Enterprise Software Success Myth #3

FreeBalance is a medium-sized Independent Software Vendor (ISV) with considerable success competing against very large Enterprise Resource Planning (ERP) vendors. We are sharing 16 lessons learned by bucking conventional wisdom to encourage industry innovation and creativity.

Conventional View

Large enterprise software companies frequently introduce new products and upgrade existing products. These introductions are presented, by these companies, as innovations. There seems to be increasing “innovation” hyperbole coming from the larger ERP companies. This innovation is rarely incremental innovation and never disruptive innovation. In fact, minor feature enhancements are presented as innovation.

Symptom

The enterprise software market business model is being disrupted through cloud computing, open source, social media – factors that Gartner calls the Nexus of Forces , what Altimeter calls Four Disruption Themes for Business and Constellation calls Engagement Systems.

Emerging Trends

• Enterprise software and ERP companies are witnessing a slow-down of “organic” growth.
• Enterprise software and ERP companies continue to acquire additional companies to overcome innovation limitations
• Innovation such as open source, open systems , cloud computing and new architectures challenges existing business models and supply chains. This often leads to the “The Witch is Dead” phenomenon of killing internal innovation in larger companies

FreeBalance Approach

Small and medium sized software companies that do not innovate do not last long. Our approach to innovation differs from what I’ve witnessed in larger companies:

• Innovation is not just about product because there are innovation opportunities in process including services, methodologies, go-to-market and business models. More modest-sized companies can focus on unbeatable products and services.
• Larger companies build proprietary technology in order to increase “intellectual property”. This technology is sometimes arguably incrementally better than commercial or open source alternatives but provides little additional value to customers. This is especially true of middleware that has rapidly become commoditized. FreeBalance focuses on the value provided in the applications seen by users.
• We make no claim that feature enhancements are “innovations”.
• Our focus for incremental innovations is to determine how to reduce the Total Cost of Ownership experienced by customers. That means looking for better ways to configure and adapt software easily to meet unique government and language needs. It also means finding ways to reduce the maintenance footprint and upgrade costs.

Doug Hadden, VP Products

Salesforce.com presented a vision for the “customer company” yesterday “live from New York”. A muddled vision. To be fair, far more articulate about customer centricity than what we hear from traditional ERP vendors. I tweeted throughout the event and curated some tweets.

FreeBalance is a Salesforce user, particularly for customer support as a mini multi-national corporation. We have developed processes designed to improve customer-centricity. And, Salesforce tools like dashboards and Chatter are used with commercial and open source tools to enable our global business. We’re also a technology company so have some unique insight here.

The Customer Company Journey

Salesforce explicitly links social technology with being a customer company. Technology, as we have found, enables a customer company – but is not necessary to become a customer company. Leaders in customer companies recognize that the notion of “customer intimacy” as a business model has been around for some time. The technology implications of this trend has been well-known since the 90’s as one of the disciplines of market leadership. from Michael Treacy and Fred Wiersema. The trend towards customers having more leverage in the power relationship with businesses was articulated by Regis McKenna and Patricia Seybold . Not to mention how Geoffrey Moore identified the stages of the technology adoption cycle where customer-centricity was critical to success. And, the work of Peppers and Rogers at the time.

I’m saying that Salesforce is joining the party late. That’s because social technology, as Salesforce rightly point out, is changing the nature of how companies communicate with customers.

The important point is that using social technology does not a customer company make.

Organizations need to build a strategy of customer centricity (or citizen centricity). Processes of engagement and measurement needs to change. And, organizations need to constantly adapt processes to do what’s best for the customer.

Salesforce Customer Company Vision – the good, bad and ugly

Salesforce has got some compelling tools to enable customer companies. Yet, these tools can be also used by non-customer companies to generate revenue and profitability with little or no regard for the customer. As you will see below, I became increasingly distressed during the webcast about the examples used by Salesforce that seemed to include concepts such as:

1. Prioritizing services to customers who have more social media impact than those who do not
2. Leveraging technology like big data and predictive analytics to sell more with little regard to customer privacy
3. Use of social technology as if it was broadcast – using it as sales and damage control channel rather than a customer engagement channel
4. Manage marketing campaigns for shampoo or television programs without any concern of whether these products are valuable for customers
5. Facilitate getting out the vote for an election rather than for continuous policy engagement with citizens

The best event example was the way in which a small jewellery business customizes products for customers. And, the notion of having relatively (for Salesforce) small events for customer engagement is a good customer-centric strategy. After all, Enterprise Software companies tend to be mute about new products and services until the annual user conference/shindig/media/hype event.

It has been my experience that Salesforce is far more open in customer engagement than traditional Enterprise Software companies. I’ve had engagement at a Cloudforce event and had a feature request for Chatter picked up via twitter. And, tweets with the #SalesforceLIVE hash tag were shown on the webcast event site whether positive or negative. As I’ve said before, social is was social does and Salesforce uses social channels for engagement.

Advice for Salesforce

1. Better vision articulation to separate the technology from the strategy
2. Advice on the why and how of customer centricity
3. Speakers at events who have researched this business model
4. Examples of customer engagement rather than customer manipulation at events
5. Use of customer surveys and feedback live




Salesforce muddled "customer company" vision

As a small global multi-national, FreeBalance leverages Salesforce software for sales, marketing, support and collaboration. Salesforce provides an important tool set that enables us to be customer centric.

Storified by · Tue, Feb 26 2013 14:15:52

It’s not that Salesforce doesn’t suspect what a “customer company” is or is being disingenuous. They have good ideas and have some insight into what makes a customer intimate company. But, the market is weighted by the large companies. And, Salesforce is a technology company (as we are) that can often confuse the difference between function and technology.
Are you customer obsessed? That’s the nature of a ‘customer company’ says @Benioff. http://salesforce.com/live #salesforceLiveSalesforce Live
#salesforceLIVE @Benioff: a Customer Connected, Listening, Focused, Obsessed, CompanyKevin Marks
The customer revolution #salesforcelive http://yfrog.com/oewv7omejMichelle Hunter
Rather than continue through the Storify, you can just read Ray Wang’s 140 character analysis.
#salesforcelive messaging sounds like… http://tinyurl.com/b6eadg7 #frontoffice is back #b2b and #b2c is dead. #custexp is kingR Ray Wang
In much the same way that Salesforce stumbled when trying to trademark “social enterprise” (and it’s OK to me that they stopped that), the company is tripping over what it means to be customer-centric. I watched the webcast from New York on Tuesday and say the good (really customer-centric) and the bad (not customer-centric)
Love the way @benioff gets off the stage and walks among the audience #salesforcelive http://twitpic.com/c72c9nGavin Heaton
@ldignan #Salesforce a bit confused about what ‘customer company’ is all aboutFreeBalance
First the good: the connection between being a customer company and doing “good”. And, engaging and listening. Most importantly – the recognition that the customer can fire you.
.@benioff: #philanthropy is the greatest drug I’ve takenFreeBalance
RT @kevinmarks: #salesforceLIVE @Benioff: Eight questions to become a customer company: http://pic.twitter.com/v4Nk4oGKqbBenjamin Reid
.@Benioff is right that all industries (& government) ready to be disrupted through customer centricity #SalesforceLIVEFreeBalance
We may be connecting – but HOW are we connecting? It’s all based on trust says @benioff #salesforceliveGavin Heaton
RT @SalesforceLive: Customer companies don’t just create satisfied customers, they create evangelists. #salesforceLIVEDave Humphrey
yes, #SalesforceLIVE: in the biz world, the client can fire you at any timeFreeBalance
#SalesforceLIVE: swarm around cases in service #cloud (we call that a #SWAT team)FreeBalance
#salesforcelive “the client can fire you anytime by moving to someone else”Kevin Marks
compelling #SalesforceLIVE @Benioff idea of the "social" front officeFreeBalance
Well done @Benioff giving stage time to SMB’s. Now just get one admin up there to give us a brief look behind the curtain. #salesforceliveSteve Williams
.@benioff on advantages of "smaller forums" to engage customers during year #SalesforceLIVEFreeBalance
And, the bad. The examples and verbiage related to the old way of business. Of broadcast rather than engagement. Don’t get me wrong, there is a value for old school companies to make customer processes more efficient and effective. It doesn’t make these companies “customer companies”.
This is where I started this “Sorry #SalesforceLIVE” when the company or example was outside the parameters of customer centricity.
IMO, find this notion of #NBC talking about "properties" seems very, very #oldmedia #SalesforceLIVEFreeBalance
@freebalance: LOL. Paying for TV that has commercials is very old media. ( #salesforcelive live at http://salesforce.com/live)Graham Knowles
sorry #SalesforceLIVE, #NBC #oldmedia ability to sell advertising vs. #NBCfail = really bad exampleFreeBalance
sorry, #SalesforceLIVE: being a customer company much more than reacting to problemsFreeBalance
sorrry #SalesforceLIVE: having efficient support #cloud not necss customer-centricity b/c have to accept inefficiency of doing right thingFreeBalance
sorry #SalesforceLIVE, customer company has nothing to do with engaging only with influential customers, it’s about doing right thingFreeBalance
you know that marketing campaigns about the Beeb is all about being a customer company #SalesforceLIVEFreeBalance
apparently in a "customer company", you only care about customers with immediate impact rather than what’s the right thing #SalesforceLIVEFreeBalance
creepy #MinorityReport moment? @Benioff recommends that stores know what you’ve bought wehn you walk in the door #SalesforceLIVEFreeBalance
#MinorityReport & #Burberry as a value proposition may not be so with many #SalesforceLIVEFreeBalance
#SalesforceLIVE LOL moment: spiffs. that’s 21st Century ‘customer company’ stuffFreeBalance
sorry #SalesforceLIVE, identity, #bigdata & #custserv tech doesn’t a customer company make it’s more profound than thatFreeBalance
@kevinmarks ie opinions & actions in battleground states help win election but this isn’t citizen centricFreeBalance
also, #SalesforceLIVE – customer companies respect identify & #privacyFreeBalance
Then the ugly: assuming that customer centricity is a new thing. It’s the notion that technology will immediate change the business DNA. (Or pave the cow path.)
My takeaway from $CRM’s unveiling of "Become the Customer Company": ad interruptions, black box targeting are passé #salesforceLIVE [1/2]christine nakatani
sorry #SalesforceLIVE, being a customer company isn’t new (1 of the 3 possible "disciplines of market leaders" http://www.amazon.com/Discipline-Market-Leaders-Customers-Dominate/dp/0201407191/ref=sr_1_1?s=books&ie=UTF8&qid=1361906743&sr=1-1&keywords=discipline+of+market+leadersFreeBalance
becoming, as we are, a customer company is a journey – not a destination, requires customer #innovation #SalesforceLIVEFreeBalance
There are implications to customer centricity for technology. My sense is that Salesforce understands many of the bits an pieces. Somehow Salesforce aspires to be advocates for the ‘customer company’ concept but gets bogged down by technology categories.
mind you, not unusual for tech types to see social change in terms of the bits of enabling tech #SalesforceLIVEFreeBalance
"There are 9 things that are creating the #CustomerRevolution." ~ @Benioff, #CEO, @Salesforce at #SalesforceLIVE http://pic.twitter.com/YfGktSIrWNZachary Jeans
seriously, being a customer company has less to do with tech as enabler + more about process, vision, mandate #SalesforceLIVEFreeBalance
sorry, #SalesforceLIVE, correspondence management has been around since the 80′s (not on the #cloud)FreeBalance
The holy grail of the social enterprise is collaboration, and connectivity/integration, says Unilever’s CIO #salesforceliveCRM
RT @servantofchaos: POV: The internet of things will transform customer experience and Salesforece are onto it #salesforceliveR Ray Wang
brilliant #SalesforceLIVE comment: the ‘Stockholm Syndrome" of #EnSw implementationsFreeBalance
Bruce Richardson: customers no longer want the 3 year #SAP implementation #SalesforceLIVE (tho, don’t have to be the CIO whisperer to knowFreeBalance
no question that #Salesforce marketecture diagram clearer than most #EnSw firms (perhaps b/c of less c/s legacy?) #SalesforceLIVEFreeBalance
.@Benioff: customer companies don’t silo technology #SalesforceLIVEFreeBalance
IMO: #mobile @Salesforce apps more usable/elegant than web versions #SalesforceLIVEFreeBalance
In today’s market, in order to connect with customers "We are all technology companies" @Benioff #salesforceLIVETravis Dion
.@Benioff: we’re all becoming "apps companies" #SalesforceLIVEFreeBalance
We have to respect the struggle Salesforce takes to adjust products and messages. Sure, the company operates in many ways as a traditional enterprise software company with slick PR. But, unlike traditional players, Salesforce engages the community in deeper ways. Case in point: some of my feature requests about Chatter were managed via Twitter.

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Au Royaume-Uni, un projet de 3,7 milliards de dollars américains utilise la plateforme dans le nuage

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FreeBalance recientemente publicó un conjunto de documentos sobre la Administración Pública Financiera (PFM*) siguiendo nuestro mandato de compartir las buenas prácticas con la comunidad. El cuarto documento compartido, adjunto abajo, describe las buenas prácticas en el diseño del Plan de Cuentas de Múltiples años. Puede parecer un tanto extraño que entreguemos algo de naturaleza “técnica” que al parecer no tenga mucho que ver con cómo llevar finanzas públicas. Sin embargo, el Plan de Cuentas (COA*) o “clasificación presupuestaria” es discutiblemente la parte más crítica de un diseño de PFM efectivo.
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*por sus siglas en inglés

What’s new at FreeBalance?

This weekly news update provides the Government Resource Planning (GRP) community with a brief overview of recent FreeBalance developments and relevant industry news.

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US$3.7 Billion Project in the UK uses Cloud Platform

The Education Funding Agency (EFA), the agency under the Department of Education in the UK tasked with providing funding for education and school building programmes, is using a cloud-based collaboration software for its £2.4 billion (US$3.7 billion) Priority School Building Programme (PSBP). PSBP was launched in May 2012 to redevelop and improve school facilities in 260 schools in the UK over five years. The EFA is responsible for managing procurement for the project and minimising cost. The agency adopted a cloud and web-based platform from Huddle to manage the large number of bidders and consider each bid separately.
Read the full article >>

Doug Hadden, VP Products

The evidence mounts – ERP has a high failure rate in government. ERP vendors, whose software is written for multiple industries, suggest that combining multiple ERP instances into a single shared service will result in “economies of scale” savings. And, it has a grain of truthiness, but, as I’ve written before, it is very much the promise of “free beer tomorrow”: this magic point at which ERP provides a better value than using best-of-breed like the FreeBalance Accountability Suite never happens.

KPMG found in 2011 some ERP in government patterns:

• Budget overruns particularly in implementation where additional software customization was needed: typically 6 months to a year
• Only 57% of implementation projects stayed in budget
• Many survey participants could not recall the original budget

A recent article from the UK describing a Cabinet Office analysis found:

• Average cost to deploy a Tier 1 ERP is £160 per employee using the traditional method
• Theoretical cost to deploy via shared services is  £93 per employee
• Use of lower cost solutions at £52 per employee

The Total Cost of Ownership (TCO) should be a critical concern in government technology procurement. Although “portfolio management” is a value proposition presented by ERP companies, our experience shows that up-front costs have little bearing on the total cost. Tier 1 ERP packages generate high costs for customization, maintenance, change and training. It’s not a good business case as I described back in 2009 (and tried my best to explain the value proposition of ERP in government as objectively as I could.)

Background

FreeBalance completed a survey at the Government Technology Exhibition and Conference (GTEC), November 5 to 8 2012 and the Financial Management Institute of Canada (FMI) Professional Development Week, November 27 to 30 2012.Both of these conferences were held in Ottawa.

FreeBalance is based in Ottawa and has been a supplier to the Government of Canada since 1984. FreeBalance is a specialist vendor in Public Financial Management with enterprise-class Government Resource Planning (GRP) implementations in governments around the world. This includes some countries where FreeBalance software runs all transactions at the federal level of government and some countries where FreeBalance software runs all government transactions at every level of government. We do not consider FreeBalance to be an Enterprise Resource Planning (ERP) vendor because FreeBalance does not provide solutions outside of government.

Survey Results

There were 207 respondents to the survey held at FreeBalance exhibits. The majority ofthe respondents were public servants in the Government of Canada. More than half ofthe respondents have had hands-on experience with FreeBalance and ERP software.

Technology Country of Origin

The majority of respondents believe that the Government of Canada should favour the acquisition of technology from Canadian companies or select the best solution regardless of country of origin.

Analysis

• No one selected “foreign large technology” as a option
• Survey results from public servants significantly contradicts government policy
• FreeBalance has been highly successful winning GRP contracts in competitive situations against the largest ERP companies, and, therefore, requires only a “level playing field” in Canada

Technology Procurement

The vast majority of respondents believes that any Government of Canada technology procurement made in the 1990s should be re-evaluated.

Analysis

• Survey results from public servants significantly contradicts government policy
• Use of legacy procurement decisions from around 15 years ago adds significant risk to enable the Government of Canada to achieve “value for money” in the procurement and maintenance of financial management systems
• There have been numerous changes in technology platforms in use in financial management systems since the mid 1990s when very few systems were even web-enabled
• It should be noted that, in the most recent versions for financial management software in use by the Government of Canada, only FreeBalance provides a pure web solution

• 1980-2000: The era of Mainframe and Personal Computer – based financial management software
• 1985-2005: The era of Client/Server software operating with different “fat” clients connected to PC and mini-computer servers
• 1995-2015: The era of Hybrid Web through the use of client/server base software that is web-enabled through translation layers and plug-ins or operate a fat clients via web protocols
• 2005-2020: The era of Pure Web financial management software using web infrastructures to support Cloud Computing and Shared Services without the architectural limitations of Client/Server infrastructures

How does the Total Cost of Ownership (TCO) for FreeBalance compare to Leading ERP Vendors?

Over 70% of respondents believe that FreeBalance software has a much lower TCO in government financial management than ERP. Almost 70% suggested that the FreeBalance TCO was between 10 and 50%.

Analysis:

• TCO is a critical calculation to determining the “value for money” in government procurement
• Software with the lowest TCO that is compliant to government needs will reduce costs
• The software license and maintenance costs represent an insignificant factor in TCO when compared to equipment, training, staff retention, software changes and version upgrades
• The assessment of public servants on TCO is similar to our analysis of quoted prices in international bids (where bid prices are publicized) that shows that the average FreeBalance turnkey price is almost, on average, half major ERP vendor prices

How Should FreeBalance react to ERP Government Failures

Two out of every three respondents recommends that FreeBalance publicize failures of ERP software in government. Over 85%  of respondents with an opinion recommended that FreeBalance publicize ERP failure in government.

Analysis

• There are numerous ERP failures, cost overruns, late deliverables and inability to achieve planned benefits in government
• A disturbing number of these ERP failures have become public
• In the interests of transparency, FreeBalance will continue to publicize ERP failures in government and provide analysis

Doug Hadden, VP of Products

It’s the last day of the Financial Management Institute Focus on Value Professional Development week in Ottawa. This is a government conference – check out the #pdweek hash tag in twitter. The use of shared services in the Government of Canada, especially the Shared Services Canada department, has been the subject of numerous speeches and presentations. And, numerous side conversations.

The concept of achieving economies of scale to improve efficiencies has a lot of merit. I was initially surprised when Gartner Group analyst Andrea di Maio expressed concern about the realism of the shared services objectives by the Government of Canada. That was before the new organization was created. I have to say that I’m beginning to understand the severe challenges that the government is facing.

Here are few:

• Data centre consolidation increases communications latency and system resilience increasing the risk a system-wide failure (there a failures in major public cloud services that have far more redundancy than envisioned by the Government of Canada)
• Centralized data centres can increase the impact of security breaches
• Governance issues such as “streamlining governance” that can result in loss of service quality
• The high costs and low service that was part of voluntary shared services prior to 2012 may not be solved by having mandatory shared services
• Back-office consolidation increases possibility that unique legal requirements needed for individual departments cannot be accommodated
• Loss of IT personal to the shared services organization results in departments requiring to outsource to the private sector for what they once did in house
• Managing standards and exceptions to those standards provides orders of magnitude larger governance burden than the status quo
• The use of inflexible legacy systems – “rust” – such as legacy ERP programs that use proprietary client/server languages add significant costs
• Value-for-money oversight when the shared services organization is the financial, technical and security authority for itself

Part 3: Capacity Building

Demographic changes means need to build civil service capacity in Canada

Doug Hadden, VP Products

This is Part 3 of 6 parts detailing the content in my Financial Management Institute of Canada lunch presentation What can we learn about Sustainability from Developing Nation Governments?

Civil service capacity and public financial management sustainability

The lack of civil service “capacity” or the need to improve “capacity” is a consistent theme when diagnosing public financial management problems in developing countries. In a recent post on the International Monetary Fund PFM Blog, Capacity Building and Why Reforms Fail, David Gentry opens with: “Rarely can you find a technical assistance related document that does not refer to the need for capacity building.” Civil servants need the proper skills to implement government programs.

Developing nations are modernizing PFM processes rapidly. Sustainability, in this context, extends beyond implementing and maintaining PFM policies competently. Civil service skills need to improve as more sophisticated processes are introduced.  In 2009, Sailendra Pattanayak, in the IMF PFM Blog, describes the Sustainability in PFM Capacity-Building in Post-Conflict Countries challenges including “general shortage of appropriate financial management and accounting skills” and the over-reliance on advisors. Peter Murphy in 2011, also in the IMF PFM Blog, in Who is “driving” the IFMIS?, describes the “classic public sector problems of retaining specialist ICT staff” and the problems associated with contracting critical Information and Communications Technology (ICT) support. This problem is particularly acute in developing nations with limited human capacity.

Civil service PFM capacity: a problem in Canada?

Canada has a high human development index. The Conference Board of Canada has found that Canadian education is effective. The OECD ranked Canadian education as one of the best in the world. Universitas 21 ranked Canada third in world colleges and universities. Legatum ranks Canada 10^th in the world for education. Where is the civil service capacity problem?

Demographics and the long-term results of public policy.

The baby boom in Canada means that there significant numbers of public servants approaching retirement. This “exodus” from the public service has created a knowledge “brain drain”. And, budget cuts are eliminating more jobs. This creates uncertainty among civil servants who seek out private sector positions. And, it means that the public service is no longer an attractive option for university graduates. Yet Public Financial Management is becoming more complex in Canada including initiatives such as:

• Accrual accounting
• Management for results
• Performance management frameworks
• Risk management approaches
• Balanced scorecard
• Increased transparency
• Spending reviews

Cloud computing may be part of the solution

It can be argued that IT capacity in government inhibits automation and innovation. Governments can become stuck with legacy technology, often called “rust”. In 2010, the Auditor General of Canada identified the dangers of “aging information systems”. That’s why the call for cloud computing by former US Government CIO, Vivek Kundra, seemed so attractive: eliminate rust and reduce the IT maintenance footprint.

Governments are reluctant to farm out many back-office functions to the cloud because of privacy and security concerns. So, governments attempt to achieve cloud computing economies of scale through “private clouds” or “shared services.”

Shared services has had mixed results especially in reducing the need for highly skilled personnel.

The capacity to manage an “elastic” fault-tolerant infrastructure requires significant capacity. And, the governance of shared services requires orders of magnitude more capacity than departmental systems. The Gartner Group concluding that “shared services” is on the descent to the trough of disillusionment.

Some governments leverage Enterprise Resource Planning (ERP) software for private clouds. ERP software is complex to use and manage. Code customization is frequently required to achieve government requirements. And, this software was not designed for a cloud deployment. Some economies of scale in IT capacity can be achieved relative to numerous on-premises implementations. However, this approach does not make the ERP software easy to use. And, the customization requirement often means retaining or contracting for expensive staff. The software bloat described in the previous post also adds to complexity: more features to learn and more IT infrastructure to management than is necessary.

IT capacity building

Capacity building is a fundamental to sustainability – the Total Cost of Ownership (TCO).That’s why there is significant attention to capacity building in turnkey Government Resource Planning (GRP) requests for proposal. The intent is to achieve government self-sufficiency regardless of the method for deployment which, in developing nations, is typically a shared service.

Turnkey PFM requirements, described in the last post, for developing nations include the following:

• Implementation of on-site help desk with government personnel that are familiar with the IT systems and the processes in use by the government
• Large training programs designed to keep a cadre of experts even in situations where there is a high turnover in the public service
• Expansion of training programs beyond the software to core PFM and IT training
• Change management focus to ensure that capacity building precedes reform
• Mentoring programs including making knowledge transfer from contractors a condition of employment
• Use of knowledge management, e-learning and adaptable help systems that include all policy manual and courseware information

Capacity in human resource systems

Developing country governments are beginning to use human resource management, or civil service management, software. The key objective for using software for civil service reform is to improve government capacity. Skills are identified and talent management queries are used to discover civil servants poised for career advancement. This can be accomplished across the entire public service. Training programs with schedules are published to self-service portals. This affords “technology leapfrog” opportunities to leverage critical advanced talent management software functions.

FreeBalance approach to capacity building

Many will argue that the software vendor has no place in capacity building. Software vendors build software. Consultants implement these solutions and are responsible for building capacity. Our business methods have been adapted to the PFM domain.

FreeBalance moved from a product-centric to customer centric company. Or, more accurately, continues the customer centric journey. The motivation came from realizing that there was an unmet need in making GRP software sustainable. The disjointed nature of what software vendors, systems integrators and training companies deliver meant there was a sustainability gap. New processes were required to overcome this gap. As a for profit social enterprise, we realized that someone had to be responsible for customer sustainability. No one else seemed to accepting the challenge. This “thinking outside the box” or traditional business methods is part of the maturing of Corporate Social Responsibility (CSR) where CSR is the core company mandate.

My sense is that governments in more developed countries can also make use of the capacity-building product features such as adaptable help and talent management. And, the training and mentoring that is part of our Integrated, Iterative, Implementation and Quality Methodology (i³+qM).

Capacity and self-reliance

It may be curious that FreeBalance measures self-reliance as part of our balanced scorecard. In other way of looking at this, we count score our ability to reduce our long term services revenue opportunity from customers. Some of the measurements we use are:

• Customer satisfaction rating includes important questions on whether customer thinks implementation is sustainable – it doesn’t matter how happy a customer is with FreeBalance, if the implementation isn’t sustainable, we’re not happy
• Number of Customer Exchange members, an invitation-only social network, to enable interaction among customers
• Targeted percent of services work by local or regional staff rather than from other regions. The need to bring in FreeBalance consultants from different regions means that we are not building FreeBalance capacity close to our customers.
• Number of FreeBalance SWAT teams required to overcome customer mistakes with our software. SWAT teams are formed whenever there is a significant customer problem. The team is cross-functional and includes executives to ensure the highest priority. Sometimes the problem is generated by improper knowledge of the software or underlying IT infrastructure. If so, we’re not building customer capacity.
• Targeted number of training days per country. This measure is to ensure that capacity is maintained in governments because there can be high civil service turnover.

Doug Hadden, VP Products

There’s more disturbing news from ERP vendors: charging customers for “indirect usage”. Dale Blake, the CEO of UpperEdge suggests that one particular ERP vendor is taking advantage of customers by “predatorily squeezing fees from their customers, and worse, seizing the opportunity to reduce flexibility and promote an anticompetitive environment.” This particular ERP vendor is charging customers for interfacing or using data in 3rd party systems. A spokesman from the ERP vendor suggests that Mr. Blake is misinformed. Of course, this comes from the vendor who tried to unilaterally increase maintenance fees in 2010. And, the other large ERP vendor has been fighting to eliminate 3rd party maintenance providers while accused of over-charging the United States federal government for software licenses.

Is this a trend? Will we see large enterprise software vendors leveraging market share to extract more revenue from customers – yet deliver less value? It’s ethically disturbing.

Not to mention the strong words like “screwing”, “fraud” and “restriction of trade” used in the articles that I’ve linked to.

My sense is that the ERP business model has become obsolete. ERP vendors can no longer exploit a lack of information in the market. Customers know that middleware is a commodity, that cloud services can be far more efficient, that proprietary technology is overly expensive and that many customers are negotiating for lower maintenance fees.

Hidden costs are no longer hidden. And, the power ratio is shifting from vendor to customers. (Something that we’ve embraced to generate customer innovation).

Yet, large ERP vendors believe that they own customers. They’ve bought other companies in order to restrict customer choices. They provide a proprietary stack of middleware to increase switching costs. Yet, customers continue to switch to more agile solutions. ERP vendors continue to acquire cloud players, but as analyst Larry Dignan suggests, ” without maintenance and software lock-in, keeping customers may be a bit trickier.”