ERP Comparison Guide for your Business Lifecycle

Transcription

1 ERP Comparison Guide for your Business Lifecycle THE KEY FACTORS IN CHOOSING ERP AND A CLOSE LOOK AT CLOUD (NETSUITE) AND ON-PREMISE (SAGE 100 ERP) OFFERINGS

2 CONTENTS Who Should Use this Guide? What You Will Learn in this Guide What is the Cloud? The Key Factors to Evaluate Deployment Technology and Architecture Security Demographics Capabilities Support The True Costs of Technology Pricing Conclusion

3 Who Should Use this Guide? This guide s purpose is to help you in the often-complicated process of making decisions about the business technology that will be used for your company s future. You may be in the early stages of evaluating a new system that will help you meet your goals, or doing preliminary research on what the market offers today. This guide is for you if you: Manage a new enterprise or new division of an existing company with an immediate need for gaining control of operations and financials Must upgrade an out-dated accounting, ERP, or ecommerce package Have outgrown your current application capabilities Have many spreadsheets and manual tasks managing your business Are planning a joint venture, a new product launch, or are spinning off a new location or division Have global divisions that require capabilities that you don t have in your existing system This guide is meant to serve as one of the first steps in your research to let you know what questions to ask, and get you started with some answers. To help you make an informed choice, we feature NetSuite and Sage 100 ERP as our sample products in these comparisons. NetSuite is a cloud-based accounting, ERP (Enterprise Resource Planning), and CRM (Customer Relationship Management) solution. The company was founded in 1998, is headquartered in Silicon Valley, and has over 12,000 companies as customers. For more information about NetSuite, please visit our website. Sage 100 ERP is one of several accounting/erp solutions from Sage North America, a division of The Sage Group PLC based in the United Kingdom. Sage North America has over 3.2 million customers across the US and Canada. For more information about Sage 100 ERP, please visit our website. What You Will Learn in this Guide The goal of this and other guides in this series is to provide unbiased information comparing various types and brands of business management (such as ERP and CRM systems) on the market today. You will learn to identify the key considerations and advantages in several categories, and learn more about how to find a solution that best fits your unique situation. 3

4 Informed buyers should consider the following factors when evaluating systems: Deployment Technology Security Demographics Capabilities Support The True Costs of Technology Pricing When it comes to ERP systems, the conversation today starts with the delivery or deployment method. On-premise solutions like Sage 100 promise robust feature sets, customization capabilities, and centralized control of systems and data. Cloud systems like NetSuite offer agility, scalability, and lower short-term costs. The Rate of Cloud Adoption What is your Organization s level of cloud adoption? Percent of respondents 90% 72% 21% Piloting In a survey of 572 global business and technology leaders conducted by IBM, 38% +33% 28% Adopting almost three-fourths of respondents had implemented cloud in their organizations 21% +215% 41% Substantially implemented as of % expect to implement the cloud by % Today Three Years Source: 2011 IBM Institute for Business Value/Economist Intelligence Unit Cloud-Enabled Business Model Survey. What is the Cloud? With so much focus on the cloud today, what are the pros and cons of cloud, Hybrid, On-Premise, and other delivery models? What do those buzzwords mean? What types of solutions are offered for each? The major types of delivery models for IT as a whole are detailed below, along with their positive and negative characteristics. 4

5 Deployment Type Characteristics Payment Method Pros Cons Example Infrastructure as a service, IaaS (or Hardware as a Service, HaaS) Organizations outsource equipment, including servers, networking components, and hardware to a service provider who owns and maintains it. Can be on client s premise, or hosted for clients. Subscription Cost savings in initial start- up, scalability, outsourced responsibility for IT support and maintenance, often quicker to get up and running. Security considerations, ongoing software management is often still a factor, requires reliable internet connection. Dell, data centers Platform as a service, PaaS PaaS providers offer a platform including operating systems, databases, and web servers for users of purchased or internally developed applications. Subscription Cost savings on infrastructure, operating systems, and systems support; scalability, ease of maintenance, fast to get up and running. Potential security and downtime considerations, requires reliable data centers, flexibility may not meet the needs of users whose requirements evolve rapidly. Windows Azure, Google App Engine, Amazon Web Services DELIVERY MODELS Software as a service, SaaS Hybrid SaaS providers install and manage their software applications and associated infrastructure for their clients. Users access applications from a browser on a desktop, laptop, tablet, or smart phone. Users have some applications running on in-house servers and use some applications in the cloud. Subscription Subscription, one-time payment, services costs, annual maintenance fees. Lower start-up costs, infrastructure hardware cost savings, scalability, low maintenance, fast to deploy, more capabilities available than many single businesses could afford to purchase on their own. Allows the best of both worlds: onpremise for more security- sensitive applications, and cloud for applications that require a lot of database updating and maintenance, i.e. sales tax jurisdiction tables. Security and downtime considerations, requires reliable internet connection. Security considerations, software management is still a factor, requires reliable internet connection. Multiple databases can create issues, when trying to maintain version compatibilities between different systems. NetSuite, SugarCRM, Gmail, Facebook, LinkedIn Sage 100 ERP with online sales tax management automated shipping, credit card payment processing solutions, EDI processing services, mobility access applications in the cloud. Vendor-hosted Software is installed in a data center, accessed over the internet from a remote location and managed by a vendor. Upfront license purchase may be required; subscription fees for the hosting service. User owns the software and data; fast to deploy; low maintenance. User does not control the environment. Sage 100 hosted via ASPs. Private cloud Companies establish data centers within their own firewalls, and use virtualization on the client end for access. One-time payment, services costs, annual maintenance fees. Greater data and security control. Significant upfront investment. Requires in-house IT staff to maintain. Sage 100 on Applianz servers. On-Premise All IT infrastructure, hardware, network, and associated infrastructure software, along with application software are onsite at the user s facility. One-time hardware, software payment upfront, implementation services costs, annual phone support and maintenance fees. Greater data and security control. Significant upfront investment. Requires in-house or outsourced IT services support to maintain. Sage 100 ERP traditional workstation or Client-Server platform installations 5

6 The Key Factors to Evaluate Deployment With changing customer expectations, the consumerization of IT, and improved reliability, the cloud has become part of the system evaluation process for ERP. Products like NetSuite Products like Sage 100 ERP Delivery Cloud ONLY On premise, hosted, or hybrid options are available Upgrades Latest versions automatically updated, no option Customer controls upgrade schedule, may rely on outside resources to support the upgrade effort. Hardware requirements Infrastructure costs related to workstations with browser software, network printers, third-party applications, such as Microsoft Exchange Server, etc. required. Infrastructure management, servers, other hardware, and IT support required, as well as network printers, third-party applications which may be required. Mobility Mobile natively available Mobile access support available through Sage and third-party application providers, such as Blytheco s bly:mobile. DEPLOYMENT Speed of deployment Scalability No procurement or setup time needed for hardware. Speed of software deployment depends on implementation flexibility. Adding users does not require install, but does require additional setup; database automatically scales. Installation time includes time to procure and set up hardware. Speed of software deployment depends on implementation flexibility. Setup includes unlocking additional users. Should transaction or user volumes exceed the product s acceptable performance limits, migrations to next level ERP products are available and expandable to three additional product levels. Customer infrastructure Enables constrained IT resources to address other compelling business priorities Enables users to leverage existing hardware and IT staff Single tenant vs. multi-tenant NetSuite s SuiteCloud platform is multitenant, meaning it can house data for multiple companies on one database, with strict security and separation between the tenants. All tenants run the same copy of the application, so everyone is always on the latest version. On-premise installation of Sage 100 ERP software can be set up to run multiple companies on a single server or instance, with no additional charge for running multiple companies other than setup and services support. Users typically maintain their own copy of the application for customization and upgrade and may elect not to install every software update. 6

7 The Cloud at the Tipping Point? The chasm Relative % of customers Innovators, technology enthusiasts Early adopters, visionaries Early majority pragmatists Late majority conservatives Laggards, skeptics Time Customers want technology and performance Customers want solutions and convenience There is evidence that cloud business solutions are now reaching the tipping point, or Chasm shown above where technology moves from its vetting process and use by early adopters to adoption by the early majority who will bring the product into the mainstream of use and influence a larger community of future users. Technology and Architecture Customization, integration, and scalability are serious concerns for many companies. Where do system strengths and weaknesses lie? Technology is the complete picture of the database, integration and customization capability, and the environment that supports the software. These elements are critical in creating a stable platform for the system, optimizing usability and flexibility, and maximizing value in a changing business environment. Integration with common or calendaring applications like Gmail/Google calendar and Microsoft Outlook is important to many buyers, as are ease of customization and availability of third-party applications that extend the use of the standard system. 7

8 Evaluating the existing environment in your company can give you important information about what types of solutions are a good fit for your team. If your preference is an internal IT focus and internal IT systems control and you also prefer to rely on server-based networked tools like Microsoft Office for productivity, then you may be more comfortable with the control offered by an on-premise ERP system. If you use tools in the cloud Google Apps, Basecamp or other online project management, online marketing automation (for example, Hubspot or Mailchimp), virtual phone or conferencing platforms, or other cloud tools, you will likely feel comfortable with Cloud ERP like NetSuite. Environment Products like NetSuite Java development environment, Oracle database. Products like Sage 100 ERP Sage-owned ProvideX-based development environment. SQL and on-line versions are also available. TECHNOLOGY AND ARCHITECTURE Enterprise-wide focus Service-based application with single data source for CRM, ERP and ecommerce. Server-based application with available integration between CRM, ERP and ecommerce. Architecture Standards-based open architecture. Object-oriented business framework available for most modules; SQL server version available. Customization/ configurability Complementary installs Third-party applications Point-and-click, standards-based application customization, rapid configuration of processes, interfaces, roles, and reports. Customizations are automatically maintained with version upgrades. Users are moving to and comfortable with cloud applications such as Google Docs and unplugging Microsoft Exchange; they are running other cloud systems. SuiteApps are applications that extend NetSuite for unique industry and business needs. Most SuiteApps run on the NetSuite Oracle database, completely inside NetSuite. Customization available through software development resources; user interface configuration available through system tools. User may need to manually port any customizations to new software versions, or may elect not to install new versions. Usually running Microsoft Office suite. May have business-specific applications that need to remain in place. Thousands of integration third-party enhancements and integrated applications are available. 8

9 Security Data and system security are of utmost concern to almost every business. These concerns often trump performance and data recovery in level of importance to buyers. Early perceptions of the cloud were that security and privacy were questionable. Many users believed that it was a risk to have sensitive company data outside of company firewalls. Fears included the inability of providers to prevent users from accessing data. High-profile breaches of Google, Salesforce.com, and others have reinforced the idea that the cloud is a security risk. However, technology has matured and perceptions are changing. In fact, in certain situations, the cloud may be more secure than on-premise systems. Large-scale cloud providers focus on security as a core component of their solution. In fact, their entire brand hinges on their ability to ensure optimal system uptime and keep data properly safeguarded. They retain dedicated security expertise at a level not affordable to most small and midsized businesses. Their CTO, IT architects and network administrators strategize and monitor the security of their solution. They are chartered to ensure robust redundancy, back-ups, and data controls, while also addressing newly arising security challenges. On the other hand, many small to medium-sized businesses struggle to implement and maintain best practices Who Drives Tech Adoption and Why? According to Gartner, the shift of technology spending from IT to the business units is driven by: Consumerization Users expect business systems and applications to look and feel like consumer products (phones, ipods, TVs, etc.) versus traditional solutions implemented today. BYOD Users buying their own phones, tablets, laptops, and other devices with the expectation that business tech will work with them seamlessly. Cloud computing Businesses are increasingly choosing technology as a service. for security and redundancy. Their IT staff is often tasked with supporting broader businesses needs and struggles to monitor and mitigate emerging threats. Further, investments in full redundancy and offsite regular back-ups can be difficult to fund and support. An environment such as this can be at a greater risk of security breaches and outages than a cloud system. 9

10 Products like NetSuite Products like Sage 100 ERP Availability Committed to minimum uptime of 99.5%. Individual performance may vary based on internet connection and workstation reliability. Varies based on customer s IT resources, environment and hardware. Redundancy Two geographically separated data centers with earthquake and fire protection, heating, cooling, and backup power. Usually maintained through Uninterruptible power systems (UPS) provisioned by users. SECURITY Recovery Data is replicated and synchronized across two data centers to facilitate recovery in the event of failure. Users establish backup procedures and schedules individually. Data security Data is encrypted according to industry standards. SAS 70 Type II Audit provided by Big Four audit firm per Sarbanes-Oxley requirements. Role-based user security specific to company, module and tasks. Continuity Provides business continuity in the event of natural disaster. Users must establish continuity plan for natural disaster. 10

11 Demographics The cloud at inception was perceived as cutting edge technology, welcomed only by those companies who were familiar with modern technology and working online. The cloud is quickly becoming a must-consider on most companies short lists of ERP solutions, with cloud benefits AND drawbacks becoming more well known. Interestingly, drivers for considering the cloud as a business tool are increasingly the managers of business units. Solution decisions are becoming more collaborative, with IT playing a consulting role providing guidance to business leaders and managers. Company Size Products like NetSuite employees >1000 employees: can use two-tier ERP model, using NetSuite for subsidiaries and rolling up results to Oracle Financials and SAP. Products like Sage 100 ERP employees. System user count Up to 4,000 to date. Up to 200 for Sage 100 ERP. Customer Growth Status In acquisition or expansion mode; focused on business agility Users establish backup procedures and schedules individually. DEMOGRAPHICS Locations Top Verticals Supports multi-company, multi-location, multi-national legislation, multi-currency, multi-language, multi-entity. Distribution/wholesale Computer software publishers Professional services Retail/eCommerce Supports multi-companies, multi-location, multi-entity, multi-currency. Distribution/wholesale Manufacturing Food and Beverage Technology Professional services Customers include Eloqua (marketing automation solution), Magellan (GPS manufacturer) Groupon, VMware. Hansen s Natural (beverage manufacturer/ distributor), Best Bath Systems (bathing systems manufacturer). Drivers for adoption Business unit managers or Board of Directors; agile responsiveness to internal and customer needs. Owner, CEO, President, CFO, IT Staff; focus on made-to-order functionality. Business and Workplace Culture Users are social/mobile and use cloud applications (Gmail, Dropbox, etc.); collaborative environment; focus on data as value driver; fast decision cycles. Hierarchical and centralized environment; heavy compliance and regulatory requirements; highly sensitive data. 11

12 Capabilities The capabilities of the system have traditionally been where the rubber meets the road when it came to choosing the system. In prior eras, companies were willing to do whatever it took to get features that closely matched existing business models. Further, they were willing to customize or develop their own systems to meet those very specific needs, despite the long-term costs in maintenance, support, and loss of business flexibility. Today, companies are less willing to sacrifice agility and cost-effectiveness for exacting feature specifications. A fastpaced and competitive global business environment demands the ability to meet customer needs quickly and at the right price, which means constant business process adaptation and less adherence to the status quo. Still, some capabilities remain must-haves. Automation of processes as workflow, global capabilities, multi-company, and reporting will always be part of a buyer s checklist as the market evolves. Products like NetSuite Products like Sage 100 ERP Workflows Built-in sophisticated workflow and multi-level approval processes. Workflow and Alerts provided as third-party product. Global currencies Supports full multi-currency functionality. NetSuite supports 17 languages and 190 currencies. Multi-currency provided as third-party product. CAPABILITIES Multi-entity consolidation Financial Analytics Business Intelligence Consolidation of financials and realtime roll-up. Real-time financial dashboards, KPIs, personalized and role-based, shareable in multiple formats. Personalized dashboards and selfservice reporting via real-time SuiteAnalytics as a standard feature, including mobile and browser support. Consolidation of divisions, companies and databases. Excel-based financial reporting with preformatted and customizable reports, real-time and automated with drill-downs. Suite of Intelligence modules as a standard feature including customized and pre-formatted real-time, drill-down enabled dashboards. Feature Maturity Relatively newer product, so less feature-rich than Sage 100. Much more mature product, so more depth and breadth of features. 12

13 Support Few companies have the resources to install, set up, maintain and support ERP systems on their own. The availability of services and support from professional ERP consultants and the quality of those consultants should weigh into any purchase decision. Consider how upgrades are handled, the health and direction of the vendor, and who will be providing your day-today user support when needed. Check customer references, Service-Level Agreements (for cloud systems, including information about uptime and backup), and redundancy plans to get a feel for reliability. Upgrade management Products like NetSuite Versions rolled out in the cloud automatically; customizations are automatically rolled forward. Products like Sage 100 ERP New versions published regularly for customers to install; may require additional work to port customizations. User Training Ongoing user training recommended. Ongoing user training recommended. Ongoing support Provided by local partner network or NetSuite. Provided by extensive local partner network or Sage. SUPPORT Vendor presence Founded in 1998, NetSuite is headquartered in San Mateo, CA, 1,000 employees, traded NYSE (N). Sage Group PLC, founded in 1981, is headquartered in Newcastle, UK, traded LSE (SGE) and has over 12,000 employees. Vendor focus NetSuite as a company has one product. Sage markets over 48 business applications in North America. Vendor Direction/ Roadmap Going up-market, targeting deeper manufacturing capability, ERP focus. Growth through acquisition, offering subscription models, on-line SaaS versions, browser-based mobility access for all products in the future. 13

14 The True Costs of Technology One of the most important considerations when choosing a system is Total Cost of Ownership (TCO). TCO includes not only the software itself (paid as a onetime license fee or ongoing subscription), but also any equipment (hardware or network infrastructure) needed to run the system, the staff required to procure, set up, and maintain the systems, plus the services to support the system. Services may include: installation (for onpremise software), upgrades to new releases (major and minor), customization, integration, user training, implementation (or set up of the system according to company business rules and processes), and ongoing technical support for the users. Conventional wisdom holds that one of the strengths of the cloud is its cost-effectiveness. While it s true that the cloud frees users from having to deploy complex and expensive hardware and infrastructure, over time and with increases in user counts, there may be scenarios in which on-premise solutions are as (or more) costeffective over the long term. In the cloud, systems are maintained by the vendor and upgraded automatically, so all customers have immediate access to the latest technology without incurring additional costs or work. Cloud systems such as NetSuite will also automatically bring customizations over with each system upgrade, requiring no additional work or investment. Annual maintenance fees for on-premise systems are typically priced as a percentage of the total software license cost. Maintenance plans supply software upgrades and periodic updates which customers must load themselves, or contract with a provider to install for them. These upgrades are often accompanied by required upgrades in hardware, infrastructure, and operating systems to maintain system compatibility. Maintenance fees and upgrades are optional, however, and many companies choose to skip some or all upgrades and remain on older versions rather than incur these costs and disruptions to their business particularly if they are highly customized. Customizations to the system must be evaluated and usually refreshed with each new version. Again, users can use internal resources to do this if they have advanced skills, though many prefer to retain the services of an experienced consultant to upgrade the system. Like customizations, buyers must consider integration of functionality and how it will impact costs. Some systems, including NetSuite, offer all-in-one front- and backoffice capabilities. For others, integration between the ERP solution and other systems will require additional software, hardware, or configuration services that come with additional costs. Owners of on-premise software systems must consider year-after-year costs of maintaining IT infrastructure and IT staff to support the system. However, these costs tend to decrease over time relative to the first year of use, and also tend to even out relative to cloud system costs when user counts increase. Costs that occur in both systems include: system implementation (configuration, data imports, etc.), user training, creation of customizations, and any ongoing technical support that is needed. These costs are typically highest in the first year and taper off over time. 14

15 Products like NetSuite Products like Sage 100 ERP THE TRUE COSTS OF TECHNOLOGY Hardware costs Includes user machines. Includes servers, user machines, networking and backup equipment. Implementation costs Upgrade costs Annual fees Support costs Users work with technology provider to set up and configure the system, and to provide user training. No additional costs, included with annual subscription fee. Training and other staff processing changes may be required. System use is billed annually per user and modules as a service. Annual subscription fee for direct NetSuite phone support. IT staff or outsource provider is needed to provide support, set up, installation, and training. Installation of upgrades is optional. Users typically rely on their business partner or technology provider to prepare the system, load the upgrade, and train users if needed, which incurs additional costs. Maintenance and Support plan fees are optional after the first year. Annual subscription fee for direct Sage phone support OR support from Sage business partner Pricing The cloud vs. on-premise conversation is often compared to a rent vs. buy scenario, where the cloud represents a rental of assets whereas on-premise software is clearly an ownership situation. But it may not be that simple. The availability of leasing and financing can easily shift the costs of on-premise from a one-time large lump sum payment to a monthly fee that creates more of a rental model for your cash flow and budget. Keep in mind that on-premise ERP systems like Sage 100 ERP also come with annual maintenance fees that provide regular product upgrades. However, these are optional fees many customers opt to NOT upgrade after a few years. While this reduces the cost, it also prevents customers from benefiting from new functionality and system capabilities. On-premise vendors are moving towards requiring software maintenance in order to purchase new user licenses and/or modules. Pricing for cloud systems can also vary. They may require upfront payments based on an assumed level of service. Further, regular payments are not optional if you want to continue to have access to your system. At any rate, cloud systems have lower upfront costs related to hardware and infrastructure, and can minimize the salary dollars for staff to maintain a system. 15

16 The Reality of Deployment Costs for Mid-Sized Businesses $400,000 ERP Software & Deployment Costs Mid-Sized Business $350,000 $300,000 $250,000 SaaS Hosted On-Premise $200,000 $150,000 $100,000 $50,000 $- Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 In averaging quotes gathered from 2-3 different ERP vendors, this pricing analysis model shows that mid-sized businesses see a break-even point for Saas versus hosted software occurs around year two. In year 5, the cost of Saas approaches the cost of on-premise; Saas costs will typically remain fixed (or increase) over time, whereas infrastructure costs for on-premise systems remains the same. 16

17 Starting price, year one Products like NetSuite $12,000 core ERP, CRM and e-commerce functionality. Products like Sage 100 ERP ON PREMISE PURCHASE: $1,495 per user for Core Financial ERP. $2,245 per user for Core Financial and Distribution ERP. HOSTED: Sage 100 ERP starting at $600 per user. Sage CRM available as add-on starting at $420 per user per year. Implementation Support Services 1 to 2 times annual subscription price..75 to 1.5 times on premise software purchase price. PRICING How is it packaged? Offered as a business management suite, with a la carte advanced modules. Offered as user bundle based pricing or a la carte functional modules. Capital investment Costs are deferred. Significant upfront capital investment required for on-premise; financing may be available. Tax Implications Longer-term costs Typically not subject to sales tax. Please refer to state tax laws. Pricing stays the same or grows over time. Subscription price increases are possible each year. Usually subject to sales tax; deductions such as Section 179 and depreciation benefits may be available. Costs drop off dramatically over time. Years two and beyond costs include: Annual Phone Support and Software Maintenance (optional) at either 21 % or 25% of purchased software price. Additional services may be required for version upgrades, new and or additional modules or users purchased. Long-term costs include: annual maintenance plan renewals, services, and additional users or functionality. The #1 Cloud ERP Software Suite 17

18 Conclusion We understand that you have a lot to consider when Blytheco. As business and solution experts with thirty evaluating a new ERP system for your business, and years of experience, we are uniquely qualified to guide much of this research can be independently gathered you through an evaluation process tailored to your goals. by your team. The goal of this guide is to provide you We work with many different technology solutions, with a place to start and to supply unbiased information so we are the objective resource you need to navigate about the pluses and minuses of some key factors in through the many options. your evaluation process. Your business and your goals We lead our customers through a detailed discovery are unique this guide is general and we hope it can process to gain clarity about their business priorities. serve to give you food for thought. Our no-charge evaluation assistance is a consultative, When you feel that you are ready for a conversation two-way conversation designed to provide you with a about your specific needs, we hope you will work with clear roadmap for your success. Contact us today to get started - We look forward to working with you x s o l utions@blytheco. com com Rev