How Big is the ERP Elephant? 200 Billion. But How Fast Will it Move?

During a talk at the latest iPhone Business Meetup (highly recommended!) someone asked:

"How big is this ERP/touchscreen tablet opportunity? Best guess?"

OK...according to the statistics available:

• 60 billion per year: current annual sales of ERP industry


• 200 Billion: Residual Value of ERP software -- legacy software that has been purchased in past 2 decades and is still in use.


• 25%: Potential value add by touch tablets and smartphones.

So, if we choose to use these numbers -- admittedly guesswork -- then the market opportunity is $50 Billion of legacy fixes, or $15 Billion/year of annual sales.

Of course total size is not the limiting factor in enterprise sales. The size is huge. It's an elephant.

The question is, how fast can we get this elephant to adopt a good new idea, even when that good idea is really easy to prove?

• Slow: Speed with which ERP market will adopt this great technology.

Elephantine rules are slow rules. The ERP market is difficult to change. But again, it's huge, so that is the tradeoff.

The strategy therefore is to pick the sector of that elephantine market that will be easiest to change, and focus our efforts there. What's the sharp stick we can poke with?

• Sharp Stick: The vertical market or product catagory which will prod the elephant most effectively (and allow us to build a viable business).

iPad 34% Faster Than Workstation or Laptop, For Key ERP Functions

We test the tablet form factor in parts of the enterprise where one might expect it to be faster..and it is!

Up to 40% of corporate users could improve productivity

Used new Enterprise iPad Toolkit from iOptimal

In which parts of the enterprise does the iPad offer the best productivity gains? We set out to find the answer to that question, and the answer is: 20%, 40%, and 34%.

We chose a set of five common data entry screens from a corporate ERP suite – Financials, MRP, CRM, and Human Resources – from vendors such as SAP, Oracle, Lawson, and Salesforce.com. These screens were chosen as a cross-section representing (as best as possible) the thousands upon thousands of legacy database applications used in organizations across the world.

We built “iPad optimized” versions of those screens, which exactly duplicated the data entry functions in the standard Windows/keyboard versions. To build the iPad version we used the new iPad-enterprise prototyping tool just released by our partner firm iOptimal.

We chose these five functions carefully, to represent what we call the “40/20 rule." 40% of corporate users – generally managers, supervisors, and engineers – use only 20% of the ERP functions. By a happy coincidence, those 40% of users – our target audience – are also the ones that most likely to use a tablet, since they are generally people who “move around the office a lot” and have difficulties using laptops and workstations. Also by happy coincidence, the 20% of functions needed by these people are functions which don’t require large amounts of keyboard use, thus are well-suited for mobile tablets.

Converting that 20% subset of of ERP functions to the iPad should create significant time savings and a lot of happy users (and happy IT managers as well, since happy users become enthusiastic supporters for IT departments).

The Results

For our five representative tests, we had people perform the correct functions as fast as possible. We timed them by watching keystrokes and time motion study (using a stopwatch). On average these functions were 34% faster to perform on the iPad, for identical data entered, compared to the laptop or workstation.

Why Faster?

Quite simply, the screens typically used by supervisors and engineer lend themselves well to touchscreen interface. Using iPad user interface standards concepts, we were able to greatly reduce clutter on the screens, use finger gestures to quickly select options (more quiickly and intuitively than the mouse), eliminate almost all keystroke entry, and use location-based optimization to auto-fill and rearrange some fields.

The net result was, faster use.

Easier To Use

In addition, the screens were dramatically more enjoyable to use. Old style ERP is often quite crowded and complex to work with, with multiple layers of menu and complex coding structures; we took the opportunity to clean it up.

Caveats

• Some people might claim that the windows/laptop screens, if they were re-designed and improved, would show a lot of improvement as well. This is likely true. But the fact is, most ERP software isn’t being re-designed. So if the iPad serves as a catalyst to force us to clean up our designs, well, that’s a valid success.


• Note also that this 34% number does not include the fact that users can “carry the iPad everywhere” and would no longer need to walk back to their desks, re-log-in, or deal with charging a laptop. For some users, the iPad is faster simply because it can be carried all day long and eliminates more of the paper forms which still plague many organizations. If this mobility improvement was taken into account, this would add even more to the iPad’s speed advantage for this test. We are working to get an estimate of this number.


• Let’s reiterate that the iPad is unlikely to be faster (and might be slower) for functions that require heavy data entry or typing. For these functions, a keyboard is an advantage, and data-entry users who sit at their desks during the day won’t get much advantage from the mobility of a tablet.


• Finally we should note that these are preliminary results. We'd like to conduct this test again under more rigorous conditions. Nevertheless it does support what many users recognize intuitively: that a touch tablet with a highly tuned interface can increase the efficiency of business users.

Added note (9/14): People say we should do this test again, with a bigger sample set and with more "disinterested observers." Maybe even a media extravaganza! Great idea.

CIO Article Highlights Productivity Advantage

How does the "always-on" touchscreen tablet make people more productive? Read this article in CIO.

Excerpt:

Now decisions at meetings are made quickly thanks to the iPad, he says. In the past, no one fired up laptops at meetings in a conference room because it made the executive look disengaged. When a topic came up that required facts to make a decision, such as the difference in cost for an allocated requisition and an unallocated one, the vice president of HR would have to research it later. Thus, the topic would be tabled for the next meeting.

Today, the vice president of HR can look up the pay grades on the iPad, find the difference, and then ask the president if there's room in the operating budget. The president can look it up on the iPad and respond appropriately. "You can't get closure if you don't have the facts," Rennie says. "With the iPad, it's a very different conversation because everyone is armed with the facts at their fingertips."

This is a illuminating quote. Executives didn't want to use laptops because they would look "disengaged." So in theory laptops give people all the facts at hand, but in reality, human nature what it is, the design and form factor of laptops can make some people uncomfortable.

Is this true for all executives? Of course not. People who work at Google or Yahoo no doubt use laptops in meetings all the time. There are many corporate cultures where every meeting is a laptop meeting, and these organizations already make those faster decisions.

But there are many other organizations where the culture is different, and a touchscreen tablet can be quite a productivity enhancer.

Study Finds Big Gains for Mobility of ERP Data

Sybase and University of Texas Study Reveals 10 Percent Increase in Usability of Enterprise Data Can Translate to $2 Billion in Additional Revenue Every Year

...the study looks at five distinct attributes of data—quality, usability, intelligence, remote accessibility and sales mobility—and examines how a 10 percent improvement in any one or two of these attributes affects the metrics commonly reported for assessing the financial performance of businesses

Why is this relevant to iPad in the enterprise? Because the use of touchscreen tablets can be used to significantly improve access to enteprise data and user productivity. We can measure productivity increases by mobile devices and plug them into this 10%-2 Billion conversion, to give us a total dollar value for iPad usage.

Wall Street Journal: Business Use of Ipads

Businesses Add iPads to Their Briefcases Some Companies, Which Barred the iPhone, Build Apps for Tablet Computer and Give Apple Gadget to Employees

Tip of the iceberg.

A Magic Trident -- Mobile Tablets, CRM, and Enterprise 2.0

In a recent iPad/iPhone Meetup group meeting there was a wide-ranging talk about the “best opportunities for iPads in enterprise software” (a topic I keep bringing up, which doesn’t seem to be irritating people yet).

CRM, collaboration, and Enterprise 2.0 were the crowd favorites. Gartner has their famous “Magic Quadrant” analysis, so without further ado, here is our Magic Trident.

Why are these tools a winning combination?

1. CRM is customer-focused and therefore sales-focused. In a recessionary environment, any effort to improve or extend sales and customer relationships will be supported by management.
2. Enteprise 2.0 is about improving unstructured communication between employees in an organization. This type of communication is extraordinarily important to process of communicating with customers and closing sales.
3. The lack of mobility and frustration with ease of use often blocks participation by all employees in the corporate social discussion. This has been a thorn in the side off the CRM world for years … organizations implement CRM software and then the sales reps don’t use it. Enterprise 2.0 faces the same resistance. If the iPad provides essential improvement in usage patterns by employees (as we’ve discussed here) then it provides a boost to CRM and Enterprise 2.0.
4. The front-line sales representatives are highly mobile and need a convenient tool to keep them linked to the back office. The iPad provides that tool.
5. The iPad is being used for much more than just CRM or data gathering. It’s being used now as a tool for sales presentations, sales prospecting, and audience participation. This means it is inherently more valuable than laptops and again, we can expect sales reps to embrace it more fully. Increased adoption by sales reps translates into an overall improvement in the quality of data.
6. The iPad or other tablets become the conduit for feeding the social knowledge accumulated by Enterprise 2.0 systems to the employee who is most important to the company – the sales representative facing customers. The CRM system is crucial because it provides a structure/context that the sales rep will understand and which will prevent social knowledge from being delivered too quickly or at the wrong time.
7. The combination of these 3 factors give us a way to monetize Enterprise 2.0 information via CRM, injected into the sales process via the iPad. This increases the value of Enterprise 2.0 and CRM to organizational leaders.

Why IPad any more than laptop?

Since E 2.0 and CRM have been around for years, and the iPad is a newcomer, we need to explain the iPad’s equal footing. I imagine people saying “Why are mobile tablets a crucial part of this picture? Sales reps already carry laptops and already have access to CRM and E 2.0 information. The tablet plays no pivotal role.”

I think the iPad does play a pivotal role.

The touchscreen isn’t just easier and lighter-weight…it is a fundamental improvement in sales customer communication. This point is subtle and hard to explain, but so many sales reps are raving about this quality. Something about the form factor of an iPad makes it so much more useful compared to a laptop.

Laptops are akward. Any awkwardness in the sales call is poison, something to be avoided. On the other hand, iPads are lovely to handle and use, and this quality also impacts the sales rep’s attitude. iPads can be handed to the customer, and can easily be passed around a group. This can create the all-important first steps towards customer commitment.

As one sales rep said: “there is something powerful about handing an iPad to your customer and letting them drive the presentation with their own hands. It perks up the whole sales call. Maybe it’s some kind of psychology trick. I don’t know but I am using it ”

(Edit 10/26/2010): For a great discussion of this see "Enterprise 2.0 and CRM, Two Great Tastes That Taste Great Together" and another announcement from the Enterprise 2.0 conference.

Why iPad Could Bypass the GUI Gooey

Thomas Otter published an article last month called "GUI Gooey" discussing why enterprise software users are unlikely to get any relief from their daily dose of really bad user interfaces.

The average enterprise will continue to make ineffective use of any and all available UI technologies. The root problem is not lack of powerful UI technology. Instead, the root causes for a suboptimal user experience consist of lack of appropriate process and governance, and lack of a genuine commitment to a quality user experience....

Translation: Enterprise users get bad interfaces because enterprises aren't willing to spend the time and money to fix those interfaces.

We think the iPad might be a viable way to leapfrog this problem. This is the "paradigm shift" that iPad offers.

1. Large organizations will switch to the iPad (and other modern tablets) in order to get some very significant added productivity (which we aim to document here in this blog). Also the iPad is stylish in the executive suites.
2. IT departments will find more and more legacy applications to convert to the iPad. Once the devices are in use, why not add more to them?
3. In order to use the iPad, you are pretty much forced to clean up your user interface. The iPad requires this, to be useful at all. Enterprises who transfer legacy enterprise apps to the iPad will create new and better interfaces for those apps.

Remember again that enterprise applications salres are $60 Billion/year, for a cumulative total of half a Trillion dollars over 20 years, so that's a big legacy market to convert.