The Road Ahead for an Enterprise Management Software Vendor

The Road Ahead for an Enterprise Management Software Vendor

With new finances, Deltek certainly plans to continue its quest to build complete project solutions, from award to audit, via both internal development and acquisitions. As for future developments of Deltek Enterprise (Deltek Costpoint), in addition to ongoing Web enablement of key business processes, and delivery of control and reporting documentation related to the US Sarbanes-Oxley Act (SOX), major new "order winning" capabilities will include EVM and PPM. For more on achieving SOX compliance, see Using Business Intelligence Infrastructure to Ensure Compliancy with the Sarbanes-Oxley Act and Joining the Sarbanes-Oxley Bandwagon; Meeting the Needs of Small and Medium Businesses. While EVM is meant to be added to both Deltek Costpoint and GCS Premier (but not to Deltek Vision, which already has the capability), PPM modules such as portfolio management, risk management, project scheduling, project analytics, and so on, are currently planned for Costpoint, although the intent, strategy, and actual product set allows for integration to any back-office solution.

More Opportunities and Challenges While the Deltek strategy to shore up its current install base and to target new related markets has been sound to date, one should never discount fierce competition as a factor, given that the market for enterprise application software has become highly competitive and dynamic. Deltek products are targeted toward a wide range of project-oriented organizations, and the competition varies depending on customer size, industry, and specific system requirements.

For larger implementations of enterprise-wide products, the principal competitors include Oracle (including former PeopleSoft and JD Edwards), Lawson Software, CODA, Unit 4 Agresso, and, inevitably, SAP. For smaller implementations of enterprise-wide products, competitors include Microsoft Business Solutions (especially when augmented by partner solutions for Microsoft Dynamics SL and Microsoft Dynamics GP [formerly Microsoft Great Plains]), Intuit, MYOB, Exact, Epicor, and Sage. Although many of the above vendors have not really competed regularly with Deltek so far, this will not necessarily be the case in the future, given Deltek's expansion aspirations.

There are also many other players which offer industry-specific products, such as (in the architectural, engineering, and construction [A/E/C] sector) Constructware, BST Consultants, and Axium, with some nifty features such as an electronic stopwatch for time collection, spread among several projects; and built-in warning systems when project is over budget (although Deltek Vision has this functionality, which will be released in version 4.1) or when the firm is going to overpay a subcontractor. Furthermore, Deltek Time Collection competes with electronic timekeeping systems offered by vendors such as Kronos, ADP, Ceridian, and Kaba Benzing. Its newly acquired Welcom applications face competition from such well-known companies as Microsoft Project, Primavera, Business Engines, Dekker, C/S Solutions, Artemis, Mantix, Integrated Management Concepts (IMC), and so on.

As the nonprofit sector requires automated allocation to support multiple funding sources under one project for billing and revenue recognition (which is traditionally done via manual calculations or custom programming within generic accounting solutions), Deltek has long supported multiple-source funding capabilities. The vendor has a nonprofit accounting product coming out later in 2006, which will target grant-based, or (as designated in the US) "A-133" nonprofit organizations. This product will be an affordable grant-based financial management system for small to medium nonprofit firms, which is a fairly sizable market in the US, contested by leaders like Blackbaud, Sage, Serenic Corporation, Intuit, Microsoft, Kintera, ASP eTapestry, and so on (see Nonprofits and Public Sector: The Latest Hot Market). While these leaders dominate the nonprofit market in a broader context—and no one is going after A-133s in any significant way at this time—this might change down the track. Point solutions like Deltek GovWin and CRM & Proposals might find their match in comparable solutions from providers like Adonix Inc., Map ROI Systems Inc., Input Inc., and others. Numerous project organizations have gotten used to manual "workarounds," and might still prefer the best-of-breed solutions they have in place—which might just be enough to represent a barrier for Deltek's all-encompassing offering.

Some of these competitors still have significantly greater financial, technical, marketing, and other resources than Deltek, not to mention a higher profile and recognition on a worldwide basis. Since they have begun to experience a deceleration in their core upper-market business, and have thus refocused their marketing and sales efforts towards the upper-middle market where Deltek actively markets its products, one should expect them to implement increasingly aggressive pricing programs. Furthermore, certain competitors, particularly Microsoft, SAP, Oracle, and Lawson, have well-established relationships with many Deltek customers (both current and prospective), and with major accounting and consulting firms which might have an incentive to recommend such competitors over Deltek. All these vendors, while possibly inferior regarding project-oriented, government-compliant, or service industries focus, will influence some purchase decisions by offering more comprehensive horizontal product portfolios and by touting a superior global presence and greater multinational product capabilities, which are still hurdles for Deltek. Still, comparisons to competitors need to be weighed with the understanding that no matter how large these competitors are, that they do not have the specific is industry focus and staff experience that Deltek does. Despite industry consolidation, Deltek remains a vendor that provides total solutions for project-oriented companies. There are really no competitors in the same space; either they are point solutions that compete in certain areas, or larger, non-project oriented vendors trying to tunnel down into this space.

But also, while Costpoint has long been very competitive with other major enterprise resource planning (ERP) systems with respect to features and capabilities for project-oriented businesses, the market has lately become more focused not only on the need for Web-based applications, but also on the need for intuitive role- and process-based user experiences (see Easy ERP: A Challenge to Conventional Thinking and Portals: Necessary But Not Self-sufficient). The lack of a fully Web-enabled system might for some time have hindered Deltek's potential growth objectives, and so the vendor has lately increased activity with respect to the Web-based development of Deltek Costpoint. Deltek believes that the realities of the market do not support the approach that the "best" solution is the one that is fully Web-based, based on the vast feedback from its customers. Deltek has chosen instead to build to the realities of the market and its customers, and the recent product developments reflect that pragmatic approach.

While the Web-enabled version is a great boost, the vendor needs to catch up with regard to developing portal-based solutions and user empowerment, especially in light of SAP's Mendocino and Microsoft's People-Ready recent initiatives (see Major Vendors Adapting to User Requirements). Each role in a service organization has a unique e-project perspective. For instance, while project managers often need full control (including the ability to change project projections), rank-and-file staff typically only need to be able to record billable project hours, and accounting needs only enough access to build the company cash flows from aggregate project data. However, all these constituencies increasingly want to accomplish these tasks from their familiar Microsoft Excel and Outlook workspaces, without the need to switch between office productivity solutions and the underlying enterprise applications. Deltek is developing a portal-based strategy, which was one of the reasons for the Welcom acquisition. Furthermore, Deltek Vision supports this type of Outlook integration, and the vendor will be releasing Excel-based interactive billing in the 5.0 product release.