Middle office is an enterprise platform too, says Apttus

What are the core business functions of a modern enterprise? For a long time it's been accepted that there are back-office systems, also known as systems of record, which process core business transactions such as billings, spending and employment. Front-office systems, which look after sales, marketing and customer service, make up a second category, named as systems of engagement by business writer Geoffrey Moore. Now there's a move to recognize a third category of middle-office systems that sit in-between, handling quotations, contracts, pricing, orders and sales compensation.

Each category of system has its own specialized computing requirements, and the middle office is no different, argues Kirk Krappe, CEO of Apttus, which outlined its pitch to be the middle office platform of choice at its annual conference this week in San Francisco. In conversation a few days prior, Krappe told me how the company had gradually come to recognize that the middle office had its own unique computing profile:

Front-office platforms are designed — if you look at specifically Salesforce — for ease of use, good user experience, drag-and-drop setup ... They're a system of record for customer touch, but not for revenue.

If you look at back office, it's the opposite. The SAPs are designed for compute, for numerical accuracy, for instant response times — all the things you need, that when you click that button, your financials are accurate, they're done in time, and it's solid.

They're not designed for ease of use, drag-and-drop, consumer experience, because they never were. Anybody who uses SAP, ask them. They'll tell you that.

Apttus names its middle office platform Omni

A middle office platform has to straddle both these requirements, says Krappe. A salesman building a quotation or a customer configuring their order in an e-commerce portal needs an easy-to-use interface — but at the same time, they're typically working from a large item catalog and complex pricing and compensation rules that need to draw on massive compute power. In addition, the need to handle contracts means that there's a document management component that you don't find in either of the other systems, says Krappe:

We have to manage clauses. We have to manage when you negotiate a clause and you change a business term, to abstract the business term and put it into the structured content. Front- and back-office platforms don't do that.

So when you look at the technology that we have in middle office, it is real, it is different. For either front or back office to do what we do in the middle office, they would have to invest in these other things ... So we believe we have a truly defensible technology platform.

This week saw the launch of that platform under the name Omni, complete with a toolkit that allows customers and partners to extend its functionality to meet their own custom needs, whether through integration to other applications, or by adding their own specific processes. Although it runs on multiple cloud infrastructures, including Salesforce, Microsoft Azure, and IBM Cloud, Krappe argues that its distinctive functionality, data model and now extensibility means that it should be seen as a platform in its own right:

Now it's really a platform for delivering — for a company to design, build, and develop their own apps — but on middle office functionality, on a middle office data model.

And no one's doing that. SAP has their tools to extend their application suites. Salesforce has the config tools to extend theirs. In this middle office, nobody has this.

So in this middle office, we've taken the clouds, we've built our applications, we've got these unique technology things, and we've put an SDK on the top, and we're branding that as Omni.

AI, IBM and Full Spectrum CPQ

Also announced at the conference this week is a new guise for the Apttus platform's AI capabilities. Previously presented as Max, a female avatar, the AI component is now Max Proactive, a disembodied conversational assistant that presents simply as an icon in the Omni platform. Max Proactive uses machine learning and other AI resources to alert users to take actions, automatically perform routine processes, or suggest steps to enhance performance.

The event also saw Apttus increase its ties with IBM, with an announcement that its configure price quote (CPQ), contract lifecycle management (CLM) and Max AI will now be available running on the IBM Cloud for IBM customers.

At the same time, Apttus has updated its CPQ offering to provide seamless configuration and combination of product sales, subscription billing and services contracts in a single quote. Called Full Spectrum CPQ, this blending of products, services and subscriptions is designed to meet the needs of enterprises that are increasingly bundling products with services, or even providing products such as computing or industrial equipment as part of a continuous service contract, billed on a pay-as-you-go subscription — often called the Everything-as-a-Service (XaaS) model.

This is a combination that's increasingly in demand as businesses turn to as-a-service models, but it's not supported by traditional CPQ tools, says Krappe:

Selling services through a CPQ-type tool is very demanding. With your standard CPQ tools, you can't sell services because services can add a whole set of soft components to them.

How do you quote/configure a service offering where there's a soft component? And being able to juggle the two, and if you give a discount here you can play with the elements, you can change scope and then you can add other things?

Full-Spectrum CPQ combines subscription products, professional services, aftermarket services and advanced product configurations in a way that future-proofs customers' sales processes, adds Brion Schweers, General Manager of CPQ at Apttus:

[It] helps customers accelerate the execution of their revenue-generating sales processes in a modern-day SaaS and service-based environments.

My take

We've highlighted the emerging significance of the middle office in previous diginomica coverage. We've also written extensively about the rise of Everything-as-a-Service and the XaaS Effect. This is a new way of doing business that requires a new kind of platform, and Apttus is capturing those needs with a unique proposition that does seem to be distinctive in the marketplace.

The decision to position Apttus as a peer and rival to the likes of Salesforce and SAP does ratchet up the stakes in a big way. But some of the customer engagements Apttus is now capturing do seem to bear out its contention that this is a distinct platform opportunity that with sophisticated requirements that it is well-placed to fulfill.

We've already spoken to companies facing similar transitions as part of our XaaS coverage and there's no doubt that this business model demands a more flexible approach than traditional systems have been able to support. We were not able to attend this year's Accelerate event in person and speak to Apttus customers about the challenges they face as they adjust their business models to an XaaS model, but we look forward to following up on their stories in future coverage.