Creating an Enterprise App Vendor Short List, Part 1

Globalization, adoption of more open, capitalist economies in developing countries, and technological advances have made building a small or medium-sized business (SMB) as tough as it’s ever been. The potential rewards are substantial, however.

Thanks to developments in the IT and telecommunications industries, SMBs — like their larger counterparts — are now able to benefit from distributing core application software throughout their organizations, helping them build businesses that can tap into opportunities the world over. The market’s largest software and computing systems vendors — the likes of IBM, SAP and Oracle — as well as less well-known providers have offerings targeting the SMB space.

However, selecting an enterprise application software solution is a process fraught with pitfalls. A judicious choice of vendor and software can mean the difference between failing and thriving.

“Are the software licensing and pricing terms comparable over a 10-year period? Does the vendor have a clearly defined product road map for the next 10 years? What do references in your industry say about the ownership experience of the product?” These are just three of the key questions SMBs should ask when choosing an enterprise application, according to Forrester Research Principal Analyst R. Ray Wang.

Proven Products, Solid Support

A lot rides on the choice of the core applications supporting a business, and for firms with comparatively smaller budgets and limited IT and other resources, choosing the right vendor is a high-pressure process. Before compiling a list and approaching vendors, SMBs should clearly define their needs; the methods, means and measures they will use to choose and differentiate between vendors and offerings — as well as to gauge their value to the organization; their expected returns; and their payback period.

“Will you be able to find cost-effective and available implementation resources? Are there various deployment options and implementation methodologies that expedite the implementation time? Is it easy to find training resources or individuals with existing experience to run the application?” and “What’s the vendor’s financial viability, and can you build an effective partnership with them?” are all key questions that should be part of an SMB’s vendor and enterprise application selection process, Wang advises.

Generally speaking, that leads SMBs toward preferring proven solutions backed by proven vendors that offer solid tech and customer support. It also means finding a vendor that can demonstrate the ability to get a best-fit solution up and running in a short time frame, as well as one that offers a flexible upgrade path and maintenance fees that don’t break the budget.

Beyond Cost and the Short Term

SMBs looking to choose enterprise application vendors and solutions need to go beyond cost and the short term to determine the real value they’re looking for.

“This can be extremely challenging in an enterprise software selection process, which is why Lawson developed Lawson Opportunity Analyzer, which includes something called a ‘value assessment,'” explained Pramod Mathur, technology programs director for Lawson Software.

It allows an organization to set practical business performance targets and identify, in advance, quantified financial and non-financial gains before committing capital expenses against an enterprise resource planning project.

Lawson’s Opportunity Analyzer also suggests best practices and key performance indicators for particular industry groups, along with benchmarked business processes that a company should implement in order to achieve such desired outcomes as payback and return on investment, Mathur added.

Oracle, Enterprise Apps and Open Source

In Oracle’s experience, the attributes and criteria that characterize SMBs and their enterprise software needs are reflected in the impact open source application software has had to date in the marketplace. “The impact of open source on enterprise apps in the mid-market space is negligible. The fact is, open source works great in a tech community where people have the time and inclination to feed the open source — so certainly open source has more impact at the OS and database levels,” commented Jeff Abbott, Oracle vice president, global accelerate strategy and 0rograms.

“But for business applications, while open source products exist, we have not seen that as significant competition. People are looking for a more complete solution backed by the strength of a major vendor and the expertise of a local partner,” he said.

“We find that there is very little that distinguishes the requirements of enterprise and mid-size customers. They share the same complexities, such as globalization [and] increased compliance and regulation. … The only difference is that mid-size customers are resource-constrained,” Abbott told the E-Commerce Times.

Enterprise resource planning may be the “definitive” enterprise application. “It’s actually very simple for Oracle to provide enterprise apps to our mid-size customers. We provide the same solutions that a (US)$10 billion customer needs to a $50 million customer,” he explained. “Unlike many of our competitors, we do not require that our customers go from a ‘small business solution’ to a ‘mid-size solution’ to an ‘enterprise solution.’ Our [enterprise resource planning] applications are the same across all customers.”

The Same but Different

Sharing common core business needs means that both large businesses and those within the SMB sector share common enterprise application needs, but there is a wide range of diversity within the SMB market. Hence, it pays for SMBs to have a comprehensive and detailed grasp of their enterprise-level data and application needs — and know to what degree off-the-shelf software packages meet them. It’s crucial to articulate them before putting together a list of potential vendors.

“How flexible is the system in allowing you to model existing processes and, in the future, design new processes? Will your users find the user experience compelling and productive? Does the application integrate well with Microsoft Office and other frequently used applications?” These are questions SMBs need to dig into when choosing enterprise applications, Forrester’s Wang continued.

Oracle offers its SMB enterprise application solutions across some 80 market segments. That type of diversity has led SAP to take a multiproduct, multichannel approach to the market, each linked by common architectural and software standards.

Three Tiers

“SAP is not a one-trick pony — we do not believe that one size of solution fits all. Hence, we are addressing [small and mid-size enterprises] with a solution portfolio approach, and are providing a portfolio of three solutions that best fit the unique and individual needs of small businesses and mid-size enterprises,” reported Astrid Polchen, SAP global communications and media relations manager.

SAP has a three-tiered line of enterprise solutions for SMBs: SAP Business One for companies with up to 100 employees; SAP ByDesign, the line’s latest addition, which caters to businesses with 100 to 500 employees; and SAP Business All-in-One for companies with demand for deep vertical and sub-vertical know-how and up to 2,500 employees.

With customer and tech support critical to supporting SMBs’ IT needs, SAP has adopted a multichannel customer support strategy that includes Web, telephone, and direct and indirect extended partner systems — with a different mix according to the particulars of geography, country and individual market demands, Polchen explained.

“SAP has all the tools and can combine them appropriately for the individual market demands,” Polchen concluded. “Partners are a key component of SAP’s go-to-market approach. Partners are also key when it comes to developing industry add-ons for the SAP SME solution portfolio.”

Creating an Enterprise App Vendor Short List, Part 2

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

Technewsworld Channels

Marketers: Beware Florida’s Mini-TCPA

If you do electronic marketing of any kind, you’ve been a captive audience to the ever-changing requirements of the federal Telephone Consumer Protection Act, known familiarly as the “TCPA.” But now, the state of Florida has amended its Telemarketing Act, creating what is being called the “Mini-TCPA.” Florida’s new law changes electronic and telemarketing in significant ways — even if you’re not in Florida.

Years of litigation over the federal TCPA has taught most companies to understand the different forms of consent, how to distinguish sales calls from informational calls, what kinds of call could legally gather information from consumers without straying into highly restricted “sales calls,” and what in the world constitutes an automated telephone dialing system (ATDS).

Now, just as we thought the law was settled — or at least settling — the new Florida state law overturns the apple cart. Many of our prior understandings are out the window. Telemarketing practices will have to change substantially, and the costs of violating the Florida law will be substantial.

Law Applies Even if You Don’t Do Business in Florida

The new statute covers any call made to any device with a Florida area code no matter where the receiving phone is located, and calls made to a person who happens to be in Florida at the time they receive a covered call.

In either case, the calling company will be considered to be “doing business in Florida” and therefore subject to the Mini-TCPA. That’s true even if the calling company has no way to know that these seemingly non-Floridian numbers in fact have some relationship to Florida.

In either scenario, there is a “rebuttable presumption” that the calls are covered by the Florida statute. “Rebuttable presumption” means as a practical matter that government regulators or class action plaintiffs can make you spend lots of money in attorney’s fees trying to prove that the calls weren’t covered.

For economic reasons, many businesses will end up making the business decision to settle these cases rather than litigating the law’s application to them.

Role of the ‘Private Right of Action’

The big danger presented by this statute is the claims that may be made by private parties, not government enforcement actions. That’s because the new Mini-TCPA contains a “private right of action.” Any consumer can sue you claiming you violated the statute. Those suits can be class actions, real or threatened.

Although the statute appears to limit recoverable damages to a maximum of only $500 per violation, that figure is a red herring for a couple of reasons. Plaintiffs tend to claim that each individual call to their phone is a separate violation. One consumer’s calls can quickly become multiple violations and therefore multiples of $500.

In addition, under some circumstances, the law trebles damages. The Mini-TCPA provides for triple the damages and attorney’s fees if the violation was intentional. Since marketing and informational calls are both generally the result of a pre-planned marketing campaign, every call is going to be asserted to be intentional.

Moreover, general Florida consumer law allows recovery of attorney’s fees and, potentially, statutory additional punitive damages.

The ATDS Rabbit Trail

All the noise generated by litigation around the federal TCPA about automated telephone dialing systems may have given businesses the impression that if you avoid using particular kinds of ATDS, you can be sure of avoiding liability. But here again, Florida’s new law changes the game.

Instead of diving into the controversy over what constitutes a covered ATDS machine, Florida simplifies the issue — and expands the danger zone. The new statute focuses its attention simply on “automated systems.” The definition of “automated system” under the Mini-TCPA is much broader than the federal TCPA’s.

As defined by the Mini-TCPA, it encompasses any system that does any one of three things: it either selects the persons to be called, or it dials calls, or it plays recorded messages. It’s hard to imagine a telephonic machine (including the one in your pocket) that isn’t potentially covered by this definition.

Mini-TCPA Goes Beyond Classic Telemarketing

Many businesses’ response to warnings about the applicability of the TCPA to their operations was “we don’t do telemarketing.” That’s because a distinction between telemarketing calls and informational calls has been enshrined in telemarketing regulation since the enactment of the TCPA law. Telemarketing calls were the bad ones; informational calls were the good ones. Later generations of FCC regulations, rules, and orders focus on this difference.

Again, Florida’s Mini-TCPA breaks new ground. While the new Florida statute regulates “telephonic sales calls” made for the traditional TCPA and telemarketing purposes, it appears that the new statute goes further. It now seems to include calls marketing products and services that were in the grey area of TCPA coverage. For example, extensions of credit.

“Non-commercial” calls are going to be exempt from coverage by the Mini-TCPA, but only if the caller has some level of licensure or certification e.g., IRS Section 501(c) and Florida state registration.

However, some authorities say that the statute also covers calls made for ultimate purpose of obtaining information for later use in sales. If this is the case, any calls used to harvest consumers’ personal information for later use in sales will require the called party’s prior express written consent under this statue.

Much of this sits squarely in a grey area. Litigation and additional legislation will certainly affect what the law will actually say. The true application to your individual marketing strategy is going to be hard to predict. Seeking legal counsel is going to be crucial to making wise decisions in this area.

Establishig Consent

If the TCPA taught us any clear lesson, it was that to make (almost) any call “legal” all you needed to do was get the called party’s consent.

What constitutes the appropriate level of consent under TCPA depends on various factors: kinds of calls, call technologies, kind of phone called, who was making the call, etc. For that reason, determining what level of consent is required for any given call under TCPA can require a complicated and troublesome analysis.

The new Florida law simplifies all of this: it mandates that the only acceptable consent for all covered calls is prior express written consent. It then carefully defines what prior express written consent must look like, with several required qualifying elements:

The consent must be in writing, bear the signature of the called party, “clearly authorize” a call using an automated system, include the authorization to call a particular number specified by the calling party, and inform the called party of certain enumerated rights.

In addition, the call must provide to consumers identifying information about the calling party. The new statute also requires that the calling party must maintain records of calls made and the consent obtained.

Sleeper Provisions

The Mini-TCPA, like the federal TCPA, is long and convoluted. There’s too much in the law to cover all the provisions in this short article. So here are some other provisions that may be worth a look:

  • Limitations on call frequency and timing;
  • the way information mining calls will be treated;
  • the liability of a company for the violations of its third-party contractors;
  • the requirements for callers to transmit identifying information; and
  • potential criminal penalties for certain activity.

There is good news, nonetheless: the Mini-TCPA law provides a long list of types of calls which are exempt from coverage by the new statute. However, the exemptions are many and complicated. Many provisions provide an exemption from liability under the statute, then take the exemption away with exceptions to the exemptions.

Competent legal counsel is a must before deciding that a company’s telemarketing is exempt from the statute.

A Final Thought

It’s easy to think that the real threat of this statute is actual litigation. It’s not. It’s the Hobson’s choice presented when your company receives a claim from either government or a private party.

When you receive a claim under the statute, if you weigh the costs of fighting it or settling it, you will quickly come to an ugly realization. Every claim can cost you upwards of $1500, plus attorney’s fees for the claimant, on top of paying your own attorney, plus trebled damages, and other possible damages.

It will almost always turn out that the potential out-of-pocket cost to fight even a bogus claim is going to be much larger than the settlement demands from a plaintiff. Given the possible downsides of litigation, good counsel may well urge you to settle any claim as quickly and as cheaply as possible. If you consider the economics when determining how to respond to a claim, this makes sense.

All of that puts a higher premium on prevention. Talk to your lawyer about how this statute might apply to you, what your exposure is, and how you might bullet-proof your marketing strategy.

The only sure way to win at these claims it to prevent them from being filed.

This article is provided for informational purposes and does not constitute legal advice. The purpose is merely to make the reader aware of some issues that must be addressed by legal counsel. This article cannot substitute for the advice of competent legal counsel addressing the reader’s specific situation.
Brad Elbein

Brad Elbein is a partner in the Atlanta office of Culhane Meadows, PLLC and is co-chair of the Government, Regulatory and Compliance Practice Group. Brad guides clients through matters involving telemarketing, electronic marketing, advertising, consumer laws (FTC Act, FDCPA, FRCA, TILA, and more), and defense of consumer law claims by government and by consumers.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

Supply Chain Fears, Inflation, Robust Online Sales Drove Jump in Holiday Returns

During the holiday season, an estimated US$120 billion in merchandise is expected to be returned to retailers, a jump of seven percent over 2020, driven by supply chain concerns, inflation and robust online sales.

Returns during a typical holiday season are around 13.3 percent of total sales, with returns from online sales some three to five times higher than returns for in-store sales, according to information provided the E-Commerce Times by Optoro, a technology company with a focus on liquidating returned, overstock and damaged-box goods.

According to the National Retail Federation, online sales exceeded more than $222 billion during the holidays. Optoro and real estate firm CBRE estimated in their annual report on the subject that $66.7 billion of that is expected result in returns.

Online goods have a higher rate of return than those purchased in brick-and-mortar stores because consumers can’t touch and feel the merchandise before they buy it, explained Sucharita Kodali, an analyst with Forrester Research.

“They don’t know what they’re getting,” she told the E-Commerce Times.

While retailers aren’t happy with rising return rates, in the current environment, they are a reflection of success. “When you have the kind of growth we’ve seen in the online channel, that’s how you get an overall high return rate,” Peter Madden, a director in the retail practice of AlixPartners, a global, multi-industry consulting firm, told the E-Commerce Times.

“If sales are higher, then returns are going to be higher,” added David Swartz, an equity analyst with Morningstar, an investment research company in Chicago.

Frictionless Returns

Swartz told the E-Commerce Times that since the pandemic hit, there’s been a big jump in online sales.

“They’ve been increasing year after year, anyway, but they jumped even faster over the last couple of years,” he said. “Stores have been closed or they have shorter hours or people just didn’t want to go out to stores.”

While returns of online sales have always been higher than in-store sales, they’re getting even higher because online sellers are removing the friction in the process. “So many online companies — everyone from Amazon on down — has made returns cheaper and easier than they used to be,” Swartz explained.

“For example,” he continued, “you can return any Amazon product at a Kohl’s store. Nordstrom has a process where you can return anything you bought at to a Nordstrom Rack store.”

“There have been times in the past when online companies would make returns difficult,” he added. “That’s not competitive anymore because they have to deal with Amazon. If Amazon is making returns really easy and you’re not, you’re going to lose customers.”

Suboptimal Purchases

Streamlining returns can be particularly beneficial to online apparel shoppers. “In clothing, an online buyer can’t try on the clothes or see them before buying,” Swartz explained. “Sometimes, when they get the clothes home, they find out they don’t fit, or the color is wrong or the style is wrong. In a store, they would have known that already.”

With easy returns, a shopper doesn’t have to be reluctant about ordering multiple copies of the same item. “A woman might buy two dresses that are exactly the same but different sizes. She’ll try both on when she gets them, and then she sends to the one that doesn’t fit back,” Swartz noted.

He added that supply chain worries have also influenced returns. “There’s been concern about products being sold out,” he explained.

“People may have bought products earlier because they were afraid that they couldn’t get something later,” he continued. “Then they found out they could get it later and returned the earlier product.”

Supply chain fears can also lead to unwanted gifts. “Because there isn’t as much product, you may be making a suboptimal purchase — you’re buying something because it’s the only product there rather than an ideal purchase,” Madden explained.

“If that’s a gift and it’s not accepted, that will add to the return rate,” he said.

Liberal Return Windows

Inflation has affected returns, too. “The cost of returns has been higher because the cost of shipping has been higher,” Swartz noted.

“There’s been a lot of online sales in the last few months and a lot of online returns so shipping demand has been very high,” he explained.

Pricing can also affect the comparative value of returns. “If you have a product priced five to 10 percent higher than last year, that shows up in a higher return value,” Madden said.

He added that another factor contributing to an increase in returns is a more liberal window for returning items. “A lot of retailers are going beyond the typical 30 days and going to 60, 90 and even 90-plus days,” he explained.

“They did that to address supply chain issues and customers buying holiday gifts earlier,” he continued.

“Because of those extended return periods,” he added, “holiday return figures could be even worse because they might still be appearing in March.”

Ways To Reduce Returns

Retailers can and are doing a number of things to reduce returns.

“Users need to see products not only relevant to their queries, but see all products attractive to them upfront, so they don’t find something later that’s more attractive to them and they return whatever they purchased earlier,” observed Eli Finkelshteyn, CEO and founder of Constructor, an AI search and discovery company in San Francisco.

That can be done by collecting browsing information about a visitor to a retailer’s website. “It’s similar to how Netflix decides which movies are going to be interesting to you or how Spotify decides what songs and radio stations are going to be more appealing to you,” Finkelshteyn told the E-Commerce Times.

“You avoid returns by making sure a user sees everything a site has that could be appealing to them before they make a purchase so they don’t find it afterwards and return an item to make a different purchase,” he explained.

Swartz added that retailers also have 3D tools that allow people to virtually try on clothing and place virtual furniture in a consumer’s home so they know what it will look like there before they buy it.

Solutions to reducing returns, though, need not be complex to be effective. “If a retailer can get the fit-sizing correct on the original transaction, if they can hit the right shipping window when a customer needs it for that special occasion, those are the kinds of things that limit returns and are much easier on operations than trying to optimize on the backend for returns logistics, processing, restocking and repricing returned items,” Madden maintained.

John P. Mello Jr.

John P. Mello Jr. has been an ECT News Network reporter since 2003. His areas of focus include cybersecurity, IT issues, privacy, e-commerce, social media, artificial intelligence, big data and consumer electronics. He has written and edited for numerous publications, including the Boston Business Journal, the Boston Phoenix, Megapixel.Net and Government Security News. Email John.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories
More by John P. Mello Jr.
More in E-Commerce