On Connected Services
Connected services are a rather generic term that is used in many contexts. Often a connected service is a Web Site that offers a Web Services based API to access. Many times connected services are promoted as add-on services to some core application or service.
In our case we are going to consider the core application service as ERP (such as Sage ERP Accpac, Sage ERP MAS 90/200, Sage ERP MAS 500, etc.). Then we are going to consider various types of add-on services that received over the Internet, making them connected.
Disclaimer – This blog post isn’t meant to describe any specific products or services that are in the works, but to just talk about connected services in general. Anything mentioned is just an example not an indication of a future partnership or product offering. Of course some services like ERP integrations to Sage Payment Services are either already deployed (such as in MAS 90/200/500) or coming soon (April for Accpac).
iTunes is the first wildly successful connected service that got everyone excited. When the iPod first launched there were lots of other MP3 players, most cheaper than the iPod. What set the iPod apart was the iTunes store where you could very easily buy music over the Internet at quite reasonable prices. The end result was that Apple pretty much replaced the music player market with the iPod (including CD players) and further replaced the music distribution industry with the iTunes store. It could be argued that the real genius of t the iPod was taking a music player and connecting it to the Internet to buy music. Others might argue that as people acquired more music, managing it became unwieldy, some companies invented 100-disc CD changers, others MP3 players. After all you can play your regular CDs on an iPod. But even if the iPod had become popular just playing CDs copied from your PC, it became wildly popular due to the iTunes store, which is its connected service.
The iPod then developed, becoming the iPhone and then getting a bigger brother in the iPad. Meanwhile the iTunes store developed, offering music for sale, small applications that run on these devices, movies, TV shows, books and so forth. Now most people think more of the part of iTunes that sells applications (the App Store) than the part that sells music.
Branching away from the iPod family there is now an App Store for the Mac computer as a distribution method for Mac applications. Many other people have since copied the Apple App Store to some degree allowing various things to be sold from these Web Stores.
A key feature is that the object bought is immediately transferred to the device where it is run or played and is immediately available. There are many fake App stores where you select the item and then when you hit buy it indicates a sales person will now call you or a DVD will be shipped to you. These services miss the point.
The point is that when you buy, you get the product available to use almost immediately. You aren’t aware of any installation process, you just know it needs a bit of time to download and then away it goes. This really means that the cost of the goods really is the cost of the goods; no more money needs to be spent installing, configuring or otherwise messing around before using it. Of course this isn’t suitable to everything, but as technology improves it is suitable for more and more things. It’s easy to come up with examples that won’t work in this model, but this shouldn’t be an excuse not to do the 90% of cases that will work.
Keeping the size of the applications small, concentrating on volume and eliminating physical production costs has really lowered the cost of applications. But it has also really un-bundled applications. The previous trend was to buy one mega-application like Microsoft Office that supposedly comes with everything you need, but now the trend has reversed and now you buy a collections of smaller applications that combined do everything you need. This prevents buying things you don’t need, such as buying a very expensive package and then only using 10% of the functionality.
Transaction Based Services
Everyone’s dream is to skim some sort of small percentage off every transaction made in the world. This is the allure for things like Credit Card processing services. These are usually categorized as connected services since a Web Service call is made to the Credit Card processor to record the sale. However these aren’t simple add-ons to an ERP system, they are quite complicated integrations and require changes to document processing at several points. The Accpac integration to Sage Payment Services is covered here. A scary SciFi novel I once read (but don’t remember the title or author) had the world government running taxation this way, taking 50% of every transaction; hopefully we don’t reach that point.
Other transaction based services could include sales tax calculation and reporting, income tax reporting/filing, direct deposits and check printing/mailing.
So how can ERP and CRM packages incorporate some of these ideas into their products?
Incorporating Credit Card processing is fairly straight forwards. The goal would be to integrate as many payment methods as possible including Credit Cards, Debit Cards, Gift Cards, Mobile Payments, etc. Basically accept money anyway possible via any hardware device (dedicated, phone, etc.). Other transaction based services like tax calculation, direct deposit and tax filing can also fit this model quite well. Here the sales model is switching from an upfront sale and M&S to a transaction based sales model.
Does an app store make sense for an ERP or CRM package? A common complaint we get is that people would like to use more third party add-ons, but finding out about them, buying them, installing them, maintaining them is a hassle. We get the same complaint for our own extended solutions and options products. An App Store seems like an ideal way to make this all easier. It gives one place to shop for extended solutions, it provides a simple unified way to buy them and then they will download and install automatically. Plus this simplification usually leads to higher volumes and lower costs. TechCrunch published an interesting article on how the Mac App Store greatly increased sales for the EverNotes application: http://techcrunch.com/2011/01/19/evernote-mac-app-store/. This shows that an App Store can be more than a small incremental increase in revenue, but quite game changing.
The trend in our products recently has been to bundle many options or extended solutions products into the main product. Now we seem to be going through a period of unbundling. The interesting question will be if say we offered more Accpac dashboard widgets on an App Store rather than including them with the core product? Would this cause a lot of complaints? It wouldn’t if they are offered for free, but if we start charging how much can we charge? Will this make a profitable side business? These will be interesting questions and things move forwards.
Often connected services can be added to augment standard parts of a typical ERP process. For instance let’s consider a typical sales cycle and the some possible connected services that could augment each part of the process.
You could then do the same thing for other ERP processes. For instance in the HR module you could have various connected services that help with the whole hire to fire cycle.
Not all connected services have to be charged. For instance automatically drawing a Google Map by every address is a connected service, but thanks to Google, quite easy to integrate into applications and then available for free. Same thing for doing research via a web search and many other things. As we go forwards we will see many cases where ERP or CRM forms are supplemented with information gathered from the Internet.
How do Business Partners factor into these equations? Certainly the role as Business Advisor and Accountant are still as strong as ever. I hope as these sort of concepts move forwards that we do reduce the role of Software Installer and Data Converter. I tend to think that if our Partners are freed up from these sorts of roles they can concentrate on higher value activities like new sales, expanding the role of ERP/CRM in existing businesses and acting as Business and Accounting advisors. One of the big problems we have is that whenever we release a new version, upgrading the entire customer base, far exceeds the Partner channel capacity. We really need to ease this burden so that so much of our Partner capacity isn’t used performing upgrades.
Connected Services are an exciting area. The Web and Mobile worlds are becoming more and more interesting and applicable whether you are running locally installed Windows desktop applications or Web applications that live in the cloud. As ERP and CRM applications move forwards rather than adding all functionality into the core product, far more effort will be going into integrating in all these readily available connected services. The other key part is to work hard to reduce installations issues, so all these things can be installed very simply by a download and putting the files in the right places.