Oracle

Turning up the Heat: A Hot Topic on a Hot Afternoon

by Lora Cecere on June 16, 2010 · 1 comment

“I have given up that I will ever find an ideal trade promotion solution, ” J&J presentation, Consumer Goods Technology Event, June 2010

They crowded together in stifling heat at the Roosevelt Hotel.  A group of 42 consumer product executives gathered to discuss Trade Promotion Management (TPM) in the Consumer Goods Technology (CGT) Share Group. It is a hot topic that become hotter as the day progressed.

Turning up the heat

Procter & Gamble (P&G) kicked off the session sharing insights on their global TPM project.  The goal is to consolidate over 50 applications for 30 countries. The project streamlines, and improves global processes.  The project genesis? It started when multiple regions for P&G could not meet the internal Sarbanes Oxley assessment.  The focus of the presentation at the session was project management:  project ownership, decision making, and global process deliverables. 

P&G is operating at a different level than the industry.  When the room was asked how many companies are currently working on the implementation of a global TPM project, no hands were raised. It is proof that for most companies, TPM is still a VERY regional process with multiple systems. 

What was boiling?

To prepare for the session, the group was given a list of potential topics.  When push came to shove, the group wanted to discuss three topics:

-IT Architecture:  Is there is a preferred system for TPM?  The answer is no. In this discussion, the room came to life.  Energy radiated as the group shared stories, anger and frustration.

 In the industry, TPM deployments are all over the map. Companies have multiple systems, many implementations and cannot identify a clear technology leader.  Traditional Customer Relationship Management (CRM) approaches under-served the market in consumer products.  When asked what systems were currently deployed?  The most widely deployed system is Oracle followed by SAP.  (There were eight companies with Oracle architectures, five using SAP-based infrastructure, four using CAS TPM, and one with Microsoft-based custom solution.)   

Oracle and SAP users agreed on similarities between the two vendors:  slowdown of innovation, fragmented direction without consistent leadership, and the lack of an acceptable user interface.  Both sets of users discussed the need to build a front-end to overlay over the architecture to improve ease of use.  Then they laughed and raised a question.  “Why should they have to build an overlay architecture to improve ease of use?

Both SAP and Oracle customers expressed frustration on how to spur development and provide leadership to improve the situation. The group agreed that the Oracle and SAP stories had amazing similarities with no ideal solution for the industry for a global deployment. Companies using best-of-breed solutions expressed similar frustrations.

-Not alot of O in TPM.  While the subject of optimization in TPM had the highest interest for the group, fifteen years after market introduction, less than 10% of companies in the room use optimization techniques intrade promotion management . The issues include the lack of manpower, expectations (the recognition that the output is directional versus absolute), ownership and the lack of process clarity. 

There is no clear technology winner.  The solutions deployed for optimization are also all over the board.  One company had deployed Oracle/Demantra, one had deployed ProMax in Australia, one had deployed DemandTec, one had M-Factor, one had Synectics, one was working in pilots with CAS 8 and one had built a custom solution.  One participant stated that business process outsourcing was not an option because they could not outsource the chaos.

-Few use Shopper Insights: Of the group, less than 8% are using shopper insights to make decisions.  Of this group, eight are looking at shelf virtualization, three are optimizing based on store clusters and one company is using test and learn techniques. In short, very little is currently being done by the group to tie shopper insights to TPM decisions.

My take:

The market is still largely a Trade Promotion Management(TPM)-as opposed to a Trade Promotion Optimization(TPO)–market. What seems so simple is still a long way away.  Companies desperately want a better user interface to improve trade coordination.  They are equally frustrated by Oracle and SAP.  The lack of success in bringing this to market has stalled the adoption for new technologies. They are disappointed that no platform vendor has brought a usable solution to market that easily combines TPM and TPO.

However, there are several trends that will transform this market.  Retailers are pushing consumer products companies to change their processes from the outside-in.  The greatest change is happening in the account team structures where retailers are asking for price and trade deals together.  This pressure from retailers to the sales teams will gradually change the processes within consumer products companies, but the adoption of systems using shopper insights and predictive analytics will happen slowly.

There will evolve and Software as a Service (SaaS) will continue to grow: 

  • A Bake-off is Coming:  There will be a race between Oracle and SAP to right the ship and improve TPM usability.  Oracle will defend the front office using its surround ERP message, and SAP will push an integration value proposition.  Companies are frustrated with both vendors.  Advancement will only happen if these two large vendors have large ears and small mouths.  Current groups like ASUG for SAP and the Oracle Customer Advisory Group have been largely ineffective because of structure, membership and vendor commitment.  Now is the time to re-frame the discussion, to actively listen and leave the quota carrying sales person at the office.
  • Predictive Analytics that Use Downstream Data and Shopper Insights will happen:  The techniques by Softwre as a Service (SAAS) vendors like  Applied Predictive Technologies, M-Factor andDemandTec to use external data within test & learn scenarios will gain receptivity as more and more companies use gain ROI. This will be forced because the rate of adoption of these techniques by retailers using Software as a Service technologies like APT, DemandTec, Predictix, and Revionics is gaining steam in retail.  The battle lines are being drawn.
  • Redefinition of Forecasting:  There will be a traffic cop emerge to own baseline forecasting. This is a pain point for every company that I speak to.  The redefinition of these processes is not as easy as data integration.  It requires a steward or over-lay organization to model demand shaping factors together, share baseline demand and provide insight into the organization on where they are getting true value from demand shaping activities.  The group thought  that this role could be played by finance or supply chain; but not by marketing or sales.  Increasingly I see inquiries on how to improve baseline forecasting. The most progress against this goal is happening with companies deploying IRI, M-Factor, SAS Demand-driven Forecasting or Terra Technology MDS.  Four very different solutions deployed by four different groups with the same goal.

Time to condense?

It is time for the consumer products company to ask themselves some hard questions:

Why do they not know baseline demand?  Why do they over-predict trade deals? Why are they not better at pricing?  Why are they not using shopper insights?  Why are they not taking advantage of test and learn capabilities?  Can they afford to not be good at these processes when it represents 14-22% of revenue?

I think not.  The answers lie in change managementand restructuring reward systems.  They need to be enabled by technologies, but it is not a technology project.  It starts with an internal audit.  The sales teams are incented on sales volume. Marketing is driven by market share.  Supply chain is driven by production volume. Who is looking after the customer?  And, serving as the check and balance on the systems?  According to the group, the answer is no one.  90% of the group responded that they would like to see an organization that crosses sales, marketing and supply chain to serve as the traffic cop: the single point of truth.

Sales teams are getting the most pressure from retail for deals.  The retail pressure will get greater.  Retailers are better at pricing and using shopper insights that consumer products manufacturers.  The gap is growing.  The sales teams are trying to keep up.  They are using the most advanced tools, but there is no check and balance.  Companies struggle with how to tie this work to corporate demand planning.  It requires a rethinking of the process from the outside-in and challenging traditional paradigms and reward systems.   

All these issue contributed to the group getting lathered up to talk TPM.  But, before we throw the baby out with the bath waterand scald the technology vendors, I think that it is important to hold up a mirror and ask how do we organize to help technology companies better serve the true need.  How do we forge a bond to help consumer products companies redefine their processes to be more responsive and accurate for customers?  It may take a hot New York minute to hit the flash point to drive change; but it is clear, it is an industry issue.

The Verdict: a Hung Jury

by Lora Cecere on May 26, 2010 · 1 comment

A hung jury is deadlocked.   It is one that cannot, by the required voting threshold, agree on a verdict due to severe differences of opinion.

History

Manugistics under delivered.  i2 Technologies over promised.

When ERP companies added Supply Chain Planning (SCP), they largely copied best-of-breed providers.

As a result, the SCP technology market is stagnant.  The question is will JDA, as the aggregator of SCM companies, evolve as the TRUE Supply Chain Company? This week, I report my thoughts from JDA’s Focus 2010 event.

The Prologue

Ten years ago, the SCM market was over-hyped, and evolving. It was an exciting time.  Then i2 Technologies and Manugistics faced off with fierce competition.  Today, it has changed.  The SCM market is mature and consolidating. True innovation is largely coming from small industry-specific  start-up companies.

On the heels of acquiring Manugistics in 2007, JDA purchased i2 Technologies in 2009. The question for all is what does this mean?

The uniting of these two major players—i2 Technologies and Manugistics— is a scenario that would have challenged the wildest imagination. In 2000, it would have been laughable.  However, it is today’s reality.  This week, as I stood in the Focus 2010 ballroom introducing folks I knew from i2 Technologies to former colleagues from Manugistics, the improbable became reality for me.  It was the coming-out party for two unlikely debutantes.

It was neither a marketing event like i2’s Planet nor a user-focused event like Manugistics’ Envision.  While it had strong attendance (1700), the program struggled for identity.  What the event lacked in content was delivered by the way of a good old-fashioned Las Vegas style party.

The market needs a leader.  Is JDA a market leader for SCM?  The company is now a 600 Million company touting 5000 customers.  Sounds good, but do the math.  600 million in revenue divided by 5000 customers represents a low-level of spending significance. Despite the acquisitions, and a 90% maintenance retention, JDA struggles to build strategic client relationships and become the SCM thought leader.  The Manugistics base is under attack from SAP APO, and the i2 Technologies base is threatened by Oracle.  This was reinforced by client discussions at the bar. Six companies were in transition: one from merger and acquisition, two for SAP APO standardization, one for business process outsourcing and one a convert to Oracle APS. One company stated that his company “sent 28 people to SAP’s Sapphire event and only 1 person to JDA’s Focus event.” (The two events happened at the same time.)  To be the SCM leader, JDA needs to rebuild its go-to-market strategies and establish strategic relationships with clients, not only in retail, but also in manufacturing.

The Evidence

Let’s evaluate the evidence.  Who will JDA be in the market?  Will it be a software aggregator or an innovator? My vote is that the company is poised to be an aggregator serving the late-adopter and main-stream market largely milking maintenace revenues from the maturing of the first phase of SCP. I do not see them as a player in driving the next phase of SCP excellence.  Here is my logic.

At the event, I give the company thumbs-up for:

  • Making the right decisions on product strategy: One of the largest challenges of the i2 acquisition is product rationalization of the code base.  To the company’s credit, within a year of the acquisition, there is a product roadmap, a decision on product evolution, and a clear direction for clients.  I agree with the product rationalization decisions.  The company has successfully moved forward with the best of i2 and Manugistics.
  • Supporting the code: Another client concern in the acquisition is maintenance and product support.  JDA’s commitment to never sunset a product is admirable.
  • Transitioning i2 Employees: When the company purchased Manugistics, employee attrition was high.  This time, JDA has done an admirable job of retaining i2 employees.  The assimilation processes were well- orchestrated, and endorsed by many long-term i2 employees over cocktails on the floor.

I give the event thumbs-down for:

  • Delivering a compelling marketing message:  The message of the event was “adapt, plan, deliver”.  An upgrade from i2’s prior message  but, the event was a missed opportunity to propel thought leadership in supply chain management.  In a time when supply chain matters more than ever, supply chain thought leadership was conspicuously absent at the conference.
  • Improving thought leadership for supply chain management: The sessions that I attended were below average. They were delivered by business users and IT directors with a focus on implementation. Strategic decision makers were conspicuously absent.  I did not attend a single session that would have warranted the prior i2 Ken Sharma award. 
  • Market innovation: The Company is flanked by innovators gnawing at its base. While JDA offers “managed services”, it is not competitive with the industry-specific SaaS solutions fromPredictix or Revionics in retail, the combination of E2Open/Kinaxis in discrete industries, ModelN in pharmaceuticals or Demandtec in consumer products.  Case studies presented were stale, and there was no evidence of true innovation in the product demonstrations in the showcase.

Early Results

All in all, some, but not substantial progress against Hamish’s two objectives :innovation and delivering real results.  When I posed the question on twitter — Is JDA the Supply Chain Company?– the response was not over whelming.  Two respondents said “no”, three said “that it was too early to tell”, and only one said yes.  I concur. The jury is split.  At the event, JDA presented itself largely as a market aggregator, not a market innovator. We have a hung jury with very strong opinions.

How do you vote?

What do you think?  Does JDA have a chance to be a leader and change the direction of supply chain management through innovation? Let me know your thoughts.

I have an exciting week planned.  Stay tuned. I will be posting a plethora of blog posts–stored up from all of my travels– and reporting from the Teradata Consumer Products Round Table on the use of Downstream Data.