HarrisData's Unconventional ERP Tune

Corrected: November 15, 2006

by Alex Woodie

When it comes to picking a new OS/400 or i5/OS ERP system, don't be lulled into thinking you have to pick from one of the "Big Four"--Infor-SSA, Oracle-J.D. Edwards, SAP, or Lawson-Intentia. While those vendors have proven solutions and big payrolls, you might find software from a smaller ERP provider a better fit. One such vendor is HarrisData, a private company with a 30-year midrange pedigree, conservative views on new technology such as SOA, and very liberal licensing terms.

HarrisData is a different sort of ERP software company. While the rest of the ERP software industry races toward similar goals--the accumulation of large installed bases through consolidation and the "mashing up" of multiple ERP products into single unified code bases that customers will consume and use via service oriented architectures (SOAs)--the Brookfield, Wisconsin-based HarrisData seems content to march to the beat of its own drum.

In some ways, HarrisData is a veritable throw-back. The company, which supports 2,500 midmarket customers with average revenues of $100 million to $250 million, is still firmly reliant and confident in the capability of its programmers to out-innovate its competitors at a time when many major OS/400 ERP packages are being put on life support. In other ways, the company is on the cutting edge of emerging trends, such as its use of Web 2.0 technologies.

The Omni License

Lately, it's been HarrisData's new licensing terms that have been generating interest. Under the new "Omni" license plan unveiled recently, customers receive a 99-year license to use the HarrisData Enterprise Suite with an unlimited number of users, five years of full software maintenance, unlimited phone and online inquiries, free updates, and full rights to run the software on a backup or secondary machine for HA/DR purposes. Under the Omni, all fees, including initial software license and ongoing maintenance fees, are combined into one fee that's structured to provide fixed, predictable ERP software costs. After five years, customers can renew their maintenance at a 10 percent annual rate.

To make the deal even sweeter, HarrisData has teamed up with IBM to provide a five-year, fixed-cost hardware maintenance package to go along with the five years of software maintenance provided by the Omni license. The deal allows customers to get a complete, integrated business system from a single vendor, which can eliminate a lot of the complication of dealing with multiple vendors.

Elaine Lennox, IBM's vice president of marketing for the System i, called HarrisData's licensing approach " innovative" and commended the OS/400-only ERP vendor for introducing new clients to the System i. "IBM's support for HarrisData is another example of how IBM is working with partners to better serve the business needs of small and medium sized customers through such programs as the Initiative for Innovation, of which HarrisData is an active part," the midrange marketing veep says.

Product, Not Services

In an age when annual maintenance fees for big-name ERP packages have crept up past the 25 percent mark and customers have legitimate questions about how those maintenance fees are being spent to protect their considerable investments in OS/400 code, HarrisData's approach with the Omni license is refreshing.

In other ways, HarrisData's approach is unusual. For example, while increased revenue from services has helped many ERP vendors weather a slow-down in license revenue as companies keep stretching their initial ERP investments, HarrisData does its best to avoid taking customers' money for services, according to Michael Mallen, the company's senior vice president and chief operating officer.

"Through modernization and by engineering problems out of software, we've been able to reduce the service component of our revenue. We've literally engineered that [maintenance cost] out of the product," Mallen says. "At the majority of software companies, 35 to 60 percent of revenues come from services, so they've raised their service and upgrade and maintenance fees. Ours is 7 percent of revenue."

HarrisData focuses its effort on improving its products and attracting new customers, instead of customizing or rewriting its customer's applications, Mallen says. In fact, the company's integrated set of financials, human resources, manufacturing, distribution, supply chain, and CRM software is so well matched to its customers' midmarket needs that the suite fills those needs out of the box, with no modifications, 95 to 98 percent of the time, according to Mallen. That out-of-the-box fit is likely a major cause of HarrisData's excellent customer retention rate, which it says is 95 percent.

Despite the lack of service revenue, the company is profitable, and growing revenues at a double-digit clip, according to Mallen. "That's really the major reason why we can do this," he says. "Instead of charging service fees, if you only need 7 percent service revenue to break even, then why raise [the service fees] if you have organic growth? What we're going to do is put all our eggs in one basket and believe what our customers have told us."

A Place for Web 2.0

In addition to high maintenance fees, another thing that HarrisData customers don't need are SOAs, according to Mallen. "They don't need it [SOA]. We went to a big SOA thing at PartnerWorld. Our customer don't need it, they absolutely don't need it. They can already connect to anything" through HarrisData's "entry and exit points," Mallen says.

While HarrisData programmers aren't spending much time enabling their RPG-based ERP suite for SOA, they are spending a lot of time these days working in Web 2.0 technologies, PHP and AJAX (Asynchronous Javascript and XML). HarrisData has been on the cutting edge of iSeries interface technology for several years, and offers browser-based user interfaces for all of its applications.

"For the last 10 years, we've worked on modernizing our platform," Mallen says. "Now we're writing everything in PHP. But we're still writing in green screen, so users can switch back and forth."

HarrisData is considering moving the back-end business logic from RPG to PHP, according to Mallen. "Ultimately we will run on anything at all," he says. "If we completely go to PHP, I would tell you that the iSeries is still the best platform out there for reliability, as a business system. [The System i] is one of the most reliable mission critical business systems out there. It's bullet-proof."

Other new technology being developed includes the HD Widgets that HarrisData unveiled at the company's annual user conference earlier this year. While information on HD Widgets is a bit slim, what is known is that they will enable users to customize their applications and extend their capabilities, but without requiring any programming. They are just being developed now, with availability expected in the second quarter of 2007.

Not everything is picture-perfect at HarrisData. Mallen fully admits there is work to be done on some of the ERP components, notably the distribution and supply chain sides (the manufacturing and financials are top notch, he says). But things seem to be going pretty well at HarrisData these days, and IBM seems grateful to have a vendor hawking fully integrated, OS/400-only solutions, just like the old days.

HarrisData plans to continue on its current path, which would seem to indicate no major changes for its customers. "We've pretty much decided we're not going to get acquired. We're not intending to go public," Mallen says. As for the chance that HarrisData could play the role of the acquirer, that's a possibility, Mallen says--provided that common pitfalls could be avoided. "We would look for qualities of technology over the acquisition of customers, because the customer base will benefit [from new technologies]. . . We won't acquire company to acquire customers."

In an industry where customers' needs often play second fiddle to the desires of shareholders and megalomaniacal CEOs, HarrisData's display of unselfishness and concern for its customers is truly refreshing.

This article has been corrected. HarrisData does not sell hardware, as the article previously stated. IT Jungle regrets the error.