October 30th, 2009

Is BI ready to meet the real world?

Posted by Dennis Howlett @ 7:14 am

Categories: business analytics

Tags: Business Intelligence, Decision-making, SAP AG, Marge Breya, Tools & Techniques, Sales Strategy, Pricing, Management, Sales, Marketing

One of my personal highlights at SAPTechEd this week was time spent with Marge Breya, EVP and general manager intelligence platform group, Netweaver. During her keynote, Marge talked about the next generation of business intelligence and gave a demonstration of Polestar. During the demo, Marge showed how it can mash up communications with finely sliced information that allows execs to make more informed decisions. It was impressive and made more so by the fact Marge runs her own demos with live data rather than the disguised PowerPoint stuff others prefer.

Afterwards, a group of us met to hear more about what Marge’s group are thinking about. Marge kicked off by saying that when the company’s preliminary Q3 results came in, she was able to quickly discover how a certain region had achieved sales that ran significantly counter to the remainder of the company. All good so far. But then Marge started to talk about how an understanding of what this group had done might be turned into a best practice. I struggle with this idea.

Marge makes no secret of the fact she’s a ‘data person’ i.e. that she likes to base any decisions on facts she can see and upon which she can rely. She argues that because SAP is able to quickly expose a far richer set of data than was possible using traditional data cubes, this allows decisions to be pushed further down the decision tree. That seems intuitively correct but it disguises many aspects of buying decisions in particular that are not readily captured and which cannot be generalized across all types of sale. Marge acknowledged that for example it is useful to know why one sales person prefers to hunt for volume deals while another prefers to go after big fish.

What fascinates me are buying decision making processes. Marge thought that by contextually understanding areas of success it might be possible to develop new best practices that would allow a company to replicate success in different parts of the business. “If you get to 70% of that success then you’re making a very big contribution to value.” Agreed. Except for one small but important problem.

Technology buyers often behave in irrational ways. In London for example I met with SAP buyers who were primarily influenced by SAP’s brand rather than functional completeness for what they need. At a personal level I’ve been a Nokia phone buyer for more years than I can remember. That only changed when the brand promise evaporated for me as I wrestled with the N96. Marge found that an odd argument yet I can think of numerous examples where irrational behaviors guide business decisions. From my side I believe it is important to understand the operational motivation behind irrational factors that drive decisions and then see if there are ways to tap into those factors. That’s far more complicated and error prone than simply crunching numbers and acquiring the tacit knowledge people are prepared to share in a wiki or blog.

The flip side is that where irrational behaviors have less influence, then outcomes can be better. As an example, I met with Consol, a South African glass packaging maker that has been using Business Objects SAP tools to work out where its IT support time and cost deltas lay. That analysis has allowed the company to release 18% savings back to IT innovation. On that basis, the use of SAP (or any other) technology becomes a no brainer and Consol is now looking at ways to drive adoption deep into its business.

The question then comes how SAP and its competitors will find ways that help business reduce decision making risk and uncertainty. The social computing crowd will jump up and say ‘Look at what we can offer in terms of social business design.’ Fair comment except we are at the very early stages of understanding the capture and dissemination methods for tacit information let alone able to deploy the interpretive and pattern matching skills needed. To that point I wasn’t convinced Marge has a clear answer. The good news is that the company is actively looking at this problem. I will be interested to hear their conclusions.

July 1st, 2009

NetSuite + AdaptivePlanning = BPM disruption

Posted by Dennis Howlett @ 3:35 pm

Categories: business analytics

Tags: BPM, NetSuite Inc., Business Process Automation, Operational Planning, Aerospace & Defense, Strategy, Enterprise Software, It Operations, Business Operations, Manufacturing

This slipped under the radar but on June 10th NetSuite and AdaptivePlanning announced a marketing and integration partnership that will see NetSuite acting as a reseller for AdaptivePlanning’s business performance management (BPM) solution. Why should this matter?

So far, the saas/on-demand transaction app players have been running hell for leather to bring functionality to a point where they can compete effectively in mainstream deals. One area that’s been ripe for disruption but which is buoyant is BPM. According to Channel Web:

Worldwide sales of business intelligence software, including BI platforms, analytical applications and performance management software, reached $8.8 billion last year, according to a new report from Gartner…The 2008 sales were up 21.7 percent over $7.2 billion in 2007, a remarkable showing given the economic headwinds vendors faced all year during which the U.S. was officially in a recession and much of the rest of the world’s economies were struggling.

“In tough times, the first step is to increase transparency, which helps identify cost centers and then to more tightly align strategy with execution,” said Gartner analyst Dan Sommer in a statement.

The recession may be a two-edged sword for BI software vendors and their channel partners. Some prospective customers may delay product purchases as part of their overall cost-cutting efforts, but the need for companies to improve visibility into their business operations and gain control of their spending may be boosting BI software sales.

We have to be a tad careful not to totally confuse BI with BPM but they tend to come under the same broad umbrella.

BPM has been one of the few bright spots in enterprise sales but it often comes with a high price ticket. Part of the reason is that BPM is an add-on to existing database structures which require a lot of heavy lifting in the form of ETL plus mapping to solutions. This has been a sticky issue for many years because many of the tools have not really advanced as much as the front end functionality. IT needs to be involved, a lot of (expensive) horsepower is required and the ability of the incumbents to get tools into the hands of many users has been difficult.

The surprise with the NetSuite and AdaptivePlanning deal is that none of the heavy lifting usually associated with reporting is required. So far, they’ve done a one way integration from NetSuite to Adaptive. In the future they will have a two way connection, vital for tying up the loose ends of putting planning into practice.

During my conversation with Bill Soward, CEO of Adaptive, he said the magic words: “The link is saas to saas so even though you can think of it as a sort of batch operation, it’s pretty much minutes.” As the comic books say: ‘Kerraaaaanng!’ This is a massive advantage because it not only cuts time to information but it means that much of the cost associated with BPM evaporates. That allows Adaptive to offer its solutions at an average implementation cost of $15,000 with a per seat price of $800 per user.

Compare with Host Analytics, another saas BPM provider, which is trying to go up against SAP/Oracle at a price point of some $50-60,000 - which is competitive in anyone’s language for an enterprise deal in this space. Compare again with BusinessObjects, Hyperion and Cognoes where you’ll see precious little change from $100,000 before the obligatory 17-22% maintenance fees, consulting, implementation and hardware costs, often to reach a handful of finance and market analysis rock stars.

Adaptive is able to reach 1:15 employees in a 200 person company across both finance and sales. NetSuite on the other hand expects to reach everyone in a similar sized company. Think about it. If NetSuite is already reaching this level of penetration then it bodes very well for Adaptive and/or Adaptive style solutions alongside NetSuite while NetSuite has an extra strong string to its bow.

There is more. Since Adaptive is a saas solution, it can use the data it unearths to provide broad industry benchmarking data. In this economy, what company would not wish to know how its performance fares against its peers? What business would not like to discover others with which it might share resources?

I also spoke with NetSuite about the offering. They were a little less gung ho about it and I was surprised they didn’t seem to have thought benefit all the way through. That might be a tad harsh because this is a fresh deal and Adaptive are in the driving seat when it comes to knowledge about how this can change the planning and modeling landscape, especially for big ‘M’ in the SMB space. As with all partnerships of this kind, both parties need to be joined at the hip and that’s not quite where they’re at today.

This is exciting stuff. The SMB market has been poorly served in the analytics space, often defaulting to Excel, a tool I have long railed against as dangerous. Right now, mid market businesses are especially vulnerable for all sorts of structural and economic reasons. They need tools such as these. If Adaptive is able to drive adoption through NetSuite’s larger channel AND is able to make the concept of bench marking stick then it becomes a disruptor the incumbents will struggle to compete against. And that despite their longevity and deep experience.

Assuming NetSuite and Adaptive make a good go of this then there is a clear win-win-win. How many times do you see that in the on-premise world?