Over the last few years I have produced a number of articles and blog entries on two once-independent and occasionally competing products: Agresso Business World (ABW) and CODA Financials. Since early 2008, these two products and their related owner companies have become siblings within the Unit 4 Agresso parent.

Unit 4 Agresso is a Netherlands-based business software company that has grown since its inception in 1980 in great part via several mergers and acquisitions (M&As). The company offers a number of regional products for small and midsize enterprises (SMEs) that are deployed mainly in the Benelux region. In addition, the vendor offers local business applications that are sold in Norway, Sweden, the UK, Germany, and Spain.

However, most of Unit 4 Agresso’s revenue is still derived from the Agresso Business World (ABW) product line. ABW [evaluate this product] is a non-manufacturing enterprise resource planning (ERP) suite targeted at upper midsize service-centric enterprises, and Unit 4 Agresso acquired it in August 2000 through a merger with the former Norwegian ERP vendor Agresso.

Agresso Nowadays

Thus, for the rest of this blog post, I will use the shorter “Agresso” name to denote the entire company. Agresso completed the CODA acquisition throughout 2008, which now makes it the sixth largest mid-market ERP vendor worldwide according to IDC. In 2008, the company had about US$ 550 million in revenues and 3,500 employees, and was operating in 19 countries in 3 continents around the world. Because of these facts, the acquisition has apparently brought benefits to both companies. Agresso now has a geographic presence and a customer base in eastern Europe and the Asia/Pacific region, along with a broader partner channel. The merger has also strengthened the company’s North American presence; Agresso’s offices are on the west coast, while CODA’s are on the east coast, so the combined entity now has continental coverage.

For its part, CODA became part of a much larger and more profitable organization that is more likely to survive in the longer term in a mature and increasingly consolidating market. Although CODA was largely a profitable company, its growth rates had not exceeded the average market growth rates for years.

The company’s modest size meant the absence of funds to make major acquisitions that would enable it to break out of its less visible market position. Consequently, the company appeared increasingly squeezed between tier-one ERP and financial management vendors.

There is still potential cross-selling synergy within the two now sibling product offerings. Namely, Agresso’s human resource (HR)/payroll, field service, talent management, and customer relationship management (CRM) products could be attractive to CODA’s existing and prospective customers.

On the other hand, CODA’s financial governance, financial statements consolidation, and cash (treasury) management offerings could be of interest to some of Agresso’s customers and prospects. It is still too early to judge how these cross-selling opportunities will pan out.

CODA 2go Forging New Ground

Furthermore, CODA has meanwhile already delivered the purely multi-tenant software-as-a-service (SaaS) CODA 2go offering using Salesforce.com’s Force.com platform as a service (PaaS). The offering caters to the general ledger capabilities (e.g., multi-currency and flexible chart of account [COA] design, unified ledger design, etc.), and a fully integrated “opportunity to cash” accounts receivable (A/R) process. The process entails the following sub-processes: invoicing from opportunity, credit management (dashboard-based credit analysis and rating), aging and collection, and cash allocation.

These A/R processes support multi-sales ledger and multi-currency capabilities. Future product deliveries will focus on the “purchase to pay” process (i.e., requisitioning, ordering, and receiving), and more A/R capabilities (invoicing, budget management, vendor management, and payment processing). These SaaS products will complement the company’s offerings and target new potential markets.

Thus, CODA’s SaaS division has been run independently, and former CODA’s chief executive officer (CEO) Jeremy Roche is in charge. For more information, see my recent blog series entitled “To SaaS or Not, Is That a Question?”

A Clearer Demarcation Line Between Agresso and CODA

From the outset, the parent unequivocally stated that it was committed to supporting CODA’s customers and products. Indeed, the company has run CODA as an independent business unit and has maintained the CODA brand, CODA 2go, for example.

Still, until recently the parent company has not completely prevented confusion in the market, along with possible internal competition among the different business units. The initial plans were to address this issue by focusing these business units on specific industry segments.

Namely, although both former companies’ solutions had cross-industry capabilities, Agresso has had a stronger track record in the mid-market public sector, education, and project- and service-centric industries. Conversely, CODA still has a focus (and a sizeable install base) on the financial services, retail, and transport and logistics sectors in the mid- and higher-end of the market.

But the indisputable product overlaps between Coda-Financials and ABW (i.e., both solutions offer sophisticated financial management applications) and direct competition in the past (especially in Europe) have occasionally prompted market observer speculations about some product convergence. There is always at least some initial temptation to leverage research and development (R&D) economies of scale.

Therefore,  some observers have wondered whether this could take the form of technology convergence while maintaining two separate product lines (similar to Lawson Software’s strategy with the Lawson M3 and Lawson S3 product lines). Alternatively, would there be a full product suite convergence (similar to Oracle’s still coming Fusion Applications or the erstwhile ill-fated and abandoned Microsoft “Project Green” strategy)?

Well, the recent analyst tour and briefing that Agresso held in Boston on April Fool’s day (April 1, 2009) finally explained and clarified the go-forward strategy for both product lines. The company has made the decision to have the following two separate core solution sets:

1. Agresso Business World will be sold as a suite for the mid-market services sector. In terms of customer size and vertical sectors, the product targets companies with US $50 million to US $1 billion in revenues in the private and public service provider, government, and education sectors.
2. CODA Financials will be sold as a best-of-class financials-only solution for the mid- and high-end market, beyond service organizations. In terms of customer size and vertical sectors, the product targets companies with US $50 million to US $5 billion in revenues in the private and public service provider, retail, manufacturing, and transportation sectors.

Blink/BLINC Twice for the Combined Go-to-Market Strategy

Both the Agresso and CODA solutions will be targeted at the horizontal niche market Businesses Living IN Change (BLINC)™, thereby addressing the core pain experienced by dynamic organizations–the cost and speed of change–from two angles:

1. inability to accommodate business change after an implementation in homogeneous environments, and
2. inter-operability challenges in heterogeneous environments.

Agresso offers post-implementation agility as its value proposition: CODA’s strength is interoperability and “playing well with others.” The new corporate strategy can be entitled “Post Implementation Agility…Meets Interoperability. ” In other words, ABW and CODA represent two solutions for two fundamentally different types of BLINC challenges.

ABW is the broader solution of the two, and covers financials, HR, payroll, project management, procurement, and field service. The suite is targeted specifically at service-centric and project-centric organizations, although the financial management module can compete on a best-of breed basis.

The latter case might happen in those situations where the prospective organization deliberately keeps its application infrastructure simple and stable–namely, in cases where the change pressures need to be met at the business level, i.e., at the front end of the application rather than the back end (integration level). The product is sold mainly to midsize companies that are growing in rapid-change business environments and thus need a system that can change with them as they grow. The primary change drivers in these sectors are the following:

• the industry consolidation landscape (M&A’s and divestments);
• organizational organic growth;
• reorganizations and ensuing financial reporting-driven changes;
• strategy shifts due to regulatory compliance, obsolescence, reforms, etc.

Agresso has more than 2,900 customers and is deployed in 100 countries. Often ABW buyers are companies pursuing initial public offerings (IPOs) and requiring “best margin” practices, or are public sector agencies striving for the “best value” for their citizens. The suite is scalable to thousands of concurrent users, and service organizations increasingly consider it as an alternative to tier-one ERP solutions.

My recent two-part blog series entitled “Agresso Bucks the Slump (and Fights the “ERP Madness”)” talks about Agresso’s ongoing success. One major reason for this success is that in this depressed market buyers getting much smarter and less easily fooled. Once-tolerated rigid ERP installations all over the globe are now at risk as frustrated and cash-strapped buyers seek more flexible alternatives.

To that end, Agresso’s underlying VITA architecture smartly couples data, business processes (workflows), and the information delivery/presentation methodology (reporting and analytics) to move in lockstep. Thus, when a change is made in one area, it does not have to be redone and rechecked for accuracy in another: the system in smart enough to take care of it on its own.

The Good and Bad (“Yin and Yang”) of SOA

During the briefing, I could sense Agresso’s occasional frustration, since some analysts are still unimpressed and do not understand the value behind the VITA architecture. Some analysts kept trying to find service-oriented architecture (SOA) somewhere within VITA, and were likely surprised by Agresso’s (anti-) SOA stance.

Agresso should perhaps not bristle at the mention of SOA. In fact, I think that VITA is based on “Immaculate SOA” or “Positive SOA.” What I mean is that VITA has the positive traits of SOA: components/objects (rather than being rigid monolithic software), the use of metadata, model driven architecture (MDA) , process-based agility, no (source) coding required for modifications, etc.

Moreover, since all Agresso components have the “same DNA,” some negatives of SOA are eliminated, such as the need for master data management (MDM) or SOA governance and management. In fact, these issues are what cost dearly when enacting any change to one or a few disparate SOA components and keep everything else in synch.

VITA keeps everything in synch by default due to its homogeneity. But with not-completely-native “BLINC plug-in” solutions like Agresso Talent Management or Agresso CRM, even Agresso is subject to SOA’s good and bad elements due to heterogeneity.

As discussed in my recent blog post there are at least two sides to SOA. For example, Ciber offers a non-technical description of SOA as follows:

The objective of SOA is to allow businesses to extend the functionality and life of their existing IT assets, reduce architectural complexity, decrease duplication of services and data, and increase business flexibility and agility in responding to market changes. SOA is a way of molding IT technology around the needs of the business, instead of molding the business around IT.

The first part of this definition is similar to what many extended-ERP platform providers are doing: stitching together existing assets through a lower cost common middleware platform. This is a laudable effort, especially in this economy.

However, the second part of the definition (referring more to molding software to the business and enabling flexibility and agility), simply are not considered by these quasi-SOA platforms. That is because the core enterprise systems and components that these platforms incorporate are themselves not necessarily SOA-based.

The Ease of Change

Agresso’s VITA architecture allows ordinary business users to make change themselves at the graphical user interface (GUI) level in a drag-and-drop or point-and-click manner. When this capability is contrasted to power users having to program at the pesky application programming interface (API) level (or even at the dreaded source code level) as with most other ERP architectures, there is a clear reason why Agresso’s value proposition is resonating in today’s economic landscape.

Slowly but surely, buyers are beginning to finally understand what SOA will not do: support change easily and cost effectively. According to a recent survey conducted by the CFO Research magazine and the previous similar survey by TEC, the conclusion is that Agresso’s changes via GUI are relatively fast and cheap. Conversely, a vast majority of Agresso’s competitors still require changes via programming, which is complicated, costly, and time-consuming.

Agresso bristles at SOA comparisons and associations to VITA for the following three reasons:

1. SOA does not do what VITA does, and the moment someone tries to call it “immaculate SOA” or any other SOA category, then they open Pandora’s box for Agresso’s competitors to start comparing the degrees of similarity to VITA “since we’re all SOA-like.”
2. In cases where Agresso has to resort to SOA (for inevitable heterogeneous environments) – it doesn’t want to get “dinged” for being a negative, since it is then the same as everyone else’s capabilities. Agresso admits that SOA is a great tool for what it does: plugs disparate parts together (perhaps clumsily, but still better than what the world had before).
3. Finally, one day when SOA is replaced by something else (the next latest-and-greatest three-letter acronym [TLA]), once again Agresso hopes to be sitting there smiling. The company expects to just grab onto the next big thing, and be able to work side by side with it, because SOA (and any future new concepts) will sit one layer up atop VITA.

Fine, I’ll give Agresso the advantage of VITA over SOA, but as soon as there is no longer a “same DNA” environment, the story is the same for everyone: stitching disparate things via SOA standard-based messaging, etc. Perhaps there could be something that Agresso and CODA can do to alleviate the MDM and SOA governance conundrum when it comes to BLINC plug-ins?

To that end, Part 2 of this blog series will focus on the CODA Link architecture that espouses superior interconnectivity. Your comments and opinions about post-implementation agility and Agresso’ bifurcated strategy are welcome in the meantime. To be more precise, how crucial are a system’s inherent agility and interoperability in your evaluation efforts?