Create A SaaS Migration Road Map That Is Fast, Not Perfect · 2018-05-16 · FoR APPLICATIoN...

Create A SaaS Migration Road Map That Is Fast, Not PerfectRoad Map: The Business Applications Playbook

by Duncan JonesSeptember 21, 2017

For ApplicAtion Development & Delivery proFeSSionAlS

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Key takeawaysAnalyze Customers’ Needs To Set Priorities For Your SaaS Migrationchoose and implement enterprisewide solutions only where you need to quickly deliver a consistent customer experience. otherwise, guide and enable the business to pick its own software, so it can address its diverse, urgent needs.

Reassess Large Incumbent Suppliers’ Future Role Before You Adopt Their SaaS ProductsSaaS migration is a rare opportunity to reassess your key business relationships and either reboot them or just boot them. take the time to get your vendor selection process right.

When Replacing, It’s Better To Be Fast Than PerfectDon’t interfere with divisional decisions if it will delay urgent actions. But try to protect business units (BUs) from common mistakes by nominating preferred suppliers, publishing guidance on issues such as contracts and security, and insisting they follow a robust selection process.

Why read this reportForrester’s data shows that three-quarters of software decision makers in enterprises plan to replace or complement their enterprise resource planning (erp) software with SaaS applications, or have already done so. However, AD&D leaders face a major challenge deciding where to prioritize their SaaS migration efforts. this report will explain how to set your execution plan by focusing on customers’ needs while balancing the often-conflicting goals of business agility and technology standardization.

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© 2017 Forrester research, inc. opinions reflect judgment at the time and are subject to change. Forrester®, technographics®, Forrester Wave, techradar, and total economic impact are trademarks of Forrester research, inc. All other trademarks are the property of their respective companies. Unauthorized copying or distributing is a violation of copyright law. [email protected] or +1 866-367-7378

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table of contents

AD&D Leaders Don’t Know Where Best To Start Their SaaS Migration

Prioritize Your SaaS Migration Based On Customers’ Needs

create A SaaS migration road map that Balances Urgency With Standardization

reassess Key Suppliers to Set their role in your SaaS road map

recommendations

Start With A Quick Win That Will Benefit Customers

Supplemental Material

related research Documents

Best practices: pricing Strategies For B2B Digital Services And Subscription products

measure the Business impact of improved App Strategy


Create A SaaS Migration Road Map That Is Fast, Not PerfectRoad Map: The Business Applications Playbook

by Duncan Joneswith christopher Andrews, luis Deya, and Andrew reese

September 21, 2017

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Create A SaaS Migration Road Map That Is Fast, Not PerfectSeptember 21, 2017

© 2017 Forrester research, inc. Unauthorized copying or distributing is a violation of copyright law. [email protected] or +1 866-367-7378

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road map: the Business Applications playbook

AD&D leaders Don’t Know Where Best to Start their SaaS migration

the erp era is over. last decade’s business application strategies have failed to deliver the systems business leaders need, creating a gulf in satisfaction levels between technology management professionals and their business colleagues (see Figure 1). AD&D leaders have been left with an infl exible portfolio of legacy applications that prevents them delivering the smart, fl exible, user-centric applications their enterprises need on their path to digital transformation. that’s why modernizing legacy applications and implementing more SaaS are high priorities for 60% and 55% of AD&D leaders respectively.1

However, many AD&D leaders are struggling to create a sound SaaS migration road map. they are unsure how best to balance the confl icting priorities their legacy applications have created, such as an ongoing need for custom development and personalization of customer experiences (see Figure 2). they face many obstacles to progress, such as lack of budget and misalignment between it and the business (see Figure 3). Forrester has seen too many companies failing to migrate quickly enough or — worse — pursuing fl awed road maps that will fatally undermine their modernization efforts. We see two great mistakes that play against each other when determining strategy:

› Misguided standardization wastes time and money you don’t have. implementing one solution enterprisewide will achieve obvious economies of scale, but will customers wait while you deliver it? it may take years to gather requirements from multiple divisions, search for a single product that will satisfy all stakeholders’ diverse needs (if such a product even exists), and then roll it out enterprisewide. moreover, technology-centric standardization may be counterproductive if autonomous business units in a heterogeneous group need to adapt it to their customers’ specifi c needs.

For instance, a large multinational conglomerate spoke publicly in 2015 about its plans to implement a single ecommerce platform enterprisewide. We cautioned that this was ill-advised, given the time it would take to accommodate the diverse needs of various divisions. three years later, the company is still unable to provide all customers with an adequate ecommerce channel — and it is unwilling to talk about the initiative.2

› Proliferation of niche solutions reduces data visibility and process consistency. AD&D leaders may be tempted to avoid the delays of standardization by instead migrating to software-as-a-service (SaaS) via a series of discrete projects. However, the resulting application fragmentation can have unpleasant side effects. Hard-coded custom integration between applications inhibits process agility. Data synchronization challenges can cause customer experience (cX) failures. Without guidance and governance, independent BUs can make bad product choices, and even expose the wider organization to excessive risk.

technology-centric standardization may be counterproductive if autonomous units in a heterogeneous group need to adapt it to their customers’ specifi c needs.

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Create A SaaS Migration Road Map That Is Fast, Not Perfectseptember 21, 2017


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Road Map: The Business Applications Playbook

For example, Uber’s lack of visibility into its contract process created obstacles to growth, as business systems manager Hyung lee explained to Forrester. For Uber, each city is a separate BU that has autonomy to decide how best to grow, which has led to wide diversity in software and processes, including contract negotiation and approval. Before Uber implemented an enterprisewide contract management system from Springcm, some BUs even had to delay launching in specific cities while they waited for company lawyers to approve backlogs of draft contracts with local business partners and customers.

FIGURe 1 Business leaders Are less Satisfied than their technology peers With their current Applications

Business pro.TM pro in business dept.Technology pro.

“Which of the following best describes the current status for the following types of software?”Answer: “satis�ed with existing product and plan to keep it”

51%

44%

44%

43%

35%

29%

35%

33%

42%

38%

32%

38%

ERP

Commerce platforms

Order management

Supply chain management

Base: 989, 968, 924 and 1,240 enterprise software decision makers whose �rms are implementing/have implemented the speci�ed software

Source: Forrester Data Global Business Technographics® Software Survey, 2016




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FIGURe 2 AD&D leaders Face Several conflicting priorities

“Which of the following software initiatives are likely to be your organization’s top software priorities over the next 12 months?”

Base: 1,714 enterprise software decision makers


41%

40%

37%

39%

32%

23%

21%

23%

20%

10%

Update/modernize key legacy applications

Personalize our customer-facing web andmobile experiences

Increase our use of software-as-a-service

Upgrade vendor built business applicationspackaged applications to a newer release

Increase custom development for betterbusiness support and/or differentiation

High

Crucial

Supportinglegacyapplications

SaaSmigration

FIGURe 3 lack of Alignment Between it And the Business is A major challenge For enterprises

“What are the biggest challenges your firm faces when orchestrating its software strategy?”(Enterprises)

24%

28%

29%

34%

40%

Inadequate or missing relevant internal skills

In�exible or hard to change culture

Lack of alignment between IT and business

Security

Budget

Base: 1,714 enterprise software decision makers





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prioritize your SaaS migration Based on customers’ needs

Forrester’s vision for the future of business applications is an eclectic mix of modern, smart, flexible SaaS products surrounding a stable core of legacy systems of record. those SaaS applications will be a combination of suites, such as customer relationship management (crm), and niche applications that augment and complement the suites for processes such as pricing, fulfillment and billing. your road map to that future state should balance speed with consistency, enable BUs to act independently when they need to move quickly, and allow time to standardize where appropriate. to get the balance right, Forrester recommends that you analyze each of your current applications in terms of two dimensions:

› How urgent is the need to upgrade or replace the application? Use Forrester’s Business Applications’ effectiveness Scorecard to separate the proverbial “burning platforms” from the “ain’t brokes.” this framework will help you rate your business applications in four dimensions: business outcomes agility, health and service. Start your SaaS migration with the applications that fail this assessment. limit the project’s scope as much as you can, because quick fixes of these urgent problems are more important than an optimal solution — in line with the need to be “Fast rather than perfect,” which is one of Forrester’s top five imperatives for winning in the age of the customer.

For instance, Forrester spoke with a technology manager of a large software company that realized it needed a new customer billing system for its growing subscription business. He told us how the previous solution — based on its legacy oracle erp suite — was causing unacceptable delays, errors, and rework. He decided to integrate a specialist subscription billing product from Zuora with its erp software, rather than upgrading or replacing the erp suite, because it needed a fast solution more than it needed a perfect one.

› Do customers want tailored processes for each BU, or groupwide consistency? Horizontal standardization across the group may be an unaffordable luxury if it involves replacing many different applications that are already working effectively. you should therefore standardize primarily where specific customers deal with multiple BUs and expect the same experience from each one. Standardize around each unit’s specific customer life cycle if each is different (see Figure 4).

For example, global customers of a company that made plant control systems would expect consistent pricing everywhere, so a single configure, price, quote (cpQ) platform companywide would be important. However, that solution may be the wrong choice for a different BU within the same conglomerate that made complex, highly configured products such as trains or aircraft engines.

https://www.forrester.com/report/Digital+Innovation+Reshapes+The+Future+Of+Business+Applications/-/E-RES118241

https://www.forrester.com/report/Top+Five+Imperatives+To+Win+In+The+Age+Of+The+Customer/-/E-RES138251https:/www.forrester.com/report/Top+Five+Imperatives+To+Win+In+The+Age+Of+The+Customer/-/E-RES138251




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FIGURe 4 Standardize Applications either Across the enterprise or Around the customer life cycle

e.g., CRM

CPQ

OM

Shipping

CSM

etc. Apps

SaaS

e.g., CRM

CPQ

OM

Shipping

CSM

etc. Apps

SaaS

Business unit 1

Business unit 2

Application delivery road map approach A:Clockwise standardization, where customers demand consistency around their life cycle within each BU

Application delivery road map approach B:Horizontal standardization, where customers demand consistency across the enterprise

ENGAGE DISCOVER

EXPLORE

BUYUSE

ASK

ENGAGEDISCOVER

EXPLORE

BUYUSE

ASK

Create A SaaS Migration Road Map That Balances Urgency With Standardization

AD&D leaders need a SaaS road map that will resolve the dilemmas between it simplification and business technology (Bt) agility, internal standardization and external personalization, and the desire for architectural elegance versus the need for speed.

Use your assessment of these two dimensions to define your SaaS migration road map, in terms of priorities and execution method (see Figure 5). this will encourage gradual consolidation of vendors, suites, and technologies while allowing urgent action where necessary, combining four possible strategies:


Create A SaaS Migration Road Map That Is Fast, Not PerfectSeptember 21, 2017


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road map: the Business Applications playbook

› Consolidate where you have an urgent need to deliver a consistent CX. Use this model when you need a global solution but can limit the scope to the immediate need, such as a demand by global customers for consistent pricing enterprisewide. limit the scope to the specifi c software niche so you can minimize intra-business disagreements about requirements. Don’t agonize too much about fi nding the perfect product; settle for fast and good enough. SaaS applications are usually particularly good for such situations because they are easy to deploy, confi gure, and integrate with each BU’s existing applications.

nestlé illustrates this approach with its choice of a specialist supplier risk and performance management (Srpm) product called Achilles to address an urgent need to ensure its supply chain’s compliance with its corporate social responsibility (cSr) policy.3 limiting the scope to Srpm was better for nestlé because it fi xed the urgent problem without having to replace many different unit-level epurchasing applications that were performing satisfactorily.

› Sole-source if you have time to fi nd the best long-term solution. choose this option if current applications rate satisfactorily for effectiveness but you see longer-term benefi ts from standardization. one advantage of this approach is that the longer horizon enables you to look for suites that support multiple related processes. you can implement select modules for early adopters then extend that to other modules, and other BUs, without forcing any of them to change its current solution. SaaS is vital for this suite approach because you need a confi gurable and continually evolving platform; with on-premises applications, sole source strategies drive excessive customization and lock-in on an obsolete version.

As an illustration, the senior director of fi nancial solutions at a large insurance company used this approach to expand gradually across the enterprise the fi rm’s use of coupa Software’s eprocurement product. the global federated organization precluded a big bang consolidation approach, so he concentrated on continually increasing adoption by both business units and suppliers.

› Multisource where no one solution can meet every customer need. Use this approach for software categories where BUs’ needs vary greatly by customer type, brand or region. it can also be a good tactic for central AD&D leaders within decentralized groups, to avoid confl ict with unit-level stakeholders who expect software-buying autonomy. in these situations, consistency isn’t feasible and may not even be desirable, but you still want to extract some economies of scale — and prevent units making bad choices.

execute multisourcing by evaluating three to fi ve products and approving two or three good ones as solutions. these should preferably be SaaS, to encourage SaaS migration, but you may need to approve an on-premises option for BUs that have strong local compliance objections to the cloud. negotiate framework agreements to leverage your scale in the commercial deal. Allow units to choose the one they prefer, when they are ready to upgrade, and discourage them from going outside your preferred list.

Don’t agonize too much about fi nding the perfect product; settle for fast and good enough.




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› Allow BUs autonomy if they have urgent, diverse needs — but guide and protect them. Don’t interfere with their product choices if you’ll merely slow them down. let them get on with it, but try to protect them from significant risks. For instance, you should encourage units to follow a sound decision process, as Forrester describes elsewhere in the Selection element of this playbook. you should insist that they validate the chosen supplier appropriately, such as checking its cyber security processes. you should ensure that they scrutinize its contract carefully, using our checklist, and secure vital amendments before they sign.

FIGURe 5 Set priorities And migration method Based on customers’ needs

Customer timeline

Urgent need Long-term goal

Customerpriority

Tailored �t

ConsistencyConsolidateChoose and implement companywidea specialist product. Keep focused ona narrow scope, to minimize delays —think fast, not perfect.

Sole sourceChoose a preferred solution and drivegradual standardization on it. Extendscope to include closely relatedcategories.

Guide

Allow divisional product choices, butreduce risk of poor choices by givingadvice on functional requirementsand approved vendors.

Multisource

Validate two or three preferred vendors,from which BU can choose. Encourageunit to migrate from legacy products toone of the alternatives you prefer.

Reassess Key Suppliers To Set Their Role In Your SaaS Road Map

your SaaS migration road map should also define the likely role of your main incumbent software providers. this is a once-in-a-lifetime opportunity to reevaluate your key supplier relationships, and use the crucial road map decisions to refresh and/or reconfigure them (see Figure 6). AD&D leaders should take great care to:

› Maintain an eclectic, pragmatic approach to software sourcing decisions. even if you want to keep your SAp-first or oracle-first strategy, you should still look at the broader market. SAp and oracle have spent billions acquiring and developing SaaS applications, and some are market leaders, but their portfolio’s quality is inconsistent. Some lack vital functionality, while others receive little investment. you should therefore evaluate each product on its merits and balance the advantages of buying from a known reliable supplier, with the benefits of independent, focused, SaaS-native vendors.

https://www.forrester.com/report/The+New+Way+To+Choose+Business+Applications/-/E-RES126741

https://www.forrester.com/report/Improve+Agility+With+Forresters+Software+And+SaaS+Contract+Review+Checklist/-/E-RES105721




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For example, in the Forrester Wave™: recurring customer And Billing management, Q3 2017, SAp Hybris’ customers told us that the dated business user tools impede agile deployment of new offerings, while oracle’s told us that its product feels dated and that changes took too much time, money, and effort.

› Mitigate the growing danger of SaaS vendor lock-in. many SaaS markets have consolidated too far, creating a big risk that two or three dominant vendors will cease to compete on price and will reduce their r&D investments.4 Forrester is already seeing clients facing excessive prices increases of 20% or more from SaaS salespeople who knew that the customer had no choice but to renew its contract. Another example of the lock-in danger is SAp’s use of the “indirect access” confusion to try to force customers to buy its SaaS products rather than competitors’.5

FIGURe 6 re-evaluate current Suppliers Before Setting their Future role in your SaaS road map

Important nichesuppliers

Preferred source foradjacent modules

Strategic partnersPreferred source for new

SaaS applications

Tactical vendorsGradually replace by

implementing SaaS suitesfrom niche and strategic

suppliers

Key operationalsuppliers

Your SaaS road mapshould reduce your

dependence on these.

Differentiation

Operational effectiveness

Bro

ad

Niche Scale

Value

Extend point solutionsinto suites

Introduce newinnovation sources

Consolidate outover time

Downg

rade

under

perfo

rming

incum

bents





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Recommendations

Start With A Quick Win that Will Benefit customers

the most frequent question for Forrester hears from AD&D pros is “Where do i start?” you want to find a project that will be sufficiently important to impress colleagues, but not too difficult for you to complete quickly. the ideal application area in which to start your SaaS migration will have three characteristics:

› Customers want you to do this better, and more consistently. your firm will currently have several different products supporting this process, or differently customized instances of one product, but few doing so particularly well. it will be something important to customers, either because it directly supports a customer journey or because it affects their perception of your brand. Supplier risk and performance management would be an example of the latter, because customers care that your supply chain is safe, ethical, and sustainable.

› You expect minimal resistance to change from BU leaders. you want to start to drive standardization enterprisewide, so your first projects should be where units’ needs are similar companywide. there can be a few hold-outs, provided most BUs embrace your initiative. ideally you should see a groundswell in demand for change or widespread dislike of the software they currently use. there may be other compelling reasons for a new solution, such as legacy software becoming unsupportable, or significant cost savings from consolidation.

› Several good, proven, independent SaaS solutions are available. incumbent vendors may play a big role in your road map — later in the program. you should start as you mean to continue, with an eclectic strategy. it should be a mature space for SaaS adoption with some established leaders, rather than a nascent market of partially baked offerings. A good way to check this is to look at relevant Forrester tech radar’s for software categories that are in the Growth phase.6




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Supplemental material

Survey Methodology

the Forrester Data Global Business technographics® Software Survey, 2016, was fielded in August and September 2016. this online survey included 3,582 respondents in Australia, Brazil, canada, china, France, Germany, india, new Zealand, the UK, and the US from companies with two or more employees.

Forrester Data Business technographics ensures that the final survey population contains only those with significant involvement in the planning, funding, and purchasing of business and technology products and services. research now fielded this survey on behalf of Forrester. Survey respondent incentives include points redeemable for gift certificates.

please note that the brand questions included in this survey should not be used to measure market share. the purpose of Forrester Data Business technographics brand questions is to show usage of a brand by a specific target audience at one point in time.

http://www.forrester.com/app

http://forr.com/1einFan

http://www.forrester.com/Analyst-Advisory/-/E-MPL172

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endnotes1 Source: Forrester Data Global Business technographics Software Survey, 2016.

2 Source: presentation by an enterprise’s vice president of digital business at a software company’s customer event.

3 Source: “Achilles experiences: nestlé appoints Achilles to map its supply chain and help to protect workers,” Achilles (http://www.achilles.com/images/locale/en-en/industry-sector/pdf/fmcg/nestle-supply-chain-mapping-case-study.pdf).

4 For buyers of cloud-based SaaS applications, the risks of cloud consolidation are greater than the benefits today. cloud clients, at least for SaaS applications like crm, Hr management, and financial management systems, are more vulnerable to vendor lock-in than traditional licensed software clients. See the Forrester report “the coming consolidation of cloud.”

5 Barak D. richman, the Bartlett professor of law and business administration at Duke University School of law, has suggested that SAp’s conduct may breach antitrust legislation. “SAp’s conduct can be anticompetitive under one of two antitrust theories: First, SAp may be engaged in illegally tying its erp software and services with its accessory product, Hybris. Second, SAp’s demand for third party license fees may constitute an illegal refusal to deal with other third-party accessory software providers.” richman summarizes by saying “in short, SAp’s conduct limits consumer choice, gives SAp an anti-competitive advantage in the erp-accessory market, and undermines a currently competitive and dynamic marketplace for erp accessories.” Source: Sam Bayer, “Duke law professor Says SAp indirect Access license Fees Are illegal,” corevist Blog, August 21, 2017 (http://www.corevist.com/duke-law-professor-says-sap-indirect-access-license-fees-illegal/?utm_campaign=shareaholic&utm_medium=linkedin&utm_source=socialnetwork).

6 For instance, the techradar™: Software-As-A-Service, Q3 2016 analyzes the maturity, adoption, and potential for business value of SaaS delivery models in key categories of enterprise applications to help application development and delivery (AD&D) professionals plan their enterprise application road map. See the Forrester report “techradar™: Software-As-A-Service, Q3 2016.”





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