Connected Enterprise - An Epicor Blog

Don’t Venture Into The Cloud Without Meyer’s List

Epicor recently sponsored a report on Cloud Services by David S. Linthicum. Linthicum is the author/coauthor of 13 books on computing and a frequent speaker at leading technology conferences on cloud computing, SOA, Web 2.0, and enterprise architecture. David knows more than a little about the cloud -- including one cloud vendor “gotcha” -- escalating fees. 

This issue is a real concern for many companies considering a Software as a Service (SaaS) strategy and to be candid, unfortunately, it’s completely justified. We ourselves have heard the industry stories about vendors holding clients hostage with unjustified subscription fee increases that, over the long term, all but completely erode the original savings in software, hardware and support.

This underscores the need for what I like to call “Meyer’s List of Contractual Assurances.” Trust me: Read this little piece of software insider wisdom now and you’ll thank me later. OK, so without further ado, here it goes:

PRICING ASSURANCES
In the area of pricing assurances, make sure there is a price cap, so going into the relationship you’ll know what the fees will be if all is successful and you decide to renew the service. This ensures you (and the vendor) have an absolute understanding of the upper range of what you will pay.

DATA ASSURANCES
It’s also important to have data assurances. Yes, breaking up is hard to do, but if you’re cutting ties with your SaaS vendor and they have your grandmother’s ring (so to speak), you’re going to want it back -- without any emotional blackmail, and also without a $$$$ penalty, let’s say. 

DATA CENTER ASSURANCES
Next data center assurances should be validated. This is an easy one, simply ask to see the SAS 70 II certification report to validate that the system is being hosted in a credible, top-tier data center and not some server in the vendor’s storage closet. A SAS 70 II is a detailed audit that shows the data center has been thoroughly checked and deemed to have satisfactory controls and safeguards in place for hosting.

SERVICE LEVEL ASSURANCES
Service level assurance is important, of course. From my perspective, it’s become table stakes. However, contractual assurances regarding the service’s downtime limits and support response times should be called out, nonetheless.

As the cloud continues to grow in popularity, customers will gain more options and more leverage as SaaS vendors grow in number and no longer wield the power to make aggressive and unilateral demands. But in the interim I leave you all with the list and invite you to get more tips on venturing into the cloud in Infoworld’s Special Report

Posted by Chad Meyer, Director, Product Marketing, Epicor

Globalization: Moving US Manufacturing Closer to the Brink, or to New Summits?

Signs of slow but steady recovery in manufacturing are being seen in both the US and Europe, stimulating continued debate about the strength of a global industry turnaround. In the US, sectors such as electrical equipment, appliances and components, and fabricated metals are continuing to grow, while consumer spending and discretionary purchasing remains down, impacting segments such as furniture, food and beverage, and even toy manufacturers.  As a whole, it seems the closer a manufacturer’s goods are to the end consumer, the slower the recovery.

Many in the US have bemoaned the fact that the US has “given away” its manufacturing base -- outsourcing this work to lower-cost suppliers in Asia, Latin America and elsewhere; maybe so, but there are two sides to every story.  The tough economic environment has driven many companies to turn to outsourcing not just to cut costs, but to survive.  Over the past few years, US corporations facing increased competition, ever tougher regulatory environments, and significantly rising health care and benefit costs have had to make tough decisions. The choice to outsource for many wasn’t merely an option, it was an absolute necessity; many would not be here today if they hadn’t. But remaining competitive in manufacturing has been about more than merely shifting around operations.  

In 2008, the cost to manufacture in the US was only 17.6% higher than the average in nine other industrial countries, including Canada, Mexico, and China, according to the Manufacturing Institute and the Manufacturers Alliance/MAPI -- down from 31.7% in 2006. While rising labor costs in developing countries was a part of the equation, a key factor in US manufacturers reducing the cost delta was the continued investment in productivity-enhancing technologies. It was clear that with ever increasing global competitiveness, US manufacturers had to reduce costs, or lose their markets forever.

A quick scan of new Epicor manufacturing customers inked over the last quarter shows strong growth in emerging international markets including China, the Middle East, Latin America and Central and Eastern Europe.  What we note is that these are not just US or European companies outsourcing -- there is also a strong mix of local companies expanding to meet the needs of local markets, as well as US companies building plants to meet growing demand (locally) in these markets.

This trend seems to align with the industry think tanks reporting that businesses are ramping up operations offshore (albeit slowly) to meet growing global demand.  At the same time, while this demand continues to build, manufacturers can’t sit by and expect a return to “normal business” and growth.

For the next few years, the “new normal” is going to be tight markets with relentless, global competition -- emerging markets are developing significant manufacturing competencies seemingly overnight (Vietnam, for instance).

To compete, business needs to be more responsive than ever to its customers and markets.  Flexibility and adaptability will be key (along with the givens of best quality, price, and performance).   We should not expect any changes in the near term (regardless of administration) that ease regulatory compliance,  or that universal healthcare will suddenly make our employees more productive. 

As before, we need to look at how technology not only can drive dramatic shifts in productivity and profitability (as well as long term sustainability), but how it can change our fundamental approach to how or where we do business.  While some companies may see technology as simply a tool for increasing efficiency, the smart companies see more than that; they see it as way to evolve their business models to focus on what has always been the strength of the US (and European) industrial sectors -- innovation.

Posted by John Hiraoka, Executive Vice President and Chief Marketing Officer, Epicor

Greenhouse Gas and Carbon Accounting: New Business Requirements Weigh Heavy on SMBs

It is estimated that the top 3,000 companies in the world caused damage to the environment worth $2.25 trillion USD (£1.5tn) in 2008 – a jaw dropping statistic which researchers say is indicative of “crisis proportions” of pollution and the rapid loss of freshwater fisheries and fertile soils due to industry.

Given this growing awareness of business impact and the resulting damage to the natural environment, and with global summits such as Copenhagen and Kyoto driving governmental focus on the environment and business impact, more and more countries will impose tracking and limitation rules on Greenhouse gases and carbon emissions, and the standards and initiatives on GHG and Carbon Accounting will only become more pervasive and stringent.  

As the initiatives take deeper hold, carbon (or green) accounting will actually put a greater burden on SMBs as they generally don't have tracking systems in place. And, the cost of carrying out the tracking will be greater as a percentage of revenue than for larger firms.  

Last week Epicor announced a partnership with Village Green Global, Inc., a company that specializes in enterprise carbon accounting. The partnership offers Epicor customers new capabilities to identify, analyze, audit, track, manage, benchmark and report on carbon emissions, environmental impact and energy consumption. By providing a simple and integrated carbon tracking system, Epicor is giving its customers the mechanism to be efficiently compliant and gain benefits from ultimate cost savings. (Statistics are already showing a minimum savings of 10% in energy usage once a company starts to take steps to reduce its carbon footprint.)

Using an internationally recognized system for carbon analysis and trading, Village Green supports reporting for carbon accounting around electricity use, water consumption, transportation, natural gas, waste and other factors to find ways to save energy and money and enable organizations to implement and maintain sustainable business practices. 

For more information on green carbon news, resources, and opinions on the rapidly expanding universe of carbon management strategies and enterprise carbon accounting, check out Greenbiz.com’s Carbon Management Center.  Also, check out our related whitepaper, 7 Technology Tactics to Promote Corporate Social Responsibility.

Has your company undertaken any carbon accounting initiatives?

Posted by Matt Muldoon, Vice President, Product Marketing, Epicor