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Podcast: SAP Business ByDesign Skills and SaaS Consulting Changes (with Ray Tetlow) Print E-mail

podcastlogo_jonerp.gif"Special Edition - Talking SAP Business ByDesign Skills and the Differences in SaaS Consulting Economics with Ray Tetlow from Skyytek" (ERP Lounge #9)
Podcast Interview Date: June 18, 2010
Podcast: Listen Now!
[PC users: "right click" to download file]
note: this is a 20 meg sound file, so it may take a minute to download

I reported on the PAC Feeding the Ecosystem blog that the SAP Business ByDesign (ByD) conversation has shifted from technology debates to product rollout. A key part of that shift is taking a closer look at the skills needed to support ByDesign implementations and the different economics of SaaS consulting. One emerging voice in that conversation is Ray Tetlow of Skyytek. Ray spoke as an early ByD partner at SAPPHIRENOW Orlando.

At SAPPHIRENOW, I found that Ray's ideas about the skills requirements for ByD professionals were much better fleshed out than most. Likely this was because of his firm's experience as a SaaS reseller and implementor with more than 1,000 SaaS installs under their belts. All told this made Ray an ideal guest for this special edition of the ERP Lounge.

During this forty-seven minute podcast, Ray hits me with some rapid-fire answers to a slew of key ByD questions, such as how he intends to train ByD professionals, why SaaS consultants are easier to bring up to speed in ByD than "on-premise" SAP consultants, and the appeals and drawbacks of the SaaS consulting model. We were able to cover a lot of fruitful ground in this podcast, but one of my favorite parts comes at the end when we get into some informal talk about how virtual SaaS consulting can change the consulting lifestyle and open up new opportunities for those who can't (or don't want to) travel - parents in particular. Most firms growing like Skyytek are building new offices; Ray is shutting most of his down. Listen to the podcast to find out why and the different approach he is taking.

Note: to comment on this podcast series, or send in a question for us to answer in the next one, be sure to join our ERP Lounge Group on Linkedin. If you want to subscribe to the series, get the The JonERP Master Blog and Podcast Feed. Or find Jon on his @jonerp Twitter feed. The ERP Lounge podcasts are also included in the JonERP iTunes podcast feed.  

Podcast Highlights

1:03 SAPPHIRENOW Orlando 2010 - Ray's reactions to his first SAP show. Another Oracle show veteran reports that the SAP food was better! Ray was glad to see all the exposure Business ByDesign got at the show.

1:45 What has Ray been up to since the show: talking to SAP about go-to-market for ByDesign and preparing for to resell and implement ByD 3.5 starting in August.

2:24 What are the SaaS consulting opportunities that some on-premise firms can't make sense of? There are two aspects: licensing and consulting. The consulting economics can be excellent, but it's a volume environment. Compared to Business One, ByDesign is a faster sales cycle so you have to be prepared for that. The rates can be very good if you are structured to capitalize on these project.

4:14 What drew Skyytek to ByDesign? Ray: we were looking for another option for a SaaS ERP suite to sell besides NetSuite, and ByDesign was the only other real game in town. Skyytek is a SaaS pure play. All they do is SaaS deployments.

6:22 Why are on-premise ERP consulting firms going to struggle with the SaaS consulting transition? Ray: using the on-premise deployment model is not effective for SaaS. Pre-sales and post-sales efforts on the client site are not affordable. There's no technical aspects to SaaS deployments, and on the functional side, it's not a configuration exercise either, so the consultants you need are very different. You don't have a consultant on site for 3-4 months on a solution - you have 6 or 7 consultants for a much shorter period of time, working on multiple projects - a "many to many" scenario. That structure became economically viable for Skyytek.

8:47 How different are the revenues in the SaaS consulting world? Initial installs happen quicker, pricing is going to be less because the installs are faster. Once the installs are done, the focus is on the functionality rather than on the technology. Ongoing services are a different question - support and training costs are lower than on-premise. Those services revenues are lower. But you have the ongoing revenue streams from selling licenses, which means payments spread over time, perpetually. The more deployments you have, the better those cumulative economics look. This can make up for the loss in hardware and database support revenues.

11:18 Unless you count Business One, you really have to go back to the early 90s to find a time where there were SAP projects without any experienced consultants to draw on. How does Skyytek plan to staff their early ByD projects? Ray: first off, technical skills aren't needed. What is important is to find consultants who are used to installing SaaS products on the functional level. These products are pretty similar in how they work.

12:55 How long will a typical ByD install take and how much will take place remotely versus on-site? Depends on size of the customer, but anywhere from 3 or 4 weeks to 4-5 months. Since the nature of SaaS is web-based applications, Skyytek will do all of their installs remotely as well. We'd rather have the right consultants on the project working remotely even if they are not geographically close.

14:30 Why are change management issues a factor in SaaS installs, and can a good SaaS consultant help with that process? Ray: absolutely. When you move from on premise to SaaS, you have to look at how your business works and understand best practices. With older systems, you often tend to adopt "worst practices" and stay with them. With the new install, it's time to embrace best practices and change your business to embrace them as needed. A good SaaS consultant can help walk companies through the process of template selection. Industry knowledge and domain experience is vitally important to SaaS deployments.

17:36 Ray has said it just takes a few weeks to train a NetSuite consultant in ByD, whereas it will take a few months to train an on-premise ERP consultant in SaaS...what is it about the skills challenge of SaaS projects that requires this longer period of adjustment for functional consultants? Ray: in a SaaS environment, you are tapping into a nationwide network of consultants and picking the ones that are best for that project based on their industry expertise. For example, NetSuite consultants are highly verticalized, and used to working on a number of projects at once. When you take an on-premise consultant used to going from one project to another, it's not easy to get used to, it's a big mindset change. You've also got to train these consultants not to think of an expert in GL, AP, or AR, you have to get them to think in terms of vertical industry knowledge, so it's not an easy skills transition in most case.

19:48 And when Ray hires new SaaS consultants, he looks for small business process experts who understand lead-to-cash and other scenarios. Narrow GL experts won't cut it. You have to have experience running a business. We look for a techno-functional business person with SaaS skills. Skyytek wants a different skills focus - not GL, but an industry-specific focus. But within that industry, we want a broader process view. Deploying a SaaS solution - you can focus all your efforts making that system work for the business. If you have a narrower focus like AR/AP, there is a chance to break into SaaS by expanding the focus: the career opportunity is to get a broader process focus in SaaS.

22:40 Ray's advice to on-premise SAP consultants: work on the industry focus, expand your business process view beyond a narrow focus in accounting or supply chain. A suite play is about a big picture view to make a company more efficient.

24:00 But surely there will be some technical roles in ByDesign? Will the work be more on building out the platform? Ray: for customers, there should be no technical aspects to ByD whatsoever. But for the third party vendors, there will be plenty of development work, whether it's a third party commission apps or a third party retail app. There will be small customizations needed in many customer accounts, but generally speaking, in a lot of cases, those can be performed by the end user.

26:30 Warning signs of SaaS gone bad? In any complex install, something can go bd. You need a partner who has the right blend of experience and you get what you pay for - if you try to "cheap out" on consultants or take them offshore, or hite consultants who don't understand your business, you're taking a big risk. The more experienced the SaaS consultant, the more the risks can be mitigated.

28:18 SAP has acknowledged that it's still sorting out how the partner and services side of ByD is going to work, so what are you telling them to ensure the product is going to get traction in the market? Ray: one of the biggest challenges SAP is going to have is to educate the salesperson that they have to sell quickly. The sales cycle is a matter of days or weeks in SaaS. Then you have to be able to provision the environment so they customer can really get a feel for what the system is going to be like. You have a 14 day window in most cases. Right now, SAP has some role-based demos, which are fine for pre-sales, but with any company, you have variations. The predefined demos SAP has today don't give a personalized flavor of the product, but SAP is listening to Skyytek's input.

32:00 SAP has faced a number of ByD obstacles - technical UI, pricing, partner rollout, skills trainin g- what do you think jumps out that SAP needs to tackle. Ray: personally I've always liked the UI. With regard to the price points, I like how ByD is priced compared to its competitors. For the partner channel, they have one of the best partner offers that are available to become a SaaS player. SAP now seems 100 percent committed to ByDesign which is very encouraging as opposed to a couple years ago when the initial announcements were made.

34:18 Putting Ray in fortune teller role: Aspiring consultants are going to get burned. How does Ray see the ByDesign market unfolding? I think SAP's go with an initial set of partners and fine tune as it goes on. Skyytek offers a program where you can enter the ByDesign business as a sub-partner of Skyytek. That mitigates a lot of the risk. Once the product gets traction, in 2011 we'll see the "proof in the pudding" where large and small partners will join up, as well as partners of the other SaaS players. I think we'll see "remarkable growth" in the channel - the growth will be directly proportional to the partner growth.

37:15 In the lower end of the mid-space, NetSuite is really going to be the biggest competition - but there really aren't any other major competitors. But there are more emerging companies on the way that are getting their act together in the midmarket. Within two years in the SaaS ERP midmarket, I expect four major players with ByDesign being one of them.

39:30: Ray mentioned in Orlando that while his company is growing, Skyytek is shutting down physical offices. Why? More people are working at home. We use dedicated independents and they prefer to work at home. We encourage it. If we're selling a virtual product, shouldn't we also have a virtual company and drink our own Kool-Aid. Just last year along, it's saved us $40-50,000 in office costs. We just don't need physical offices. Why should we? We're not deploying on-premise solutions. One tipping point was 3 or 4 years ago, we opened up an office with a capacity of ten people, and nobody ever went into the office. We were paying $5,000 a month for one person. So my goal is one or two offices eventually - one on each coast.

42:30 Ray: There's been a lifestyle shift. There are stay at home mothers, fathers, a fantastic pool of consultants from SAP R/3 and Oracle etc who are stay at home mothers, you have big utilization of labor that you can now use. They can't commute due to circumstance, but we can put them to work if they have the skills. There's a major untapped skill set there. Ray: I think the rates are in line with on-premise rates due to the demand for these consultants, but you're no longer on 40 hour a week 3 months projects, some weeks you can be working ten hours, other weeks eighty.

45:00 So does the location of the consultant matter at all? Ray: it used to come up 5-6 years ago, but it really doesn't come up now at all. Having geographical proximity can be good, but it's really more a matter of customer perception than reality.

Note: to comment on this podcast series, or send in a question for us to answer in the next one, be sure to join our ERP Lounge Group on Linkedin. If you want to subscribe to the series, get the The JonERP Master Blog and Podcast Feed. Or find Jon on his @jonerp Twitter feed. The ERP Lounge podcasts are also included in the JonERP iTunes podcast feed.  


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