March 2014 NEXT GENERATION ERP: KENANDY’S APPROACH CHANGING THE WORLD OF ERP, ONE CLICK AT A TIME What do Star Trek and Enterprise Resource Planning (ERP) have in common? Apart from each being a bold adventure, both have experienced a rebirth as a next generation. In recent reports, Mint Jutras describes the next generation of ERP in terms of new technology that enables: • new ways of engaging with ERP • custom configuration without programming • more innovation • better integration The next generation of Star Trek continued the original journey but was faster, more technologically enabled and more in tune with the evolving needs of the galaxy. When Sandy Kurtzig came out of retirement in 2010 and founded Kenandy, she may not have been thinking about Star Trek but she clearly wanted to explore new worlds in her entrepreneurial journey and boldly go where no ERP for manufacturing has gone before. Using new technology, Kenandy designed its new ERP from scratch with a singular purpose in mind: to deliver a robust solution quickly that would also keep pace with the rapidly changing world in which we live. DOES KENANDY QUALIFY AS NEXT GENERATION ERP? Not every ERP solution on the market today qualifies as a “next generation” ERP. The depth and breadth of functionality has increased over the past three decades, which makes it harder for a new entrant to compete in the market. The “basics” are table stakes, but they aren’t so basic anymore, particularly in the world of manufacturing where Kenandy hopes to compete. While other industries might be able to survive with back office functionality that is limited to accounting or human resource management, manufacturing requires a much broader set of features and functions. Indeed, ERP for manufacturing has evolved from material requirements planning (MRP) to manufacturing resource planning (MRP II), to the full operational and transactional system of record of the business. Even the manufacturing of a simple product can be quite complex when you run lean, but strive to be responsive to your demanding customers. Any ERP vendor today must compete on functionality, but that is not what makes a solution “next generation.” It is the underlying technology and the Data Source In this paper, Mint Jutras references data collected from its 2013 and 2014 ERP Solution Studies which are used to investigate ERP goals, challenges and status and also to benchmark performance of ERP implementations. Over 350 responses were collected for the 2013 study. At time of publication, the 2014 survey remains open, with over 425 responses collected. However, as additional data is collected, the percentages shown in this report may change.
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March 2014
NEXT GENERATION ERP: KENANDY’S APPROACH
CHANGING THE WORLD OF ERP, ONE CLICK AT A TIME
What do Star Trek and Enterprise Resource Planning (ERP) have in common? Apart from each being a bold adventure, both have experienced a rebirth as a next generation. In recent reports, Mint Jutras describes the next generation of ERP in terms of new technology that enables:
• new ways of engaging with ERP • custom configuration without programming • more innovation • better integration
The next generation of Star Trek continued the original journey but was faster, more technologically enabled and more in tune with the evolving needs of the galaxy. When Sandy Kurtzig came out of retirement in 2010 and founded Kenandy, she may not have been thinking about Star Trek but she clearly wanted to explore new worlds in her entrepreneurial journey and boldly go where no ERP for manufacturing has gone before. Using new technology, Kenandy designed its new ERP from scratch with a singular purpose in mind: to deliver a robust solution quickly that would also keep pace with the rapidly changing world in which we live.
DOES KENANDY QUALIFY AS NEXT GENERATION ERP?
Not every ERP solution on the market today qualifies as a “next generation” ERP. The depth and breadth of functionality has increased over the past three decades, which makes it harder for a new entrant to compete in the market. The “basics” are table stakes, but they aren’t so basic anymore, particularly in the world of manufacturing where Kenandy hopes to compete.
While other industries might be able to survive with back office functionality that is limited to accounting or human resource management, manufacturing requires a much broader set of features and functions. Indeed, ERP for manufacturing has evolved from material requirements planning (MRP) to manufacturing resource planning (MRP II), to the full operational and transactional system of record of the business. Even the manufacturing of a simple product can be quite complex when you run lean, but strive to be responsive to your demanding customers.
Any ERP vendor today must compete on functionality, but that is not what makes a solution “next generation.” It is the underlying technology and the
Data Source In this paper, Mint Jutras references data collected from its 2013 and 2014 ERP Solution Studies which are used to investigate ERP goals, challenges and status and also to benchmark performance of ERP implementations.
Over 350 responses were collected for the 2013 study. At time of publication, the 2014 survey remains open, with over 425 responses collected. However, as additional data is collected, the percentages shown in this report may change.
Next Generation ERP: Kenandy’s Approach Page 2 of 11
power it delivers. But technology and functionality are closely related, because it is the power of the technology platform that allows solution providers to deliver more features and functions faster. Selecting the right platform on which to build ERP is therefore critical.
While the platform may not be immediately visible to the end user of the software, it is dangerous to ignore it and the power of technology. You probably never knew how the USS Enterprise achieved warp speed, but you knew that it could. You didn’t know how the transporter beam worked, but you knew what happened when Captain Kirk said, “Beam me up, Scottie.” While neither were the only ways to get from point A to point B, both added speed and efficiency.
While Kenandy chose to build an ERP solution from a clean sheet of paper, in order to compete, it needed to find a way to add both speed and efficiency to the development process. Kenandy chose to build on the Salesforce Platform to deliver both. And in doing so, its customers also benefit from speed and simplicity, which together yield efficiency.
ERP: EMPOWER REAL PEOPLETM
Speed and efficiency are prerequisites for delivering on the first element of next generation ERP: providing new ways of engaging with enterprise software.
Traditionally, users have engaged with ERP through a hierarchical series of menus, which require at least a rudimentary knowledge of how data and processes are organized. Hopefully this organization reflects how the business processes and the enterprise itself are structured, but with a hierarchy of menus, there are no guarantees that navigation is intuitive or that business processes are streamlined and efficient.
When processes within ERP are clumsy and inefficient, employees spend more time trying to work around the system, rather than working with it. Cynics like to refer to ERP not as “enterprise resource planning”, but as “Excel runs production.” Sandy Kurtzig strives for a different goal where ERP stands for “empower real people.” For that to happen you need to reach both up and down the corporate ladder.
Traditionally, a small percentage of employees of any company ever put their hands directly on ERP, and this select group almost never included top-‐level executive decision-‐makers. But the speed of required decision-‐making and the consumerization of IT are making this unacceptable.
While the percentage of employees with direct access to ERP used to be very small, Mint Jutras research shows that today that percentage is holding steady at about 50%. And we are also seeing evidence of increased executive engagement (Figure 1). While in the past it was very unusual for top-‐level
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executives to lay their hands on ERP, the 2013 ERP Solution Study signaled a change with almost half of participants (47%) indicating top-‐level execs have access to and use ERP regularly. Preliminary results from the 2014 study show this trend continuing, with a 30% jump in executives with full access to ERP.
Figure 1: Executive Access to ERP
Source: Mint Jutras 2013 and 2014 ERP Solution Studies
So how does Kenandy empower real people? It relies on the Salesforce Platform to deliver a user experience that is appealing to the younger work force that has grown up on the Internet. And in making the solution appealing to the millennials, it also makes it easier for the older crowd to use. It recognizes there are “mobile” and “social” users as well, both of which are addressed by the platform.
The Salesforce Platform provides a simple user interface, using a single screen approach. Its popularity with (non-‐technical) sales teams (using Salesforce) is a tribute to this simplicity. No sales person is going to read a manual. If it is not intuitive, it doesn’t get used. And yet more and more companies today are successful in requiring the use of sales force automation (like Salesforce) as a prerequisite for getting paid. No opportunity in the system means no commission.
And yet ERP is not sales force automation. While selling is not necessarily easy, the process of managing contacts and opportunities is far simpler than processes like planning, scheduling and production or managing cash flow. So while ERP can inherit features such as web-‐based access and intuitive navigation, it must go further than this to really provide new ways of engaging a very diverse audience. Different disciplines and different types of users expect different experiences. Those who spend the day heads down doing data entry require the ability to minimize clicks and tabs, search extensively
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and even type ahead. This type of audience might prefer what Kenandy refers to as a “grid design.” On a different note, a sales or support person out in the field, communicating through a mobile device, needs to maximize the value of the limited real estate on a small screen, but still have immediate access to a full view of a customer, including history. And an executive needs a customized collection of key performance indicators (KPIs) displayed graphically, that takes advantage of touch technology to drill down to the detail.
According to Charlie Merrow, CEO of Merrow Sewing Machine Company, a family-‐owned business in Fall River, Massachusetts, Kenandy has brought “unprecedented visibility” to the entire company. “Kenandy lets us see what is really going on in our business. We have the system running on three 50-‐inch flat screens in our lobby. Plus in each department there is a giant flat-‐screen with dashboards showing what is going on in that particular area – how many invoices need to go out, what packages are shipping, what products are in production. We’ve never had access to this breadth and depth before. It’s really extraordinary, and it’s making an enormous difference.”
So Kenandy can be on your desk, on a “big screen” or in your pocket. Not exactly your traditional ERP user experience.
The Salesforce Platform also enables collaboration by connecting people to the business and to information. For years, salesforce.com made a big deal out of its “social” capabilities but the manufacturing community is just now appreciating social. While a hot topic among pundits and industry “influencers,” the perceived value was lost on many, particularly in manufacturing. Traditionalists distinguish between a business event and a social event, between a business conversation and a social chat, between a business colleague and a friend or social acquaintance. Many didn’t “get” that social is really just shorthand for new and improved ways of getting and staying informed in a collaborative way. And who doesn’t want that?
By building an ERP on the Salesforce Platform, these social and mobile aspects are built in. Kenandy doesn’t need to use its own precious development resources for that. It can concentrate on what it knows best: ERP for manufacturing. And yet, in spite of its collective knowledge and expertise, it is important to not develop a solution like ERP in an ivory tower. And therefore Kenandy needs to actively engage not only with its prospects, but also its customers. For that type of engagement, it needs to build an active community.
This was something Sandy Kurtzig’s prior company was very good at – so good in fact that the MANMAN (ASK’s product) community has outlived the company and lives on even today. Can Kenandy replicate this kind of success? Odds are in favor of doing just that. The MANMAN community was built on word of mouth, local and regional user groups and an annual conference. Not
“Kenandy lets us see what is really going on in our business…. We’ve never had access to this breadth and depth before. It’s really extraordinary, and it’s making an enormous difference.”
Charlie Merrow, CEO, Merrow Sewing
Machine Company
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only does Kenandy hope to be able to deliver a full customer list for references (as ASK did for many years), but also has many more tools at its disposal to support that community, including a one-‐stop customer portal (called the Kenandy Community). Its ability to engage with the community either as a whole, or personally, one customer at a time, has never been more technology-‐enabled.
PERSONALIZING WITH CLICKS NOT CODE
The Kenandy team has decades of experience with both ERP and manufacturing. It knows how inherently complex that world can be. While all manufacturers face similar challenges, they also have unique ways of dealing with those challenges, and in doing so, actively seek differentiation in their individual markets. What company today doesn’t believe it is unique in some way?
Being different used to mean customization and with traditional, older generation ERP, this meant programming changes, mucking around in source code and building barriers to upgrade and innovation. To qualify as a “next generation” ERP, most, if not all of this customization must be done without ever touching a line of source code. Configuration, tailoring and personalization should replace customization.
Kenandy likes to say it can personalize with “clicks, not code.” This means adding fields, changing workflows, rearranging the screens. This is an absolute necessity in a Kenandy environment because it is delivered only as multi-‐tenant software as a service (SaaS). In a multi-‐tenant environment, multiple companies use the same instance of (hosted) software. Of course, data is protected from access by other companies (tenants), but any “customization” is generally delivered through configuration settings, which vary per company.
Figure 2: What level of customization do you believe you need?
Source: Mint Jutras 2013 ERP Solution Study
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Mint Jutras research finds multi-‐tenancy is one of those features that most end users don’t understand and don’t necessarily care about. But they do care about the benefits it delivers: massive scalability and flexibility of an elastic cloud. But they are unwilling to sacrifice their ability to be unique.
To better distinguish between configuration and customization, Mint Jutras posed the question to ERP survey participants, “What level of customization do you believe you need?” Respondents were allowed to select any or all of the options presented. Their responses are shown in Figure 2.
Kenandy’s architecture allows you to modify business processes and the user experience, including screens, dashboards and even the device. This doesn’t require programmers. Simplicity and this “Do It Yourself” aspect were among the primary reasons Blue Clover Devices selected Kenandy. These features became obvious to Blue Clover during its trial run of the system.
“I immediately saw how easy it is to add and extend capabilities with Kenandy,” said Pete Staples, President and Co-‐founder. “I was convinced that this was something we could manage pretty much on our own, and that had a strong appeal to us.” While the other system Blue Clover was considering had many positive features, “We felt like we would have to hire them to do everything for us, and that just made us nervous.”
Since implementing Kenandy, Blue Clover has found it easy to add its own customized objects, including samples, test reports and regulatory certificates. These new objects are not only connectable and searchable, but also, all customizations are protected when Kenandy does its upgrades.
Staples goes on to say, “Kenandy is like Legos whereas the traditional ERP systems are more like a stack of lumber and blueprints. With Kenandy, it’s fundamentally easier to put things together and make them work.”
Kenandy also allows you to extend the solution with your own added applications built on the platform or purchase pre-‐built extensions from the Salesforce AppExchange. Merrow Sewing Machine Company did just that, purchasing an extension built on the Salesforce Platform to manage repairs. According to Merrow’s CEO, it was integrated with Kenandy by “one of our smart guys, who doesn’t have a programming bone in his body.”
BEYOND THE INITIAL IMPLEMENTATION While this level of personalization and configuration is important when Kenandy is first being implemented, it becomes even more so as life goes on. Today’s manufacturers are bombarded with change, whether as a result of growth, regulatory requirements or just the desire for continuous improvement. Change doesn’t halt once you implement ERP. In fact, the need for change may accelerate as new functionality and new technology opens doors for growth and improvement.
“I immediately saw how easy it is to add and extend capabilities with Kenandy. I was convinced that this was something we could manage pretty much on our own, and that had a strong appeal to us…. Kenandy is like Legos whereas the traditional ERP systems are more like a stack of lumber and blueprints. With Kenandy, it’s fundamentally easier to put things together and make them work.”
Pete Staples, President and Co-‐founder, Blue
Clover Devices
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And yet managing change has traditionally been an obstacle to achieving the goals of an ERP solution. The 2014 ERP Solution Study found this to be the number one challenge with the vast majority (82%) rating it as moderately to extremely challenging (Figure 3).
Figure 3: The challenge of changes to ERP as a result of business change
Source: Mint Jutras 2014 ERP Solution Study
The ability to handle this kind of change was the primary reason Big Heart Pet Brands (formerly Del Monte Foods) selected Kenandy to support its recent acquisition of Natural Balance Pet Foods. “One of the many reasons Del Monte selected Kenandy was that we wanted a flexible system that easily adapts to business changes, such as acquisitions, while also offering enterprise-‐class capabilities,” said David McLain, Senior Vice President, Chief Information Officer and Procurement Officer, Big Heart Pet Brands.
Kenandy attributes this post-‐implementation agility to the flexibility and extensibility of the platform and Stuart Kowarsky, Vice President of Operations at Natural Balance seems to be a big fan. “At Natural Balance and in our corporate systems, we’re replacing a patchwork of applications with one unified, extensible solution that will grow and scale with Big Heart's needs.”
But Kenandy’s ability to accommodate change is not only attributable to the platform, but also to how it has architected the solution on top of that platform, with a unified data model that takes full advantage of the power of business objects.
“WIDE-‐BODY” OBJECTSTM Legacy ERP solution data models consisted of an extensive number of tables. Joining those tables together reflected relationships between data. For example, a sales order header table might need to be joined to line items. In turn, those line items needed to be joined with the products being delivered, and any number of associated tables for validation, like units of measure, product categories, inventory locations, planning and replenishment codes, etc. The sales order also had to be joined with customers, shipments, and invoices. It didn’t take long for the number of tables and joins to proliferate
“One of the many reasons Del Monte selected Kenandy was that we wanted a flexible system that easily adapts to business changes, such as acquisitions, while also offering enterprise-‐class capabilities.”
David McLain, Senior Vice President, CIO and Procurement
Officer, Big Heart Pet Brands
Next Generation ERP: Kenandy’s Approach Page 8 of 11
almost exponentially, making a change to any one element a labyrinth of changes.
Kenandy replaces that myriad of tables with what it calls a ”Wide-‐Body” ObjectTM architecture. These objects will sound quite familiar: orders, invoices, customers, etc. But by packing lots of information into each object, it significantly reduces the number that needs to be managed. Kenandy has less than 100 Wide-‐Body Objects.
For example, invoice, credit memo and adjustments share similar data structures and therefore can be expressed as a single object, distinguished by embedded fields. Adding fields is a simple process and only has to be done in one place. Changing workflow steps is equally simple because the workflow connects directly to the objects. Also, these Wide-‐Body Objects are reusable and it is a simple process to make these changes by pointing and clicking. No database administrator (DBA) required.
This simplicity is the result of Kenandy’s addition of new dimensions to the objects for:
1. Access: The objects themselves contain information about their relationship to other objects. So when you access a sales order, for example, it “knows” about the products and the customer and all the other related data. This intelligence is built into the object so you don’t have to manage the complexity that can turn what seems to be a simple inquiry into a complex nightmare. How does it do that? It doesn’t really matter. You don’t know how the starship Enterprise achieves warp speed, but you know that it can.
2. Variants: This is how Kenandy reduces the overall number of objects. The invoice, credit memo and adjustment can share a single object and be distinguished as variants. Fewer objects are easier to understand and manage.
3. Lifecycle: A single object can progress through different “states.” A product may be planned, work in progress, completed, or shipped. All of this is captured in a single object container. This has the added benefit of simplifying audit trails and traceability.
This is a relatively simple philosophical design change, although it might take a little effort for an IT department to wrap its collective head around it. But once it does, the implications and the savings potential are impressive. Think about refining or changing business processes to add efficiency. Think about the impact of large corporations going through structural changes, merging or splitting business units. Think about how mergers and acquisitions impact ERP.
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MORE INNOVATION TO COME
The ability to enable change this rapidly also has implications for the on-‐going development of the product, which impacts the third requirement for next generation ERP: more innovation.
In deciding to build a new product from scratch, Kenandy avoided a lot of the headaches other longer-‐tenured companies face. In developing a new product, you don't have to worry about keeping any existing customers happy with product or implementation decisions they may have already made. You can start from a clean slate. It is sort of like building a new house. It is much easier to start with an empty lot and a design plan, than it is to remodel an existing structure.
And yet Kenandy set out to build a very big and complex structure. As noted earlier, the depth and breadth of functionality needed to compete today, particularly in manufacturing, is extensive. And yet Kenandy is being used in several companies today, some mid-‐sized, but then some, like Del Monte, are quite large.
The platform itself comes with an extensive toolbox that accelerates the development process. The power of the platform, combined with its SaaS-‐only delivery model, supports agile development, managed around “sprints,” a concept familiar to proponents of rapid application development. Innovation doesn’t have to be packaged up to be delivered every 12 to 18 months, but in shorter cycles that include scripting a scenario, designing a solution, building and testing. Think of these more as a series of short proof of concept projects, which are continually being delivered. As a SaaS model, no customer is left behind running an older release.
In an interesting twist on “agile” and “sprints,” Kenandy applies these same concepts to the implementation process. New customers gain access immediately to an instance of the software. They can add data, experiment and test it out in a series of pilots. At the end of the process, teams not only have a working environment, but also have learned how to make changes to business processes, again with clicks, not code. Nothing is cast in concrete as the first (or any) “go live” milestone is achieved, therefore it encourages and supports the popular manufacturing concept of continuous improvement.
These were some of the benefits Del Monte saw in its recent acquisition of Natural Balance. Indeed, Sandra Kurtzig was so confident in Kenandy’s ability to respond quickly, she made a commitment to Del Monte to go live with Kenandy at Natural Balance just 90 minutes after the acquisition was complete. No, that’s not a typo – that’s 90 minutes, not 90 days. In fact, the system was up and running in less time and represented a complete implementation including order-‐to-‐cash, planning and production, procure-‐to-‐pay and financials.
Sandra Kurtzig was so confident in Kenandy’s ability to respond quickly, she made a commitment to Del Monte to go live with Kenandy at Natural Balance just 90 minutes after the acquisition was complete. No, that’s not a typo – that’s 90 minutes, not 90 days. In fact the system was up and running in less time and represented a complete implementation including order-‐to-‐cash, planning and production, procure-‐to-‐pay and financials.
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BEYOND ERP: BETTER INTEGRATION
As Kenandy and other ERP companies continue to expand their solution footprints, you might start to wonder where ERP ends and other applications begin. The vast majority of companies using ERP today prefer a single integrated suite from a single vendor, although many will be cautious before sacrificing functional requirements for ease of integration or a single vendor (Figure 4). As a result, integration capabilities have become that much more important.
Figure 4: Preference is high for an integrated suite
Source: Mint Jutras 2014 ERP Solution Study
A whole cottage industry of sorts has sprung up around the Salesforce Platform, with several companies specializing in integration. And of course Kenandy and Salesforce are quite seamlessly integrated. An opportunity in Salesforce can easily and automatically be converted to a sales order in Kenandy. But you don’t have to use Salesforce in order to achieve this level of integration. Kenandy can be integrated with any CRM.
Integration is not limited to CRM but might include any number of other applications. Natural Balance for example integrated its financials to Hyperion running at Del Monte corporate. Kenandy has published Web APIs, creating an open architecture by which content and data are shared between communities and applications. Integration is also simplified because of the logic embedded into its Wide-‐Body Objects.
SUMMARY
Like the starship Enterprise, whose five-‐year mission was to explore new worlds and “to boldly go where no man has gone before,” early versions of ERP charted new territory for enterprise applications. It evolved from MRP (material requirements planning) to MRP II (manufacturing resource planning)
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and then boldly set out to conquer the “final frontier” of ERP, managing not a small piece of the enterprise, but the enterprise itself.
The new journey Kenandy has embarked on, this next generation ERP, is a far cry from legacy ERP solutions of the past. Not wanting to be constrained by legacy code or preconceived notions, it started with a clean sheet of paper to design a whole new solution. But this new company knew better than to take a further step back in designing its own development platform. Instead it chose a platform that has already proven itself in terms of power, flexibility and reliability.
When Sandy Kurtzig stepped down from her first venture (The ASK Group) she left behind a loyal following within the manufacturing community, where trust is not easily given, but is hard earned. Can she attract the same kind of following in her new venture? In order to compete in this new era she will need:
ü A proven technology platform that allows users to engage with ERP in new and different ways, with intuitive and visually appealing user interfaces, which don’t rely on intimate knowledge of how the system or the data is structured. She’ll need a platform that opens doors to a whole new level of executive involvement… Check
ü A system that is easily custom-‐configured, eliminating invasive customization that prevents companies from moving forward with updates and upgrades… Check
ü To deliver innovation at an increased (and impressive) pace, supported through the use of web-‐based services, and object-‐oriented data models… Check
ü Good integration capabilities that provide a seamless user experience across the enterprise… Check
Manufacturers stuck on older technology with limited functionality might well consider saying, “Beam me up, Sandy.”
About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 35 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 8 years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.