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? 

 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 hear this question often enough that I thought our readers might be interested in the answer that I recently posted on Proformative.  Here's the link to the original post, which includes some other answers with helpful information: www.proformative.com/ask/question/what-difference-between-cloud-computing-managed-services.  Here's my answer, from that same page:

"Managed services has been well explained here, and cloud computing with software as a service has been covered nicely as well. I would add that there are benefits possible with cloud computing – specifically, a public cloud environment, shared among multiple users - that leverage technology and the democratize high end computing in a way that managed services can’t. In a public cloud environment, these benefits provide high end capabilities to customers that would not otherwise be affordable to them.

While a public cloud environment requires careful attention to security, isolation, and process, it also offers significant management and cost advantages over the managed services model. For example, 100 managed service customers may require 200 or more servers to support. The same numbers of public cloud customers may only require something in the order of 20 servers with the appropriate management technology. The cost savings for a public cloud are evident, but these numbers actually translate into significantly improved security, since there are far fewer servers that need to be monitored.

Another benefit of a public cloud is 'high availability,' which basically boils down to this: there’s no single point of failure. In a managed services or an in-house, on-premise model, you would need to duplicate – at a minimum – every feature of your infrastructure to achieve high availability. In addition, a public cloud environment will include data management technology that is far beyond the average mid-market company’s budget, but can be provided cost effectively in a public cloud.

The choice of what’s right for your company depends on the type of technical service and software subscriptions you need, of course. But, there are compelling reasons for the popularity of the cloud model, chief among them being its ability to make high end computing available to companies who couldn’t afford the same level of technology in a comparable in-house system."

Tensoft provides solutions in a public cloud - rather than as managed services - because our customers want the benefits that I've outlined above.  In fact, we use the same public cloud that we provide to our customers, so feel free to ask me how we like it!  

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!

It seems that even SaaS skeptics are now finding it hard to deny that cloud deployment is a trend.  A February 21, 2011 article published on MSDynamicsWorld.com cites a recent study that found an overall increase in SaaS adoption from 6% in 2009 to 17% in 2010.   Results like that are tough to attribute to just “marketing hype.”

With Tensoft’s focus on the technology industry – and with that industry’s natural tendency to constantly create new companies – perhaps we’ve seen more than the national average’s share of SaaS converts.  We certainly began to see strong interest in the SaaS model from our customers and prospective customers earlier than our colleagues’ who specialize in other industry segments (or those who have no particular industry focus). 

In fact, demand was strong enough that we announced the release of our end-to-end cloud ERP solution for the fabless semiconductor industry in 2007.  By the third quarter of 2009, the majority of our new customers were choosing to deploy in the cloud.   

One of Tensoft’s customers was interviewed for the article, so I thought the excerpt below might be of interest to Technology Insider readers:

Most of the companies that decide on a SaaS model don't have an ERP system in place.... That was exactly the case for Syndiant, a manufacturer of small and high-resolution light modulating chips used in ultra-portable projectors.

"We're an early-stage company that started in 2004 and we didn't do product manufacturing until late October 2009," said Syndiant Controller Cory Johnson. "In December 2009 the executives of the corporation made a decision that it would be wise to go from QuickBooks to an ERP system. And they decided since we didn't have an onsite IT staff it would be better and more cost efficient to run it as a SaaS hosted model."

After looking at a number of vendors, the company chose Tensoft Inc.'s Fabless Semiconductor Management solution (FSM) and Microsoft Dynamics GP using Tensoft's hosted subscription model.

"It went live April 15 2010 and, for the most part, it went pretty smooth," he said. "The full ERP system was to help us manage from cradle to grave from procurement of raw materials to the maintaining and monitoring of our manufacturing that was outsourced to a third party. We had to have vendor integration so they could send us inventory status reports that we can automatically import and it will update and move our inventory from one manufacturing step to another and update the general ledger and accounting system on a more timely basis so we can be more efficient."

For Syndiant, the executive team didn't really have any concerns when they were considering a SaaS ERP implementation, Johnson said.

"Considering the people who made the decision weren't accountants there weren't any concerns," he said. "But one caution should be around security measures. But the security measures set up by Tensoft and the way they it set up for us to access the hosted solution is pretty safe and secure. It's working well and when we run across an issue we e-mail Tensoft and we usually hear back within an hour or so."

Please note the system live date of April 15, 2010 above.  Then take a look at the January 18, 2010 press release when Tensoft announced that Syndiant had just signed.  That’s a three month implementation for what the customer has described as “cradle to grave” ERP, with no onsite IT staff - a ringing endorsement both for everyone involved, including Syndiant’s hard-working team, and for the SaaS deployment model.   

By the way, if you’re interested in more details about Tensoft’s cloud deployment at Syndiant, please stay tuned for the case study that will be available soon.

I recently ran across  a Microsoft press release  that summarized the results of its global SMB IT and Hosted IT Index, a research study that investigates how small and midsize businesses are faring during the recession and how they use technology. The research was extensive, interviewing 3,000+ small and mid-sized companies in 15 countries.

The key conclusions are well summarized in the first paragraph of the press release:  “businesses that value IT as an enabler for better business productivity and effectiveness and those that use hosted services performed better fiscally than those that do not.”   

Interestingly, more than 40% of the respondents were using hosted or cloud technology, and these companies reported revenue rises of 30% or more, despite the global recession.  On the other hand, 90% of the respondents who did not use hosted or cloud technology saw revenue decreases.  That’s a pretty strong endorsement for allocating IT budget in the direction of cloud technology!

Here at Tensoft, we’ve definitely noticed a trend towards the adoption of cloud or hosted ERP among our customers (see 10/1/09 press release).  While we could name quite a few examples of well-run companies from our customer list who choose to host their ERP systems on-premise, most of these are utilizing some form of hosted or cloud technology. 

This all makes good sense.   Most of our customers are multinational operations by the time they have 50 employees.   Building an internal IT infrastructure that can support a global operation 24/7 is a costly undertaking.  And, for many companies today, it’s a distraction from their core competencies. 

Of course, there are exceptions.   But the results of this study suggest that companies that haven’t yet tried some form of cloud technology may be making a mistake.