We've been seeing strong signs of optimism about the economy in our customer base and in the prospective customers as well, so I was interested to see the results of PwC's survey of 60 multinational U.S. industrial manufacturing companies.  While this is a somewhat different segment of manufacturing than most of our customers, I think there's definitely enough overlap to be relevant to high tech. 

Based on the survey summary released today, these companies expect global economic growth this year and are planning accordingly.  Here's a quick overview of some of the findings: 

·         Most survey respondents plan to increase hiring in 2012.

·         The majority of those surveyed plan to increase investment spending this year. 

·         Companies report improved profitability in recent quarters.

·         There's less worry today about growth barriers than in the recent past.

One section of the survey that may be of particular interest to readers here is how the overwhelming majority of these companies have used technology to help achieve their strategic objectives to date.  In fact, a full 98% of these companies credit technology for improving operating performance in areas such as business intelligence and reporting and manufacturing and supply chain/distribution processes.   Most also cite increased business agility as a benefit of technology investments.

Going forward, 71% of these companies will be looking to digital change and transformation as a key enabler for their business growth over the next 1-2 years.  Why?   The two most common reasons are customer demands, especially for product information access, and supplier demands, especially for order management capabilities. 

Finally, 57% stated that their immediate plans for technology investment include cloud computing.

It's worth reading the entire summary, if you have a chance.

  Statement on Auditing Standards 70 (SAS 70) was the internationally recognized auditing standard used by service auditors to reporting on controls placed in operation at service organizations, including cloud services providers.  The American Institute of Certified Public Accountants (AICPA) issued Standards for Attestation Engagements 16 (SSAE 16) in 2010 to begin replacing SAS 70, starting on June 15, 2011.  

SSAE 16 was created both to update the SAS 70 standard and to align the US based standard to similar guidance released by the International Auditing and Assurance Standards Board (IAASB).  This guidance is known as the International Standard on Assurance Engagements 3402 (ISAE 3402), Assurance Reports on Controls at a Service Organization. 

The bottom line is this: what was once an auditing standard is now an attest standard.  SAS 70 required a description of controls, but not a written assertion by management.  Both SSAE 16 and ISAE 3402, however, require a description of the service organization’s system, along with a written assertion by management.

If your cloud services provider is not SSAE 16 and ISAE 3402 certified, you may want to ask some questions, and soon.  After all, the security and integrity of your data may depend on it.

 Technology companies are often criticized for using jargon and acronyms, and I'm as guilty of this as most of us in my industry.  In my defense, I can only say that jargon serves an important purpose - it provides a shortcut for expressing complex concepts, eventually promoting the more popular jargon to a full fledged part of our dynamic language.  

"Scalability" is a word that I've seen on lists of jargonistic goobledygook that should be avoided at all costs.  Yet this is a term that really captues a very specific quality of some technology offerings - that is, the ability to easily scale your investment up or down.  Where do this apply?  There's no better example that the Cloud.

An article in CIO magazine provides a good illustration of how scalability in the cloud works, as well as the clear benefit that this providers to cloud customers.  In this case, Lehman Brothers needed to dismantle $600 billion of assets and needed high performance IT systems to wind down operations, while meeting the requirements of the bankruptcy court.  A key requirement for this was the ability to scale up quickly and efficiently with little (or no) capital investment, and then to be able to scale down gradually as the company dismantled.  

With Tensoft's focus on serving customers in the technology industry, we see this requirement frequently.  Companies want to conserve cash at the same time that they ramp systems and processes to support rapid growth.  They need systems to scale easily, so that they can quickly add new users or capabilities, or remove them if they're no longer needed.  Scalability is a important concept to understanding the cloud model, as well as a key benefit to cloud customers.

 When we first started to develop our own apps, we took a step back to see what we thought would be both scalable and attractive to customers.  Part of what we saw was the begining of a trend towards web-based apps instead of traditional client-server apps.  Clearly, the ability to deliver solutions as web apps would need to be an important part of our solution offering. 

As part of that planning, we began using a loosely coupled integration method, where we isolated the interfaces between our software and the ERP system, so that we would have a way to rapidly upgrade our apps when the ERP was upgraded.  In practice today, moving from one version of Tensoft FSM from the next typically takes only a day to validate that its still working, using the integration tools available to us from the ERP system that we’re integrating to.  Our applications didn’t become so tightly coupled with one ERP that it required a lot of work on our side to migrate to the next version.  We also benefited from this loosely coupled integration model later when we moved our apps to a cloud environment, because we have an interface that’s a web service exchange between ERP data and Tensoft app data.  This is a bi-directional data model that allows us to de-couple our software in a true cloud-based environment so that, for example, we can host our software for a customer and they can have their ERP system on-site on their servers, or we can host both our software and the ERP, or they can have both on-site.  Whether it’s a private cloud or a public cloud, the design should still apply. 

The challenge with a cloud-deployment model for traditional client/server software is that the underlying infrastructure needs are greater since you need to provide more of a remote desktop or terminal server-type platform in order to deploy the software.  It increases the complexity and resources required to deploy that type of solution.  The underlying infrastructure needed to deploy a client/server app in the cloud is greater than for an application that’s been developed for the cloud that can run in a web app and has more universal access for remote users.

In terms of licensing, our model provides some advantages as well.  Tensoft is able to provide vertical appication-specific functionality directly to users who may not need access to the ERP system itself.  Therefore, they don’t have to buy GP seats to access Tensoft apps.   For example, with Tensoft RCM, if a user wants to look at the revenue sub-ledger, they can just use Tensoft RCM independently of the ERP system.  It can be a more cost-effective licensing model for many companies.

 In a world where "the new new thing" is king and longevity is often slightly suspect, it's startling to think that we've now been building web applications since before the turn of the century.  Our current applications and business have evolved to the point where there's scant (if any) mention of those early efforts on our current website, but thank goodness for the Internet Archive: The Wayback Machine!  A quick glance back to this page from April 2000 shows some of the projects that we'd taken live for customers by then, including a web-based travel and expense system. 

When we began developing our current product offerings shortly after that, there was no question about it: they'd be web applications.  Even if most of our customers weren't ready to put their entire financial and/or manufacturing system(s) in a virtualized environment, it seemed to us that the writing was on the wall.  We wanted to develop for the new century.

The move to the cloud has changed our approach in many ways, but it's important to remember some of the very basic differences between today and yesterday.  For starters, the shift from client/server access to a web app model means that only what's required goes to the client.  In other words, the client's machine is no longer required for computing power.   Even more importantly, the shift to using the browser as a web interface has re-set users’ expectations of what they can expect from web applications and what the experience of using a web applications should  be like.  In some ways, the key question that we asked ourselves was: “How do we create more of a web/consumer product experience in our  business management applications?”   For example, we work at making everything no more than 3 clicks away, and we make sure that the basics are there, like a back button that takes you back. 

Building web applications today is all about building applications the way that they need to be built to optimize the world of on-demand cloud systems .   A little experience doing this definitely doesn't hurt!

 There seems to be a fairly common misconception floating around these days that the cloud ERP model automatically lowers training and consulting costs for cloud deployments.   I’ve seen questions about this come up often enough in forums and discussions that I no longer consider it to be just an anomaly.  It’s understandable too, considering all the marketing hype to the effect that “SaaS has changed everything” – consulting and training costs are part of “everything,” aren’t they?

While it’s certainly true that the cloud model has changed the dynamic around system management, it doesn’t negate the need for an implementation  consulting and training effort.  SaaS deployment may save you the expense of new servers and some of the resources to keep them – and your new solution – running securely and up-to-date.  By choosing the cloud, you simply won’t need the same kind of internal IT staff that an on-premise system requires

However, when you’re moving systems, it’s often a time of transition for your company.   Some of the reasons for the change may include business growth, going public, or just outgrowing old systems.   At a time of this sort of significant change, it makes sense to take a serious look at your business model, business processes, and generally how you do things.  

If you are at a transition point in your business, having input from implementation consultants who are skilled in your industry and its best practices will be extremely valuable to the long term success of your SaaS ERP implementation.    It’s a smart investment.

 I just read a blog post by Mike Gualtieri, a senior analyst at Forrester Research who specializes in application development, IT management and delivery issues. In his post, Mike was reflecting on the popularity of running cloud applications, and how “The Cloud” has now become a buzzword for savings and flexibility, when in fact this may not always be true.

He maintains that cloud computing is ideal only when “elasticity” is built into the mix -- when the cloud system is automatically brought into play during peak periods, and it’s “asleep” the remainder of the time. Mike used the analogy of the homeowner’s ability to only pay for electricity when the lights are turned on.

Reading this, I reflected gratefully on how Tensoft has implemented the cloud in just this way – building automatic flexibility into each installation. Unlike other solutions providers, our customers enjoy this benefit now, because they’re able to add or remove users on a monthly basis, paying only for the ones that they currently need.  We also scale the application infrastructure support without the user needing to ask or to even think about asking for it.  The result? No wasted user licenses or extraneous costs. Tensoft solutions are helping our customers to “shut off the lights” when they’re not in use.

Take a look at Mike Gualtieri’s blog and tell me what you think. I think this is an issue that bears more discussion.

We’ve recently posted a great new customer case study to the Tensoft website that beautifully illustrates the benefits of cloud deployment. Focusing on our customer, Syndiant, the four-page case study describes how this technology industry start-up has been able to leverage Tensoft’s industry-specific solutions in the cloud to quickly gain better visibility, control, and efficiency.  .

 Syndiant’s V.P. of Operations, Tupper Patnode, provided much of the commentary in the document, discussing in detail how Tensoft FSM and Microsoft Dynamics GP, running on a cloud platform provided by Tensoft partner SaaSplaza, enabled the company to comfortably plan and scale their growth from a $1 million company to $20 and up to a $60 million enterprise. Take a look at the Syndiant case study and tell us what you think by responding to this blog.

And, if you’re planning to attend Microsoft Dynamics Convergence in Atlanta on April 10-13, discuss the particulars of the Syndiant project or your own future project with our own Michael Chadwick and Sonam Thandi in the SaaSplaza booth #1316. They will only be at the booth part of the time, so contact me ASAP if you’d like to arrange a time to meet.

See you in the Cloud!

I'm here in Atlanta, GA for Microsoft Convergence, the 14th annual user conference for Microsoft Dynamics business applications, along with over 8,000 attendees.

Yesterday, Microsoft announced the general availability of the Dynamics GP 2010 (version 11.0) ERP software solution.  The opening keynote address was delivered by Stephen Elop, President of the Microsoft Business Division. The spotlight was the agile interconnectivity of Microsoft Dynamics GP 2010 simultaneously working with both on-premise and on-demand systems including Customer Relationship Management SaaS software, instant messaging, video conferencing, word processing, spreadsheet and email programs. Some of this was pretty interesting, so you may want to take a look at this live demo: http://www.microsoft.com/presspass/presskits/dynamics/videogallery.aspx. 

Dynamics GP 2010 enhancements include:

• Tighter integration with other Microsoft business solutions and cloud computing technologies
• 100+ new dashboard indicators / KPI's
• 400 Excel and SQL Reporting Services (SRS) web based reports
• Simplified and enhanced workflow automation
• Web based ERP enhancements

Interesting Microsoft facts shared during the keynote on their cloud strategy including the Windows Azure platform:

• 20 million customers now using Microsoft cloud computing applications
• 70% of programmers focused on developing applications for the cloud
• Spending $9.5 billion on R&D in 2010

Simply put, it appears that Microsoft is "all in" as it relates to cloud and software-as-a-service technology.

- Mike Chadwick, Director of Sales, Tensoft