Narrator: Today's episode of The ERP Advisor features a special report on cloud ERP in the aftermath of COVID-19.
Juliette Welch: Shawn Windle is our guest today. Shawn is the Founder and Managing Principal of ERP Advisors Group based in Denver, Colorado. Today, our chat will focus on sifting through the realities of COVID-19 and its aftermath, with an in depth look at finding the appropriate enterprise software path going forward.
As you're listening today, if you have any questions, feel free to submit them through the chat and we will address them at the end of the call if we have time. So be sure to do that. Welcome, Shawn, thanks so much for joining us today. We really appreciate it.
Shawn Windle: You bet. Thank you, Juliette.
Juliette: How are you doing?
Shawn: Good. Yesterday was kind of interesting. I came down with a little bit of a cough and it was like, oh boy. So, I sat in the shower for a little bit of time this morning to kind of let some stuff loosen up, which was good. But overall, we've been fantastic. Same for you? Family's doing okay?
Juliette: Yes, we are healthy and well. I'm hoping that continues for sure. Thanks for asking. Well, if you're ready, let's jump right in.
Shawn: Let's do it.
Juliette: Okay, great.
So, what are you seeing in these uncertain times related to enterprise software?
Shawn: Well, I think, as everybody knows, this is not the usual. Maybe even to answer the question, if we take a couple of months — maybe even a month ago — to look at where we were then, or maybe even a little bit longer versus where we're at now.
So, we had done a report at the beginning of the year talking about that — that we felt like 2020 was the year where small to medium size businesses, especially, we were going to see a huge uptake in enterprise software for organizations, nonprofits, for profits, anywhere from five to ten to 20 million dollars in revenue and up were really looking at purchasing software. More so than I've seen in my career in, probably 25 years of being in enterprise software.
But seriously, we were seeing a lot of interest from a lot of organizations and different people in businesses, too. I mean, we usually work a lot with the chief financial officer and controllers and that, but lots of different folks say, yeah, this is the year we're going to buy software, or we've been on an app for a long time and we need to get off. We’re really seeing a lot of demand in forecasting and a really big 2020 for nonprofits, for some of the government agencies that we work with, some of the businesses, and then basically COVID-19 happened. And, I mean, there were some distractions at the beginning of the year also, I think with a little bit of uncertainty politically, to be honest with you, we won't get into politics — if we want to talk about that later, we can do it on a different call — but ultimately, all the indicators were really good.
And an enterprise software is a really interesting thing, too, because it's sort of like you're paying to organize your business. That's ultimately what enterprise software allows you to do. I see a couple people on the call that have been former clients, and I think about the projects that we did, and those projects helped them to get their item lists cleaned up and help them to get a better understanding of their accounting and automate processes that were manual, which means sometimes there can be more errors or issues or whatever.
So, enterprise software is really about, hey, I'm going to organize my business or my organization so it can grow. Well, then COVID 19 hit and the first impact that we saw was we got to keep the doors open — the virtual doors. Where do employees work? And how do people still stay productive? So many, many people that were looking at enterprise software — we had an international firm we had just started talking to whose focus was on, we've got to get the software and now for multiple reasons, then it went to, okay, how do we get our 3000 people to be able to work from home? So, as you know, Juliette, we're not a huge business, we're 17 or 18 people and we were concerned about that for us. Imagine 3000 people. So totally makes sense. People were very focused on how do we keep people productive and working — and even morale wise — how do we keep people in a position where they're able to be productive but healthy? More importantly, the healthy part. So much of the focus over the last several weeks has been shifted over to that.
But we've seen with the organizations that we've talked to that were there — like there aren't a lot of organizations now that are worried about, oh my gosh, can make people work from home? They’re kind of worked through that. We even changed over to Zoom from the other system we were using because it's more of a stable platform. We have all the security set up. We've been doing our best practice research on that. But everything's good there.
So, then you still have the employees that are on site. And ensuring their safety has been continuous throughout this whole thing. And it needs to continue to be even to the point where — we were talking to a client just this morning who has multiple sites throughout the country and the activities that they're taking another organization we work very closely with is using things like Decon7 to completely and totally kill every possible germ in their place so that people can still be productive. So that's pretty much done. So, we kind of got the danger condition handled like, okay, people can now work from home and be productive and work through the realities of having dogs and kids and everything else and — how do you still stay true to those roles as well as then being able to be productive in business?
What we're seeing is we're kind of through all that. So, now at the same time though, we're seeing demand — that most of our clients across the board — has gone down for the services or products that they sell. And that's the part that gets me very nervous. I don't know if we know when that change is. There's different indicators that are happening in the market today and politically, again, that kind of point to different things. We're watching them very closely, but overall, what we're seeing is that almost all of our client's demand is down.
Now we are talking to some organizations where their demand has increased — certain kinds of industrial inventory and equipment, some kind of outdoors equipment, too, really went through the roof — the demand has increased. But overall, most of it has gone down.
So, now you have people that are able to be productive and they really want to be — that's the other thing — because the worst thing you could do right now is sit around and watch the news all day. You'll go crazy. Anytime that’s probably true, but especially now. We want to stay productive. So, what do we do with people that are able to do their jobs? Maybe it's a little less demand on them and so we are starting to see clients say, let's talk about this enterprise software project again. We know we need to keep this organization in. And I would say, and this is broadly, the groups — we talk to a lot of people on a weekly basis, lots and lots of organizations.
Most people think that demand will increase soon. They don't know when — the summer — lots of anecdotal stories I can talk about with that. But if that's the case, we have productive people. We did let go of some people also. Some of our clients have had to cut certain people because of some of the issues that are going on with the lack of demand. And we still have a core team. They want to be productive and we want to keep them productive. They've got their situations handled by being able to work remotely. Maybe now is a good time to look at that enterprise software project and pick it back up because a lot of that work can happen remotely.
That's the interesting thing about what we do is that frequently our projects have been remote. But I do expect to see that there's going to be more investment and focus put on these kinds of projects that are infrastructure, if you will — enterprise software as an infrastructure project to a business to get the procure-to-pay process nailed down, the order-to-cash process, and move down to accounting.
We have many, many clients, including our lead account and my partner who has to go to the office still once a week and go get checks. It’s time to look at the lockbox function and get some of those things in. But we are kind of seeing this interest starting to creep up a little bit, especially in cloud ERPs because it extends the business beyond the four walls of the brick and mortar. Now we have virtual walls that everybody has to work within.
So, that's really the truth. I mean, we're in enterprise software, but I'm talking to people who've been through projects and people that are looking at it who are realizing if we don't have this — what are we going to do? Not just in the future if something like this happens, but they're really understanding that cloud ERP is something that they're going to really have to do no matter what.
Juliette: Well, speaking of cloud ERP, what exactly are we talking about when referring to cloud ERP?
Shawn: That is a great question. And it's kind of funny, it's the basic, most simple definition that I would say is it's your software that runs on somebody else's hardware. So it's not as if — I mean, as we know, you have software, everybody knows what software is, you have it on your desktop. And most of the folks on the call are very technical from either a CFO perspective or even software enterprise, software salespeople’s perspective — you guys know what software is, but let's think about this for a minute. It's basically instructions, it's code that runs and runs and does whatever we tell it to do, sort of like a little machine, like a virtual machine, but it can't run without hardware. So, cloud ERP doesn't mean, whoa, the software is just out there and runs automatically. No, it just runs on somebody else's servers.
So, but the thing about it is — with cloud ERP — is it doesn't just run on somebody else's servers. It runs on people's servers whose full-time job, night and day, 24/7, their full job is to keep the enterprise servers running for many companies. So, they're going to do things like ensuring the cooling is exactly perfect, that there's backup power from generators — one of our clients is a data center, and I got to see one of their generators, which was a jet engine, literally a jet engine. I don't know many of my clients that have a jet engine in the back office that they can run their servers off on. So, when we talk about cloud ERP, I think it's kind of known in the market, but I really do want people to understand. Basically you're paying somebody else to handle the running of the servers and the rest of the infrastructure that runs the enterprise resource planning application itself.
So, the app is basically the same — it does the same thing — it helps you to automate your core business processes. But by having a firm or a data center or there's some of our larger clients have — or vendors we work with have their own data centers. That's all these people do day in and day out is make sure that your application is maintained on the server side as well as the application maintenance.
It's sort of like having house. You've got to maintain the house. Enterprise software is no different than that. Somebody has to make sure that stuff works from the software side. The cloud ERP vendors do that. And, we had two instances that I want to share with you of two clients.
One of them said that their migration to a cloud ERP was a godsend. Now, I've been doing this for a long time, and I have worked on lots and lots of projects. I have never had a client compare their enterprise software to a godsend ever. Usually it's like they compare their enterprise software to the exact opposite because it is hard and it's expensive. But he saved his business by moving to the cloud. He had to send his people home. The old app didn't work any place except in the office, and they could do some dial-up, but people were extremely — dial-up, that's how old I am — they could do some remote log in, but it was still extremely slow to do it through those standpoints, so it was worthless. So, by going to a pure cloud application that they could just access, it was available for them.
And another client we just spoke with today, same thing where they purchase a lot of equipment, hundreds of millions of dollars of equipment, and then turn around and sell it as a wholesale distributor. And they were able to keep their purchasing going because people could work from home, whereas they didn't have it before.
So, I just think it's important that everybody on the call and for those that are going to listen to this later as a webinar — as a podcast — is enterprise software is one of those things where, kind of independent of what's happening with the economy, it's going to be a pretty good thing to do.
And the software is good; it’s helpful. In times like this what really counts is that it forces organizations to make tough decisions on how do we structure our data? What kind of reports do we really need to run our business? What kind of analytics can tell us more so that we can make better decisions? And whether the economy is going up or about the same or even down, there's a case there that you can make for doing the project.
It takes a lot of effort from people. It really does. But if those people are willing to do it and they have the time, which right now some folks do have more time, it just makes sense to take a look at it because it's a great investment for the future and taking a look at ongoing strategies.
Juliette: It helps the company reframe how they do business and approach to their business.
Shawn: Yeah, that's exactly right.
Juliette: With that said, Shawn, do you have any advice you can give us for an ERP strategy now that everything has seemed to change?
Shawn: Yeah, man, it's a hell of a time to buy. We're the independent guys, right? We work with a lot of different vendors and ultimately, we want to do well for our vendors. We really want to do well for our clients, and very honestly, Juliette, we're seeing some great financing opportunities right now that I've never seen. So, some great discounting and different kinds of models that are going out from the big guys. If you look at Oracle, you look at even SAP and Microsoft and some of these companies are acknowledging that things are a little different.
It's a little bit of a leap of faith to take money out of your account right now when you don't know exactly what's going to happen. And you don't want to put money into an investment that maybe you don't have the cash available for other purposes.
But just short-term strategy-wise, it's worth it to at least look at the enterprise software project one more time. Because it probably got put on the back burner earlier this year. My guess is that probably 70% of the organizations out there, nonprofits to government, whoever, were already looking at enterprise software. That many organizations were going to make a change this year because there's so many great solutions in the market and it just makes a lot of sense. I bet at those 70% of the organizations, probably 100%, maybe 95% stopped there are new initiatives. Most of them kept going with what they were working on and that's good because that's keeping a lot of smart people busy right now — internal climate folks. But I think when there's better indicators — like we're already seeing even yesterday, really good indicators of kind of what's going on here that we can get to a point where we can come back from this whole thing. And I think we will.
I mean, whether you're religious or whatever you are right now, I don't care, but whatever it is, just do what you do to put the good whatever you want to call them out there, that we could really come back and be on fire as a country. And even relationships with North America in South America and globally — it could be a different world after this.
And I mean, how does that have to do with enterprise software? But the reality is, when you look at an ERP strategy, it's all based on growth. If the fundamental seed is not growth — now, it could be that you have an old system. And what happens if the person wins a lottery? Or the person has to stay at home and can't access the app? That's a good reason to change, too. But even in that instance, I would say, if you're not growing, why take on the risk of enterprise software?
So, the strategy, the advice that I can give you on an ERP strategy is to really look at your market, look at what's happening with your customers and make sure that you've got the right software in place where before maybe an omni-channel presence — being able to sell your software, your inventory, your food — the way you used to do it was through one way, but now imagine if you're a food processor and you used to sell directly to brokers and now you have your channels online where folks can put their orders in. It opens up your business.
We're working with a software business right now that is traditionally sold through salespeople. Salespeople aren't able to be as effective as they were before, so now they're putting on an eCommerce site. We can buy software on eCommerce, which is a little unique for software. That's not usually how software is sold in this particular industry. So, the strategy is to look at the opportunities that are going to be coming up as we emerge from this unusual time and get the software in place as soon as you can to leverage that.
And look, I mean, I am a very optimistic person. I think when you own and run a business and employ people, you better be. Everybody looks to you for that. And our clients look to us for that. But I think if we as a group, as a society, as business people, and nonprofit leaders, and that if we can put the future there, it will happen. And enterprise software is a big part of that future for a lot of organizations.
So, I would say, again, strategy-wise, look at strategic investments for sure, whether it's e-commerce or we're working with — or we were about to work with before this whole thing hit — a major park here in the Denver/Boulder area. And they were looking at how do they consolidate all these different proprietary applications into one platform so they could get a better view of who their constituents were. That will be valuable no matter what happens.
You’ve got to take care of your people. You've got to take care of the organization, and then the software can be something that is just super valuable for a strategy.
Juliette: Well to circle back, you spoke about different opportunities. Can you speak more to other enterprise software opportunities to different businesses that have available resources today?
Shawn: That's a really interesting question. I mean, we're kind of in business — like our clients need us to do what we're doing. It's kind of a funny thing, right? Because they don't have to be experts in enterprise software because we are and we shoulder that weight which is a very heavy weight to shoulder because this stuff is not easy as.
But we're always looking for what can a company do? What can people do to push things forward? And, and I think an unusual opportunity right now is to get your house in order. Now, everybody that I've talked to from my wife to our neighbors who are all riding their — well, they're not riding their bikes as much outside now — but everybody is cleaning up their house, like physically cleaning their house, and that’s good. Sort of the same thing with your business. If you think about it as a virtual — software is a virtual representation of your organization. And if that virtual representation is a mess, it's not going to run very well.
Almost anybody on this call who has been through enterprise software, which I think most of the people have, you know that if your price list is a mess, you know that if your item list is a mess, your customer list, your vendor list — oh yeah, we've got ABC inc, we've got ABC incorporated, we've got ABC. Maybe even the deployments — well, we've talked about the remote connectivity — I think that's kind of gotten fixed, frankly, and companies that didn't have that, I think that's fixed right now.
So let me just talk about the data part. You are making a mess for your salespeople if you have the exact same customer that has six different records. Well, maybe the salespeople created that because they needed to hurry up and get an order in. Okay, fine. But can we put procedures in place to track and stop that? It is kind of hard but is there a time — like we do this with our physical warehouses with many, many of our clients.
We had a client recently that could literally eat off the floor of the warehouse; it was so clean. I wouldn't have done it then, but I wouldn't do it now either. But you know what I mean, that their physical assets — you look in most offices and they're very clean, yet you have this nasty data. So that is one opportunity right now is to clean your data. Absolutely scrub it. I mean, especially if you're looking at an enterprise software solution in the future. It could lead to your biggest risk is that your data is a nightmare.
I mean, frankly, we're in a client right now with multiple systems going into one, different geographies throughout the world have been operating basically autonomously. Now we want to put them all on the same enterprise system and run and we're going to have efficiencies. But man, cleaning their data has just been extremely tough and it's blown the budget out of the water, to be totally honest with you. The good news is, is we're able to do it.
So, if you have great people that are kind of at home, you know, maybe not quite as busy as normal, maybe you don't have the next big deal that's coming in that everybody has to focus on, now is a great time to clean your data. As I mentioned to get your remote connectivity cleaned up so that if somebody does have to work someplace for hopefully better reasons than COVID 19, that they can do that.
And then I would say that the third area that if you have available resources — frankly now in terms of enterprise software is your reports — that it's very easy for an organization to kind of get away with a certain level of reports when they can just go right next door to the next office and ask the person. Fortunately through zoom and other apps, you can be virtually, but you're still looking at like — it's not the same person. Don't forget that. But if you can focus on the reports that you really need and what's missing with them, it is looking to stay busy, too, right now.
So, you have a partner — or partners are looking to stay really busy right now, too — that's been a big change because we had a lot of folks that were super busy and were hard to get ahold of honestly, especially from some of the technology vendors and their professional services teams across the board with everybody. Now all of a sudden their demand went down so they need the work. So, it's a good time to say, hey, here's some reports and analytics that would help us run the business.
So those are the three things. Definitely the remote connectivity, definitely cleaning up your data, and then getting reports and analytics in water.
Juliette: That's a lot of good information. Are you ready for some questions?
Shawn: Let's do it. That'd be great.
Shaun Orthmann: Yes, we do have a question from the chat. Shawn, you mentioned that it is a great time to buy, what if we’re okay with our current ERP? Is there something we can do to leverage the current market to further exploit our current ERP for little to no additional license fees?
Shawn: Love that question. There's definitely the remote connectivity. I think, again, the data migration and then the reporting are certainly strategies to look at with your existing software, no doubt.
The other thing that I would add to that — and it is if you have a little bit of extra investment that is available, is there are column fringe modules and it might be a procure-to-pay automation system that does optical character recognition when you receive vendor bills — I can get techie really quick. Or like I mentioned eCommerce solutions. There may even be some advanced planning and scheduling for manufacturer for professional services, maybe it's more resource planning.
There's modules that sit outside the core functionality of an app that most of our clients will put those core functionality applications in for phase one, maybe phase two, but then what are the phase three or phase four things that were probably the real reason why you bought the software in the first place? And you maybe even own the modules. Maybe you pay a little bit of extra to go hire an expert to help you set up those modules. Again, those more kind of fringe or advanced kind of functionality modules are a great place to get some additional investment out of your ERP.
And if you don't have a dime to put on ERP now, figure it out yourself. Like, I’m not a — people who work with me say different things about me, but I am very much a take responsibility yourself. And so, if you have the time — someone's got to have the time, it's either you are an expert or somebody on your team — go do the research, call your vendor, they're not going to charge you for some advice, they love it when clients are kind of do-it-yourselfers, and look at what those areas were that you really wanted to have in place when you implement it but you don't. Figure it out.
The more you figure out, you can call an expert — I was talking to a client whose expense reporting approvals was a nightmare. She was basically approving everybody's expense reports and she wants a little workflow. Okay, well, you design it, you talk to everybody to get it approved and we'll go find a developer who can build it very quickly, you test it, and then that developer pushes it to production and it's done. When times were good that may have been a $30,000 project for the external guys, but you guys do it, and that'll cut it down to maybe, you know, $2,500 to $5,000 depending on what's needed.
So that's what I would say is look for yourself on some areas that you think could be helpful in those fringe business processes and see what you can do there.
Juliette: Shawn, thank you for that, we appreciate you sharing all your expertise with us. We really are thankful.
All right, well everyone, we appreciate you taking the time to join us today. Please let us know if you have any other questions. If you weren't able to submit them through the chat, you can always reach out to us through our website or call us. We're happy to help in any way we can.
Looking to the future we hope you will join us for our next call on May 14th, “The Puzzle Box: Solving ERP Selection Problems.” This next edition of The ERP Advisor will help sort out and identify the pieces of the ERP puzzle and provide guidance to help you solve your ERP selection problems. Please go to our website, erpadvisorsgroup.com for more details and to register.
Again, thank you for joining us today. We really do appreciate it.
ERP Advisors Group is one of the country's top independent enterprise software advisory firms. ERP Advisors Group advises mid to large size businesses on selecting and implementing business applications from enterprise resource planning, customer relationship management, human capital management, business intelligence, and other enterprise applications which equate to millions of dollars in software deals each year across many industries.
Thanks again, everyone. We really do appreciate it. Stay healthy and well, and we hope to see you soon.