The uncertainty when Covid hit in the spring of 2019 resulted in a year’s long effort to find out how clients could react and survive. Studying the market winners, it was determined that many sectors were beginning to thrive almost immediately after the lockdown.  Was it because they were well ahead in technology and used cloud based software to quickly pivot to new market opportunities? Or was it the most forward thinking companies tend to be more adventuresome in their approach to new technologies? The fact is, more and more companies are utilizing technology for competitive advantage and those clients naturally gravitate to firms like ProfitFromERP. Here’s how 2020 advances can help your company do the same.

ERPodcast E26

CEO/CFO Report 2021 Cloud

Episode 26 of the ERPodcast –

MFX Up and Under

It’s the CEO/CFO Report 2021 – on the Top 10 Top 10 Lists for 2021.  Two things – one, as you may know, when we do a CEO/CFO Report we topload the info – listen to the first 90 seconds of the podcast and you’ll be exposed to all content – with the detail to follow. Also, as a busy C-level exec, you can find links on the ProfitFromERP website to learn more. And secondly, saving you even more time, every year end and the start of every new year, you get lists – Top 10 things that happened, Top 10 Trends for the new year…– so we’ve waded through all of the year end/year start lists and pulled out the best when it comes to business, business software, business efficiency, business productivity – we read through it all so you don’t have to – the best information when it comes to ProfitFromERP.

Here’s what we’re talking about on the CEO/CFO Report 2021 –

• There was huge growth among companies who were able to shift quickly to the new markets.
• Digitally driven companies, cloud-based companies saw the highest growth rates and expansion – and we’re talking about traditional businesses now using cloud technology, engine manufacturers, pizza delivery, parts, musical instruments, furniture distributors, even junkyards – and if a junkyard can go digital, it’s a pretty fair bet your company has an undiscovered digital advantage just waiting. We’ll talk about how to find it.
• Good Enough is no longer Good enough – many companies were operating on years old ERP – even Quickbooks and spreadsheets and as one client put it, “we couldn’t keep throwing labor and spreadsheets at the problem”.
• Financial transformation – Often, the finance department is locked into historic company status – reporting what happened last month, often deep into this month. With the rapid changes happening in 2020, last month could be a world that no longer exists – so a balance sheet from another universe was beyond useless – well, maybe for nostalgia’s sake, the way we were, that sort of thing. Today, finance is shifting to cloud technology and reporting via dashboard what happened this morning and forecasting next week – and oh, yeah we’re closing the books on the second of next month instead of the 17^th.
• Today’s markets are in flux. Brand loyalty means zip when the brand you’re loyal to can no longer easily do business with you. As consumers and B2B customers are shifting allegances, is yours the path of least resistance? Or is it ‘the way we’ve always done it’ recipe one for the closed businesses of yesterday. Look, if doing business with your company isn’t the easiest possible way to access a product or service – you’re particularly vulnerable. And out of stock? Lost sale. Lost customer.
• There were many losers in 2020, but one winner was technology. From Zoom which was under the radar and is now ubiquitous, to cloud based back office systems we’ve been driving our clients to since 2014 – while traditional software companies were spending their time to connect to a home based workforce, our digital clients were spending their time connecting to customers.
• 80% of Controllers surveyed reported that their companies planned to accelerate digital transformation – new software and apps – in 2021. Last year was a banner year for cloud based software vendors, if this metric holds, an 80% quest for new technology – good implementation consultants are going to be in scarce supply – unless you’re willing to bet your company on the B team, you’d better step up quickly. ProfitFromERP can help with that.

We’re going to cover these topics and give you the links for more information – and let you know what ProfitFromERP clients are doing with ERP, CRM, AI, BI, – what’s going on in the market so your 2021 plans can be combined with the reality of the 2021 ERP market and of course, how you too, can ProfitFromERP.

Sponsorship

If you’re a new listener to the ERPodcast you might be wondering what it’s all about. I’m Gene Hammons, Director of ProfitFromERP standing in the hanger of one of our latest clients where they keep these C130 cargo planes ready to respond to emergencies worldwide – but that’s just one of 400+ ERP projects we’ve done over the last few years. – And ERPodcast is the official podcast of Profit From ERP, a consulting firm that focuses on the business uses of software, or the business consulting side of software projects – mostly ERP or associated enterprise software such as CRM, HR, Business Intelligence and AI, supply chain and so on.

So, we don’t sell the software, we don’t install the software – we say just sell the Profit that can be made when a company approaches operational software projects the right way. When you do it right, you get Profit From ERP.

Here’s how it works.

You may realize your company is drowning in a sea of spreadsheets and nobody’s numbers match, and speaking of bodies, there’s so many of them around and we’re still floundering at month end.

So you call in Profit From ERP. We do a short engagement to analyze your specific business requirements and recommend two or three ERP vendors that would be well suited to succeed in your industry.  We also give you a benchmark cost revenue model to show exactly how the new ERP can make your business more efficient and profitable.

We have a network of Affiliate Partners – representing every major ERP system and run by expert teams who have great reputations from decades in the business. We’ve worked with these Affiliate Partners time and time again, so we know they’re proven experts.

We guide you through the evaluation and the implementation – and then – we’re there to make sure you achieve the goals you set out to accomplish – the Profit From ERP.

Having said that, it’s incredibly complex when you think about the different companies, industries, the different software systems and so on. So by bringing you the right affiliate partners, we help you do it right.

And we talk about some of the details, right here, most weeks on the ERPodcast – sharing some of the tips and tricks learned over the course of hundreds of ERP projects. From these huge C130’s to tiny microchips, molecules at pharma manufacturing, food & Beverage, Furniture, Distributors, manufacturers  – whatever your business Don’t drown in spreadsheets, send out an SOS via email to Info@ProfitFromERP.com We’ll get you connected with the right lifeline…for ProfitFromERP – our clients make ERP pay.

Welcome back to the ERPodcast, I’m your host Gene Hammons, Director of ProfitFromERP – so let’s just jump into our stack of stuff.

Up first –  When the  pandemic hit, we saw digital companies, companies that embraced technology and used tech as a cost effective business driver, we saw these companies quickly pivot and offer their customers new ways of connecting, new ways of doing business, becoming easily accessible  – the thing was, when everything was locked down, and along comes a business that’s easier to work with, well, as a consumer, are you going to keep beating your head against a non-functional wall – NO – you’re going to say, well, at least Costco lets me go touch free with an app instead of a membership card. It’s following the path of least resistance.

ERPodcast Episode 24 and Episode 25 Is a case study on one company, Nice Link Home Furnishings, who implemented the Cloud ERP Acumatica in the middle of the pandemic lockdown – and grew substantially by opening new ecommerce avenues – If you missed those, listen to Nice Link President Jay Carlson in his own words talk about it – here’s the link to the ERPodcast ERP News Page.

So you’ve heard of Digital Transformation – what’s that term mean?  Well, for our client The Arizona Coyotes, it’s using the Clear app so fans can pass a health screening prior to arriving at the stadium on game day. What’s not digital transformation? Dozens of tables at each entrance with stacks of forms and dispensers of bic pens so fans could fill out a health questionnaire prior to entry. We saw the disaster that local regulations had on the San Francisco 49rs having to finish their season playing home games in Arizona – better the digital response of the Coyotes to regulations requiring forms to attend games.

On the other hand, we saw with a current group of our ProfitFromERP clients – despite overwhelming evidence that digital transformation was the key to the future – they just couldn’t move. They were too tied to how business ran in the past – and frankly – we had concerns that they’d even make it in the new covidian economy.

So the task wasn’t to find the right technology – it was to find the right mindset. Big question. Why can some 19 year old kids in Silicon Valley take over industry after industry – when the real experts of those industries had decades – even lifetimes of experience?

In the Wall Street Journal’s recent 2020 Review, journalist Tom Vanderbilt cites his new book, You’re Never Too Old to Become a Beginner. It talks about the increased thirst for knowledge that people worldwide are seeking. Online learning has boomed. US grocery stores can’t keep flour and yeast in stock, because people at home have turned to learning to baking their own bread.

What Mr. Vanderbilt has found, is that researchers have discovered that learning new skills, even for older adults, maintains brain function and increases brain capacities in various cognitive areas. So even if you’re learning something unrelated to work – you’re exercising that brain muscle.

My own father had a fascination with airplanes since WWII  – and finally, at the age of 66 he took flying lessons and qualified as a Pilot and bought his own plane at 67.  The challenge and rigor of aeronautics kept him really sharp well into his late ‘80’s which translated into his investment advisory services.

This is the type of thing we’re encouraging our clients to embrace.

Seeing new ways of business operation, learning new skills in technology and how to reach the new market opportunities – before those 19 year old whiz kids upend the entire industry. Check out the links on our website for the Wall Street Journal Article as well as Tom Vanderbilt’s Book Beginners: the Joy and Transformative Power of Lifelong Learning.

Which leads us into our next topic, Fender Guitars. We profiled Fender in an earlier digital transformation ERPodcast, how the iconic producer of market leading Stratocasters, Telecasters, Amplifiers, Bass, and Acoustic guitars went digital – guitar manufacturing is a fairly old technology and Amplifiers haven’t radically changed since the 1950’s – but Fender, faced with a declining worldwide guitar market on top of a pandemic that shut all the retail outlets for their products – Fender went digital with a program they’d launched earlier – response had been OK, but when all other aspects of your business get shut down, you focus on what’s left, so they got behind Fender Play in a big way. Fender Play is a series of online guitar lessons to take brand new guitarists from the very basics of guitar play through lessons, learning and practice to become actual guitarists.

So think about it. What do you need to sell guitars? Well, it helps if there are more people playing guitars – More guitarists, more guitars get sold. And if you know anything about people who get serious about guitars, the correct number of guitars to own is whatever number you currently own…plus just one more. If it sounds like that guitar acquisition strategy never ends, well, it never ends, just some guitarists control it better than others.

So when the covid lockdowns hit, Fender offered their $99 annual Fender Play lessons for half price for the first 100,000 people who signed up. They hit that number in three days. 100,000 people signed up. Recently they revealed that over 1-milllion new subscribers were now learning guitar through Fender Play. Fender is a private company but you can run a numbers estimate if half those new players paid half price, and half full price, well, north of $60m in new digitally generated revenue isn’t bad for a $600 million annual revenue company. Now imagine the new market Fender is creating. Short term and long term, look at the new guitars Fender Play enthusiasts will buy.  Fender normally has around a 35% market share – you’d have to think that watching hours of lessons demonstrated on Fender products, plus seeing how hundreds of hit songs utilized a Fender for this sound or that – you could well have half a million or more new guitarists eyeing a new Fender for their next guitar/amp acquisition.

So the takeaway is two fold.

One, Fender’s digital approach shows another way the inventive use of digital technology really reaches today’s consumer – and perhaps you should be thinking similarly for your company. And if you’re looking to become a Beginner in lifelong learning or just the quest to be the next Eric Clapton, well, maybe Fender Play is just what you’re looking for personally as well.

Topic Next

So one of the more influential voices in Tech is the Software Eats World blog of Andressen Horowitz. In a recent article The CFO in Crisis Mode: Modern Times Call for New Tools everything starts out nicely as they recognize what we’ve known for some time, most finance teams spend the majority of their time and resources transacting data, entering or manipulating data – while the most valuable work of Financial Planning and Strategic Finance gets short shrift. Nothing new there. We’ve been talking about that wasteful situation for a couple of years now.

Next they talk about the various products a CFO is responsible for – ERP such as NetSuite, and then a dozen other products for Payroll/HR, Payment Processing, Billing, Tax & Treasury, Monthly Close, FP&A and so on. Stand-alone products with different users, training, and not at all integrated

That’s where they’re absolutely right and also very wrong.

They’re talking about different software products from different vendors – but starting with NetSuite. Now think about something – Net – Suite – it’s designed to be a networked suite of solutions. A Networked Suite – a NetSuite.

Now of course NetSuite was re-acquired  by Oracle some 18 months ago, which Oracle has taken the leading mid-market ERP product and poured a generous helping of research and development into.

Andresson Horowitz presents it as a standalone ERP.

Here’s the thing, Oracle has developed a fairly robust HR/Payroll module for NetSuite – a new offering, one that is destined to improve through the every 6 month update release cycle – but quite useable now.

Oracle has also taken the historically leading Hyperion FP&A software and tightly integrated the module into the core NetSuite offering – but here’s something else – when it comes to FP&A, the article mentions Adaptive Planning as a standalone solution.

Actually, Adaptive Planning used to be sold along side NetSuite as ‘NetSuite Advanced Financials’. It had been integrated using the same NetSuite technology and for the users, it simply appeared as another tab on the homepage – the user couldn’t tell if they were in Native NetSuite or Adaptive – the integration was that tight. FloQast, Avalera, several HR – all integrate similarly.

So for Andresson to say none of these integrate is not really accurate – but here’s where they got it right.

Usually, those products are implemented as standalone solutions. Integrations are often very basic and not particularly robust. And I have to tell you, working this concept with hundreds of customers, the word ‘integration’ is shunned more than any, except maybe it’s cousin word, ‘customization’.

Things have changed.

We posted a link to a blogpost from 2014, where we started a strategy we called Component ERP for mid-market companies who have to compete with Fortune 500 providers. The mid-market guys can’t afford the SAP/Oracle ERP stacks nor the staff needed to run them. But with made for cloud back end software, specifically NetSuite and Intacct, we were creating a base technology in the back office – and linking operational best of breed. So we were using top technology cloud back ends, tightly integrating operational component software using the same core technology and delivering a SAP level functionality for 1/10^th the price.

Look, I know customization has a bad reputation – endless stories of companies version-locked into systems that couldn’t be upgraded because they’d been customized – customized to a point that seemed like a good idea at the time, but times had changed and the customizations were also outdated – expensive handcuffs slowing the business – painful –

But today it’s different because of your pocket. Or what’s in your pocket. I’m talking about your cellphone. If you are an average iPhone user, there’s 26 customizations to your iPhone – they’re called ‘apps’ – apps are completely different you say, An app is simply new integrated code performing a function the base phone did not offer – but they call it an app.

NetSuite was written about the same time as iPhone – and they have the same concept of the App Store, SuiteApps in NetSuite’s case, over 300 different programs that integrate as easily as the Facebook app works on your iPhone.  Without going deeper into apps and such, just consider the concept – think about it with the idea that it could be right – of course you need to vet any concept built around running your business. Just think about it.

But back to the Andreeson Horowitz article – this is one of the industries leaders in technology content from their Software Eats World podcast and a16z blog. You’ll remember Marc Andreeson from the Netscape Navigator browser days – I have no idea who Horowitz is – they’re a leading VC firm for startups and a respected influential name in the tech community.

But unlike ProfitFromERP, they’re not dealing in the ERP industry day to day – and what we’re trying to say is that unless your consultants are hands-on, on the street working with multiple clients – they’ll get parts of the story right, but miss on the why’s and hows. The details like when one add-on solution used to be the go-to, and another better solution has emerged.

What the integration points are, from actually doing the integrations for client after client.

Look, here’s the thing. A single ERP package, while it might seem like a total companywide solution – could do that for a $20m – $40m dollar company – but for most $200m and up companies, ERP is just the starting platform – you can have a dozen other systems running all kinds of operational functions – and if you do it right – the first system makes your company more profitable or cuts costs – and pays for itself, leading to the second, third – all carrying their own financial weight in ROI – and all making you a more efficient and productive company. That’s what the ProfitFromERP value concept is modeled on – the clients that seek continuous improvement in software and technology.

Anyway – on to Item Next.

Quick hit on SAP – not to pick on the big guy  – but But back in October SAP reported Q3 earnings slowing and in the worst day of trading in 12 years, SAP’s valuation dropped by 30-billion Euro’s.

SAP’s answer is to turn things around is that they’re planning to deliver more of their product via cloud.

However, the downturn of made for cloud software, there was some covid related slowdowns mid summer, but that meant NetSuite grew at 20% instead of the customary 30% per year.

So, cloud based NetSuite does well, so SAP should be on the cloud and they’ll do well in the future.

Wrong – Wrong – Wrong -Wrong

NetSuite was made for cloud – meaning current technology sets, no legacy code and one of the main advantages of NetSuite is you can get it up and running in about 90-120 days in a reasonably sized operation.

SAP? We’re talking millions to license and rollout in 18-24 months with multi-million dollar upgrades every few years compared to NetSuites free upgrades every 6 months – and granted, there are Fortune 500 companies that do very well with SAP and we still have SAP clients and would not hesitate to recommend SAP in the right situation.

But as we talked about in our Digital Transformation Series of podcasts – we had Bushan Parikh former CIO and major IT guru at companies like Nike, Avnet, Johnson Controls – his new company is Get Digital Velocity – and his play during the pandemic was we can’t wait a year and a half to implement new SAP technologies so we can pivot our clients to react to covid -but we can launch NetSuite and tie it to the old SAP system and use the nimble NetSuite to serve new market segments starting in 100 days. You can listen to the Digital Transformation Series of ERPodcasts here.

But the point is, when the market changes as fast as covid turned everything upside down, you don’t have 24 months to turn battleship SAP around, but a launching the NetSuite cruiser destroyers can turn the battle pretty quickly – even if your battleship is still in the fleet.

So, was it cloud that kept NetSuite growing while SAP shrunk? Or was it the nimble deployment against a multi year traditional software rollout? You tell me.

But here’s what I’m telling you – made for cloud ERP software has been so successful that every traditional ERP vendor has launched a so-called cloud version. But simply putting your legacy code on the cloud and still taking a year to bring it up. It’s not the same.

Again – unless you’re dealing with clients examining and evaluating these differences – unless you’re there every day, you don’t see the real reasons behind market leadership. Advantage goes to clients of ProfitFromERP.

Item Next

Here We source several articles from trade papers

Controllers Council notes the trend of technological innovation in the Finance office will continue, and with it the evolution of the accounting and finance team into strategic business partners within their organizations. Link.

CFODive reports there’s a trend towards a return to Zero Based Budgeting – but unlike slash and burn budget cutting, this round relies more on cloud technology and recognizes in a post covid world, yesterday’s budget decisions are no longer relevant to today’s economy. Link.

Auditoria has a new concept – recorded 5 minute Zoom videos featuring leading CFO’s – thye’re calling it CFO Corner – and while most of the videos talk about technology and finance, one theme springs clear – while being a data-driven CFO is the ideal, the average accounting office has difficulty presenting good, clean data upon which to base those decisions. Traditional, outdated software is a main culprit.

Item Next – Digital is OK for those guys, but won’t work for me.

I find it amazing that I can now book a haircut through Square with my barber – I think she likes being called a stylist, but my styling days are over. The local golf course now sends an iCal appointment when I book a tee time. I keep golf scores on the iPhone with Hole 19 and track bike miles with Strava on the Apple Watch. In other words, all of these digital tools are right where I am, laptop, iPad, iPhone, Apple Watch – and that’s who gets my business because it’s easier to book a tee time down the street on the internet than to search for other places to play.

And here’s something I find really interesting – a small nugget in an article about Kawasaki Engines – a division of Kawasaki, they have three factories producing lawn mower engines in the US. In a recent article on the Diginomica website, they talked about using Salesforce so the at-home workforce could see all communications channels through Salesforce, emails, records of phone calls, faxes – to whatever department whenever it happened. Great use of Salesforce and another reason cloud software works so well in today’s distributed workforces. But then came this – competition with newer companies meant that Kawasaki’s customers were getting used to new customer experiences. Here’s the thing, a younger generation of workers, people raised in the internet era are becoming managers and purchasing agents. Doing business like it’s 1970 doesn’t work anymore. Heck, doing business like it’s 2019 doesn’t work anymore. Link.

Again the Wall Street Journal reports covid spawned business changes that would have taken years unfolded in months – it brought 2030 to 2020. And there’s no going back, changes for covid are now the new norm. They talk about changes in car buying with Carvana, Zoom of course, Apple Music for entertainment, jewelry companies, and they also talk about the network effect – the more businesses that are on the internet, the more audiences turn first to the internet – interesting article particularly for those businesses who decided to preserve capital at all costs and ride out the pandemic – hint – it looks like the pre-covid economy isn’t coming back, time to get moving to where your customers are now. Also, business spending on logistics – of course for delivery – but also Technology spend  has boomed. That means if you didn’t pivot, you’re already way behind. Link.

Final example, Here comes Forbes with an article on Copart – an actual junkyard that started putting parts on the internet and was so successful that they bought another junkyard and another – now it’s a billion-dollar business. Junkyards. (SFX) For those of you too young to remember or too busy to watch re-runs, that’s comedian Fred Fox in Sandford and Sons, a junkyard guy who was NOT Digitally Transformed. Link.

To Wrap Up –

Digital Transformation is real. Cloud ERP and modern apps are offering you advantages you never got with Great Plains Accounting Software. We’re in a more dynamic time, meaning things change faster than any of us would prefer. Are these software programs costly? Yes, but the payback is huge. A 100m company can spend 500k on digital systems. But they can also see great bottom line improvements  – 5-7% – but say you only get half that – 2.5% – that’s 2 and a half million on a 500k investment – a system paying for itself in 9 months.

So how does ProfitFromERP fit into all of this?

We’re the business consulting side of this entire project. You call us in, we spend a week or two doing business analysis, less for smaller companies more for larger firms.

We develop a budget for the project based on a business case. We help secure the financing if needed and work out the SaaS software subscription contracts. We also deliver the Cost/Revenue Model showing exactly how, down to the transaction level, how you’ll recover the technology spend and take the project from cost center to revenue center.

Then, based on our analysis, we bring in software vendors – our Alliance Partners – non affiliated vendors we’ve worked with time and time again. We help you with the initial implementation and go-live, then continue to work as your internal business consultant to get the returns you set out to achieve.

What’s our cost? We’re paid up front by billable hours – however – we’re revenue neutral in the project as we help secure additional software discounts – as a volume referral partner we secure greater discounts – and we keep our clients out of the Cost Overrun debacles you hear so much about.

So for many smaller firms, we’re involved for a short term up front and very limited hours thourghout the project. For our larger clients we’re more hands on throughout. For national and international firms we’re bringing in Affiliates from the beginning – whatever it takes to get the job done, we’re bringing expertise to the table when it’s needed.

So, like we’ve said earlier in the ERPodcast, you can call in some pretty big names with not so much direct ERP experience, or ProfitFromERP – where I’m the Director, Gene Hammons and I’ll be involved in every client engagement  some more than others, but either supervisorily or directly  – you’ll get ProfitFromERP.  Contact us at Info@ProfitFromERP.com or visit our website ProfitFromERP and as we like to say, ProfitFromERP, our clients make ERP Pay!