With recent news of the planned obsolescence of SAP solutions including its long established ECC and R/3 ERP products, users are under pressure to consider when they will migrate to the latest iteration of the German giant’s software. But for many in Australia and New Zealand, the advantages of SAP’s most recent flagship solution, S/4HANA, are such that migrations and upgrades are being completed proactively, long before any hard deadlines are brought to bear.

iStart caught up with Nick Mulcahy, CEO of Zag, one of Australasia’s leading SAP implementation partners, in a quest to understand what end of support means – and why many of Zag’s customers are already shifting to S/4HANA.

“We’re seeing a ‘soft landing’ from SAP, and that’s pretty unprecedented.”

Mulcahy immediately said there should be no reason to panic at the announcement of end of support for R/3 and ECC, initially announced as 2025, now 2027. “What’s interesting [in the changed deadline] is that we’re seeing a ‘soft landing’ from SAP, and that’s pretty unprecedented,” he said.

“A great example is that the original statement on end of support said all HR and payroll customers had to be off by 2025; a more recent announcement says anyone on existing on-premise systems can remain on them indefinitely.

“SAP was perhaps a little ambiguous with the initial announcement of 2025, but they quickly changed plans once they realised it may not be possible, with the number of partners available to assist customers with a migration, and so pushed that to 2027.”

What Mulcahy is alluding to is that like most ERP and digital transformation projects, SAP installations and upgrades can take time, investment and change management. This is not unreasonable, as SAP installations are also typically found in what he calls “the most complex” of environments: highly demanding, by necessity customised, at enterprise scale. An upgrade can be as challenging or even more so than a Greenfield implementation – and that means even the well-established partner ecosystem might find itself overwhelmed.

Mulcahy says it is encouraging that SAP is listening to its customer and partner base. “I wouldn’t expect them to be severe and the move as a whole fits with what customers want; all customers, including those on R/3 and ECC and even those on S/4HANA, can take comfort from the softening stance SAP is taking.”

Part of that relates to the reality of highly complex systems in global companies; another part reflects the realities of certain customers around the world who are unable to countenance a move to the Cloud.

The S/4HANA stampede has begun
To date, Zag has already brought multiple customers onto the S/4HANA platform. “We’re seeing significant adoption of S/4HANA, particularly in New Zealand; several are live, and we have more lined up for the coming year than we’ve already delivered,” Mulcahy confirms.

He adds that in the early days, the fastest SAP ever (first released in 2015), with its in-memory HANA database delivering what SAP describes as ‘Intelligent ERP’, sales were slow. “S/4HANA is a considerable upgrade and with considerable upgrades businesses often wait for a few other organisations to convert first, taking on board their lessons learnt. Now that the early adopters and industry disrupters have blazed the trail, we’re seeing a big group of companies in the early majority category eager to implement.”

It is in that organic momentum that the justification for the effort is to be found. In simple terms, S/4HANA is worth the effort. “We’ve never seen this before in SAP upgrades. Businesses are being proactive; they are requesting S/4HANA and they are going about it differently than before.”

One approach has been through completing a technical upgrade first, in which the SAP system is brought to the latest released version, and then the business case is delivered with innovation sprints. “Customers are completing anywhere between 5-10 sprints, each a month long and delivering specific functionality,” Mulcahy said.

This is noteworthy because it represents better business planning and ‘innovation in action’. “It also differs from the traditional approach which bakes the lot into a core implementation,” says Mulcahy, adding that the ‘sprint’ approach consequently delivers value faster. “The technical upgrade might take 5 to 7 months, then you cherry pick innovation sprints depending on where value is found.”

He believes the changed approach owes to customers becoming adept at digitising their businesses. “IT departments especially are getting well used to the agile concept and how to do it. The business side, perhaps not as much, but we are seeing more savvy Boards where they want milestones and value paybacks along the way not waiting until the end.”

The value is in the S/4
It’s all about value and Mulcahy is adamant that the numbers of customers willingly signing up (“We don’t have to push this,” he notes) is a confirmation that the juice is well worth the squeeze.

“Customers cannot execute their 5-10 year strategy on ECC and SAP legacy solutions because the underlying technology is holding them back from, for example, delivering procurement savings or having the ability to grow their business which requires changing the way they execute their supply chain,” Mulcahy explains.

Improved execution depends on a digital core and real time data, created with S/4HANA and enhanced with Ariba or C/4HANA or Success Factors. “Broadly speaking, these customers are taking customer-facing journeys, the stuff that McKinsey and BCG are talking about, with big programmes of work changing the way their business operates.”

Towards a brighter SAP future
Since S/4HANA offers considerable advantages in delivering a ‘digital core’, Mulcahy says every SAP customer should get it on their radar. What’s more, with a deadline coming and analysts around the world questioning the capacity of the partner ecosystem, those who move early are likely to enjoy easier access to services. “The talk is that the ecosystem will have to double to meet demand and even that won’t be sufficient to convert all customers by 2027. It’s therefore a good idea to look at your business cases and consider where your business is going – and for some, for example on ECC who haven’t had an outage for 5 years, maybe there isn’t a case and that’s fine. But if your analysis points to action, best to take it sooner rather than later.”

Significant time, effort and money are tied up in invoicing and the Australian and New Zealand governments have indicated that the imminent introduction of a new standard for digitising the exchange of business documents could put A$30 billion back into the economies.

That standard is named PEPPOL, or Pan-European Public Procurement Online, and government agencies on both sides of the ditch have been consulting with industry partners to bring the benefits to life. One such partner is B2BE, which is set to become one of the early access points to the network. B2BE, with deep local roots and a global footprint as an electronic data interchange specialist, is expecting PEPPOL to go-live shortly and start putting those savings into the pockets of local organisations. This, says B2BE PEPPOL manager Jason Diack, will initially be driven by companies doing business with the government being encouraged and incentivised to use e-invoicing.

“This is a big step forward for what we generally call Electronic Data Interchange [EDI], because it effectively allows anyone to trade under a single framework whether locally or in Australia,” says Diack.

On the western side of the Tasman, the Australian Tax Office is the PEPPOL controlling authority; in New Zealand, the role is handled by the Ministry for Business, Innovation and Enterprise (MBIE). When the PMs of both governments jointly announced PEPPOL back in February, they estimated the A$30 billion would be cut out of invoicing costs over the course of the coming decade. “There are a number of pilot activities already underway around the draft specifications which have been established for PEPPOL locally,” notes Diack; “There’s obviously many document types, but PEPPOL is kicking off with the most common – e-invoicing.”

Clive Calder, Senior Manager Trade Technology at Pfizer New Zealand, explains the benefits of EDI. “With B2BE we cover numerous connections to our customers in the pharmaceutical and healthcare industry.  Over time, we have expanded the number of customers we connect with, and this now includes electronic messaging of purchase orders, acknowledgements, shipping notes and invoices. This automation enables Pfizer to better serve customers with reduced effort, improved accuracy and quicker response. It is an important contributor in managing and optimising the supply chain.”

“It’s a faster, easier setup because everyone’s talking the same language.”

Praful Patel, in charge of eBusiness at NZSafety Blackwoods which has used B2BE services for over 10 years, adds that the efficiencies associated with EDI connections cannot be underestimated. “Our customers benefit by using a standardised procurement practice to raise and submit purchase orders, which allows for efficient processing and payment of invoices. B2BE make it simple by translating purchase order and invoicing formats so they work in our systems, and in those of our customers.”

He adds that NZSafety Blackwoods is likely to use the PEPPOL standard in due course. “If government agencies that procure from us are changing, we’ll partner with them on it. And we’ll work with B2BE to do it; their experience in the integration space is second to none.”

Pfizer’s Calder, meanwhile, says the pharmaceutical company has reviewed PEPPOL. “We do not have any deployments in place, but we will engage with B2BE in New Zealand if opportunities arose to drive procurement improvements for our customers. “

Diack points out the big advantage of PEPPOL over other EDI standards and methods: “As a single standard, it is an easy introduction to EDI. With ‘traditional’ methods, if you had 100 trading partners, you might spend $1,000 integrating each one to your business systems. It could be more, depending on how many document types you’re exchanging – purchase orders, advanced shipping notices, waybills.”

It costs that much says Diack, because most EDI requires custom programming on both sides of the transaction. “PEPPOL standardisation and conformity means you map one document to trade with all government departments and your trading partners. It’s a faster, easier setup because everyone’s talking the same language.”

A good question is where PEPPOL leaves ‘other’ EDI. It isn’t a case of ‘one ring to rule them all’ and nor has it ever been, explains Diack. “PEPPOL will broaden the reach of EDI particularly to smaller businesses, but it doesn’t replace custom integrations. These remain valuable, particularly those already in place. And a general standard doesn’t always provide for specific use-cases, so going forward, companies with process- or industry- specific EDI requirements will still find value in custom interconnections.”

Diack’s colleague and fellow B2BE BDM Grant Young says B2BE is extending its 20-year track record in the provision of EDI solutions to PEPPOL and certification as a PEPPOL access point. “We’re ready to help local businesses get on to PEPPOL so they quickly see the advantages and the cost savings,” he says.

And it’s more than cost savings; going digital is faster, more convenient and delivers a boost to the cash conversion cycle. Simply put, e-invoicing should mean getting paid faster, with less hassle – something every business appreciates.

B2BE is happy to speak with anyone seeking more information about how PEPPOL works and what is involved to get it set up.

Contact details:

Australia                                                        New Zealand

T: +61 3 9682 6388                                        T: +64 9 912 2200
E: au.info@b2be.com                                    E: nz.info@b2be.com

With Industry 4.0 or the Fourth Industrial Revolution breaking all around us, businesses of every stripe are obliged to do better or stand by as competitors move in on their territory by delivering improved accessibility, convenience and service.

Doing so depends on appropriate systems to make it happen. The coincidence of many so-called digital transformations across organisations has heralded an ‘Age of Industry Transformation’ where data is much more fluid along the value chain. It is an era that will be driven by a postmodern enterprise technology architecture.

That is the idea put forward by Matthew Addley, business strategist and industry evangelist at Infor, who says that while there is an element of the foundational in core systems like ERP, they must also enable agility and innovation.

“Postmodern implies a willingness to co-exist… it’s a thin wrapper on those core services, into which other systems can easily be connected as and when required.”

“When you have digital siloes emerging, you have a problem. You need your core systems to be open and flexible and to do that you invest in the cloud and a suitably open architecture which gives you the ability to pivot and develop nuanced aspects with, for example, collaborative workflows and mobility within the same platform.”

Postmodern ERP, he explains, is a business applications strategy which features a connected portfolio of heterogenous applications.

“You are making sure to have rigour in the core, along with the ability to provide workflow and collaboration. Postmodern also implies a willingness to co-exist, rather than trying to be all things to all people; it’s a thin wrapper on those core services, into which other systems can easily be connected as and when required.”

The Age of Industry Transformation is to digital transformation what postmodernism is to modernism. It is an era where businesses have a sharp focus on customers and convenience, with less attention afforded to raw ‘cost’ (which, regardless of what anyone says, remains a fundamental driver for most buying decisions).

What this means in practice is the necessity for more integrated supply chains and business systems more closely married to the particular operations of any one business (Infor calls this ‘micro-verticals).

After all, convenience and customer service are differentiators capable of transcending even the powerful force of cost (people are always prepared to – and do – pay for convenience). And achieving convenience at scale depends on finely tuned operations.

Addley says this fine tuning starts with a solid set of foundations within the enterprise, but also depends on integrating other systems and data sources – IoT data, POS data, or the systems of partners and suppliers.

“The important bit is that your systems can integrate and they can enable collaboration not only at a systems level, but at a people level too,” he notes.

As for ‘openness’, that means Application Programming Interfaces, right? “One of the technologies is an open API, that’s the preferred method and it can perform well. But many businesses don’t have API-ready platforms themselves, so you have to offer more,” Addley confirms.

And it doesn’t have to be ‘high tech’ either, at least not conceptually. He says something akin to the humble chat app can play a major role in advancing the Age of Industry Transformation, and it all has to do with the fact that people do business with people.

“If you’ve got the procurement department beating up vendors just for another cent off, it doesn’t actually help matters, it introduces additional risk into the supply chain,” Addley points out. “But even in the absence of integrated systems [a preferred scenario, obviously], you can achieve better cooperation if people are equipped to talk to one another very easily.”

Addley looks to business collaboration apps delivering clever stuff like context analytics resting on data contained in enterprise systems, as well as easy sharing of screens and other information involved in various business processes. But at its heart, it’s simply a repurposing of a tool which has its roots somewhere back in the 1990s.

The Age of Industry Transformation is the topic of our Lunch Box webinar where Matthew Addley presents the concept to attendees, and then discusses in a roundtable with DX professionals representing enterprises who have or are undergoing transformational change.

Management guru Peter Drucker’s memorable line that ‘culture eats strategy for breakfast’ has a local incarnation in the winner of the recent CIO Awards ‘Best ICT Team Culture’ gong. Top SAP and cloud services partner Zag has added the accolade to its collection and it’s one the company is particularly proud of.

That’s according to Nick Mulcahy, Zag CEO. “It’s phenomenal to win, particularly given the growth we’ve experienced over the past year. And even though this award is aimed at internal IT teams rather than whole companies, we had confidence in our entry because everyone in our business is part of one team – team Zag.”

Zag recently rebranded from Soltius, with the new name reflecting the consulting provider’s approach of ‘doing things differently’ (where others zig, they Zag). There’s the usual stuff, of course, of focusing on customers and treating everyone with respect and dignity; these are obvious and generic requirements for common decency if nothing else, even if all too often it’s more lip service than fact.

The way Zag shows it is getting the bacon delivered is in some hard facts of its own. In business for 23 years, it has a 90 to 95 percent staff retention rate. It has 5 employees who have been with the company for over 20 years. The management team has a 50/50 gender split. Mulcahy started as an Enterprise Architect 16 years ago; the Chief Customer Officer as an IT Administrator in 2004. Zag is 100 percent owned by its employees, in fact, almost a quarter of them own shares in the business.

Everyone within the company is expected to actively live the values – which themselves were determined through engagement with every staff member

There are more numbers, too, and they point to the natural difficulty of maintaining an award-winning culture in a growing organisation. There’s the sheer headcount, for starters, which has gone up by 27 percent in the past year, following several years of 15-odd percent growth. This makes for some 200 employees. Then there’s the cultural differences across countries: Zag has expanded to Australia and the United States, both nations where things are done somewhat differently from God’s Own.

Those with an anthropological bent will know that co-operation with larger numbers becomes increasingly difficult. In fact, it gets to a point where it all falls down…unless there is a commonality which gets everyone pulling in the same direction.

That commonality is culture, and this is precisely why it eats strategy for breakfast.

It starts with lived values
Creating a company culture starts with values. Since values lists don’t generally vary much from one business to another, there’s no point rolling them out here; what is instead important is the approach taken by Zag in instilling them.

“Actions speak louder than words, everyone within the company is expected to actively live the values – which themselves were determined through engagement with every staff member,” says Chief People Officer, Sarah Millard. “It’s why, when expanding to Australia and the States, we made sure to have a consistent senior executive presence in the new offices. It helps culture grow through osmosis.”

Where Zag differs from many is through a desire to actively encourage, measure and manage windows into its culture. The primary tool to do that has been the Officevibe interactive platform. Feedback and comment are constantly assessed, either anonymously or personally, weekly surveys constantly measure the pulse and major changes or decisions impacting employees – like the creation of company values – are put to a vote.

“We have a high survey participation rate and thousands of comments or suggestions [in Officevibe]. Our leaders are constantly answering queries, acting on suggestions and most of all actively listening to what our people have to say,” Millard reports.

It means staff members aren’t isolated from one another or managerial decisions; Mulcahy likes to joke that his door is always open. That’s because he doesn’t have one, choosing to  sit in the open-plan office with the same desk set up as the next staff member.

Investing in people
If you’re going to claim a culture of caring, demonstrating care is essential. “Our people are our brand and our identity is a tight-knit, high-performing team who do things differently,” says Mulcahy.

Keeping people happy, engaged and up-to-speed is crucial, adds Millard, and that, she says explains Zag’s high staff retention. “We invest heavily in health and wellness, and training and development initiatives. And we have company targets for new skills gained, knowledge sharing and completion of development plans.”

The company has ‘wellness rooms’, Fly-Home Fridays (where staff working at remote sites do just that) and provides flexible hours and work-from-home opportunities. It has even engaged a wellness doctor and mentorship coaches. Again, hard facts, not easy words.

“We might be involved in technology services,” says Millard, “but we’re in the people business. Looking after our people is the foundation on which Zag is built. In every decision we make, culture is thought about first and foremost.”

Company culture is probably a bit like marriage. In the early days, things progress well all on their own. As time goes by, more effort and investment are required. It’s something Zag clearly takes very seriously and by all accounts is endorsed company wide.

After all, just look at the Best ICT Team Culture trophy shining, amongst plenty of others, on the awards table.

Ever had a nagging feeling that those invoices for business software are bigger and more frequent than they should be? Do you wonder why ‘support’ and ‘maintenance’ bills are both frequent and eye-watering? Do upgrades frighten you, not only because they inevitably cost more than planned, but are also disruptive?

Vincent Cerra, general manager of Medatech Australia told iStart the perception that ERP is too expensive is widespread. “With the bigger software providers, it’s simple. Customers are charged for everything they do or want done. Need a little development? Want another report? It’s going to cost you. And that’s before you even look at the big upfront costs for licensing.”

“If we get into a small manufacturer and provide software which accelerates their business, without punitive pricing, we all win.”

With 15 years of ERP implementation experience under his belt, Cerra has worked closely with a range of clients, industries and ERP solutions.

And he’s often seen that even when it takes next to no effort to make a change or introduce a new feature (or unlock a feature already in the software), ERP customers can expect big bills for consulting and configuration. “This is the way the ERP world is run. It’s not even the software itself; look at the resellers, the business model of which is typically based on billing for everything that moves.”

There’s an element of branding, too, Cerra added. “It costs a lot to build a big brand and customers ultimately pay for that. What’s more, when you have a ‘big name’ ERP, you pay a premium price and still don’t get all the features. For that, you’ll usually need to buy additional modules or use third party add-ons.”

Cerra said it is Medatech’s mission to change this situation. The company is a reseller of the Priority ERP solution. Priority was founded in 1986 with a mission to make ERP easier and is today used by some 8,700 companies around the world in on-premise or cloud software-as-a-service configuration. The ‘sweet spot’ for the ERP solution is manufacturing and distribution (from small to large scale), although it is also suitable for almost any general business.

In addition to being a clear mid-market leader in its home country, Medatech is active in the United Kingdom and Australia and has customers across the Pacific, including New Zealand. The company has development and support teams in Israel, AU and the UK.

Picking up on Priority’s notion of ‘making ERP easier’ (and less expensive), Cerra said unlike other packages, Priority is rapidly implemented (“No other ERP offers complex manufacturing as standard, out of the box,” he noted), low-maintenance and provides seamless upgrades. Asked how it is that upgrades are no-impact, he said it is down to how the software is written, along with the vendor’s unique business model which is tailored to benefit the end customer in both service and price.

And pressed for an example of rapid implementation, Cerra said creating a mobile application for warehouse transfers, for example, would require just 30 minutes. “And you can do that on the shop floor.”

He said all the features are included in the software, rather than developed as add-on modules. This also contributes to the relatively simple upgrade process. “You’ll have an element of testing, of course, as nothing is perfect, and these are complex environments, but it is far simpler and faster than with other ERP systems,” he claimed.

Cerra said competing on price can be a funny thing. “With Priority, the solution isn’t ‘cheap’, although it costs far less than what you’d pay from a big-name brand – and note that none of the big ones have a list price, they keep that from you. Instead, I’d describe our pricing as ‘fair’. You can get a license from a ‘big name vendor’ for, say AU$300 per month, which won’t do advanced manufacturing or provide an out-of-the-box mobility solution, or you could get the lot from Priority ERP for AU$160 per month. That’s fair.

“We also feel that we should be here to help our customers. If we get into a small manufacturer and provide software which accelerates their business, without punitive pricing, we all win.”

Cerra tackled the topic ‘Demonstrating ERP value for money’ in an iStart Prodcast webinar. Listen to him as he rolls up his sleeves for an exclusive peek behind the scenes of how modern built-for-cloud ERP solutions can transform your business, not your bank balance.

But just like the software itself and the environment in which it operates is complex, so too are licensing regimes – and without the right expertise, your environment may be costing more than it must on the one hand. On the other, it could be non-compliant with the contracts entered with the vendor, leaving your business open to penalties.

“Software compliance is potentially the biggest unbudgeted exposure for many organisations,” said Anna-Rita Stanley-Best, MD of Palisade Compliance, an independent provider of contract, compliance and pricing advisory services across the full Oracle stack. “And that even goes for companies which have a Software Asset Management solution in place.”

Stanley-Best pointed out that in Oracle specifically, there are multiple complex layers in the vendor’s solutions which can easily result in using software outside of the license provisions or accessing features which aren’t licensed for use.

And yet, most companies believe they are doing just fine. “In my experience, probably 99 percent of organisations feel they are OK. That’s because they are using the software in good faith; very seldom are there any organisations looking to intentionally breach their obligations.”

She points to one of Palisade’s recent customers as an example. “This company told us we were brought in to deliver a mere ‘tick in a box’, as they knew everything was in order. The feedback after the engagement was ‘boy, were we wrong’. There’s a lot of grey areas in Oracle licensing and this company’s experience is an unfortunately common scenario.”

Stanley-Best, who heads a team which consists of multiple former Oracle employees (including herself) said it is advisable to have the experts run a ruler over things before an audit is initiated by the vendor. “The sooner you get an assessment from an independent specialist the better. If we’re involved before the audit, there’s more we can do – and you will be in a better position for any negotiations.”

She said a specialist like Palisade understands software contracts as well as the software itself; that’s important, she explained, as it enables Palisade to understand how features and functions in software translate into the contracts. “Something else worth noting is that the language in contracts stays the same, but the features and functionality in software evolves constantly. It is essential to clearly understand where everything is, and be secure in the knowledge that the software and the contracts are aligned.”

What the customers say: Australia
But don’t just take Palisade Compliance’s word for it. One of the company’s Australian clients, who spoke with iStart on condition of anonymity, made no bones about the complexity of Oracle’s licensing regime, nor the value delivered by Palisade. “We’re a pretty big Oracle user, with over 50 databases; and yes, we’ve been hit by Oracle audit letters several times over the years,” he said.

Just what kind of an experience was that? “Truly awful. They aren’t there to help you comply, they are there to extract money. And we suffered badly, to the tune of millions of dollars. Not because we’d done anything wrong, but because the licensing, it seems, is designed to trip you up. The licensing is very hard to understand, it doesn’t make sense. And when you get audited, they will find something, and you will pay.”

Asked if he feels taken advantage of through this process, the user was unequivocal. “Oh absolutely. To this day. We’ve been audited by other big software companies, Microsoft, IBM, those guys come in and work with you to make sure everything’s properly aligned. Not Oracle.”

Getting Palisade Compliance involved some three years ago completely changed the game. “We realised we needed experts. And Palisade has given us the confidence to negotiate; when we get anything from Oracle, we don’t answer until Palisade has looked at it first.”

The question to which everyone is keen to know an answer is ‘has this saved you money’. “Millions. This is what is at stake, and I am not overinflating it. If you are an enterprise Oracle user, you must – you must – have independent experts examine your licensing and contracts. I mean, just on maintenance alone, we went from over a million per year, to $200,000. It’s significant.”

What the customers say: New Zealand
Another client, this one based in New Zealand, prefaced his discussion with iStart by saying “Oracle licensing is a complex and scary area.” While noting that Oracle technology “underpins our core systems. As a business, we can’t work without Oracle at all,” the Kiwi customer stressed the necessity for external and independent assurance and support. “After our first review with Palisade, it emerged we weren’t in a very good position. The expertise provided by Anna-Rita and her team meant we worked ourselves into compliance for a couple of hundred thousand.”

What could it have been, had Oracle’s audit descended? “It could have been in the millions.” And the customer added that the cost of Palisade’s intervention is less than a tenth of what the organisation would otherwise be paying the vendor. “The really good thing is that we don’t buy or do anything with Oracle without first consulting Palisade or taking them along with us. And the people at Oracle appreciate that Palisade knows what it’s doing. The relationship with Oracle has definitely changed: it feels that we are on a more even footing now.”

Most importantly, the customer added that he can sleep soundly at night, knowing his organisation is safe – and that his own professional integrity is unimpeachable.

Asked if this rather fascinating situation meant a fraught relationship with Oracle, the customer said that wasn’t the case. “It’s just a professional, commercial relationship. That’s it.”

From her perspective, when asked which sorts of businesses should seek software compliance assurance, Stanley-Best said the short answer is any which uses Oracle software. “The analogy is that if you are not across your taxes, it’s probably not a good idea to walk into your local tax office and let them sort it out. You’ll do better to first visit an accountant who will optimise it for you and work towards the best possible outcome for you.”

Published on the 27/04/2018 | Written by Donovan Jackson

One is that it isn’t new. Another is that it is a journey and not a destination – a process which, while it might have a definite start, doesn’t have a definite end. And probably most importantly, all efforts at digital transformation must be led by delivery of value to the organisation it supports.

That’s the observations from someone well into the process: The University of Tasmania’s CIO Jeff Murray. Over the course of five years, he’s guided a complete reinvention of the organisation’s business systems – a reinvention which has come with a price tag of around A$120 million, but which is delivering lasting and quantifiable benefits.

In a discussion with iStart, Murray said it all started by analysing where IT was sitting and realising that it needed vast improvement; “Particularly around service delivery, the supporting systems and infrastructure, it was clear that things weren’t ideal,” he related.

As is the nature of things in the technology industry (it is not for nothing that Gartner has a hype cycle), there is always the possibility of being led astray by the shiny new stuff. “At that time, there was a rush to the cloud. When putting together a strategy for digital transformation, it wasn’t a case of embracing the ‘latest and greatest’. Instead, we were looking to improve the way the organisation works, uplift innovation of the IT service and help people work better. Everything we considered was analysed in terms of the value it could add,” Murray continues.

Murray will share his story with delegates at the CIO Summit, taking place in Auckland from 13-14 June 2018.

The hardest yards, arguably, were to map every enterprise system over a 10-year time frame and how those systems were expected to evolve, whether legacy, custom, off the shelf or cloud. “We had a very close eye on understanding the way the ecosystem needed to work together to deliver a transformative journey.”

A lot went under the microscope, including the core student system the university runs on which Murray described as ‘the equivalent of manufacturing’s CAD-CAM’ and which itself is an ecosystem of some 20 subsystems. A lot of new initiatives were introduced, too, including CRM, a digital strategy for the external website, a course catalogue system, BI ‘which was virtually non-existent’ and a service management approach across multiple business units. He added that work is presently underway to digitise all processes where paper is involved.

What gave the University an advantage, Murray believes, is his description of the IT environment as ‘a good integration shop’. “We use TIBCO as middleware and that gave agility particularly around doing so many projects in such a short space of time. What that’s allowing us to do is combine front end service delivery into one shop for internal and external customers – something banks have been doing for 20 years, but which in education is unheard of.”

The introduction of service management, using software from ServiceNow, ‘really put digital transformation on steroids’, said Murray – but before explaining that, he said one thing which demands careful attention when making so much change is managing user expectations. “You get a general expectation from users that IT projects work seamlessly. That just isn’t going to happen. It takes time and careful management. Going live is often not the point at which value is realised and that is often the start of building features and functions which do in time add value,” he cautions.

Service management is being introduced across five departments in addition to the IT department. That’s involved the application of proven ITIL service management principles to marketing, student services and HR. More than the simple value of bringing order to chaos, Murray said this has another important benefit: it helps IT become a leader in the business where it once wasn’t.

“Take HR for example: they get 50,000 requests per year, so service management is crucial to help them manage better.”

Of course, investment demands results and Murray advocates the importance of measuring value. He reports that some A$11 million in annual savings have been demonstrated. In the time that’s passed, the University is now doing A$160 million more in turnover, which would likely not have been easy or even possible without transformed IT systems. The IT department is 30 percent more efficient in terms of people to run the show. And he believes everyone else is between 10 and 20 percent more efficient.

But these are still early days and he cautions those who look for rapid demonstration of value. “IT has a lag impact. It is difficult to say in advance what the benefits will be, but you must do it if the business is hurting, if the indicators are down, if you start needing more staff, if you aren’t able to process the transactions in the given time. When bringing in digitisation, you’ll only start seeing the benefits in one to three years’ time.”

You can hear directly what Jeff Murray and the University of Tasmania discovered on its digital transformation journey at the 2018 CIO Summit June 13-14 in Auckland.

Amidst the continued pressure to deliver innovative, services-driven business models and continued growth, financial leaders are playing an important, evolving role. Already the most important interface with investors, the CFO now also needs to become a key force in supporting business strategy and growth.

iStart caught up recently with David Krauss, cloud evangelist for San Francisco-based ERP provider FinancialForce, in a wide ranging discussion on why the landscape for CFOs is shifting – and found it is the software business that has a lot to blame for the changing sands.

It is tied to a perceptible shift from ‘product’ to ‘service’, and adding lifetime value to customers.

“For the CFO of yesteryear, it was about cost containment and pure operational efficiency. Now, it’s about how the back office can deliver top line growth to the organisation – and that means blending and evolving the responsibility for the CFO to facilitate growth, while cutting the cost of maximising lifetime customer value,” explained Krauss.

“For the CFO of yesteryear, it was about cost containment and pure operational efficiency. Now, it’s about how the back office can deliver top line growth to the organisation.”

In short, it’s a shift from ‘cost’ to ‘revenue’. “That’s in the context of a services economy; it’s easiest to think of that in terms of software as a service, but it applies to many more organisations, too. Think of the old days, when you sold software on a perpetual license. You couldn’t care less what the customer did with the software, whether they even used it or not, because the relationship ended right there.”

With SaaS (or anything ‘as-a-service’, for that matter), the vendor cares a lot about what the customer does with the goods. If they don’t use it, they stop paying for it. They stop paying for it and the CFO, the traditional bean counter, has fewer legumes to worry about. And that’s not a good thing.

Krauss knows this better than most. FinancialForce, part owned by Salesforce, is a member of a growing community of cloud software providers living and breathing on the Force.com platform.

And that environment really sums up the ‘value shift’ which has come along as part of the move to services. Vendors have far more interest in creating and adding ongoing value. Customers enjoy far more choice and (in most cases) have the power to simply move on if it doesn’t work for them.

Or as Krauss said, “The value is no longer in the ownership, but the utility of it.” You don’t want the digger, you want the hole.

Fair enough, then. But why is this a CFO problem; shouldn’t it really stay with sales and marketing, or maybe even the CEO? “Well, good question,” said Krauss, and it turns out, the answer is something of a data story “Consistent with the shift to the subscription economy, we’re seeing an evolving role and responsibility for office of finance, because with the right systems, the CFO has an unprecedented insight into the customer lifecycle.”

Krauss said the traditional notion of a separation between back and front office systems is giving way to one where it is possible to capture a multitude of data points from across the whole organisation: the touchpoints include customer interactions, invoices and billing events, support contracts and any engagements in the provision of the service. “These, in totality, create additional insight into how to maximise the value of the customer.”

Or, to look at it another way, to maximise the value your organisation can add to the customer. “Absolutely,” Krauss agreed. “You’re now able to put the customer at the centre of the universe. It’s a different way of looking at ERP, which in legacy terms, was architected around product and supply chain. We’re talking about architecting around the customer. And that should be exciting for everyone in the business – and CFOs in particular.”

iStart’s Lunch Box webinar “Top 4 CFO Imperatives for 2018” was a panel discussion looking at the evolving role of the CFO.

An Australian start-up is looking to change democracy for the better using blockchain technology. The company, SecureVote, has developed a system which it says allows people to vote securely, anonymously and instantly on issues as they arise, a process which CEO Nathan Spataro said can ‘increase the frequency of democracy’.

Politics and philosophy are at the heart of the company’s technology. Spataro told iStart the ‘journey began’ in 2014 through the founders’ involvement in the bitcoin community. “Then we started working on Flux, which is a new system of democracy, and formed a political party where we could make change without the ‘ruling class’, and out of that came a need for a decentralised voting system.”

Wikipedia states that the Flux party constitution confers the powers of a benevolent dictator on its leaders; the idea of ‘issues based direct democracy’ supported by blockchain isn’t unique either, with USA-based not-for-profit Democracy Earth looking to do something similar.

Clearly, Spataro and his co-founders believe there is a problem with democracy as it is presently practised. In the pitch for the interview, the following message was included: ‘Throughout the world, there are increasing levels of dissatisfaction with the democratic process. Many people feel their views are not being considered and that politicians are out of step with the feelings of voters.

‘High-profile examples of this dissatisfaction can be seen in events such as the Brexit vote in the United Kingdom and the election of Donald Trump in the United States. In both instances, many voters claimed afterward their vote was meant first and foremost to ‘buck the system’ rather than reflect their actual political values.’

While there is certainly a case to be made for the digitisation of an obviously clumsy, expensive and slow system of casting votes – which involves paper and pencils, of all things, for millions of people – it is arguable that democracy can’t be considered problematic when it doesn’t deliver the ‘right’ outcome.

Going on, the pitch added: ‘This broad sense of dissatisfaction comes at a time when people have never had better access to knowledge. No longer restricted just to mainstream media outlets, they can obtain information from a broad range of sources, allowing them to gain fresh perspectives and make more educated decisions. Unfortunately, however, the traditional democratic system is not well designed to cope with a more educated and informed voter base. There is no easy way for people to become more involved in the decision-making process, outside of electing politicians every three or four years.’

Also unfortunately, despite or perhaps even because of the internet, people remain gullible. Fake news and ‘do your own research’ are catch-calls in a society ready and willing to embrace new idiocy (anti-vax and chemtrails) with evergreen claptrap (homeopathy, crystal skulls, etc.)

Vote on every issue, easily
SecureVote’s answer was the development of a system which will allow people to vote every time an issue arises, using their smartphone. “We’ve devised a way to do decentralised voting on blockchain which provides anonymity for voters, something which hasn’t been done yet in any other digital systems,” said Spataro. “And it offers scalability and trust; with blockchain, you don’t need to worry about trust as you can publicly audit it, while maintaining a secret ballot, and see that the votes are coming from validated users.”

Spataro said the technology was initially built for Flux, the political party; with the Australian federal election complete (in which Flux won 0.15 percent of the vote), attention turned to the start-up company, SecureVote.

From politics to business
But even ideologically-driven companies (and one is impressed with 20-something Spataro’s exuberance) must pay the bills, and as has been the case since antiquity, politics and business inevitably mix. “We quickly identified that as a start-up business, it’s not prudent to focus on governments as they tend to be slow to move. We realised that the cryptocurrency market needs this technology as they don’t have a good way to provide governance or for token holders to impact the ecosystem, provide feedback and so on.”

So, while blockchain is again being posited as a world changer, in this case targeting something as fundamental to Western civilization as democracy itself, it still can’t be disconnected from cryptocurrency. At least not where SecureVote is concerned.

But this also demonstrates the power of Spataro and his colleagues’ innovation. A secure voting system can allow shareholders/stakeholders to rapidly participate in company decisions which need to go to a vote, accelerating the process and arguably driving up the convenience and ease with which input from everyone is gathered.

The company’s first client is Swarm Fund, a Silicon Valley investment platform. “We’ve moved the company to focus on providing these kinds of solutions, looking to position for sustainability then grow the business to a point where it can focus on government, while maturing the product.”

And back to politics
Changing the way democracy is a lofty goal, agreed Spataro. Asked if this is even viable, he said it is not only that but also ‘almost inevitable’. “What we are doing is part of a bigger wave. Our ambition comes from the problems we see. Generally, the world is moving towards a more democratic future; the thinking behind this is that humans are the most important thing in the universe. We don’t know anything else that can construct new knowledge and all good ideas come from humans. People today have never been so empowered in terms of financial wellbeing and knowledge, so it makes sense to leverage that to solve those problems.”

From the pitch, those problems might appear to be democracy as we know it today delivering the ‘wrong’ outcomes: Brexit and Trump. But whether one agrees with that or not, fortunately, is somewhat beside the point as will soon become clear.

Spataro instead said democracy as it is today doesn’t harness the power of the people, and hence he sees ‘pain’. “Brexit, if you think it a bad thing doesn’t matter, people made that decision, but they don’t feel that they are participating, and they want to. If democracy is going to succeed, it has to factor in human power.”

A more engaged future (is that even desirable?)
Democracy while not an ideal system is, to paraphrase Winston Churchill, still the best one we have. Which doesn’t mean a technologically driven update to it isn’t overdue, whatever the philosophical or political underpinnings of those who seek to make the change. “We need a better way to participate by making the process as easy and accessible as possible.

“These are things we need to think about, we need to prepare for a future where people are more engaged, with models of democracy that more high frequency and which allow people to participate on their own terms. And SecureVote delivers the technology to make it possible, so people can vote on an ad hoc basis. And we’ve built this system to handle billions of votes – we’ve done 1,5 billion votes in 24 hours.”

While it might be argued that the constituent who can’t be bothered to get off the couch to vote shouldn’t necessarily be empowered to do so as he or she might simply vote for the candidate with the nicest smile, Spataro and SecureVote provide the technology to do just that. “The ability to handle high frequency and high-volume votes is not available with traditional or other digital voting systems,” he said.

SecureVote’s ‘transformative process is to democratise’. It’s a big, big goal. “We might as well aim high. If you’re going to tackle something go for it – and this something I deeply care about. Technology has solved a lot of problems, but how has it been used to fix the machinery of democracy? Voting with the blockchain can get deliver open polling, users could log on from their smartphone and complete their ballot, there are cost and security benefits. Voters can engage from the comfort of their own homes without the pressure of being in a voting booth. And when people recognise that their decisions have an impact, I believe they will become more involved.”

Justin Newman is CEO at Sydney-based timber industry digital solution provider VTH. When he was approached by an industry disruptor wanting to build an online building supplies business, he immediately recognised that success depended on the best available technology solutions. For this he called in New Zealand’s First Software and its n2 ERP solution to provide ecommerce and distribution functionality, and another Kiwi company Vesta-Central to provide the product data platform.

Because of the collaboration of these three vendors, Michael Agnew’s Agnew Building Supplies is equipped with a powerful online solution which is central to the success of Australia’s first online-only hardware retailer.

Agnew Building Supplies was founded with a vision to provide rapid access to a complete range of building suppliers online. Unlike traditional ‘bricks and mortar’ retailers, Agnew Building Supplies is born in the cloud and provides customers with the best online ordering and fulfilment experience so they can spend more time on the job site.

Taking hardware online
While some hardware can be bought online from the major incumbents, the reality is that these organisations are not specialist ‘etailers’. That’s the opportunity Michael Agnew recognised: he could do it better, faster and get materials on site cheaper.

But doing so depended on an appropriate technology infrastructure.

On the back of a longstanding business relationship, Agnew approached Newman with the idea of creating an online store with a supply chain optimised for speed and low cost. “At VTH, we specialise in the front end, e-commerce stuff, so I said I can’t do the full supply chain – but I also said I will find out who can,” Newman relates.

A Trans-Tasman study of the market led him to First Software and its n2 ERP solution. “We wanted a system which had the power to do nearly everything required – ecommerce, warehousing, distribution, financials, procurement and supply chain – it had to do as much as possible out the box, and VTH would work with that company to do the rest.”

Alex Petraska, General Manager of First Software, says when he started planning with Newman he could see that n2 ERP fit the bill. “The standard n2 ERP software was very close to what Agnew Building Supplies needed, so working with VTH, we developed some industry-specific functionality into it.”

He adds that some 95 percent of the functionality required was already there, due to having customers like Forman Building Systems (part of Fletcher Building).

Petraska adds, “n2 ERP has been available for over 10 years and has always focused on retailers and distributors so extending the reach to building supplies stores was a natural progression. In the past we have also built specific functionality for 3PLs and cool stores, so we are adept at creating industry focused extensions.”

And he notes that even with Agnew Building Supplies operating entirely online, n2 ERP also supports bricks and mortar stores with integrated Point of Sale. “Future customers can be a mix of online, in store or both.”

Newman says success for a disruptor like Agnew Building Supplies depends on system excellence which spans the entire supply chain. “There’s no point being efficient in, say, warehousing, but then having people manually entering data for incoming goods. The whole system is only as fast as its slowest point; achieving the sort of efficiency which enables a ‘next day delivery’ depends on the latest electronic data interchange technology – and that’s where Vesta-Central comes into the picture.”

“There’s no point being efficient in, say, warehousing, but then having people manually entering data for incoming goods. The whole system is only as fast as its slowest point.”

Automation solves a prickly problem
Vesta-Central Founder and CEO Charles Nicolson explains that the company provides a product data platform which simplifies and automates product pricing information across extended supply chains. “Several years ago, we saw that for industries like timber and hardware, getting into ecommerce when stocking hundreds of thousands of products from thousands of suppliers was exceedingly difficult. Pricing information for every product had to be manually entered.”

There’s more to it than pricing, too. Much more. Explains Nicolson: “A company like Agnew would have to work with suppliers on every product to get an image, specifications, videos, safety information and hazard sheets, manuals, technical installation documents. All that information is necessary so anyone buying the product is well informed with everything they need to know.”

Through some technical magic which involves APIs and EDI integration, Vesta-Central enables information to be pulled from source – often manufacturers or distributors – all the way through the supply chain, eventually winding up published on the front end of Agnew Building Supplies’ customer-facing website via n2 ERP. “We are a data collection and sharing platform which enables retailers to easily list their products. Our system sources the information from the suppliers and directly addresses a major barrier for ecommerce operators.”

With cost-competitiveness among the key value propositions offered by Agnew Building Supplies, the Vesta-Central platform plays a crucial role. “Pre-us, organisations hired people to get the data and manage it. And the sad thing is that this is still how most retailers do it today, because a lot of suppliers have no simple way of getting information to their retailers or distribution networks.”

Nicolson adds that data flows up and down through the Vesta-Central platform. “It is synchronised every two hours – so if, for example, a spelling mistake is made, a correction will be updated everywhere that information appears: at the manufacturer, at the distributor and at the retailer, all automatically.”

The system automatically pulls the data from various sources, including ERP systems or spreadsheets, or it is manually uploaded where appropriate. “With Agnew Building Supplies, we wanted to eliminate the need to work on multiple screens with ‘swivel chair integration’. Now, they just work directly in n2 ERP; Vesta is contained inside the First Software solution. It is invisible to the users. When they set up a new supplier, they just log on to n2 ERP, set up the supplier and product range, and a request is triggered to that supplier to upload their product information. Often within a day, the information flows through and an operator checks a box to confirm and accept it to n2 ERP which then feeds it to the website. It is as simple as that.”

Unique to this implementation, Nicolson says First Software, Vesta-Central, VTH and Agnew Building Supplies worked with suppliers to fully automate product pricing. “In the traditional model, a supplier sends a PDF or spreadsheet which is manually rekeyed into the ERP system. In this case, we worked with suppliers to automate pricing from their end into n2 ERP – and not only the prices for today, but future prices, too. With awareness of price changes 3 or 6 months in advance, Agnew Building Supplies is better equipped to optimise purchasing or to negotiate preferential deals.”

What’s more, Vesta Central also includes a component which facilitates Electronic Data Interchange between suppliers and Agnew, automating many of the inter-company processes such as invoicing and payments.

Nicolson says integrating with n2 ERP was a straightforward and smooth process. “What makes for a good interchange is a solid technical team and a good API to perform actions in their system. First Software has that, which makes for a seamless experience.”

All things digital
Newman says Michael Agnew had the vision of what he wanted to create – and that vision all comes back to good data and a good customer experience. “This was a collaborative effort where we all realised our individual competencies and brought together the best bits to deliver a solution which enables Agnew Building Supplies. The team at the client are experts at selling timber and hardware products; we had to make sure to give them the right tools.”

Live and operating since June 2017, Agnew Building Supplies has a system which is performing well and delivering the digital advantages of an optimised, automated supply chain where day to day operating costs are kept to the minimum, thanks in no small part to the complete Agnew Building Suppliesence of massive retail operations which also allows them to invest in holding more stock in their 10,000-square metre warehouse

And the concept is finding favour with Australia’s tradies and DIY enthusiasts. “Agnew Building Supplies is ahead of projections and the system is doing what it should. Right now, we’re implementing the next stage which is digital engagement to drive demand now that the system is proven,” Newman notes.

Petraska concludes: “Agnew Building Supplies’ platform provides an advantage which can’t be underestimated. Without it, the business model doesn’t work. Competitors have enormous costs and expenses and the efficiency Agnew Building Supplies enjoys enables it to compete and grow. Doing business the digital way, quite simply, depends on having the best technology today and into the future.”