April2017

SAPBUSINESSONE:THENEXT20YEARS

BECOMINGANERPPLATFORM

SAPBusinessOneturned20lastyear.Ifitwereahuman,thatwouldmeanitwaspoisedtoentertheprimeofitslife.Ifitwereadog,itwouldbegettingverylonginthetooth,unableperhapstolearnnewtricks.Insoftwareyears,20isoftenthoughtofasmature,butequallyasoftenviewedasancient.Indeedsome20yearoldenterpriseresourceplanning(ERP)solutionsaretrulyapproaching“endoflife.”Oftenreferredtoas“legacy”solutions,thesearetheonesthatarestillbasedonoutdatedtechnology,havechangedverylittleoverthelastdecadeormore,andarestillbasedontheiroriginal,outdatedtechnologyandarchitectures.Fortunatelyforthemorethan55,000customersrunningtheirbusinesseswithSAPBusinessOne,thisERPsolutionforsmalltomid-sizebusinesses(SMBs)hascomeaverylongwaysinceitwasfirstintroduced.

ButSAPbelievesitstillhasalonglifeaheadandisaggressivelyplanningforthenext20years.But,justastoday’ssolutionbearsverylittleresemblancetotheoriginalsingle-usersystem(runningonaMac),theSAPBusinessOneofthefuturewilllook,feelandbesomethingdifferentthanitistoday.SAPBusinessOneisbecomingmorethanjustERP.Itisbecomingabusinessprocessplatform.Thatmeansitwillbeopen,extensible,andpoisedtomeetveryspecificneedsacrossmanydifferentverticals…andfullycapableofbeingdeliveredthroughthecloudasaservice.

WHYAPLATFORM?

PeriodicallypunditsinthesoftwareindustrytryhardtokilloffERP,largelybasedonoldperceptions.Let’sfaceit:NobodyrecallstheearlydaysofERPas“thegoodolddays.”EarlyERPsolutionswererigidandinflexible,hardtoinstallandimplementandevenhardertouse.Functionalitywaslimited(andlimiting)andimplementationswerenotforthefaintofheart.Horrorstoriesoffailedimplementationscostingmillionsofdollarswerefairlycommon.Formany,thoseperceptionsliveon.

Somesolutionprovidersjumponthisbandwagonandtrytorepositiontheirsolutionsassomethingelsewithoutreallychangingwhattheyactuallydo.IsSAP’smoveasimilartactic?Wethinknot.WebelieveitisanindicationthattheleadershipoftheSAPSMBteamhasafirmgraspoftheneedsofthesesmallerenterprisesandiscommittedtosatisfyingthoseneeds.

SAP Business One by the Numbers

ü 55,000+customerswithoveramillionusers

ü 6,391customersaddedlastyear

ü 22%revenuegrowthyearoveryear

ü 95%renewalrate

ü 400+industrysolutionsbuilt

ü 1,000+partners

ü localizedfor43countries

ü 20yearsinservice

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Overtheyears,SMBsingeneralhavebeenturnedoffbyERP,thinkingofitasahuge,disruptiveandexpensiveundertaking.SAPinparticularhassufferedfromtheseperceptionsasaresultofitspenetrationintolarge,multi-nationalenterprises.OverlookingthefactthatSAPsellsacompletelydifferentsolutiontoSMBs,manymistakenlybelieveallERPimplementationstobeoverwhelminglycomplexandoverkillfortheirsmalleroperations.Theyfallintothetrapofthinkingtheycangetbywithoutit.Ortheythinktheyneed“somethingelse.”Inreality,basedonthewayMintJutrasdefinesERP(seesidebar),theynotonlyneedit,theyneedERPandmore.WebelievethisistherationalebehindSAP’splatformapproach.

SomeoftheproblemswiththeearlyversionsofERPresultedfromsoftwarevendorstryingtobeallthingstoallbusinesses.Withfewexceptions,mostearlysolutionproviderscastawidenet.Unwillingtoturnanypotentialbusinessawaywithoutatry,theycametomarketwithverybroadsolutions.Bytryingtopleaseeveryone,theyneverhadacompletesolutionforanyone.The80-20ruleprevailed.Nobodyexpectedasolutiontosatisfyalltheirneeds(an80%fitwasoftenthegoal),resultingininvasive(andsometimesexpensive)customizationsthatbuiltbarrierstofurtherinnovation.

SAPseemstoagreewithourconclusion:AllbusinessesneedsomeflavorofERP.Buta“onesizefitsall”solutionisnotthemosteffectiveapproach,becauseofthefacttheyalsoneed“more”.Butthe“more”neededbyabreweryisverydifferentfromthe“more”neededbythecompanyprovidingfieldservicestotheoilandgasindustry,orthefitnessclubsellinggymmemberships.Eveninfoodandbeverage,the“more”neededbygrowersisverydifferentthanthe“more”neededinthepoultryindustry.

Andwhilebrewers,growers,fieldserviceproviders,fitnessclubsandpoultryprovidersallhavesimilarneedsinfinance,accounting,bookingandrevenueandinventorymanagement,theyarenotwillingtospendalotonthesebackofficefunctions,preferringinsteadtoinvestinsolutionsthathelpthemdirectlygrowtheirbusinesses.Thesecompanieswanttoinvestinagymclubsolution,orabeerbrewingsolution,orafieldservicesolution,notagenericERP.

Butwouldn’titbeniceifyoucouldsatisfyallyourneeds,includingthosebasicfunctions,withthespecializedsolutionsthathelpyoudirectlydriveyourbusiness?Youcanifthosespecializedsolutionsarebuiltontopofastrongfoundation–anERPplatform.ThatistheplanforSAPBusinessOne.

SAPwillcontinuetoinvest(andinvestheavily)intheongoingdevelopmentofthegenericcoreERP,includingnewfeaturesandfunctions,aswellastheuserexperience.Itwillmodernizetheuserinterface,includingaccessfrommobiledevices,andembedanalyticalcapabilities.Butperhapsequally,ifnotmoreimportantly,itwillinvestintheunderlyingarchitectureandtechnologiesthatenablepartnerstomoreeasilyenhanceandextendthesolutionforthe

Definition of ERP MintJutrasdefinesERPasanintegratedsuiteofmodulesthatprovidestheoperationalandtransactionalsystemofrecordforyourbusiness.HowevermostERPsolutionstodaydomuchmore.AndyetmostSMBssettleforsomethingless,leavingthemwithlittlecontrolandevenlessvisibilityintohowbesttogrowmostprofitably.

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specificneedsofdifferentvertical,andinsomecasesevenmorespecializedmicroverticalindustries.

ManyofSAP’spartnershavebeendevelopingextensionstoSAPBusinessOneintendedtodeliverspecializedfunctionalityforspecificverticals.Forexample:

• Produmexofferssolutionsforindustryverticalsincludinglifesciences,consumerproducts,food&beverage,wholesale&distribution,includingthirdpartylogisticproviders(3PLS).

• LiberalioffersSAPBusinessOnewithcomplementarysolutionsforagriculturemanagement.

• VistaVuSolutionsspecializesinindustrialfieldservicecompanies,includingthoseintheoilandgasindustry.

• beasManufacturingoffersabitmoregeneralizedsolution,butspecificallyformanufacturing.

• MTCIntegrationTechnologyisveryspecialized,offeringtheMTCChickenIntegrationSolutionbuiltonSAPBusinessOne.

Thesearejustafewofthehundredsofpartnersthathavebeencreatingadd-onsolutionsthatcomplementSAPBusinessOneforyears.Yetupuntilnowtheyhavealsobeenverylikelytocustomizethesoftwareforindividualcustomers.Theplanforthefuturewillbetoopenuptheplatform,makingitmoreextensible(i.e.easiertoaddnewfunctionality)whilepreservingtheintegrityofthecore.SAPwillencourageloosecouplingoftheseextensionsthroughmodernAPIs(applicationprogramminginterfaces)anddiscourageinvasivecustomization.

Thiswillbeaccomplishedthroughmicroservices.Forthereaderwithatechnicalbackground,microservices,alsoknownasthemicroservicearchitecture,isdefined(byWikipedia)asanarchitecturalstylethatstructuresanapplicationasacollectionoflooselycoupledservices.Forthosenontechnicalreaders,thinkofitasconstructingasolutionfromasetofLegobuildingblocks.

ThinkabouthowyoubuildastructurefromLegos.EachLegoblockismadeofthesamekindofmaterialandisattached(connected)totheotherLegoblocksthesameway.Inmanywaystheyareinterchangeable.Butbychoosingdifferentcolorsandsizes,andconnectingthemwithadifferentdesign,youcanmakeastructurethatisveryunique.Andonceconstructed,ifyouwanttochangeit,decouplingsomeoftheblocksandreplacingthemdoesn’tdestroythepartsthatarenotaffected.Thereisfarlessdisruptionintroducedthanifyouhadconstructeditwithahammerandnails.

SAPwillintroducemicroservicesbyrefactoringtheunderlyingcode.Again,forthenontechnicalreader,thinkofitasrestructuringthecodewithoutchangingthebehaviororthefunctionality.Youmightbewondering,whybothertochangethecodeifyouaren’tchangingwhatitdoes?Theremaybeany

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numberofreasons,includingmakingiteasiertoworkwith,reducingcomplexityandimproving“readability.”ButMintJutrasfeelsthemostvaluableby-productofrefactoringistomakeitmore“extensible.”InthecontextofSAPBusinessOne:tomakeiteasierforpartnerstoaddthesespecializedsolutionstoasolidcorethatwillbeuseduniversally.

SAPwillbereplacingportionsthatwerepreviouslybuiltfromtimberswithhammerandnails,replacingthemwithLegoblocks.SAPwon’tdothisallinonefellswoop,butratherpiecebypiece.Thisisalessdisruptiveapproachandallowspartnerstostarttakingadvantageofthosemicroservicesastheybecomeavailable.ItalsomakesSAPBusinessOneincreasinglyagile.

THEVALUEOFAGILITY

The2016MintJutrasEnterpriseSolutionStudyfound88%ofcompaniesbelievetheyfacesomelevelofriskintheirbusinessesand/orindustriesbeingdisruptedbynewinnovativeproducts,newwaysofsellingorpricingexistingproductsorservices,entirelynewbusinessmodels,orsomecombinationofalloftheabove.Andthenofcoursetherearestillthemoretraditionaldisruptivefactorslikeexpansionandgrowth,organizationalrestructuringandregulatorychanges,justtonameafew.

Allthisdisruptioncanhaveacascadingimpactonbusinessapplicationrequirements,makingagility-theabilitytoeasilyinnovate,evolveandchange-evenmoreimportantthancurrentfunctionality.

Asaresultofthispotentialfordisruption,wemadeinnovationacenterpieceforour2017EnterpriseSolutionStudy.Thedaysofslowandlimitedinnovationarelonggone.Oursurveyparticipantsthisyearconfirmmanysolutionprovidershaveincreasedthepaceandvolumeofupgrades(Figure1).

Figure1:Howhasthepaceofinnovationdeliveredchanged?

Source: Mint Jutras 2017 Enterprise Solution Study

ThisobviouslyputsmorepressureonSAPtoremaincompetitive.WhileothersolutionproviderswouldstartrestingontheirlaurelsgiventhehugeinstalledbaseenjoyedbySAPBusinessOne,SAPisanythingbutcomplacent.

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Howmuchpressure?Wealsoaskedrespondents,onaverage,howfrequentlynewreleases(notjustbugfixes)aredeliveredtoday(Figure2).

Figure2:Howfrequentlyarenewreleasesdelivered?

Source: Mint Jutras 2017 Enterprise Solution Study

Ifweaveragetheresponses,wefindsolutionprovidersofferanewreleaseevery5.2months.Thisfrequencyishigherthanexpected.WesuspectthisislargelyduetothehighpercentageofcompaniessurveyedthathavedeployedERPascloud-basedSoftwareasaService(SaaS).ThebreakdownisnotedinthesidebartotheleftofFigure2.ContinuousinnovationisreallyonlyfeasiblewithSaaSsolutions.ThisisoneofmanyofthepotentialbenefitsofSaaS,andoneofthemanyreasonswhyfewerandfewerpotentialbuyersofERPwillnolongerevenconsiderasolutionthatisonlyavailablethroughtraditionalon-premiselicenses.

We’vebeenaskingthesamequestioninourannualEnterpriseSolutionStudiesforyearsnow:Ifyouweretoselectanewsolutiontoday,whichdeploymentoptionswouldyouconsider?Participantsareallowedtoselectasmanyastheydesired.

Figure3:Whichdeploymentoptionswouldyouconsidertoday?

Source: Mint Jutras Enterprise Solution Studies

* Hybrid option added in 2015

ItisclearfromFigure2thatthewillingnesstoconsiderSaaShassteadilyrisentobecomethemostpopularoption.Thisyearweaddedafollowonquestion,

Deployment Models Breakdownofdeploymentmodelsacrossoursurveyrespondents:

Ø49%SoftwareasaService(SaaS)

Ø22%LicensedbuthostedbyyourERPvendor

Ø4%Licensedbuthostedbyanindependent3rdparty

Ø17%Traditionallicensedon-premise

Ø17%Hybrid:Partsarelicensedandmaintainedon-premiseandpartsareSaaS

NotethisisanunusuallyhighpercentageofSaaSdeploymentsandshouldnotbeinterpretedasanoverallSaaSadoptionrate.

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listingallthedeploymentoptionsselectedandaskingwhichisthetopchoice.Overhalf(51%)ofallsurveyrespondentsselectedSaaSand70%ofthosethatwouldconsiderSaaS,indicateditistheirfirstchoice.

THECLOUD/SAASIMPACT

Continuousupdate(theoptionshowninthefarlefthandcolumnofFigure2)wasonlypresentedasanoptiontothoserunningERPdeployedasSaaSorahybridofSaaSandlicensed,on-premiseERP.Thishighlightsanoftenunder-valuedbenefitofaSaaSsolution–moreinnovationandmorefrequentupdates.Webelieveoneofthereasonsthisbenefitisoftenoverlookedisbecausemanyequateall“cloud”solutionstoSaaS.Whilethetermsareoftenusedinterchangeably,theyarenotthesame.Tobeclear:

Cloudreferstoaccesstocomputing,software,storageofdataoveranetwork(generallytheInternet.)Youmaypurchasealicenseforthesoftwareandinstallitonyourowncomputersorthoseownedandmanagedbyanothercompany,butyouraccessisthroughtheInternetandthereforethroughthe“cloud,”whetherprivateorpublic.

SaaSisexactlywhatisimpliedbywhattheacronymstandsfor:SoftwareasaService.Softwareisdeliveredonlyasaservice.ItisnotdeliveredonaCDorothermediatobeloadedonyourown(oranother’s)computer.ItisaccessedovertheInternetandisgenerallypaidforonasubscriptionbasis.

Usingthesedefinitions,wecanconfidentlysayallSaaSiscloudcomputing,butnotallcloudcomputingisSaaS.

Whileoftenoverlooked,thatvalueofmoreinnovationbecomesveryrealonceyoumakethemovetoSaaS,asevidencedbyhowfrequentlyinnovationisactuallyconsumed.WefindthoserunningSaaSsolutionsupgradefarmorefrequently(Figure4),largelybecausethevendor,notthecustomer,doesmostoftheheavyliftingwhenitcomestimetoupgrade.

Cloud versus SaaS

Cloudreferstoaccesstocomputing,software,storageofdataoveranetwork(generallytheInternet.)Youmaypurchasealicenseforthesoftwareandinstallitonyourowncomputersorthoseownedandmanagedbyanothercompany,butyouraccessisthroughtheInternetandthereforethroughthe“cloud,”whetherprivateorpublic.

SaaSisexactlywhatisimpliedbywhattheacronymstandsfor:SoftwareasaService.Softwareisdeliveredonlyasaservice.ItisnotdeliveredonaCDorothermediatobeloadedonyourown(oranother’s)computer.ItisaccessedovertheInternetandisgenerallypaidforonasubscriptionbasis.

Usingthesedefinitions,wecanconfidentlysayallSaaSiscloudcomputing,butnotallcloudcomputingisSaaS.

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Figure4:Howfrequentlydoyouconsumeupgrades?

Source: Mint Jutras 2017 Enterprise Solution Study

ThoserunningSaaSsolutionsarerelievedofthetechnicalburdenoftheupgrade.Butevenwheninnovationisdeliveredcontinuously,ittakeseffortonthepartoftheconsumerofERPtotakefulladvantageofit.Somedothatcontinuously,butothersfallbackintotheoldwayofdoingthingsandonlyreviewnewfunctionalityperiodically.WesuspectthesmallpercentageinaSaaSenvironmentthatarenotupgradingfrequentlymayberunninginprivatecloudswithasingle-tenantsolution(seesidebar).Theyenjoysome,butnotallofthebenefitsofthoserunningamulti-tenantSaaSsolutionwherethevendors’effortsareinvestedinmaintaininganddevelopingasinglelineofcode.Whilemanyofitscustomersmightnotappreciatethesignificance,SAPdoes,andinrefactoringtheSAPBusinessOnecode,isworkingsteadilytowardsmakingitfullymulti-tenant.

Thoseoperatinginahybridenvironmentarepresumablymigratinginthedirectionofmoresoftwareinthecloudandthereforemorefrequentupdates.AsSAPrefactorsthecodepiecebypiece,manyofitsSAPBusinessOnecustomerswillfallintothiscategory.

Inaddition,manyofSAP’spartnersdevelopingextensionstoSAPBusinessOnearenotonlyputtingthosecomponentsinthecloud,butdeliveringthemasSaaS.EnterpryzeisonesuchSAPpartnerthatisassistingSAPBusinessOnecustomersinmakingthetransitiontothecloudandSaaS.Withataglineof“SimpleOnlineMobileAccessforSAPBusinessOne,”Enterpryzeprovidesbotha“webapp”thatconnectsfromabrowserdirectlytoSAPBusinessOne,usingmoduleslikeSales,Service,Delivery,Expenses,Finance,customerrelationship

Multi-tenant versus Single-tenant SaaS

Multi-tenantSaaS:Multiplecompaniesusethesameinstanceofhostedsoftware;configurationsettings,companyandrole-basedaccesspersonalizebusinessprocessesandprotectdatasecurity.

Single-tenant(orMulti-instance)SaaS:Eachcompanyisgivenitsowninstanceofthesoftware,butmaysharecommonservices,suchasanintegrationplatform,andsecurity.

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management(CRM)andProcurement.Alternatively,Enterpryzecustomerscandownloadthesamefunctionsas“mobileapps”runningonAppleiOSandAndroiddevices.

ByusingtheEnterpryzeAppsontopofSAPBusinessOne,eventhosewithon-premiselicensesstarttorealizethealwayson,accessanytime,fromanywherebenefitsofaSaaSsolution.Andtheprice($9.95peruserpermonthgivesusersaccesstoanyfunctionstheymightrequire)makesitaffordableforallemployees.Whilethetypicalsmallbusinessmightliketheideaofprovidingaccessto100%ofitsemployees,afulluserlicenseforeachmayputthepriceofSAPBusinessOneoutoftheirreach.Sotheytypicallywillrestrictaccesstothosewhoneeditthemost,therebyalsolimitingthevalue.EnterpryzeAppssolvethatproblembyconnectingusersdirectlytodatainSAPBusinessOneatareducedcost.

ONEMORETHING…CUSTOMIZATION

Asmentionedearlier,SAPBusinessOnecustomersoftenturnedtopartnerstofillgapsinthesoftwarewithcustomization.Thesecustomizationstendedtocreatebarrierstoupgrades,whichfurtherslowedinnovation.Yetnotall“customizations”addednewfeatures.Theymighthaveaddedqueryandreportingcapabilities,madecosmeticchangesortweakedworkflows.

Inthepastanytypeofcustomizationwasinvasive,eventhosemakingsimplisticchangeslikethosenotedabove.Itmeantmuckingaroundinsourcecode.Notonlywasthisacostly,lengthyandtime-consumingprocess,italsocreatedbarrierstoupgrades.Todaythereshouldbefarlessneedtoevertouchtheunderlyingsourcecode.

Thenewestgenerationofmodern-dayERPsolutionshavebecomemuchmoreconfigurable,allowingyoutopersonalizeandtailorthesolutiontoyourindividualneedswithoutcostlyandinvasivecustomization.Weaskedour2017EnterpriseSolutionStudyparticipantstocheckoffallthedifferenttypesof“customization”theybelievetheyneed(Figure4).Keepinmindthatmostanychangetothesoftwareortheuserexperienceistypicallyreferredtoas“customization.”

Therearetendifferenttypesof“customization”listedinFigure5.Theyaresortedbythelikelihoodofthembeingrequired.SAPBusinessOnepartnersshouldtodaybeabletodeliverthefirsteightofthesewithoutrequiringanyinvasivecodechangesandwithoutbuildingbarrierstoconsuminginnovation.AndasSAPcontinuestorefactortheunderlyingcode,themorelikelyeventhoselasttworequirements,whichspelltheneedforcustomlogicandfeaturesthatdifferentiatebusinesses,canbebuiltwiththesoftwareequivalentofLegos.

Thenewestgenerationofmodern-dayERPsolutionshavebecomemuchmoreconfigurable,allowingyoutopersonalizeandtailorthesolutiontoyourindividualneedswithoutcostlyandinvasivecustomization.

Enterpryze “Apps” Customerspay$9.95peruserpermonthforaccesstoSAPBusinessOnethroughaseriesofwebormobileapps.Thepriceperuserincludesanyandall“apps”neededforanindivdualuser.Appsavailabletodayare:

ü Serviceü Expenseü Sellü Deliverü Purchaseü Financeü Timesheetü CreditControlü Pipelineü Dashboard/

ReportingCustomersalsopaytobeusersofSAPBusinessOne,butatthereducedrateofacasualuser.

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Figure5:Whattypeofcustomizationdoyoubelieveyouneed?

Source: Mint Jutras 2017 Enterprise Solution Study

KEYTAKEAWAYS

SAPBusinessOneisamaturesolution.Butunlikemanyofitscompetitorsofsimilarvintage,ithascontinuedtoevolveovertheyears.Thedepthandbreadthoffunctionalityandtheunderlyingtechnicalarchitectureisafarcryfromitshumblebeginnings.Ithastrulycomeaverylongwayinthepast20years.AndyetSAPisaggressivelyplanningforthenext20years.

Ofcoursenobodytodaycanaccuratelypredictwhattheworldwillbelikein2036,whichmeansyou(andthesolutionthatrunsyourbusiness)betterbereadyforanything.Weliveindisruptivetimes,makingagilitymostimportant.Agilityprovidesyouwiththeabilitytoinnovate,evolveandchangeinordertotakefulladvantageofallthenewandunprecedentedopportunitiesthatlieinthefuture.

ButSAPdoesn’tplanonbeingeverythingtoeverybody.It’snotgoingitalone.YesitwillcontinuetoinvestinthecorefunctionsofERP,alongwiththeunderlyingarchitectureandtheover-archinguserexperiences.AllcompaniesbeyondtheincubationstagerequireagoodsolidERP.Customersdon’tneedsomethingdifferentthanERP.TheyneedERPand“more”.Thetypeofbusinessdetermineswhat“more”theyneed.

SAPisrelyingheavilyonitspartnerstohelptakesitscustomersthatfinalmilebeyondcoreERPandisnowuppingtheanteinhelpingthosepartnersdeliver.SAPBusinessOneiswellonitswaytobecominganERPplatform.

“Customization” Manymodern,technology-enabledERPsolutionstodaydeliverahighlevelofpersonalizationandconfigurationwithoutcustomizationasdefinedintheclassicsenseofinvasivecodechanges.

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Abouttheauthor:CindyJutrasisawidelyrecognizedexpertinanalyzingtheimpactofenterpriseapplicationsonbusinessperformance.Utilizingover40yearsofcorporateexperienceandspecificexpertiseinmanufacturing,supplychain,customerserviceandbusinessperformancemanagement,Cindyhasspentthepast11yearsbenchmarkingtheperformanceofsoftwaresolutionsinthecontextofthebusinessbenefitsoftechnology.In2011CindyfoundedMintJutrasLLC(www.mintjutras.com),specializinginanalyzingandcommunicatingthebusinessvalueenterpriseapplicationsbringtotheenterprise.