Purchasing Enterprise Software for Dummies

Purchasing enterprise software is one of the most curious product purchasing event there is.  No other industry would have a customer purchase products and services that they don’t plan to use for 9 to 12 months.  Not only does the software sit idle on the “shelf” until it is put into use, but the service contract starts to run and therefore the customer is wasting valuable support dollars that could help them solve a production issue when needed.

The basic strategy that venders use is to imply that if the customer were to purchase today (actually before the end of the quarter), they will get the deal of the “century”.  When in fact, if the customer were to ask for the same or a similar deal at the end the subsequent quarter, it will magically be available to them.

In addition, most projects when planned correctly and phased in over time, don’t require all the software at the project initiation phase.  The software for developing the system is required initially, followed by the software for the test environment(s), followed by the software for production.  And depending on the numbers of developers, a reasonable strategy would be to simply purchase named user licenses for the development team and then CPU based licenses for test and production. (There’s further refinements on this model as well.)

Finally, if customers are willing to take on a measured amount of risk in their deployment rollout, purchasing can occur over a range of months and weeks as users are ramped up on the system.  Much of this last point is dependent on using virtual machine software (VMWare & Oracle VM) as a model for hard partitioning CPUs on the machines for the production system.  But the model is quite simple, if the user population is low for the initial rollout, the customer may be willing to have a single point of failure (with the expectation that recovery time is within an hour).

There's a lot of detail behind each point above that I'll share with anyone that asks...

Texas Industries, Inc (TXI), Oracle WebCenter IPM, and AP Automation

Here's a topic that you likely don't think much about but has a very large impact and application within any medium to large size customer.  It's around taking accounts payable invoices, pulling them into a managed infrastructure, and reducing the need to manage all kinds of forms and paper documents.

Sexy? Not really.  Big business benefit for a reasonable investment?  Absolutely.

At Keste, we worked with Texas Industries, Inc during this year to provide a solution in just this space.

Borrowing from TXI's site, they are a leading supplier of cement, aggregate and consumer product building materials.  All types of construction - residential, commercial and public works - use these materials.  They have 4 Cement plants in TX &CA, 18 Aggregate plants, and over 70 Concrete plants to meet their increasing demand from customers.  TXI is the largest, low-cost producer of cement in Texas. When the economy recovers, TXI will enhance its market position when it completes its expansion project to more than double the existing production capacity at our Central Texas cement plant.  They have similar expansion plans for their CA plants as well.  So needless to say, they aren't the exact profile that you might expect a high tech AP automation process to have a lot of value but they absolutely are a key target area for these types of solutions.


Reducing operating cost is one of the main reasons to initiate this project because if look at the Elements of a Typical AP cost from the chart below, you can see that the labor cost is by far the largest cost in the invoice processing cycle. 

So in order to reduce the cost of labor, it requires an understanding of the elements that contribute to the total cost.  For TXI, the main cost areas were manual data entry, approval routing and manual
approvals.  The best way to eliminate this manual process is through automation.


Invoices were mailed to virtually all plant/office locations. Each location has resource(s) dedicated to handling AP invoices and TXI had over 50 people involved in the process.  At each plant location from opening the mail, to identifying the approval hierarchy, through routing the invoice for approval, took nearly 30 days.  Some of the plants are located very close to each other and have shared management resources, but these were still very laborious and very expensive processes.

So the overall goals were simple:

1. Minimize manual data entry
2. Eliminate manual paper handling processes
3. Reduce employee resources involved in AP invoice processing

Our specific target was to get all invoices into the AP system in less than 5 days (compared to ranging from 1 day to 2 weeks or longer).

This would enable three changes to the business:

1. Allow for additional earned discounts
2. We can identify liabilities much faster

3. We could better assess the daily cash needs 

Now lets talk about how TXI's new invoice process works.  The diagram below also illustrates this.  Invoices are no longer processed at the field office/plant locations, they are all sent to central processing center. This immediately reduces the need for an AP Processor in each field office. For TXI, the AP processor total headcount was reduced by a total of 47 people.  These 47 people were then able to spend more time helping the field offices serve customers or retrained in other parts of the business.

WebcenterCapture, which starts the process by scanning documents such as invoices and receipts, and then capturing important data from them for indexing before committing them to WebCenter Imaging. 

There is 1 person that is performing invoice scanning through the use of Oracle Forms Recognition technology.  This allows us to achieve over 75% of scanned invoices to be entered into the system without any exceptions.  This means that the 3 other AP processors handle the exceptions.  Their job focus shifts from data entry to data review, editing, & workflow monitoring.  A much more efficient use of their time and much more valuable to the overall business.

In addition, Oracle WebCenter IPM 11g was used for coding and handling the different validation errors in combination with Oracle eBusiness Suite as the AP system source of record.  

Webcenter Content is the storage and content lifecycle management system for all financial documents. It ensures that no more costly
shipping, handling and retention of paper is required, as documents such as invoices can be imaged at the front end of the process, and then effectively managed throughout the various stages of business operations until they need to be archived for safekeeping and data offload. Secondly, it allows for imaged invoices to be attached to workflows, and be retrieved through E-Business Suite interfaces for processing, such as the Payables UI.  So, this implementation cut down on processing times by ensuring that AP Processors never have to leave their environment to accomplish tasks like key from image or P.O. matching. 

Leveraging the power of Oracle BPEL Process Manager workflow engine included with the Oracle Business Process Management Suite, TXI implemented advance exception handling capabilities for routing and delegation to handle tasks. The Business Activity Monitoring component provides a customizable dashboard view of key metrics, enabling the A/P Manager to gain the insight into any process bottlenecks before they become an issue. 

And the actual goals have been reached and exceeded to the extent that invoices without any exceptions are in the system on the same day.  At worst case for the exceptions, invoices are in the system in less than 5 days, always!

For the future, TXI plans to leverage this solution as a foundation for automating other operations such as expense management, contracts or receivables, and various HR processes.

All of this was kicked off by a discovery workshop run by Keste to nail down the specific business requirements and put a phased delivery plan in place.  Anyone at Keste can provide you more specifics! But you can download the whitepaper and learn more from http://kestecoeevents.com/webinar.php

Social Software IPOs vs Oracle's WebCenter Social Network

Saw a really interesting article this morning in the San Jose Mercury News about Jive taking their company public. 

While I wish them all the luck in the world, I found the interesting detail to be in the Jive submission to the SEC.  They plan to go out at $8 to $10 per share and raise nearly $575M.  Great numbers!  The not so great numbers were in the fact that in the first 9 months of the year, they lost nearly $40M.  So extrapolating to the full year number, they'll lose nearly $55M for the year.  Compare that to losing nearly $21M the year before, I'm still struggling to figure out where the money is in this Social Software for the Enterprise software business.

In writing our book titled Reshaping Your Business with Web 2.0, we discussed some of these concepts and surprisingly not much has changed in the two years.

The missing piece of information is that customers are not looking for a Facebook for the Enterprise.  They don't want another destination that distracts their workers from getting their jobs done.  Yes, it is helpful to built a sense of community within a company or organization.  However, why wouldn't a company just sponsor a LinkedIn or Facebook community to allow this type of interaction.

Within most organizations, they are looking to get more context rich information when the reader needs it or requests it.  They want community interactions to influence results of what they are looking for to speed their quest.  For example, if I read a white paper on the latest improvements in Oracle's Exalogic, then everyone else from my company should benefit from the fact that 1) I found this as a content search, 2) I read it or more directly I downloaded it, and 3) I rated it or "liked it".  Oracle's WebCenter technologies includes an Activity Graph that enables all of these actions to be weighted to help influence what others see when they do a similar search.

Another example would be when sales reps are finalizing a quote for a customer.  At the time they compose the quote, they want the same type of "Ask the Expert" type features you see on most eCommerce sites on the public Internet.  This has to be included within their existing Portals or Applications without a rewrite.

And finally, they are looking for gaming style interactions but apply to their business problem.  If any of you have teenagers, you'll know of the online gaming sites like World of Warcraft or Call of Duty.  A screenshot below gives you a basic view:

Now I'm not going to say that I'm an expert, but integrated in the application, you can see a chat at the bottom left, in the middle of the screen all the resources available are shown, in the top right you get a view of where you are in the "world", and there are quick keys to slide these things out of your way, if they get in your way.

That's what customers are asking for in their daily work.  They want the tools and people they need available to them when they are required.  I encourage you to take a look at some of the HCM UIs for Fusion Applications as they embody this concept.  All of this is made possible with the WebCenter technology stack.

You can quickly see at a glance all the relevant items.  This is my experience of what customers are asking for when they want social software brought into their enterprise.  They don't need another distraction for their employees.  This is my take on why the stand along social software products cause enterprises pause when they try to compute ROI.

Keste has unmatched expertise in building compelling portals delivering a rich end user experiences

While I wasn't the most prolific blogger at Oracle, I did post on a regular basis to provide insights into the product strategy and direction.  You can check out some of my previous posts.  So now that I'm kicking off my blog at another home, I figured that I'd take a few paragraphs to answer the question that seems to be first and foremost in the minds of many of my colleagues and friends: Why did you decide to join Keste?

My reasons were two fold: one professional and one personal.  I'm going to start with the personal drive and then I'll provide the professional choice. 

I'm a California native and except for me venturing down to the Southland to attend UCLA, I'm a bay area native as well.  So when my wife and I discussed moving to another country in a few years, we became very excited.  But we both knew that to drive product strategy and to be geographically removed from the core team members would spell disaster for the product and would lead to a very ineffective management chain.  We knew that I would need to move out of the product area and into the services field.  Once we came to this conclusion, I looked inside and outside of Oracle as we expected to some how land in Europe in a few years with our family.

This brings me to my professional choice for joining Keste.  I had been working with the team from Keste for over 4 years in all their cutting edge work on WebCenter, UCM, SOA, Fusion Middleware, and Applications.  I knew that above all other partners, they invested early in learning the new WebCenter product even when it wasn't ready for widespread usage.  They had sharp, dedicated engineers join the onsite and off site beta programs.  They provided direct feedback from early projects that they started when no one else was yet using the product.  Then they showed consistent success with early adopter customers to make them quickly successful.  The reason for their early successes were three fold: 1) Exceptional technical product knowledge, 2) Practical project scoping for quick wins, and 3) they had really smart people on the team at every position.  These core assets are brought to every project and lead to the biggest references around the WebCenter product. 

In addition to the technical investment, I quickly learned that they obsess on the customer's goals as their singular focus.  Keste takes the time to build a long term relationship with each and every customer.  The focus is not on volume and profit, the focus is squarely on the customer.  Don't get me wrong, their is a focus on pipeline and profit, but if you focus solely on the customer, the other two have a way of taking care of themselves.

So when I talked to Howard, Sri, & Ken about joining the company, it was a very quick conversation.  Keste has unmatched technical expertise that takes a long time to acquire, has a customer focused approach to project delivery, have implemented solutions that are unachievable by any other partner, and pays close attention to detail to make sure the projects are delivered on time and under budget.  With the combined expertise at Keste and the opportunities for new business in Europe, it was the easiest choice I ever made!

KESTE's Vince Casarez speaking at AIIM 2011 re Oracle WebCenter and E2.0