has also built an ecommerce module, which is primarily used for product-driven organizations, including professional services organizations that also market products. The following table highlights s core functionality. Core Management Modules Module Financials Employee Management & Productivity Sub-Modules General Ledger, Accounts Receivable, Accounts Payable, Advanced Financials, Revenue Recognition, Budgeting, Multi-currency, Order Management and Fulfillment, Time and Billing, Billing schedule management, Recurring billing terms, Forecast & Commissions on billing schedule, Milestone-based billing Role-based Dashboards, Group Calendaring and Collaboration, Employee Records, Expense Reporting, Purchase Requisitions, Employee Self-Service Page 5

6 Module Client Relationship Procurement ecommerce Business Intelligence Sub-Modules Client Center (client-facing self-service), Sales Force Automation, Marketing Automation, Customer Support and Service, Incentive Management, Partner Relationship Management, Offline Sales Client, Global CRM Purchasing, Inventory Management, Drop Shipment/Special Order, Integrated FedEx Shipping Functionality, Integrated UPS Online Shipping Tools, Standard, Customizable Reports Database Driven Web Site/Web Store, Front- and Back-Office, Integration, Affiliate Marketing, Customer Acquisition, Customer, Partner Self-Service, Web Site Analytics Real-time dashboards, Selectable Key Performance Indicators, Business Performance Scorecards, Suite Analytics, Standard and ad hoc reporting, ODBC Integration, Standard and ad hoc financial ratios, Universal direct drill-down, Ability to embed Excellike formulas in any report, KPI or KPI Scorecards. Source: Service Performance Insight, July 2007 will continue to develop additional functionality for PSOs, integrating each capability along the way. SPI Analysis is building a solid reputation in ERP for Professional Services. Over the past year, the vendor has worked to solidify its product offering to deliver end-to-end (frontoffice/back-office) enterprise solutions for PSOs. The solution is just coming to fruition. The company must add stronger resource scheduling and project management components to its solution and specific functionality such as Gantt Charts, as well as integrate with Microsoft Project. As a smaller, less established supplier in the worldwide market, must rapidly move to increase market share in order to grow and establish a broader presence. SPI Research expects to see this supplier gain an international presence and now feels the vendor is positioned to go after a wider segment of the market. While is an emerging player in the ERP market, it has aggressively grown its solution set and increased market visibility through an ongoing series of Webinars, coupled with an aggressive release schedule. Its increasing revenue stream should provide additional funds for new product development, sales and marketing which should position for continued stellar growth. SPI Research expects to make a significant market impact with the right combination of vision, development and delivery to meet the growing demand for business management applications for the Professional Services sector. Service Performance Insight (SPI Research) is a globally-focused research firm specializing in management issues regarding IT use in the services sector. The firm closely follows professional services organizations (PSOs), independent software vendors (ISVs) and other technology providers, analyzing how organizations best use technology to make their people more productive and profitable. SPI Research pays particular attention to the integration of the three key assets of a PSO: its people, (business) processes and capital, and how technology can help optimize their use Service Performance Insight Page 6