Guest Blog: Haves vs. Have-Nots | Our Q4 2011 ERP Software Financial Roundup by Don Fornes

By: Don Fornes Don Fornes

Founder & CEO at Software Advice
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Don started Software Advice in 2005 after a ten-year career in the software industry. Previously he held positions as an ERP analyst at an investment firm and as a corporate development executive at a pioneering CRM software company. He enjoys observing the evolution of software markets, including changing competitive dynamics, the impact of disruptive innovations and the success or failure of marketing strategies. Meanwhile, Don is most passionate about running his own business, Software Advice. Don lives in Austin, Texas with his wife Lauren, daughter Hudson and bernese mountain dog Stinson.

Founder & CEO, Software Advice

A handful of enterprise resource planning (ERP) software companies have exited the great recession, regained their footing and posted respectable growth. Much like the macro economy, however, there is a growing divide between the “haves” and the “have-nots.”

In the ERP industry, the haves include old-money titans Oracle and SAP, who both put up solid fourth quarter earnings. The “middle class,” meanwhile, presented a mixed bag of results as mid-cap players produced fairly tepid growth, and in one case, a decline in revenue. Finally, NetSuite represents the nouveau riche, aspiring to capitalize on the secular trend toward hosted enterprise apps – and succeeding.

Before we dig into the details, a few things to note:

• We stuck to revenue as a metric of company growth, and avoided talk of profit margins and net income. The later can get into tricky financial analysis.
• When a company has a non-traditional quarter end (e.g. November instead of December), we used the most recent quarterly data available.
• Our percentage change in stock price is calculated based on the closing price on September 30th, 2010 through December 31st, 2010.
• We tried to note situations where currency exchange rates impacted results, but we didn’t get too picky about it.

Large-Cap ERP Companies

Oracle kicked off the earnings seasons in December when they announced a very strong November quarter. Total revenue for the quarter was $8.6 billion, up 47% from the prior year. We should note that roughly $1.8 billion of that growth comes from the Sun Microsystems acquisition, which closed within the past twelve months and therefore inflates the year-over-year growth.

Regardless, applications license revenue was $579 million, up 21% over the prior year’s November quarter. Wall Street analysts were shocked by the upside to their expectations, which had sat around $480 million. Large deals seemed to drive the upside as large enterprises re-entered the market after a couple years of laying low. These firms had delayed upgrades and new purchases during the recession and now represent pent-up demand for Oracle apps.

Another factor that may drive continued upside for Oracle is the rollout of the new Fusion Applications later this year. Oracle shares traded up 17% in the last three months of 2010 as investors are increasingly optimistic about Oracle’s outlook.

SAP also benefited from a return to large deals as it reported revenue of $5.4 billion in the quarter ended December 31st, 2010, up from $4.3 billion a year earlier. Roughly 10% of this growth resulted from foreign currency fluctuations which moved in SAP’s favor relative to 2009.
Digging deeper, software license revenue grew 35% to roughly $2.0 billion, up from $1.5 billion in Q4 2009.

Beyond the improving economy, other factors helped to drive SAP’s improved growth. For one, there has been a substantial reshuffling of internal operations since Bill McDermott and Jim Hegemann Snabe took over as co-CEOs after Leo Apotheker left. Presumably, these changes have been effective. At the same time, SAP is benefiting from huge tailwinds behind business intelligence (BI) software. The company’s acquisition of Business Objects is proving to be prescient as BI demand continues to grow.

Microsoft reported a 7% increase in revenue from its Dynamics family of business applications. The company no longer breaks out specific revenue numbers for that unit, but we know that the current run rate is somewhere just North of $1 billion. This growth trails that of Oracle and SAP, but is in-line with the results of other mid-market players discussed below.

Small to Mid-Cap ERP Companies

Lawson Software grew revenue just 2% year over year in its quarter ended November 30th, 2010. All of its growth came from an increase software maintenance revenue – a sign that customers are sticking around. However, sales of new software licenses declined 7% (6% at constant currencies) to $26.4 million, from $28.4 million in the same quarter a year earlier. The company also continues to deliberately shift consulting work to partners, which reduced that side of the business 10% to $63.6 million from $70.9 million in the same quarter a year earlier. Lawson is clearly still feeling the effects of the downturn, but management pointed to two very healthy market segments – human capital management (HCM) and the health care vertical – which could drive growth in 2011.

Epicor’s revenue grew only 5% year over year in the quarter ended December 31st, 2010. However, management struck a very optimistic posture after releasing their results. They indicated that they are increasingly competing for larger deals at the top end of the mid market. Larger deals have longer cycles and some of these larger deals did not close in December as expected. Epicor is well positioned as they enter 2011 with a new product cycle (Epicor 9) and a new cloud offering at the low end of the market. The company also made a smart strategic moving in acquiring Spectrum’s HR solutions, which will allow them to participate in the HCM market.

Deltek grew revenue 23% year over year in its quarter ended December 31st, 2010. This growth was helped along by the addition of the Maconomy and INPUT operations it acquired earlier in 2010 (i.e. their results are not included in the prior year period). License revenue grew 8% to $20.8 million from $19.2 million in the same quarter a year earlier. Deltek has long benefited from a focus on project-oriented applications, and is now leveraging that foundation to offer new, non-software solutions, such as INPUT’s market intelligence services.

QAD was the only ERP vendor to report a decline in year over year revenue. QAD revenue declined 1% in its quarter ended October 31st, 2010. License revenue declined 19% to $6.8 million, from $8.4 million in the same quarter a year earlier. Maintenance revenue declined 2% to $33.2 million from $33.8 million in the same quarter a year earlier. In prepared statements, management pointed out that the company is controlling costs to maintain a solid balance sheet, while expecting that an improving manufacturing sector and a new on-demand offering will lead a return to growth later this year.

NetSuite posted very strong results, growing revenue 21% year over year in its quarter ended December 31st, 2010. Keep in mind that the vast majority of NetSuite’s revenue is subscription-based, so both the company’s scale of revenue and growth rates are even more impressive. NetSuite is a clear beneficiary of the popular movement to cloud computing. The company appears to be getting a hall pass on profitability: despite NetSuite not turning a profit, investors have bid up the stock to a $2 billion market capitalization, which surpasses that of the other mid-cap ERP players mentioned above.

Software Advice’s Key Takeaways:

• The ERP market has regained strength, but we’re seeing a growing disparity between the big ERP players and the mid-tier players.
• As small and mid-size businesses return to the market in 2011, leading mid-tier players can regain momentum; others will flounder.
• There is growing momentum behind cloud-based ERP, which will benefit NetSuite, as well as those traditional ERP companies that adapt.

Guest blog post: 5 Steps to Maximise Leadership Success

5 Steps to Maximise Leadership Success by Deanne Earle of Unlike Before.

Have you ever been thrown in the deep end of a new role and asked to work miracles? What are the first things you do when you're asked to take on a poorly performing team, department, or project in chaos? Do you leap in like the caped crusader to save the world or are you overly consultative in an attempt to make friends and influence people?

We know how challenging these situations are and we also know that they can be exceptionally rewarding. To help you swim through the mud we've put together a list of the 5 practical steps that we know work. Why do we know they work? Because they're what we do and we've proven their success time and time again. These 5 steps will help you set the scene, quickly establish credibility, build trust and maximize the chances of success.

Try them and let us know how you get on.

1. Get clear
If you're not clear on what it is you're being asked to do how will you be able to do it? Forget about the rumours and forget your own thoughts and opinions for the moment because the first step is to have absolute clarity of your role by asking the following:

* What is it exactly that you're being asked to do? Do not presume to understand from the first explanation.
* What role are you being asked to play? Tough guy, motivate, sort-out, clean-up, delivery, or all of these.
* Why are they asking you? What is it you do that makes you the choice for this role?
* What's the timeframe? Constraints? Dependencies?
* What is the line of accountability, level of authority, and scope of responsibilities?

Important Note - if the person asking you to take the role cannot answer these questions find someone who can. Get clear on your reporting path and purpose. Without this success will be severely limited.

2. Agenda(s)
Find out who has what agenda and why. What are the motivations behind this need and how do they relate to the scope of the challenge at hand? Having this information will help you identify and fill any gaps in the brief and round-off Step 1.

3. Initial thoughts
Based on Steps 1 and 2, and the various bits of gossip, grapevine hearsay and corridor conversations you've picked up, it's time to begin forming initial opinions, ideas and thoughts. Many of these will be questions, which you'll work to answer in Steps 4 and 5. It's important to reserve judgement and for any opinions to remain fluid until you've got all the input because at this stage you've only been spoken to by a higher authority and you haven't yet spoken with your new team.

4. Active Listening
Critical to a successful outcome is consulting with those you'll be working with. The best way to do this is with 1-on-1's. Preparation is imperative:

* Clear your diary and make 1-on-1 times with everyone
* Set expectations via a communication:

* Why you are the chosen one. Set the scene about your role. Stick to the facts
* Purpose of the 1-on-1
* Input expected from each individual. Make it clear that this is a collaborative session and is their opportunity to contribute. You want their input on:

What works well now
What doesn't
What they see as issues and risks
Which things they believe can be improved, why and how
What level of involvement or contribution they're prepared to have / give
What expectations they have of you

* Conduct each session of a base of integrity. Approach each one as a blank canvas and with an open mind. Be firm yet fair. You want to create a collaborative atmosphere. One where trust can be built through honesty and transparency. Let the team know that this is a level playing field and that they have as much, if not more, to contribute as you do.

* Let them talk getting their frustrations out while making sure to bring the session back on track if necessary. It's their opportunity to be constructive and proactively contribute, not just a moaning session.

* Make lots of notes. Paraphrase back what they say to ensure you have understood their meaning correctly. Where you know something is not possible or never going to happen, tell them. There are things you can and cannot influence so don't lead them up the garden path.

* Keep asking 'what else?' until you see in their body language and hear in their words that all is out and on the table.

* Wrap up the session with a definitive statement about what will happen next.

5. Plan for Action
Now it's time to consolidate what you're actually going to do, what you want / need others to do, the milestones that need to be achieved and their timeline, and what approach you're going to take to deliver it all. It's important to invest time and effort here as:

* you don't want to destroy the momentum created in Step 4 by paying lip-service to your new team
* everything you plan needs to remain aligned with the original brief you've been given

Taking all the gathered inputs you can now add your own ideas and opinions to develop a truly collaborative plan. Your delivery style is also critical, though if you've approached Step 4 using the information you received in Step 1, this should already be established and not change radically going forward. Always start how you mean to continue while also being prepared to adapt as situations change.

Don't forget to share the plan! Maintain the momentum you've created and maximise the opportunity for success by communicating what is to be done and the part everyone has to play in it. This clarity of purpose ensures buy-in because everyone in your new team needs you to specify their Step 1.

These 5 Steps are repeatable and work every time. Use them with each new role or situation and we know you will maximise both your and others success.

Deanne Earle is CEO of Unlike Before based near Turin in Italy. Business Consultants and Program/Project managers specialising in organisational change and IT-led projects that are complex in nature or in a state of crisis.
http://www.unlikebefore.com/

Avoid the confusion – join Drive Fusion!

The market is screaming out for a social media site which allows and encourages people to talk to each other socially and professionally. We are at the beginning of a social media phenomenon and there will be many changes to come in the future. Some issues are obvious and can be addressed early. Others will be fixed later during shakedowns. Drive Fusion appeals to business and professional people who want to socialise, communicate and collaborate with their peers without the annoyance of spammers and noise.

There are a number of issues with the most popular social media sites. Those issues are either about the site policy, performance or the functionality. People have to communicate in order to build those relationships. But there are too many spammers and too much noise on sites. There is too much emphasis on technology rather than the needs of users. The ability to connect with the right people is restrictive and often requires payment. The allowed number of connections or invitations are restricted on sites. The messages length is often limited by sites too. The most popular sites are so big and growing so quickly, that performance is often slow and frustrating.
Lots of connections are of little value in themselves. So how do we nurture relationships? There are several main ways of developing relationships with your connections, friends and followers.

• Ask them questions. People like to help. Use ‘Answers’ on LinkedIn and ask open questions in groups and fan pages or tweet your question openly or directly.
• Become a ‘thought leader’ and blog your views, ideas and vision. You will get responses.
• Always be personal in your communication. Use your own name, photo and profile.
• Be consistent on social media sites – same name, profile, photo and professionalism on each site.
• Ask connections how you can help them.
• Get to know people ask them for help! People like to help others! Later as the relationship develops you can ask for referrals and business.
• Use bridge strategies to ease your connections ultimately to your website. Send them first to your blog, group or fan pages.

Drive Fusion is a communication and collaboration site for business and professional people who wish to communicate and collaborate socially and professionally. All invitations are sent to recommended people to ensure spammers are excluded always. Users are encouraged to connect easily and get to know each other. Unsolicited pitching or spamming is outlawed. It is designed to encourage momentum in your communications and has the following exciting features:

• Real time communication
• Create & manage groups
• Cross posting to Twitter
• Track topics
• File sharing
• Long posts
• Highly scalable
• Reporting & statistics
• Add external feeds
• Target messages to individuals, groups or everyone
• Invite users
• Shrink url
• Help & Support team
• Updates via email, IM, MMS and SMS
• Applications connections
• Top class present.ly platform by the award winning Intridea team

Drive Fusion is brought to you by the Drive ERP - http://www.driveerp.com/ and Drive Social Media - http://www.drive-social-media.com/ teams and their 20,000+ connections will be invited to Drive Fusion soon.

Business and professional communities and individuals are welcome to join Drive Fusion.
See you soon!
http://drivefusion.presentlyapp.com/

It’s all about Fusion...

The starting point for any successful social media marketing or collaboration campaign is strategy development. Many questions need to be asked and answered by brainstorming. Some of the key questions include:

• What are the attributes of your best customers?
• Define your brand in terms of the target’s view
• What is it that your brand is / does?
• What is it that you do?
• What is in it for me? (Prospect view)
• SWOT Analysis
• What triggers Customers decisions to buy?
• Define Your Partners
• Who are my competitors?
• How do I measure return on investment?
• What is my sales process?
• Where are my customers?
• Where are my prospective business partners?
• How can we collaborate?

After answering these questions, setting objectives and developing a plan it is time for action. There are many social media marketing tools available and it is important to utilise the most effective and efficient ones. I would suggest the following for starters:

• Twitter
• LinkedIn
• Facebook
• You Tube
• Blogging
• Niche sites

It is important to understand the nature of each tool and its strengths and weaknesses.

Twitter is a microblogging site limiting tweets to 2 or 3 sentences. It has over 20 million users and growing quickly. It is easy to find customers and business partners, as well as joining in conversations. The functionality is limited and the noise and spamming restricts it severely.

LinkedIn is a business professional networking site with about 50 million users. Customers and business partners can be found in groups. Spammers are kept out and the functionality is improving. Building a network is somewhat slow and communications restricted between users.

Facebook has over 350 million users and is growing at half a million per day. It is a ‘business casual’ site and allows users to personalise their business using fan pages. Users can also join groups to help their search for customers and business partners. All profiles are searchable and spreading messages is easy and effective. Facebook has strict terms of service which they enforce seriously. Although it has text chat boxes it is extremely slow at times.

You Tube is the last of the ‘Big 4’. It is a very powerful site for personalising your business with 75 million views per month. Users can have their own channel, load their own and favourite videos, and because You Tube is owned by Google there is a very positive move up the search engine rankings quickly. It’s free and users can even load MS Powerpoint presentations. There is no communication or collaboration tool.

Blogging is a very powerful way to personalise your business. It also enables you to establish yourself as a thought leader in your industry. Blogs should be posted on a regular basis and not too long. They appear quickly in search engine rankings. They are ideal bridges between connecting and directing prospects to your website. Although blogging sites allow comments from readers, blogging tends to be one way communication.

There are over 600 niche social media sites. The easiest way to find one to suit a use is a Google search for ‘keyword’ and ‘social networking’. It is advisable to join only 2 or 3 of these niche sites due to time constraints. These sites are a bit more focused but again communication is slow and this limits collaboration possibilities.

To be successful in exploiting social media tools to attract customers and business partners; and to improve communications and collaboration internally in organisations a systematic approach works best. Begin with developing a strategy followed by establishing a presence on each social media site. Then expand your reach by increasing your following and friends on all sites. A target of 100 new connections per week is easily achievable. Large numbers of connections are of little value in themselves. It is vital to then nurture relationships with speedy and effective communication and collaboration. Finally, once the system is working, it is important to maintain it with good time management and good tools to achieve efficiency.

The weakest link currently is in nurturing relationships. The social networking sites communication tools are often slow, cumbersome and in the case of Twitter full of noise and spammers. Online communities need real time communication tools for users and effective collaboration tools to allow file sharing, long posts, embedded videos, longer posts, built in searching, safety and security, reporting and statistics and highly scalable and much more.....

Both real and virtual online communities can then nurture relationships improving communications, collaboration, lead generation, sales, product development, team working, project success, and customer service.

I’ve just found that tool I’m delighted to announce ....more soon on ‘Drive Fusion’.

Continues soon...

http://www.DriveERP.com
http://twitter.com/John_McGrann

ERP Customers Rule OK?

Recently I blogged about how people drive Enterprise Resource Planning (ERP) systems to success. The tools that leverage superior people performance in turn can enhance the business performance of ERP systems in an organisation. The social phenomenon known as social media marketing can play an important part in ERP performance in the future. Let’s see it from the customer / user perspective.

The social media marketing ‘Big 4’ of Twitter, Facebook, LinkedIn and You Tube together with blogs, websites and intranet pages offer the following possible benefits for ERP customers / users:

• Promoting your site or business
• Improved marketing, PR and customer service
• Powerful strategy to gain connections & knowledge
• Conversations with vendors and ERP experts directly
• Conversations with other ERP customers/ users
• Easy searching of ERP vendors and experts
• Easy searching of other ERP customers/users
• Groups sharing best practises and knowledge
• Personalisation - find people you know, like & trust
• Cost effective marketing solutions
• Obtaining recommendations & references
• Online business meetings
• Intranet pages for ERP user communities
• Ask questions and ask for help

The key objectives for all ERP systems should be:

• Automating processes - achieving cost savings
• Informing stakeholders (reporting) - effective information for competitive advantage
• Educating users and managers - to utilise the full potential of ERP systems
• Transforming the way business is done - use ERP systems to change for the better

Organisations which fail to maximise the potential of ERP systems display similar problems such as heavy customizations, a lack of planning and management, disgruntled users, ad hoc ancillary systems in MS Excel and MS Access, an array of reporting tools, problematic interfaces and are often IT driven. There is a big hole between the users and the applications team in IT. Much disappears down it....

Could it be that just like people, ERP systems need behaviours and attributes to drive them to success? I believe even in successful ERP implementations the Go Live is the half way mark at best.

So what are the drivers for ERP performance success?

In my experience I would suggest the following:

• Actually Managing Oracle Applications
• Successful Change Management
• Leading a Support Team
• Measuring Success and Value for Money
• Data and Information Management
• Customers and Collaboration
• Reporting and Business Intelligence
• Empowerment and Super Users
• Change Control and Value for Money
• Project Management Kept Simple
• Process Improvement

So how can the features, tools and strategies of social media marketing support these drivers? Well a little brainstorming suggests the following.

The search and selection of ERP vendors can be supported by finding and conversing with the vendors’ existing customers about the suitability of their solution. The recruitment of ERP staff and contractors follows the same line.

There should be greater visibility of both ERP strategy and business ownership of ERP systems in the organisation. Greater personalisation and visibility will enable companies to become demand-driven ERP users rather than supply-driven.

Successful change management can be supported by more informal and rapid communications of visions, strategies, online training, online presentations, conversations, and the publication of short term wins. The team can be fired up by a leadership alliance and team of change agents both visible and consistent in their messages.

An effective support team can be enhanced by joining online communities on social media sites around their ERP system. They can listen to their users daily about their pain points. Support updates, training tips and system downtimes can be communicated by text or video. They should use Intranet forms for support service requests ensuring requests reach support analysts almost immediately.

Both technical and business performance can be measured, published, discussed, and improved using online communities. Such communities can undertake their own benchmarking initiatives covering ROI, service requests, customer analysis, efficiency analysis, change requests and the efficiency and effectiveness of ongoing training provision including online delivery.

Business process, data and information management best practises can also be published and discussed in social media groups and intranet pages.

It is so important to clearly define your customers and users. Then collaborate with these colleagues in organisations using engagement models and custodianship models. These define clearly and consistently engagements, roles, responsibilities, duties etc. Using social media tools can enhance communications and teamwork especially between the business and IT.

ERP Reporting and Business Intelligence are minefields which again need the collaboration of the business and IT. The healthier and more personalised this relationship it will surely improve the chances of clearly defining requirements and jointly seeking optimal solutions from vendors.

ERP Super Users can enhance their teamwork, training and education using social media tools. This should help fill the hole between IT and the business. There are many resources available out there to be consumed, discussed and shared in their communities. Their customers including users, managers, auditors and other stakeholders can join in these conversations.

Organisations can improve change request control and securing value for money processes by increasing visibility and inviting rapid feedback from all functional analysts and business colleagues too.

Project management can be kept simple and more effective by building relationships between all stakeholders; and using online meetings and social media tools to enhance communications, project reporting, asking for help, mitigating risks and fixing issues.

Social media marketing is about personalisation - people talking to each other and nurturing relationships. People working and doing business with those they know, like and trust too. There is greater participation, openness and willingness to help. There are many tools which can be utilised such as forums, groups, fan pages, profile searches, recommendations etc.

Organisations need to have a social media strategy which leverages the benefits and mitigates the security and PR risks; and manages changing relationships with vendors. The costs of social media marketing are a fraction of the potential rewards.

There are real cost savings out there to be gained from improved ERP selection, recruitment of resources, and fiercer and fairer competition between ERP vendors. A highly motivated IT and business alliance can leverage the drivers of ERP performance and drive greater value from ERP systems.

Continued soon...

www.DriveERP.com

http://twitter.com/John_McGrann

Out of the Chaos

The social media marketing revolution is rising slowly out of the chaos reigning on sites such as Twitter, Facebook, LinkedIn and YouTube. If you thought the internet was always a minefield of dubious quality resources to help your your business then try these social media sites. Over 300 million subscribers are scrambling about these sites, self educating and doing what the internet never really allowed before. People are talking to each other.

And better still their contributions are welcome too. On personal and professional platforms there is openness. There is a huge amount of information available to subscribers and a whole range of subjects. People are connecting with each other on one or more sites. It’s happening on Twitter for micro-blogging, Facebook at a personal or business casual level and LinkedIn at a more formal business level. YouTube brings people to life using video. There are many more niche sites too.

So how can all of this activity help me in the ERP world or you in your business? Social media marketing with the right strategies will: positively promote your business; support effectively your marketing, PR and customer service efforts; generate increased website traffic; generate connections and attention globally; and ultimately bring leads for your products and services.

Those who use online social networks are three times more likely to trust the opinion of others in their network than traditional advertising when it comes down to making a decision about a purchase. It’s all about knowing people and people knowing you too. It’s about personalisation.

I’ve built a network of 13,000 professional connections, a 1200+ member professional ERP group, researched and trained in this new social phenomenon for the past year. I’m taking on clients in the IT sector and more. I am loving it!

Continued soon...

www.DriveERP.com

http://twitter.com/John_McGrann

Seller Beware!

I was at the back of the queue when they were handing out mobile telephones. In fact, I wasn’t even in the queue... My first one was thrust upon me by a rather insistent Czech lady Martina who told me I had to have it to do my job as a project manager. After a little training and a lot of anxiety I learned how to make and receive calls. Then I worked out how to send text messages. Ten years later I have progressed little.

My problem was I didn’t want the mobile phone. I couldn’t see the benefits. I thought it was going to cost me money and a lot of anxiety, especially if I lost it. In this case I had to take it but often in hard sell situations my resistance is total and formidable. No insurance, car or real estate salesperson is going to force me to buy something that I don’t want and many of you surely are the same.

Because when I am looking to spend my hard earned (relatively) dollars I want to be treated with courtesy, honesty and respect. In fact I like to buy from people who I like and trust too. It matters not if it’s a personal or professional purchase.

There is a global social revolution taking place all around us which is impacting how we will buy products and services in the future. It’s chaos at the moment and many people don’t understand how it works and its implications. This time I’m at the forefront of change and loving it.

It’s time for buyer power – bring on the social media marketing revolution!

Continued soon....

www.DriveERP.com

http://twitter.com/John_McGrann