Another Tech Bubble?

tech bubbleThere’s plenty of reason to think that Silicon Valley is building to yet another bubble or, as they say, partying like it’s 1999.  Companies these days are raising some rather staggering sums of money – there are about 100 who are already valued at $1 billion or more, now known as “unicorns.”  Some of these are dubious at best, notes Nick Bilton in Vanity Fair, like apps that alert you about a parking space or let you know that friends are nearby.  Many such app development teams are minting millions or tens of millions creating “instantly rich young people” who now spend their money on fancy cars, or upping the price of Silicon Valley real estate.

While it may appear “euphoric” from the outside, as a recent article in the Tech section of The Week has noted, some of these valuations look pretty murky, even inflated and, it notes, at times “fabricated.”

Doug Hegwood, in an article from The Nation calls it “surreal.”  Airbnb, which doesn’t own any of its properties – or much of anything actually – is valued at $24 billion.  That’s more than Marriott which operates more than 4,000 hotels.

As The Week points out however, unlike last time around, this ‘bubble’ isn’t dominated by the ‘ordinary folks’ who lost over $6 trillion in the post Y2K meltdown in risky Wall Street IPOs and the market’s tech crash.  This time around, the money comes mostly from wealthy venture capitalists, of whom there seems to be a growing number of late.

According to Michael Johnston of MarketWatch.com “Today’s environment can’t come close to matching that of 1999.”  Back then, pets.com for one, went bust in a year.  Microsoft was valued at a whopping $600 billion, almost double today’s valuation, with a fraction of the revenue.  On the positive side today, at least many of the current tech favorites have actual products and revenue, and not just a cool domain name (again, see pets.com).

Perhaps the silver lining to this party is that the boom-and-bust cycle underlying it actually drives innovation, according to an article in the Financial Times.  For example, all that spending on the buildout of broadband in the last tech bubble laid the foundations for the Web 2.0 that followed.

Some of the most interesting conclusions on all this have been drawn by Dave Pell in Medium.com.  Mr. Pell notes that “We’re definitely in a bubble, but it’s not a financial one – it’s psychological.”  He notes that today’s techies sometimes appear to believe that “just because they wrote an algorithm that gets us to the airport faster, they’re experts on every other topic.”  They forget “the role timing and serendipity play” in building their fortunes.

As The Week concludes in its Sept. 18th article: “Here’s something to keep in mind: Showing up at a gold rush with a shovel and a pan doesn’t make you a genius.”



druckerOhnoIn his 1993 book The Post Capitalist Society longtime management guru Peter Drucker of Claremont Graduate University (and for this writer’s money, the greatest and most innovative management thinker ever) described what he saw as the coming shift from the knowledge worker to the “knowledges” worker.  His point was that companies were being created to make all available knowledge as productive as possible.  Drucker argued for “decentralized organizations” that were built for continuous change, composed largely of equals who were focused on innovation – in things like processes, tools and really, all work related efforts.  His then unconventional thinking has become the standard for business today.

In 1987, Taiichi Ohno in his book Toyota Production System: Beyond Large-Scale Production, told the world that the goal of “just in time” (JIT) was, simply, the elimination of waste.  He also stated his opinion that the Toyota Production System was more than a production system – it was a management system.

These two operational touchpoints were brought together in a recent article by John Collins, President of Sustainable Solutions and an APICS CFPIM in the current issue of APICS Magazine (Sep/Oct 2015) in which he asks whether perhaps today’s newest technological advances – he names 3D printing as an example (also known as “additive manufacturing”) – are now making it possible to seriously consider mass customization.

Collins points out that “there are many pros and cons inherent in the strategic and operational choices associated with mass production” (including make to stock, just in time, sequence assembly, configurators, job shop and customized project design).  These methods have long had to deal with trade-offs including the ability to forecast demand, the customer’s desire for customization, and the volume of products that can be efficiently delivered.  Thus, he notes, mass customization is viewed with suspicion as it “attempts to overcome these inherent compromises by producing a high volume of customized products offered to customers at near-mass-production prices.”

And so it is that he quotes Drucker and Ohno in reminding us that we have been challenged to confront such “traditional principles” for many decades now.  The times continue to change.  Today’s additive manufacturing, which makes 3D solid objects from a digital file by adding continuous layers of material (plastic being only the best-known, but not the only, example), forces us to change our thinking.  Today, it is actually possible to construct buildings with this new technology.  A Dutch company, Collins notes, is building a pedestrian bridge in Amsterdam, on-site – over a canal! – exclusively with 3D printers.

Once again, change is in the air.  Drucker and Ohno would certainly approve.  And they would probably remind us that companies need to make production and operational choices in keeping with this new and burgeoning demand for mass customizations, 3D printing and today’s new range of digitally-driven manufacturing.


nav 2016Microsoft is releasing the latest version of its best-selling Dynamics NAV ERP software – now deployed at 120,000 companies worldwide – this month, coinciding with the “Directions EMEA” (Europe, Middle East, Asia) conference in a few days, followed immediately by the “Directions USA” conference, being held in Orlando this yer, and which will be attended by several of us at PSSI in just a couple weeks.

Early word is that the newest NAV, code-named Corfu, will be the most cloud enabled ever (no surprise there, as Microsoft continues to heavily promote its Azure cloud platform infrastructure).  Additional enhancements are said to include:

  • Better integration to O365 and Power BI
  • Native Integration to CRM Online
  • Improve agility to allow improved access from any device including mobile
  • Electronic invoicing and optical character recognition
  • Enhanced accounting functionality
  • Workflow enhancements to improve customized automation around billing, HR and Payroll, financials and other critical functions.

Microsoft will release all the details about the Dynamics NAV 2016 when our team is in Orlando this month for Directions, as noted earlier.  But as the folks at NAV-hosting firm RoseASP put it at their website recently, “it is clear that this is going to be a major release for the product and it seems like this version will be worth getting excited about.”

Expect to hear more from us in the days and weeks ahead about this significant release of Microsoft’s best-selling ERP product.  Stay tuned…


apics_astlCustomers and readers know that our firm is a long-time proponent, booster, member and champion of APICS (the American Production & Inventory Control Society).  They are, as noted in the organization’s vision statement: “the world’s leading community for end-to-end supply chain excellence.”  APICS chapters nationwide boast 43,000 members in an organization that has been building supply chain excellence since 1957.

Recently, APICS merged with the American Society of Transportation and Logistics (AST&L).  The merger is an illustration of the importance that logistics maintains in the overall supply chain.  As a recent article in APICS Magazine pointed out, the original APICS logo consisted of a stylized representation of a car’s rear axle and differential – an appropriate symbol of today’s merger in illustrating the importance that the movement of product from point A to point B holds even today, as transport remains an integral part of supply chain and operational management.

The key message, APICS notes, is simply this: “Production and inventory control is not an island.”  The productive functioning of the inbound/outbound supply chain is critical to delivering customer value, and transport and logistics thus occupy a key piece in the global supply chain puzzle.  The focus shifts over time from the plant to the supply chain as a whole.  This is merely a broadening of the definition of the term supply chain, and it simply recognizes that what a customer buys is not just a product but an entire experience.

As the APICS Dictionary itself points out in defining the ‘perfect order’ – it’s “an order in which the ‘seven Rs’ are satisfied: the right product, the right quantity, the right condition, the right place, the right time, the right customer, the right cost.”  As the APICS article notes: the plant can’t do that all by itself.

And so, just as APICS has recognized this simple fact in its merger with the AST&L, all manufacturers do well to remember that success comes from catering to the customer’s perception of value, “and anything we can do to enhance that customer value will encourage sales, revenue growth and satisfaction.  Products aren’t purchased strictly on the value inherent in the physical item all by itself.”

Price, promotion and place all play crucial roles, and so too as we deal with internal issues like planning, scheduling and materials availability, it’s important to remember that we’re all part of a global supply chain – from production through transport, and often back again.  It’s all about coordinating and collaboration across all these lines – whether you’re a national organization like APICS or just a small business like yours, or ours.


dynamics erpAs a Microsoft Dynamics NAV reseller of many years specializing almost exclusively in companies that engage in manufacturing and distribution, we frequently find ourselves describing what Dynamics is and, right after that, why there are four different “versions.”  While those “versions” are the result of separate Microsoft acquisitions of different, unrelated firms over the years, over time Microsoft has folded its offerings under the single umbrella named “Dynamics” and offered four entirely different ERP products.

Today’s post comes from a site called OnWindows, which, according to its website: “provides news and industry thought leadership on Microsoft and partner technology in the enterprise.”  We thought they did a pretty good job of describing the products and their target markets – and give confirmation to why we chose one of the only two Dynamics products (AX and NAV) focused on manufacturing firms.  Here’s what they had to say in a post you can find here.

Microsoft Dynamics AX

  • Company size: emerging and mid-sized
  • Target industries: wholesale distribution, manufacturing, public sector, non-profit, retail, professional services, software, transportation
  • Target market: company revenue of US$50 million-US$2 billion
  • Strengths: industry-specific solution templates for distribution, retail, professional services, manufacturing, lean and public sector; enterprise functionality – share data across companies, e-banking, supports a shared services model; agile business enabling technology; integration tools support legacy and newest technology; integrated document control; automates procedures; enterprise reporting and analysis.

Microsoft Dynamics GP

  • Company size: small to large and everything in between
  • Target industries: healthcare, distribution, education, government agencies, non-profit, retail, consumer packaged goods
  • Target market: US$5 million-US$1 billion
  • Strengths: integrates with Microsoft Dynamics CRM; business alerts, routines, wizards and help; easy to customize; field service suite; collections management; extensive third-party offerings; integrated fixed asset module; integrated HR and payroll; integration with office.

Microsoft Dynamics NAV

  • Company size: small to mid-sized
  • Target industries: consumer packaged goods, wholesale distribution, manufacturing, retail, professional services, high tech, oil and gas
  • Target market: US$10 million-US$500 million
  • Strengths: highly flexible and customizable; strong multi-company and consolidation support for unlimited companies in one database; localized in multi-country and multi-language; strong financial and cash management; supply chain management; three-tier architecture; job costing; Microsoft Office integration; basic HR.

Microsoft Dynamics SL

  • Company size: small to mid-sized
  • Target industries: contracting and government contracting, professional services, oil and gas, field services, construction, distribution
  • Target market: US$10 million-US$500 million
  • Strengths: strong multi-company support; easily customizable; time and expense for employees; professional services functionality; architectural, engineering and construction functionality; web-enabled project management functions; web services; integrated payroll module; government contract compliance capabilities; standard Microsoft Dynamics CRM integration.


chip fabIn a recent article from Bloomberg (“Focus On/Manufacturing” August 2015) the editors note that Intel and Texas Instruments have pretty much by now perfected the sci-fi form of manufacturing known as chip fabs – pristine, windowless clean rooms where some of the world’s most sophisticated chips are fabricated.  They run 24 hours a day, knowing that these multi-billion dollar plants could be made obsolete in as little as five years or so, as new technologies and capabilities leapfrog the old.

Now these firms want to show the rest of the world how it’s done.  The goal: an estimated (by IHS) $185 billion global market for the gear to automate industrial production.  To do so, firms like Intel and others are prodding companies to bring the IoT (Internet of Things) – physical objects embedded with electronics that talk to one another – into factories.

According to Bloomberg, on the assembly line of tomorrow, “industrial robots now caged off to prevent them from accidentally injuring human workers will move about more freely.  A machine outfitted with optical and motion sensors would be able to detect a hand that is delivering a tray of parts and adjust its movements so as not to inflict damage.”

Intel is also working to make technology for humans on the shop floor less error prone, including gloves that use chips to power a display on the wrist.  If an assembly worker correctly completes a task, a large green check mark appears; if not, a red crosses flashes on the screen – a useful accessory first conceived by a group of ex-BWM employees that could become a useful accessory in auto and electronics plants.

While autonomous robots may be years away, Ethernet connections are now making a real entrance onto the floor, while Wi-Fi, per Bloomberg, has hardly made a dent, meaning most plants don’t have the communications infrastructure – yet – to support the Internet of Things.  But it’s only matter of time.

This is partly by design however, it must be noted: Hackers cannot penetrate systems that aren’t connected to the outside, as the IoT, by definition, would.  As the head of embedded processing for Texas Instruments wisely noted, “The best way to protect your system is to disconnect it from the rest of the world… while the very idea of IoT is to connect it to the rest of the world.”

To allay these concerns, TI is pushing the development of multiple networks, so that a wireless link that transmits information on the internal workings of a machine can’t be hijacked to take control of the machine itself.  This is similar to the recent staged hack of a Jeep Cherokee that made news in July.

Still, as Intel is showing, advances in shop floor IoT have demonstrated benefits.  At one unnamed Intel facility, sensors and software correctly identified that pumps used to manufacture silicon wafers were about to fail.  The clue was found in irregularities in the pumps’ normal pattern of vibrations, detected by this sophisticated application of IoT.

For the near future, it’s thought that selling companies on the use of electronics for somewhat “discrete” functions, such as maintenance, will be a much easier sell than overhauling entire factories so every machine’s data can be parsed by computers.  But some do see a day when “factories will be able to talk directly to warehouses, which will be in communication with stores, which will allow companies to tailor production more carefully to demand,” as the article’s editors note.

The grand goal of this smart manufacturing is to create the ultimate supply chain – and if technology and computers have proven anything to us, it’s that it is only a matter of when, not if.



solutionWhen we first started doing ERP implementations back in the 80s (and we didn’t even call them “ERP implementations” back then…), the industry’s focus was mostly on technology, not business.  We have always been suspect of that approach, and sure enough, post year 2000, these implementations became very much about business.  I recall how in the run-up to Y2K, the focus was, largely, on making sure you were “Windows-compliant” and Year 2000 ready.

Today it may be a different story, but it your ERP implementation sure had better be all about the business focus.  Because that’s where the ROI lies.  That’s where process reform lies.  And that’s where you will find the roots of your business success in the next ten years.

Recently a post by Eric Kimberling wisely pointed out key differences between a tech-focused implementation and a business-focused one.  We’ll highlight his observations here, by noting 5 key differentiators:

  1. Executive support focuses on getting the job done right. Most successful business-focused implementations focus on getting the job done right the first time, and thus wisely consider the long-term business implications.   You only want to do this once (or every so many years) – so you’d best do it right and be sure to “find the right balance between short-term implementation costs and longer-term costs and benefits.”
  2. Business processes are well-defined up front. Don’t just throw caution to the wind and assume the new ERP system will automatically provide you with the path to better business processes.  The business-focused implementation requires a clear vision on management’s part about what you want your processes to look like, and they focus all the time necessary on business process analysis and reengineering.
  3. Organizational change management entails much more than basic end-user training. Training is just one component of having your employees adapt new software and deliver measurable results to the business.  Assessments pertaining to organizational readiness… impact… and a healthy discussion about changes… all should be a part of the mix.
  4. Testing focuses on business usage instead of technical stability. Getting the technical aspects of modifications and implementation tasks is hard enough.  But it’s not enough.  It’s critically important (and really should go without saying) that testing must be used to validate that the necessary business requirements will be met.  No one knows your business like you do, so companies must take a major role in ensuring that testing focuses on their business use.
  5. Benefits realization is focused on real business results. A technically sound implementation is not necessarily a successful one from a business standpoint.  Business-focused implementations, besides striving to be ‘on-time, on-budget’ focus on tangible measurable results.  They set baselines and targets and identify the key performance indicators that yield the most meaningful benchmarks in their business.  They then make sure to measure those results.

Remember that in the end, the purpose of your ERP implementation is to improve business results and streamline operations, not to impress the world with your technology chops.


Get every new post delivered to your Inbox.

Join 104 other followers