Gartner analyst Jim Sheperd recently published a commentary called "Multienterprise Commerce May Be What Comes After ERP," which discusses the need for a replacement for ERP.  Here's a partial explanation of why he's suggesting this:

"Many companies in the retail, distribution and manufacturing industries are struggling to manage complex and dynamic global supply chains with ERP systems that were intended to support the internal operations of a vertically integrated enterprise. The 'enterprise' in ERP was definitely singular!  The problems that I dealt with as a material planner in the 1970s, or that I designed ERP and supply chain applications for in the 1980s and 1990s, are largely irrelevant today. I needed systems that could help me plan materials with six- to nine-month vendor lead times, where everyone's warehouses and distribution channels were stuffed with inventory....  The real business problem that today's manufacturers and distributors are struggling to manage takes place between companies, not within them. Planning, sourcing, production, costing, tracking and fulfillment must take place in an environment that can be accessed and updated by all the players in the value chain. "

Tensoft's customers operate in exactly this environment, which has informed our product design from inception.  Cloud delivery has been a more recent development, but I couldn't agree more that it is the right way to go to meet today's collaboration challenges.  

What do you think? 

Since most of Tensoft’s customers are technology companies - and because we’re a technology company ourselves - we follow news about the tech industry with a great deal of interest.   The past year has seen a significant bump in tech IPOs, accompanied by a great deal of speculation about whether or not this presages another dot-com bubble.   Rampant overvaluation heads the list of the symptoms cited most often, although there are plenty of other  voices arguing that the recent tech IPOs are companies with solid businesses, not Webvan or Pets.com. 

Thanks to this infographic by KISSmetrics and FeeFighters, it’s a little easier to see what’s been happening and how it looks compared to the dot-com bubble in the late 90’s.  And, thanks, The Atlantic’s Associate Editor Nicholas Jackson, you don’t even need to sort through the data – he’s provided a pretty concise analysis, which I’ll quote herein full:

• Although it may seem that recently (2009-2011) startups haven't had problems raising capital, the level of venture investment currently pales in comparison to levels during the .com bubble. A lot of people are talking about an early stage bubble, but even in early stage deals, we're nowhere near the .com bubble.
• Even with the seemingly high number of recent tech IPOs, historical data suggests that the number of current tech IPOs is drastically smaller than during the .com bubble.
• When most people think of the .com bubble of the '90s, they think of the giant run-up in tech stocks. The pace at which the Nasdaq 100 index shot up (10x in four years) was impressive and every individual investor wanted a piece of the action. Fortunately, we don't seem to be approaching the craziness of that time.
• Today, tech companies have access to a relatively large pool of potential customers -- something that the tech companies of the .com bubble didn't have. In 2010, there were 10 times the number of Internet users there were in 2000. The current number of active Facebook users is equal to the number of total Internet users there were in 2002.  (from “Infographic: Are We in the Middle of Another Tech Bubble?,” Nicholas Jackson, The Atlantic, 7/19/11).

What do you think?

 Accounting for multi-element sales has quickly become one of the most complex areas of revenue recognition, a topic that affects most technology companies.  A multi-element sale occurs when two or more related product components are sold together at the same time.

The classic example of the multi-element sale is software plus maintenance. These are normally sold as two separate line items, but are inextricably related to each other, so they constitute a multi-element sale.  Beyond this relatively simple example of a multi-element sale, think of all of the everyday consumer products that we use where software is embedded, such as a mobile device.  Or think of an online subscription that includes setup as well as ongoing service.  In accounting terms, a mobile device is hardware, software and service. These multiple elements need to be treated separately in order to properly determine revenue.

The other day I saw an advertisement that said: “60% of the new products introduced in North America this year are ‘smart’ products – products with some sort of ‘smart’ or intelligent feature associated with them.”  As technology becomes more pervasive, more products become subject to the rules governing multi-element sales.  At what point do technology revenue recognition rules become the norm instead of the exception? 

  Tensoft’s High Tech Dashboard (HTD) is one of our newer products, but customers who’ve been using it already swear by it. One of the keys to its value is its ability to look at booking/billing/backlog information on a daily basis. With HTD, company executives simply check their mobile device every morning, and get an up-to-date reading of this key performance indicator.

Booking/billing/backlog reports are common for many tech companies, but may not be as familiar to those outside of that industry.  A booking is a new order.  It’s not revenue yet, because it hasn’t shipped, but this data is a leading indicator of where revenue is heading, and whether or not a company is going to make its numbers for the quarter. Backlog numbers indicate how much the company is going to ship, a number which can be time phased to see when it should turn into revenue. Together, these provide a quick indicator of health.

I’m always amazed at the effort companies will put into tracking bookings/billing/backlog manually. Often, we’ll go into a company and discover that one person’s entire job is to maintain a monster booking/billing/backlog spreadsheet. This huge spreadsheet gets passed around the company, but by the time the updates are done and it reaches all key personnel, it’s already out of date.  (Not to mention, highly suspect, due to the high incidence of error inherent to spreadsheets.)

Tensoft HTD both automates this process and provides options to do a lot more with that data.  ERP systems generate a huge amount of data, but this needs to be turned into actionable information to help execs make informed decisions. Tensoft HTD makes use of the data that’s already there in your ERP system, including historic sales data, tactical operations data for execution and forward-looking data used, for example, to see whether there’s enough material to meet supply.

Let’s look at a real world example. One of our long-time HTD customers uses the product to send an email to its CEO every day – before he even gets to the office. This email tells him whether the company is on track or not, by looking at performance indicators such as bookings/billings/backlog against forecast.   And, every salesperson in the company also gets a daily email that says: “Here are your bookings, quarter-to-date, and here’s where you are compared to your quota.” So every day, both the company executives and field salespeople get actionable, behavior-driving information that they can drill-down to a very detailed level.  Now that’s technology-driven motivation!

  After two days at keynotes, meetings and more meetings at Microsoft’s Worldwide Partner Conference (WPC), we’re feeling better than ever about Tensoft’s focus these days.  Between our long-time vertical industry focus, our commitment to the cloud, and our Gold ERP Competency, almost everything that we’re hearing here supports and validates our goals.

During Monday’s keynote session, Steve Ballmer cited a 20% compound annual growth rate over the past 10 years for the Dynamics product line.  In the National Strategic Partner FY12 Kickoff meeting that we attended today, nationally managed partners were credited with driving a substantial portion of this growth. 

In another meeting, a Microsoft executive noted that 25% of this year’s 15,000 WPC attendees are Dynamics partners - remarkably high considering all of Microsoft’s other product lines that partners represent. 

As expected, there has been a lot of focus on the cloud this year.  But, we’ve been pleasantly surprised by the focus on Dynamics, and glad that we made the effort to be at both WPC and Convergence in 2011!  

 While Tensoft has been a Microsoft Gold Certified Partner since 2004, it’s never been as difficult to meet the requirements as it was this year.  That’s because of deliberate changes that Microsoft has made to their Partner Network Program.

IDC analyst Darren Bibby does a great job explaining what’s happened in his blog post, “Microsoft Partner Network - Can We Bring Back Meaning To ‘Gold’ Please?”   In brief, Bibby says that, in recent years, about 50% of all Microsoft Partners were able to attain Gold Partner status.  His point, of course is that:  “50% is not such an elite level.”  By contrast, Microsoft’s Partner Network website states that, currently, “only 1 percent of Microsoft partners worldwide that have attained this outstanding degree of proficiency.”  Now that’s a little more elite!

The other programmatic change that Bibby mentions is that the new Gold and Silver (which is now the top 5%) levels are associated with specific “competencies,” each focusing on very specific knowledge and expertise.  Combined with the more rigorous requirements for Gold, this ensures that a Microsoft Partner that really excels at what they do within these competencies is easily identifiable to customers, partners, and Microsoft employees.  

Tensoft is especially proud to have attained the Gold level for the ERP Competency this year, demonstrating our excellence in the skills, expertise, and resources needed to successfully deploy financial and supply chain management solutions for our customers.  One percent out of approximately 640,000 partners is not bad – we’re honored to make it, and we congratulate all of the other Microsoft Network Partner members who made it as well. 

 One of the highlights of this year's MOMENTUM 2011 was guest presenter Charlotte Diener's session entitled "Planning Rhythm."  Diener has created an excellent Slideshare version of this that's available now to anyone who's interested.  You can link to it here, or search for "The Planning Rhythm: Managing Risk Through Marching to the Same Drum" on Slideshare. 

This brief description of Diener's presentation from the conference agenda applies to the revised slides on Slideshare as well: "Just as world-class manufacturing operates to the drum beat of critical equipment, the excellent supply chain operates to a regular rhythm of processes. The use of a process rhythm is critical to the performance of supply chain planning, irrespective of software. This presentation will explore the critical processes necessary in semiconductor planning, their frequency and duration."

Ms. Diener is an independent consultant with extensive supply chain, turn-around, M&A integration and international experience. Ms. Diener has completed several global multi-million dollar M&A integration projects and the re-engineering of several corporate processes, including a complete re-work of both the supply chains and new product development processes at ON Semiconductor.  Her contact information is included on the slides. 

 In case you missed this recent announcement, Tensoft Revenue Cycle Management (RCM) recently passed Microsoft's highest standard for partner-developed software and is now "Certified for Microsoft Dynamics" (CfMD).  This certification consists of a rigorous testing process performed by VeriTest, to demonstrate product development quality and compatibility, as well as at least 10 confirmed references.  (Many thanks to our customers who helped with this requirement - we were done in well under the average time for completion because of your help!)

Those were basically the same requirements for the CfMD that we had the last time that we went through this process, when we certified Tensoft Multi-National Consolidation.  This time there was one key difference though - the addition of a requirement to have a Source Code Escrow Account. 

This new requirement seems to get short shrift in discussions/articles about CfMD, but we see it as one of the key benefit to customers of CfMD products.  Without it, the CfMD benefits have the potential of being short-lived, providing cold comfort to unlucky customers.

A source code escrow account isn't something new for Tensoft - we've had an Iron Mountain account for years.  Having weathered two significant economic downturns since we started business in 1996, we've counted our blessings as we watched much larger companies fail.  While we feel pretty good about surviving, it would be foolishly arrogant to believe that we're now somehow "immune." 

We buy insurance to protect against adversity, and our Iron Mountain account is insurance that we buy for our customers.  We see it as a great investment in customer service!

Thinking the other day about our annual FSM User Conference, Momentum 2011, which wrapped up last month, I was struck by how absolutely energizing this yearly event is – not only for attendees, but also for everyone on the Tensoft side as well.  

Everyone has the opportunity to discuss ideas, meet with their counterparts in other companies and get away from day-to-day interruptions to simply work on productivity and improvement. It’s a chance to think about doing your job better with people who are of like mind, discussing topics that facilitate creative thinking and problem-solving.

We stretched the Momentum envelope a bit this year by inviting some suppliers and outside experts into our discussions.  We asked questions like: “What does the demand model look like for your end-customers?” and “What do the suppliers look like from your production side?” and “What does your planning rhythm look like, or what does your input to executive management from the operations perspective look like?”

Attendees and Tensoft staff were able to coalesce their own ideas, learn from other people and take this all back to their companies to make what they do better.  I think that’s why so many good things come out of Momentum every year, and this year was no exception.

 This year at Tensoft FSM's annual user conference, we had the privilege of hearing from several really terrific guest presenters and panelists.  Semiconductor supply chain consultant Charlotte Diener kicked things off on the first day with her presentation on "Planning Rhythm."  Here's a brief description of what she covered: "Just as world-class manufacturing operates to the drum beat of critical equipment, the excellent supply chain operates to a regular rhythm of processes.  The use of a process rhythm is critical to the performance of supply chain planning, irrespective of software."  This presentation explored the critical processes necessary in semiconductor planning, their frequency and duration. A great session and a very warm response from MOMENTUM 2011 attendees! 

On Day 2, Ron Jones of the N-Able Group provided some fascinating - and very sobering - insight into "The Tragedy in Japan and the Semiconductor Supply Chain."  He covered how the immediate and subsequent events of the recent earthquake and tsunami in Japan are impacting products and markets around the world, and discussed both possible recovery scenarios and implications to supply chain management in the future.  Ron has been doing a great job covering this topic in his newsletter too, so be sure to sign up for that on www.n-ablegroup.com if you're interested.

Following that, Ron moderated a panel discussion on supplier integration.  The conference agenda described this session as follows: "Supply chain execution is about the fabless company managing the process.  It is also about partnering with your suppliers, exchanging data across your production flow, and communicating the right information to all parties on a timely basis.  Our supplier panel brings together leading industry suppliers (UMC, AMKOR) with fabless companies and an electronics supply chain experts to discuss relevant and current topics important to the semiconductor Industry.  Panelist presentations and a moderated Q&A session provide interesting and helpful insights for all participants."  The guest panelists were Amkor's Trisha Giacopazzi, UMC's K.T.Goh, Dean Strausl from V-Case (and the former Executive Director of the Electronics Supply Chain Association), and the VP of Operations at iWatt, Alex Sinar.  Apologies to our attendees that we didn't plan more time for this distinguished group - this session could easily have stretched to half a day or more!

One small world observation during the conference this year: unbeknownst to us, 2 of the guest presenters had worked together some years ago, and had a chance to catch up over lunch.  Great to see such a strong degree of collegiality among both guest presenters and conference attendees!