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An Oracle Accelerate Briefing

November, 2010

21st Century Realities— Emerging Companies Deploy Top Tier ERP Sooner to Persevere and Prosper

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In this briefing…

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Executive Summary

Some say the world is flat. Others say the world is shrinking. No matter how someone

chooses to describe the world today, all will agree that Information Technology (IT) innovation

is a principal cause of cultural and economic global transformation. This innovation has

created a level playing field for businesses of all sizes. Being “Best” no longer has to mean

being “Big”. Whether it’s Business-to-Business (B2B) or Business-to-Consumer (B2C), speed

and flawless execution are requirements to doing business in an impatient and increasingly

impersonal marketplace.

Enterprise Resource Planning (ERP) applications, delivery ecosystems, and knowledge

resources have evolved radically over the last two decades. With that evolution, the IT

strategies of “Emerging Companies”—with less than $100 million USD in revenue—have

changed. In some ways, these organizations need Top Tier ERP—integrated and

collaborative solutions with broad and deep capabilities—more than their larger competitors.

Emerging companies source, manufacture, and sell globally. Customers are increasingly fickle

and there can be no latency in B2B and B2C collaboration. Yet for some, the misconception

still lingers that Top Tier ERP is too complex, expensive, and resource consuming for smaller,

emerging companies. The reality is that emerging companies aspiring to greatness

increasingly deploy Top Tier ERP sooner than later—realizing the value earlier in life while

avoiding the pitfalls of waiting too long.

Enterprise Resource Planning (ERP) applications, delivery ecosystems, and knowledge

resources have evolved radically over the last two decades. Oracle Accelerate for Midsize

Companies makes Top Tier Oracle ERP affordable and manageable for companies in their

early life stages. Oracle Accelerate is Oracle’s approach to providing business software

solutions to midsize organizations. Oracle partners deliver complete software and services

packaged in rapid, low cost implementations. The keys to this approach are Oracle Business

Accelerators. They allow solution providers to deliver industry-leading practices gained via

more than 24,000 implementations in a low cost fixed-scope implementation.

This briefing provides insight into why and how emerging companies are deploying Top Tier

ERP. Included are examples from around the globe of Oracle customers that chose to

implement Top Tier ERP while they were in early phases of growth.

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I. 21st Century Realities for Midsize Companies

Think about how business has changed in just the last few years.

The dominance of “Big Box” retailers—“Supercenters‖ or ―Megastores‖ put many small competitors out of business while creating an ecosystem for thousands of niche suppliers.

The emergence of tech-savvy consumers—customers who were once content with basic call centers and a 24-48 hour response window via email now expect real time support via phone, web-based knowledge centers, and ―live‖ text support.

Global commerce for all—global supply chains, global customer markets, and growth by acquisition are viable business models for companies of all sizes.

The Commoditization of everything—business and consumers who once would rather ―fight than switch‖ now require quality, speed, and lowest price from whoever can provide it in the most convenient manner.

The decline of the Full Time Employee—by necessity, businesses look to contract labor, outsourcing services, off-shoring, and re-shoring to deal with the ebb and flow of demand resulting from volatile economic conditions.

With such rapid and continual evolution of market conditions, business managers understand

that these realities require constant innovation matched with continual process improvement.

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II. Why should emerging companies invest in Top Tier ERP NOW?

It took about two decades for the business world to move from ―green screen‖ mainframe

computing to PC-based and client-server environments. During that time, IT was largely

viewed as a back-office requirement of doing business. In contrast, the move to thin client and

web applications is occurring in a fraction of that time. The speed of business drives this

innovation and now business executives and managers look to IT systems as enablers of both

their tactical and strategic plans.

Today, almost every consulting, process reengineering, and compliance project aimed at

improving business performance ultimately becomes an IT project. Why? Because the desired

results cannot be achieved without corresponding IT innovation.

Standards and Compliance—Sarbanes Oxley, J-Sox, IFRS, Deutscher Corporate Governance Kodex, Pre-IPO

Manufacturing & Supply Chain Efficiency—Lean, Demand Flow, Six Sigma, SCOR

Business Process Automation—employee self service, e-procurement, order-to-cash

B2B Collaboration— EDI, e-store, Standards for Suppliers, Vendor Managed Inventories

Marketing and Sales—CRM, social media, mobile applications, pipeline forecasting

The vast majority of large enterprises implemented Top Tier ERP at some point in their

existence. Emerging companies now realize a global economy requires the deep industry

functional capabilities and the broad product footprint of Top Tier ERP Likewise, Top Tier

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ERP vendors like Oracle have invested heavily in making their products easier to deploy and

maintain while constantly striving to reduce TCO (Total Cost of Ownership).

In addition to the immediate impact, as a small companies grow they benefit from the

flexibility, scalability, and functional richness of Top Tier ERP in—

Lower opportunity costs—IT infrastructure is in place for future innovation initiatives.

Earlier process automation—leveraging the broad product footprint of core ERP.

Avoidance of a “Rip and Replace” scenario—the disruption of replacing legacy

systems.

Phased rollout—applications can more easily be deployed in smaller, easier projects.

Complementary portfolio—pick and choose from an extended portfolio of applications

with an integrated architecture built on open standards to support future business

needs.

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III. How do emerging companies deploy Top Tier ERP?

Whereas emerging companies need the functional depth and product breadth of Top Tier ERP,

they typically cannot deploy them in the same manner as do large enterprises. Let’s examine

some of the deployment considerations.

Resources

For midsize companies, selection of an implementation partner is equally important to

selection of a software applications provider. Typically, such companies do not have the in-

house resource bandwidth and expertise to support a full scale replacement of legacy systems.

Mentoring—partner resources work alongside internal IT staff to transfer knowledge during all phases of the implementation.

Resource augmentation—partner resources provide the necessary incremental bandwidth to complete the project on time and avoid business disruption.

Talent pool—Top Tier ERP skill sets are more commonplace than those for Tier 2 ERP and niche products.

Product and project scope

Emerging companies must keep focused on the project plan and avoid being distracted by add-

on projects when implementing Top Tier ERP.

Strict scope control—avoidance of change orders associated with broadening of application footprint or functional plan.

Timing—implement applications rapidly during slowest season and control project scope to ensure the project is completed before the next busy time of year.

Phased implementations—applications are deployed in shorter projects—typically 60-120 days—with rigid scope control that addresses very specific needs.

Prioritization by value—initial phase focuses on high value areas with tangible benefits that sometimes fund subsequent phases of the overall IT applications strategy.

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Tools and Methodologies

Emerging companies have small IT staffs—typically 2 to 10 people—focused on maintaining

legacy systems. With little or no knowledge of the new applications being deployed, these

companies rely heavily on partner and software tools and methodologies to ensure a successful

project.

Focus on the “To be” rather than the “As is”— spend less project time on documenting existing processes and more on understanding post go-live business processes.

Adoption of best practices— adopt embedded industry leading practices for most processes –as much as 85% —and devote resources to configuring unique needs.

Rapid go-live on conference room pilot (CRP)— get up and running immediately on CRP—usually in about one week—so that internal resources can learn by doing.

Use of Rapid Implementation tools—vendor and partner developed tools aid in the rapid configuration of both embedded industry leading practices and specialized needs.

Deployment Options

A growing company’s hardware and staff needs change rapidly as does its capital structure.

These needs are not always clearly definable. Thus, it is increasingly common for companies

to adopt a hybrid or blended approach that accommodates current needs while providing

flexibility for changes in the future.

Alternative financing—applications vendors and third parties offer financing alternatives with per month pricing to reduce or eliminate capital expenditures.

Hosting Services—applications vendors and third parties also offer hosting options that reduce both physical and IT staff needs.

Skills outsourcing—companies contract with their implementation partner on an ongoing basis for functions such as system maintenance, database administration, and application configuration when they don’t need these roles in Full-Time-Equivalents.

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IV. Considering a Tier 2 ERP Solution? Ask these questions first.

Top Tier ERP may not be the right solution for every emerging company. But before you

choose a solution from a Tier 2 ERP provider, answer these questions.

Ten Questions to Answer before Choosing Tier 2 ERP

1. Will we have multiple implementation partners to choose from in our geographic area with both product and industry expertise?

Some Tier 2 ERP providers assign territories to their partners while others do

not have extensive partner networks to provide potential customers with

choices.

Oracle has thousands of certified partners worldwide to provide customers

with multiple options.

2. How many partners will be required to complete our enterprise applications implementation?

With some Tier 2 ERP providers, you may need multiple partners to deliver all

components of your solution.

In the vast majority of projects, only one Certified Oracle Partner is required

to complete all aspects of your implementation

3. How hard will it be to find and hire IT staff to support our ERP choice?

There may be a shortage of resources in your area and/or industry with skills

matched to Tier 2 ERP provider’s solutions.

Oracle ERP skills are among the most common within consulting communities

worldwide.

4. Will we have to move to a different version of ERP when we grow beyond midsize and/or expand to multiple countries?

Commonly, Tier 2 ERP providers cannot scale to support large enterprise

needs or multi-currency, multi-company operations.

Regardless of which ERP suite they choose, all Oracle ERP customers use the

exact same versions of products, whether they are startups or multi-billion

dollar conglomerates.

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5. How much of the functionality we need will be provided by standard—“out of the box”—capabilities and how much will require customization.

Some Tier 2 ERP providers only offer core ERP functionality, requiring

customers to implement 3rd

party products or contract with partners for

industry-specific extensions.

Oracle offers deep functionality across a broad range of industries so that

midsize customers rarely customize their ERP solutions, meeting functionality

requirements via configuration not customization.

6. How will we be provided with documentation and support for all products and customizations we need to meet our project goals and how will that impact our ability to upgrade those products in the future?

When a company has multiple enterprise applications, implemented by

multiple partners, documentation of customizations and integrations can be

difficult to create and maintain over time which can adversely affect their

ability to accept software updates and upgrades.

Oracle offers broad product coverage within each ERP application suite,

reducing the requirement for multiple vendors and partners which eliminates

the need for customer-specific documentation.

7. How financially strong and stable is our potential ERP vendor of choice?

Many Tier 2 ERP providers are experiencing decline in revenues and profits

which hinders Research and Development while often making them candidates

for takeover.

Oracle has a strong financial track record, including 18% an average annual

revenue growth rate over the last five years

8. What is the long term viability of our potential ERP product suite of choice?

Tier 2 ERP providers may not have the financial resources or economies of

scale to invest both in long range product innovation and in building

incremental functionality for all their existing product suites.

Oracle is committed to long term support of all its ERP product suites via its

Oracle Applications Unlimited and Lifetime Support policies while also

investing in enterprise applications innovation via the Oracle Fusion

Applications initiative.

9. Will our product of choice be able to support expansion into new global markets?

Tier 2 ERP providers typically cannot support their products in as many global

markets as can Top Tier ERP vendors and may not offer multi-currency,

multi-country capabilities without multiple instances.

Oracle has customers in over 145 countries worldwide and all core ERP suites

offer multi-country, multi-currency capabilities.

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10. How do Tier 2 ERP choices compare to Top Tier ERP in both Total Cost of Ownership (TCO) and Return on Investment (ROI)?

The true costs of an ERP choice must take into account not just initial and

ongoing costs but also the benefits to be realized immediately and in the long

term.

Top Tier Oracle ERP has a manageable TCO for midsize businesses and

delivers tangible ROI rapidly to emerging companies.

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V. The Oracle Accelerate Difference

Oracle Accelerate is Oracle’s approach to providing business software solutions to midsize

organizations. Oracle partners deliver complete software and services packaged in rapid, low

cost implementations. The keys to this approach are Oracle Business Accelerators. They allow

solution providers to deliver industry-leading practices gained via more than 24,000

implementations in a low cost fixed-scope implementation.

Learn more about Oracle Accelerate for Midsize Companies

Find an Oracle Accelerate solution for your industry and geography

http://www.oracle.com/us/solutions/midsize/accelerate-solutions-marketplace-071686.html

Download webcasts and whitepapers

www.oracle.com/goto/midsize/thoughtleadership

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VI. The Oracle Customer Experience—Emerging companies that have deployed Oracle ERP

North America Customers

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Asia Pacific/China Customers

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Europe/Middle East/Africa (EMEA) Customers

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Latin America

\ White Paper Title

December 2010

Author: Jim Lein]

Contributing Authors: Adarsh Pete

Oracle Corporation

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