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8 Ways Legacy ERP
Read Time: 23 min.
Today’s Outdated State of ERP
When was the last time you upgraded your ERP system? Not just
patched, fixed or tinkered with it—but implemented a substantive
upgrade that enabled real business innovation, generated
excitement and unleashed a wave of ideas and productivity from
your users? You know—the same kinds of enthusiasm that greets
web or iPhone apps like Instagram, Spotify, Netflix, etc.?
If you’re like your peers, then the answer is “not in recent
memory.” In fact, according to Forrester, “approximately half of
8 Ways Legacy ERP
Remember when your business environment was like this? Is your ERP still
stuck in the Stone Age?
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1 ERP Customers Demand Better Flexibility, Cost Transparency, and Mobility, Forrester Research
ERP customers are on releases that are two versions behind
the current release, which may be four years old or more.”1 In
today’s fast-moving environment, that may as well be in the Stone
Age. More than likely, your ERP was designed in an era where
fax machines were still relevant, channels were slowly grown
over time, and going global meant owning expensive global
infrastructure to support growth.
The fact is that the world is innovating faster than ever, but ERP
installations seem to stay frozen in time. It’s hard to believe
that an outdated, five-year-old ERP system can be relevant to a
business in a hyperactive world.
Technology has transformed the broader world of business
software and consumer applications. Workers now interact
through mobile devices and social media, and applications
are increasingly connected together over the Web. But many
ERP deployments have remained oblivious to these tectonic
changes—it’s as if the iPhone was never invented, social media
was a futuristic concept and connecting ERP to web channels
was a kooky concept for the dabbling few.
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It’s no wonder, according to a survey published in CIO magazine
some time ago, that only 4 percent of IT leaders believe their
ERP systems create competitive advantage. The competitive
advantage vanished long ago.
On-premise ERP systems like Sage, Microsoft Dynamics GP
(Great Plains) and SAP have locked businesses onto a treadmill
with annual maintenance fees of more than 20% for the right to
make a support call and download the latest software—but what
good is it if you can’t upgrade your ERP deployment to take
advantage of change and keep your business running efficiently?
The business environment is changing faster than ever before.
Is your ERP keeping pace?
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2 Forrester Forrsights
The Danger of “Version-Locked” ERP
The sad reality is that for almost every business, “version-lock”
is the Achilles heel of their on-premise ERP. Customizations
to an ERP that seemed so innocuous at the beginning of an
implementation years ago have built up over time like silicon
plaque. Gradually, your ERP becomes hardened to change
because an upgrade to on-premise technology means
re-implementing and testing those custom schema changes,
integrations, workflows and reports.
Faced with outsized risk, cost and resource requirements for
what may seem like an incremental upgrade, your company
can be effectively forced into “version-lock,” with an aging ERP
system that’s increasingly out of alignment with the needs of
the business. Your users begin working around your system
with unproductive manual processes and spreadsheets to fill in
the functional gaps that have grown over time.
With businesses already spending an average of 5 percent
of their revenue on IT operating and capital budgets, there’s
little appetite to further erode margin by growing the IT budget
without delivering sustained transformational value and real
Does running an aging, out-of-date ERP really damage your
business? Does it matter if your ERP is “version-locked?”
After all, isn’t it simply automating the same old accounting
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processes that haven’t changed in decades? The reality is
that the damage is real, and while your ERP has your business
stuck in quicksand, your competitors are not standing still. Your
business needs ERP that supports real transformation, and that
outdated ERP system you’re running simply isn’t aligned
with the business environment in which you and your
The Eight Ways “Version-Locked” ERP Damages
Back in the early 1990s, change happened less rapidly. Product
cycles were slower, communication occurred mostly by
telephone and fax, and email was still a novelty. If you wanted to
boost sales, you hired more sales personnel. Let’s just say you
could afford to move “a little slower.”
But over the last few years, the pace of business and innovation
has accelerated dramatically. Today’s speed of change places
stresses on business process. Worker expectations have
changed on how they want to engage with your business
systems. And your customers have changed the way they want
to engage with you. Businesses can now go global in an instant,
ecommerce has opened up new sales and customer service
channels and the last decade has seen the birth of several
Owning an ERP system that can only be upgraded every
four or five years (at best) is simply not enough to maintain
competitiveness with your peers. Business and technology are
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now moving so quickly that even if you do invest six months
and $1 million in an ERP upgrade, the end result will be out
of date by the time it’s completed. Worse still, old ERP is
fundamentally incompatible with the way companies need to be
structured for success.
It’s time to explore the eight ways that your aging ERP system is
holding back your business.
1. Legacy ERP Drains the Innovation from Your
The key to knowing how aligned your ERP systems are with
your business imperatives is measuring how much of the IT
budget is devoted to innovation rather than maintenance.
How much of IT’s time can you devote to addressing new
business requirements, rather than day-to-day operations such
as patches, fixes, support calls and otherwise managing your
infrastructure? Take a hard look at the aging, version-locked
ERP system you are running right now, and do the math.
Fact: Between 50%
and 90% or more of a
typical IT Budget is spent
on maintenance, not
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Analysts from Forrester to Gartner measure this allocation
closely, and find that maintenance spend can range from
50 percent to more than 90 percent of a typical IT budget.
Only a fraction is left over for meeting business needs. It’s
no wonder, considering the average cost of SAP deployment
can be between $12 million and $17 million, according
to CIO magazine.3 Subsequent recurring maintenance
fees, infrastructure upgrades, integrations and ongoing IT
maintenance can quickly consume the IT budget.
Simply changing the equation and reallocating the IT budget
from maintenance to innovation is almost impossible with old
ERP, because every costly old on-premise ERP upgrade, patch
and fix is “opportunity cost” —money and time that isn’t spent
on tailoring ERP to meet the needs of the business. Worse still,
businesses have little left over for managing core areas such
as security and reliability. For example, does your business
have budget left over to manage a second data center?
3 Why ERP Is Still So Hard, CIO Magazine, Thomas Wailgum
Does your IT budget allocation look like this?
Blame your outdated on-premise ERP.
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But your competitors are already changing their budget
allocation—and cloud computing is the tool that enables
them to do it, by cutting IT costs by 50 percent or more.4
They’re able to reduce spend on maintenance, and increase
spend on such value-added activities as creating new
cross-functional workflows and reporting processes, adding
sales channels, entering new markets and improving
connectedness between internal and external systems. That
adds up to a decided competitive advantage, while the
company gains enterprise security, redundancy and data
recovery that would be cost-prohibitive as internal company
In 2013, Shaw Carpets, a $4.5 billion subsidiary of Berkshire
Hathaway and manufacturer of flooring and turf products for
commercial, residential and institutional markets was looking
to expand its manufacturing facilities into China and needed
a new ERP solution to support China and subsequent
subsidiaries that would be created in the APAC region.
Faced with the reality of an aging on-premise ERP solution
and the associated pain of maintaining the customizations,
the company was faced with the problem of version
lock. Shaw Carpets had to choose between retooling the
customizations with every upgrade of the core ERP system
(and burning their IT resources in the process) or staying
on outdated releases. While staying on older releases was
‘safer’ it prevented the company from taking advantage of
the latest and greatest functionality from their on-premise
4 How TCO Benefits Make Cloud Computing a No-Brainer for Many SMBs and Mid-Market Enterprises
SMB Group, Inc. February 2013
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One of the company’s key requirements was a platform
that guaranteed that their customizations would work with
newer releases of products, without killing their IT resources
in the process. Shaw Carpets ended up choosing NetSuite
and is now enjoying the benefits of zero upfront capital
expenditure, rapid deployment across 11 subsidiaries and
counting. Most importantly, Shaw is taking advantage of the
latest functionality that NetSuite offers every six months
WITHOUT worrying about any customizations.
2. Business Regulations Demand Fluidity; Brittle and
Outdated ERP Fails to Keep Pace
The accounting and regulatory environment is in constant
flux as governments tighten fiscal policy through sales and
corporate tax changes, or accounting bodies implement
more stringent requirements such as FASB’s ASC 605-25
rules governing revenue recognition for “multi-element”
products and services. These kinds of changes place
enormous pressure on finance organizations. An out-of-date
ERP is simply not designed with change in mind. How could
your SAP R/3 install circa 2005 ever have known about
revenue recognition changes that would be hitting in 2014?
“We were spending 3 percent of our revenue on SAP. By
switching to NetSuite, we reduced that cost to 0.1 percent
of revenue.” – Asahi Kasei, Spandex America
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The gulf between your ERP and your current business
operating environment is filled with spreadsheets and
headcount. This is the “putty” that fills the gap that your ERP
was meant to automate. Revenue recognition schedules
suddenly migrate to spreadsheets, local geo tax reports get
massaged through CSV exports and manual entry, and sales
tax calculations suddenly start becoming error-prone affairs.
The fact is that your on-premise ERP will never track with
change—because on the rare occasion you upgrade it, the
operating environment will already have changed, and
spreadsheets and personnel once again rush to fill the gap.
TCO for NetSuite cloud is 50 percent less than legacy on-premise.
*Source: SMB Group, 2013
NetSuite Mid-Market ERP and CRM
On-premise Mid-Market ERP and CRM
Year 1 Year 2 Year 3 Year 4
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In contrast, cloud-based ERP aligns continuously with your
operating environment. It applies the same philosophy to
corporate ERP that’s behind web-based applications like
TurboTax Online—you’re always up to date to adhere to
the latest accounting rules, tax regulations and compliance
standards. These upgrades are rolled out regularly by the
cloud ERP vendor as necessary and while you sleep, your
ERP is updated with the latest regulations and requirements.
The result is less risk, less headcount and more time spent
on strategic rather than operational tasks.
3. Aging ERP Is a Drag on Business Velocity
The web enables business to go global instantly—reaching
many millions of customers in a year or two, whereas it used
to take a decade or more to make that type of progress.
Some of today’s fast growing publicly traded companies are
growing because they are not shackled to their on-premise
Has your operating environment changed but your ERP stayed the same?
Welcome to spreadsheet hell.
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ERP systems. Had these companies relied on an upgrade
to the installation of their on-premise ERP system to take
advantage of innovation, who knows where they’d be today?
Your ability to compete is diminished if you’re running an
aging install of Microsoft Dynamics NAV or Epicor that was
designed for when businesses grew incrementally—country
by country, market by market, over years and decades. The
old way of doing business meant deploying multiple ERP
instances and databases for each market. It meant hiring
IT in each location, setting up offices, procuring software
and hardware, and enduring onerous setup processes. IT
budget, resources and time were the constraining factors for
Cloud applications like NetSuite provide the engine to drive
growth, enabling businesses to lay down an applications
footprint for each country and subsidiary in weeks—not
months or years. Cloud ERP spares businesses from having
to worry about scaling up expensive IT resources and
large capital expenditures on IT infrastructure. The result is
velocity that creates true competitive advantage.
4. Mobile Workforce Battles Immobile and
The millennial generation entering the workforce demand
easy-to-use systems that mirror social tools or online
shopping and increasingly blur the lines between work and
home life. At the end of the day, putting the right person
in the right place with the right tools remains the best way
for a company of any size to stay competitive. According
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to Gartner, worldwide devices (the combined shipments of
PCs, tablets and mobile phones) are on pace to reaching
more than 2.9 billion units in 2017. But your ERP system was
designed for when work was done in the office cube, and
consumer computing and business computing were clearly
separated. Using outdated ERP means either completely
giving up on accessing your information from anywhere
outside of your office, struggling for access over sloth-like
Citrix connections or enduring painfully slow client-server
experiences over virtual private networks (VPNs)—not to
mention the associated IT and maintenance costs. It also
means having no visibility into business operations when
on the road, or having to drive into the office to approve a
sales order. The result is your employees are simply less
productive than they could be and you make decisions more
slowly based on outdated information.
Old ERP was never designed for the post-PC era of the
anytime, anywhere workforce, but cloud applications are. In
fact, no matter how much you upgrade your old PC-era ERP
system, it will never be easy to access over mobile devices
because it was not initially architected with the web in mind
and, in some cases, was engineered before the Internet
was invented. On the other hand, web-based cloud ERP
applications are optimized for bringing the world of mobile
“NetSuite requires as little as 10% of the implementation effort
normally associated with an ERP deployment.” – Nucleus Research
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computing together with ERP, enabling your employees to
monitor and manage the business from anywhere on any
device. For example, without any IT setup work, NetSuite
cloud ERP can be accessed from anytime, anywhere via any
web browser, whether IE, Chrome, Safari or Firefox, and any
mobile device, whether iPads, iPhone, Androids or whichever
device hits the market next.
5. Centralized Old ERP Hampers the Increasingly
It’s not just workers that are becoming mobile. Businesses as
a whole are becoming more distributed.
To compete, businesses are looking to achieve agility and
fluidity in their business structure. In a globalized world,
businesses need to be able to choose where work takes
place based on cost, timeliness and the ability to maintain
and adapt an elastic workforce.
Today’s businesses are running operations in multiple
locations and maximizing efficiency with offshoring and
remote workers. But last generation’s ERP was never
designed with this in mind, requiring hefty Windows clients
and heavyweight software in each location. Old ERP forces
you into an expensive centralized structure, unless you can
afford to dispatch IT teams to every corner of the globe. It
means maintaining desktops at multiple locations, upgrading
clients and dealing with information fragmentation across
local desktops. Businesses want to decentralize while
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maintaining visibility and control, but old ERP holds them
back from achieving those goals.
A good example of how a business can compete in this
newly globalized environment is Sundia Corporation, a
multimillion-dollar fresh produce brand based in Oakland,
California. With customer support in the Philippines,
accounting in India and the executive team in California,
Sundia needed to get operations up quickly while
maintaining an efficient ongoing cost structure. Cloud
ERP is the foundation for Sundia’s modern, global and
decentralized operations, enabling its personnel across the
globe to access, manage and even innovate the ERP system
It’s an organizational structure that would have been
untenable with old centralized ERP. Brad Oberwager,
Founder, Chairman and CEO, observed that Sundia “simply
wouldn’t be in business with the old way.” Sundia is able to
leverage the power of cloud to drive innovation further, with
remote application development and customization based in
Asia taking place in real-time on the cloud platform.
Cloud computing enables the distributed “elastic”
business—enabling the extended workforce to access
applications from anywhere across the globe, offshore as
it makes sense, and scale up and down easily whenever
needed. They can easily operate on a true “follow-the-sun”
model and not be limited by the constraints of centralized
ERP or be dependent on local IT resources.
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6. Legacy ERP Fails to Satisfy the Appetite for Real-Time
If you’re running legacy ERP like Sage MAS or Microsoft
Dynamics GP, you know the drill. Your business is running on
spreadsheets, and management reporting is an onerous and
error-prone exercise. You’ve got employees dedicated to
the job of simply reporting, or reporting consumes the lion’s
share of their day.
More often than not, it takes days to assemble bookings,
billings and backlogs reports, or complete the periodic
budgeting and forecasting process. You’re constantly
struggling to unlock data that’s buried in the ERP (or other
disconnected systems and spreadsheets). Amazingly, while
businesses can today measure ad performance, marketing
campaign responses, and the number of unique visitors
to their website in real-time, core financial management
reporting remains measured in weeks and business days.
According to a survey by Forrester research titled Key
Prevailing Trends in ERP, more companies are interested in
adopting the following trends and Analytics is one of the top
• SaaS: Deployments are complementary to on-premises apps.
• Mobile: Running ERP apps on a variety of smart devices.
• Analytics: Broadening their organization’s use of BI and reporting.
• Collaboration: Taking on technologies as part of a push for app usability.
• Business Processes: Embedding processes within ERP apps.
*Source: Gartner (May 2013)
5 Five Prevailing Trends In ERP, Forrester Research
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And for good reason—there’s a gulf between what financial
managers need and what their ERP is delivering. Custom
ABAP reporting in an SAP ERP system, static Crystal Reports
or out-of-date spreadsheets emailed among managers
just aren’t enough. Your ERP is starving your business of
information, forcing you to make strategic and tactical
decisions based on out-of-date, incomplete or simply
To compete, businesses need modern ERP designed
for today’s needs, not the needs of yesteryear. BI and
analytics should be part and parcel of the ERP experience.
BI has to empower every employee with personalized key
performance indicators (KPIs) in real-time, enable them to
get down to the invoice behind that days sales outstanding
(DSO) threshold metric, gain visibility across the complete
business and create and share their own reports with self-
Combining the mobility and distributed access enabled
by the cloud with real-time analytics puts your company
firmly on the path to true competitive advantage—enabling
workers across the extended business to collaborate and
achieve alignment, no matter where their location and
without days of delay. Modern cloud ERP like NetSuite
eliminates the gap between the demand for analytics, your
business processes and the decisions you need to make
based on both of those items.
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7. Stone Age ERP Walls Your Business Off from Suppliers,
Channels and Customers
Everything has become connected through the cloud. Your
customers are no longer content to wait on the phone to
check an order; they want to browse your website to get
their order status right now. Your suppliers stand ready to
drop-ship your orders in real-time rather than forcing you to
tie up capital in inventory.
Channels like Amazon are ripe to drive additional sales.
Your website is increasingly your principal storefront, and
customers judge your business by the level of service
it provides. Your operations have to be interconnected
with customers, suppliers and partners, enabling real-time
information exchange on demand.
But your out-of-date SAP R/3 or Microsoft Dynamics AX
deployment was never designed for such an interconnected
world—forcing you to deploy expensive adapters,
third-party applications and CSV exports. In short, Stone Age
ERP was never designed to be connected across so many
touchpoints and with so many external stakeholders—they’re
simply not service-oriented systems.
As the Web increasingly becomes the medium for
information exchange, your on-premise ERP is increasingly
an anathema, a silo—disconnected and out of sync.
The impact is multi-faceted. Your customers are frustrated
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if they can’t easily view pricing and inventory information on
your website, or check the status of orders or returns. You’re
frustrated if you can’t switch suppliers on demand, because
the effort requires yet more expensive integrations.
In contrast, cloud ERP applications were designed to connect
with other platforms and web applications within your
enterprise and beyond. Designed from the ground up to be
service-oriented and always-on, cloud ERP makes it easy to
synchronize your back- and front-office with your website
in real-time and connect to the extended enterprise. Your
customers see their orders and returns in real-time. Your
suppliers are able to fulfill your customers’ orders as they
process in your ERP. Your stock levels are always up to date,
providing visibility for your sales and service reps as well as
customers browsing through channels like eBay and Amazon.
8. Old ERP is a Barrier Between Your Employees and Self-
Are you part of a self-service business? Can your employees
enter time and expenses themselves into the ERP, or does
someone need to rekey it for them? Can an accounting
manager quickly implement a new purchase order process, or
do you need to wait weeks for IT to do it? Can your finance
team easily change the invoice template, or add another field
to a customer record themselves? If none of this rings true,
don’t blame your co-workers—blame your ERP.
Stone Age ERP was designed when businesses were top-
heavy in general administration—when it was standard
practice to have someone assigned to rekeying purchase
orders or time and expense entries. Back then, a manager
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could offload his reporting to the finance staff, and you could
hire another IT guy to make an ERP process change.
Cloud ERP is designed for lean businesses and uses the
power of the web to drive employee self-service, just as the
Web has securely transformed online banking and customer
self-service systems. As banks have known for years,
empowering customers with self-service through the Web
increases profitability and reduces waste that goes straight
to the bottom line. Employees who use the cloud gain self-
service efficiencies that aren’t possible to achieve with old
ERP. They can submit time and expense reports or purchase
orders, even enter receipts directly into the ERP anywhere
from a web page or mobile device. Once these transactions
are submitted, it’s just a matter of online approval. Managing
change is also self-service, with graphical workflows, forms
and schema changes that require no delay or IT involvement.
Even reporting—a function long offloaded to “reporting
analysts”—can be performed by managers themselves.
From “Version-Locked” Outdated ERP to
“Version-Less” Cloud ERP
Cloud ERP frees businesses from the brittle, inflexible and
change resistant ERP of the past. With the cloud, businesses
can run on ERP that is “version-less.” It means that businesses
get the latest innovations automatically, from new features to
support for the latest regulations. No more waiting, no more
costly upgrades, no more upgrade risk. No more outdated ERP.
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“Version-less” cloud ERP enables enterprises to experience ERP
innovation as fast as consumers experience innovation in the
enhanced web applications they use every day. It continuously
aligns your ERP with your business operating environment.
Better still, enterprises no longer have to live in fear of
customizations acting like “silicon concrete,” hardening their ERP
to change and slowing their business to a crawl. They can finally
customize their ERP with confidence, because with cloud ERP,
customizations migrate automatically with every new release.
Customization no longer becomes a barrier to innovation.
The Competitive Advantage of Cloud ERP
A recent Forrester Research Forrsights survey found that the top
four reasons that businesses move to the cloud are improved
business agility, speed of implementation and deployment, faster
delivery of new features and functions and to support business
innovation with new capabilities. At NetSuite, we couldn’t agree
more—we’ve seen the 30,000+ companies and subsidiaries that
run on the NetSuite cloud, experience the same benefits.
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Why make the move now? Consider the alternative. Remaining
on Stone Age “version-locked” systems means high ongoingcost,
distraction from focusing on what matters and a continuing
drag on business agility. And ultimately that means falling
behind your competition.
SaaS Benefits Emphasize Agility and Speed
*Source: Forrsights Software Survey, Q4 2013
May 2014 ”Application Adoption Trends: The Rise of SaaS”
(Important  and very important )
Improved business agility
Speed of implementation
Faster delivery of new features
and functions from Saas/
Support business innovation
with new capabilities
Allow us to focus resources
on more important projects
Lower overall costs
Ability to substitute upfront costs
with regular monthly payments
Base: 765 NA and EU software decision-makers
Page 24Copyright © 2017, Oracle and/or its affiliates. All rights reserved.
In today’s business environment, businesses can’t afford to ignore
these competitive factors and advantages:
About Oracle NetSuite Global Business Unit
Oracle NetSuite Global Business Unit, a wholly-owned subsidiary of Oracle, pioneered the
Cloud Computing revolution in 1998, establishing the world’s first company dedicated to
delivering business applications over the Internet. Today, Oracle NetSuite Global Business
Unit provides a suite of cloud-based financials/Enterprise Resource Planning (ERP) and
omnichannel commerce software that runs the business of companies in more than 100
countries. For more information, please visit www.netsuite.com.
Competitive AdvAntAge netSuite Cloud
1 Realign towards innovation focused IT spend Yes No
2 Reduce risk and resources through continuous
3 Enable business velocity without scaling cost
4 Empower the mobile workforce Yes No
5 Create a distributed, decentralized business Yes No
6 Close the “analytics gap” Yes No
7 Drive the “connected” business with suppliers,
channels and customers
8 Equip your employees for self-service Yes No
“NetSuite is the most successful ERP suite SaaS provider operating
in terms of active customers, international presence and
functionality offered across the product.” – Gartner
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