November 25th, 2009

Thanksgiving reading. Soccer and enterprise apps: the similarities and differences

Posted by Dennis Howlett @ 3:34 pm

Categories: ERP, Enterprise applications

Tags: Team, SAP AG, Team Management, Management, Dennis Howlett

The other evening I had the pleasure of visiting Old Trafford soccer stadium. It’s the home of Manchester United, arguably the most successful soccer team in living memory. Consistently at the top or near the top of the British Premier League and European Champions League in the late 20th and early 21st centuries, the ‘Red Devils’ have enjoyed a glittering period of success since 1990, four years after Sir Alex Ferguson became the team manager. Today, it is thought to be one of the richest in the world and commands the highest revenues. It’s team stars are feted, regularly appear in the press and are paid millions each year to entertain their fans. The stadium holds more than 75,000 people and is the largest of its kind in the UK by some distance. As an armchair soccer fan it was wonderful to see the trophy cabinets, reflecting a history that goes back to 1878. Seeing the great names from the past celebrated on the walls and in the museum cabinets evokes a sense of pride. But it was the passion of our guide that struck a chord.

He has been a fan for 52 years and works as a museum and ground guide. As we sat for a few moments in the best seats on a cold and damp night, you could almost see the ghosts of past sporting heroes. As he reeled off the names, talked about the club’s highs and briefly described some of the club’s stellar moments I saw a twinkle in his eyes and a swelling of the chest in pride of something that brings joy to thousands of people every week.

Of course it hasn’t always been that way. In 1958, the team lost eight players and several staff members in the Munich Air Disaster. It sent a shock wave through the nation and, at one time, it was thought the club would fold. Under the leadership of Sir Matt Busby, Man U was rebuilt, bringing forward some of the most famous names in the club’s history, including George Best, one of an elite few regarded as the greatest players of all time.

What does any of this have to do with enterprise applications? The links may be tenuous to some but they are there.

When a great soccer team has great leadership then it almost doesn’t matter what the composition of the team looks like, the odds of them winning are always greater than if the manager is not so strong. Great leaders know how to coax and cajole, reward and discipline in a way that always has the interests of the team as his foremost objective. That and winning. Winners attract winners and it is no surprise that the best of the best want to be in the company of other great stars. When I look at the Oracle Aces or the SAP Mentors I get that same feeling of passion as our tour guide displayed. They’ll go the extra mile without thinking twice. They know the ‘team’ limitations but they’re not allowed to get in the way of moving things forward.

When a team does well it is rewarded by a loyal following. Think about the number of life long fans, the premium value that seats command, the add-on merchandise market and other income sources. Now think about long term customers like Nestle or Siemens for SAP or, for that matter, SAP for Oracle DB.

There is however one crucial difference. Each year, all soccer clubs depend on subscription renewal as base line income. For the top clubs like Man U, it’s not enough the team does well. It has to shine, delivering extraordinary value each and every match. The days they lose there is a post mortem, sometimes accompanied by a roasting by commenters. If there is a run of poor form the top head rolls. There is no sense of entitlement but a constant striving to do more, do better. There is a sense of ‘ownership’ among fans who think nothing of ‘offering’ management the benefit of their field side wisdom. Fans can be powerful voices of dissent which they’ll voice with the same vigor as their roars of support. They can do so because they always have the option of voting with their wallets.

Compare that with the way the user groups have, until recently, been captive to the vendors or the way the perpetual license and maintenance tax has gone unchallenged. Regular readers will know that’s changing as SaaS becomes more popular.

As I was in Manchester as a guest of SAP’s UK and Ireland User Group, the visit to the ground was a perfect foil for comparing soccer and enterprise apps. This group has become independent of SAP to the point where it charges for it to have a booth at the conference expo. It’s voice is being heard as issues of importance become increasingly pressing. To its credit, SAP is learning how to respond appropriately. There is a ways to go. Oracle’s User Groups on the other hand have long held positions of independence. It is that independence that helps foster some sense of partnership, even if it comes at a premium price.

Right now SAP is going through a tough period with many almost writing it off. Some of the more lurid headlines would see the company acquired or thrown into the dustbin of IT history. But like great clubs, SAP has a tradition that is not easy to shrug off. Is that where the similarities end? Time will tell. But if you’re an avid sports fan then maybe this will resonate.

[Photos taken by me while visiting Manchester United's football museum]

November 15th, 2009

Oracle consulting layoffs: but what's the number?

Posted by Dennis Howlett @ 8:07 pm

Categories: ERP, Enterprise applications, implementation, outsourcing

Tags: Layoff, Oracle Corp., TrailMaster, Workforce Management, Human Resources, Dennis Howlett

Speculation took off over the weekend that Oracle is/has laid off sizeable numbers from its consulting organization. At least one source claims 20%, others 7-10% and yet another says 3,000. The difference between the various reports suggests no-one really knows except the tight lipped HR management and the board. Whichever the number, it sounds like the cuts will run deep.

Fellow Enterprise Advocate Frank Scavo noticed something odd was happening when his site started getting pinged on the topic. How? The graphic to the left which comes from his Sitemeter, records shows the ping action:

A quick check of my webstats shows a pickup in web referrals today searching under the key words “Oracle layoffs,” “Oracle Consulting layoff,” and “Oracle layoffs, Nov 2009.” (see image on right).

In the past, this type of activity has been a reliable indicator of Oracle’s workforce reduction actions.

Frank has been following the ERP layoff story for well over a year. In October 2008 he said:

Oracle’s layoffs are baffling. Senior consultants with Oracle experience are reportedly in short supply. If Oracle’s sales are as robust as Oracle says they are, they should be hiring such people, not firing them. Perhaps this is an early warning that Oracle sees softness in its new sales pipeline, and without cutting headcount it knows that consultant utilization will fall. In professional services, utilization is the key to profitability.

The current round of layoffs are equally baffling at one level yet eminently understandable. On the LayoffBlog, a person named ‘NAC’ comments:

OCS needs to rationalize their Billing Rates to survive in this competitive market. Gone are those days when you could charge the Customer @ $250/Hr. Customers these days have become really smart and they can get good quality experienced Resources at a much cheaper cost. Instead of laying off the Delivery Consultants, OCS Senior Management should aim at cutting down the Administrative Overheads such as the Resource Analysts and Admin Assistants who generate No Revenue at all.

Another one bites the dust says:

The long awaited hammer finally dropped on me today. Got my “bonus”, time to look for independent work. The funny thing is, OC price itself out of the market with a single minded goal of “margin”. There is plenty of work out there. Plenty of them I have seen from the PJR that went unfilled because of botched negotiation. time to grab those.

TrailMaster adds:

Today is my last day. 11 years with PeopleSoft Oracle and I was on a billable project till April. Go figure!

These comments have a ring of truth about them. I have seen this before in Europe, accompanied by staunch denials or handing off to middle management who couldn’t possibly answer the tough questions. It is standard Oracle procedure. Here’s how it goes:

• It’s coming up to quarter end, the numbers are probably going to look bad, let’s give Wall Street something to cheer about.
• Oracle can’t lie about the numbers but will avoid bumping up against the WARN Act if it can. I suspect the latter’s what’s been calculated here.
• Since projects are ongoing and people within those projects are also being RIF’d then I also suspect that at least some of those same consultants will be re-hired as contractors. I saw that in Europe on a number of occasions. There’s no reason to doubt it will not happen in the US, especially if the numbers being RIF’d are high and possibly indiscriminately. The short term effect is that Oracle can legitimately call headcount numbers as lower which will please the financial analysts but will mask what’s really going on.
• Customers lose out. Pulling consultants off projects mid-way through is disruptive for all the wrong reasons. If Oracle projects are billed on time and materials, then there’s always the chance that Oracle can get away for a few weeks at least by having people on the job billed out in the usual manner even if they’re really coming up to speed and not being productive. Alternatively, Oracle can offshore the work in the hope that any project delays can be compensated by short term over staffing in cheaper locales while maintaining the outbound contracted billing rate. Customers lose out either through delays for which they pay or substandard work requiring later re-work. Oracle doesn’t need to factor in the additional margin immediately as it can provide against the cost leverage it is able to get from sending work to cheaper locations against possible rework. Whichever method of accounting it adopts, it can afford to be cautious and still come up smiling

POV: Once again (but like others in the ERP market) Oracle is squeezing the P&L account. Oracle’s masters are the Wall Street analysts. Oracle knows it and plays the game masterfully. It is one reason analysts consistently think Oracle is a winner while SAP is a loser. They are mostly wrong despite Oracle having a brilliant acquisition strategy and execution team.

You can’t keep chasing margin at the expense of the two most important communities (customers and implementation consultants) and expect the business will go on producing stellar results forever and a day. It’s neither logical nor possible without something blowing up along the way.

While this layoff may be significant, it is too early to tell how customers will be impacted. My guess is there will be short term disruption that Oracle will paper over by parachuting Oracle Aces in where needed.

From comments I’ve read and people who’ve spoken with me about Oracle in the past, it seems this is a company that has layers of fat that could be usefully excised. More than one of the commenters to LayoffBlog has said as much. In the past, acquired Peoplesoft staff have told me Oracle represents a relatively comfortable and well paid meal ticket. The fact we are seeing a repeat of the past suggests Oracle is not managing the intermediary layers as well as it could.

More broadly, the combination of the recession, better value offerings from SaaS vendors and an increasingly well informed buyer community able to negotiate better terms is biting hard into the big ERP vendor pocket books. Blended rates are plummeting yet Oracle needs to maintain its margins. More productivity is one answer. Deflecting attention to headcount is another.

Oracle’s RIF is just the latest manifestation of an industry that has yet to come to terms with a new reality. For what it’s worth, I am hearing repeated rumors of a potential re-organization at SAP planned for January 2010 with another sizable chunk of people due to be RIF’d. There will be many more stories of this kind in the coming months before the recessionary tide turns.

PS - I have sent a request for details on the RIF to Oracle. It’s a weekend so I don’t expect a response in the next few hours and I am preparing for a long travel day so may not see a response the moment it lands into the inbox. Therefore much of what is being said can only be regarded as reasonably well informed rumor. I will update this post as soon as I see a response or other facts emerge.

UPDATE: Oracle’s response is: ‘no comment.’

November 14th, 2009

Another chapter starts to unfold in the SAP maintenance story

Posted by Dennis Howlett @ 7:50 am

Categories: ERP, Enterprise applications

Tags: Customer, SAP AG, Helmuth Guembel, Free Trade, Finance, Dennis Howlett

Claiming an exclusive, wiwo.de today says it is receiving reports that SAP is looking for price increases from those customers who are not on Enterprise Support by reference to the never before used cost of living index clause that is tied to inflation in the German wages index. This is not a new story. Helmuth Guembel has raked this over a couple of times, most recently noting that:

Maintenance will increase to 20.7% for all agreements dated 2000 and earlier. Agreements closed in 2008 will carry an increase of  .315%.

Customers can cancel their maintenance agreement by December 31st within 2 weeks after receiving the “love letter.” Customers who receive service through SAP partners can cancel within 4 weeks after ther partner has received said letter.

The wiwo.de article broadly retreads Helmuth’s position but adds more color about the number of companies likely to be affected and, more importantly, naming more companies coming out the woodwork on contract negotiations.

According to the article, some 400 companies are likely to feel what amounts to an arm twisting increase up to 20.8% instead of the Enterprise Support figure for 2010 of 18.4%. Andreas Oczko, deputy chairmen of the German SAP user group (DSAG) regards the move as “unfair” and described members as “annoyed.”

Earlier in the week I was fielding emails from Wall Street analysts looking to tweak their SAP year end closing models. One was insistent that on the basis of their calculations, SAP has to push the proposed price increase through. That may well be in SAP’s best interests. But increasingly I and colleagues are finding that customers remain far from convinced they will see value from the KPIs agreed between SAP and SUGEN. These represent the way customers assess value delivered and against which SAP expects to see maintenance price increases.

If SAP is successful in this latest move, it would accelerate some maintenance revenue. On the other hand, wiwo.de believes that overall maintenance and support revenues will fall by 4% or around €200 million ($298 million.)  Given that the German based Raad Research believes only 24% of customers have signed up for Enterprise Support, that €200 million number might well be in the right ball park. At 90-95% margin, it’s a big number to drop out of the profit and loss account, implying SAP will have to run another slide rule over its headcount in early 2010.

Earlier we heard that Siemens had canned and then re-negotiated its maintenance contract with SAP at a much lower price. Now wiwo.de is naming other marquee customers: Nestlé, Daimler and Tchibo as in negotiations on this line item. None of these companies provided public comment. Crucially, none were denying the veracity of wiwo.de’s claims. Siemens set the benchmark, others will surely follow.

It strikes me that despite all the behind the scenes negotiations, SAP cannot seem to understand that customers are not in a position to readily accept either the cash cost drain nor the value proposition that SAP espouses. It’s a double whammy.

Like so many things one sees at SAP these days, this is a company that is struggling to issue public statements that makes sense either to jittery investors or unhappy customers. There are plenty of people inside SAP who question what’s going on, not just here but in other parts of the business. But then there is that 1990’s arrogance when SAP could charge $10K and up just to have them turn up and put on a PowerPoint demo. At times it seems that SAP is the only one who doesn’t ‘get it’ on certain issues. In the long run, that continued blindness to market reality (as opposed to Wall Street wishful thinking) will hurt the company much more than it may realize. In my mind it is playing with fire and that despite its massive brand attractiveness.

Third party providers like Rimini Street on maintenance, Cognizant on BPO, under the radar Indian providers doing both and others will offer a lower cost haven for those distressed customers unwilling to pay SAP’s maintenance tax. As things stand today, the 3PM companies have almost no downside unless SAP does yet another about face.

In the meantime, Helmuth is doubling down on the Sapience conference he ran in Europe earlier in the year. This time in Cambridge MA overlapping SAP’s annual Influencer Summit just down the road in Boston. Coincidence? Go figure. Enterprise Advocates Vinnie Mirchandani and Ray Wang are slated to appear as are former SAP execs Paul Wahl and Matthias Meuller-Wolf. Other industry heavyweights like Craig Conway (ex-CEO PeopleSoft), and Jan Baan (ex-CEO Baan Corp) contribute to an impressive line-up. It will be interesting to see which event generates more ‘ink’ and how reports vary. I’m already sharpening my digital pencil.

November 10th, 2009

Epicor Perspectives: the analyst view

Posted by Dennis Howlett @ 11:54 am

Categories: ERP, Enterprise applications, implementation

Tags: Epicor Software Corp., Software As A Service (SaaS), Managed Hosting, Cloud Computing, Emerging Technologies, Dennis Howlett

A thousand customers and 1,500 total attendees may be 20% down on past years but represents a good effort by Epicor to get the faithful out to hear the latest and greatest when compared with other vendor led events where attendance has been down 30-40%.

Unsurprisingly, blockbuster announcements were thin on the ground. The emphasis was on assuring customers that Epicor is here to stay and that customers should be thinking about moving to Epicor 9, which was introduced last year.

Epicor has shipped around 890 copies of Epicor 9, has 60 live and been successful in attracting 275 new customers. However, the go live rate is anemic - stated as six per month. Epicor says this will accelerate dramatically as we come to year end, probably doubling the number of go-live customers by December, 31st. Watch this space for an update.

One surprise was the quiet discussion around Epicor Express, a SaaS offering currently in beta with a handful of customers and likely to ship early 2010. Aimed at small jobbing manufacturing shops, the solution sounds compelling but I’ll need a much deeper dive before making the inevitable comparisons with SAP Business ByDesign. More surprising is Epicor’s low key approach to SaaS. It realizes it left the smaller customer behind some years ago and recognizes a potential opportunity to fill a large white space with a cost effective solution. However, it is not pushing the marketing gas pedal and doesn’t believe it will see significant traction in 2010-11. I think that’s a mistake because SaaS can offer significant advantages for SMEs.

Notwithstanding, analysts seem upbeat. In this video, Ray Wang of Altimeter/Enterprise Advocates and Nigel Montgomery, AMR Research EMEA provide complementary and contrasting views on what they’ve seen so far.

November 9th, 2009

Enterprise 2.0: now we're talking

Posted by Dennis Howlett @ 6:38 am

Categories: ERP, Social computing, Social software

Tags: Industry, Social Computing, Enterprise 2.0, E2.0, Alex Williams, Susan Scrupski, Social Networking, Online Communications, Marketing, Advertising & Promotion

[Warning: extra long post]

It’s always a joy when a post provokes a stack of other posts that add value to the discussion. My curmudgeonly rant about the ‘what a crock’ non-debate did the trick. I would have been deeply disappointed if it hadn’t provoked a response. Before responding to the various arguments it’s worth contextualizing where I’m coming from:

The software industry is littered with the bodies of failure. Those same failures have cost business billions of dollars. It provides the backdrop against which my colleague Mike Krigsman writes story after story how tech fails its intended buyers. There is no reason to believe that Enterprise 2.0 is any different. Check the video on my personal weblog: How communities can fail.

The expression ‘Enterprise 2.0′ is riddled with difficulty not least because it pre-supposes a technology solution to what in my view is an ill-defined or at times non-existent problem. That is compounded by the fact E2.0 was defined by an academic. Few people in the business world are prepared to take on academia. It’s a dangerous game to play, especially when that game seems to fit so neatly around an attractive play.

I don’t need to recrunch the ’social’ thing but it is an important factor that in my mind amply illustrates the lack of intellectual rigor around solution creation. It is good to see that in the discourse even my sharpest critics have acknowledged the emphasis and use of ’social’ as a dreadful mistake. That admission alone should provide topic thinkers with an escape hatch through which they can reframe this topic.

I wasn’t there is person but take Timo Elliott’s account as an accurate reflection of events. The problem is that while billed as a debate, there wasn’t one. How could there be when only one side of the argument was represented? It should therefore be no surprise when critics such as I get up on hind legs and bellow at the crowd, often in unflattering terms.

So to the specifics.

Read the rest of this entry »

October 28th, 2009

SAP Q3: sales down, profit up

Posted by Dennis Howlett @ 2:05 am

Categories: ERP, Enterprise applications

Tags: SAP AG, Sales Strategy, Tools & Techniques, Operational Accounting, Sales Force Management, Sales, Management, Finance, Dennis Howlett

SAP’s Q3 results demonstrate continuing softening in the enterprise software sales market. Revenues were down year on year by 31% to €525 million ($787 mill) from €763 million ($1.144 bn) in the same period 2008. Software and software related service revenues declined 3% or €57 million ($85 mill) year on year. In a pre-prepared statement, the company said it is tracking software and software related service revenues down 6-8% for the full year. It is perhaps an indication of the lack of clarity in seeing the market forward that in July, SAP thought this number would track down 4-6%.

SAP is close to achieving its planned 3,000 headcount reduction for 2009 by year end. This together with other savings measures means SAP has improved operating margins from 22.2% to 24.2%. However, the scale of decline on the top line means that net income fell from €614 million ($921 mill) to €606 million ($909 mill). Talking to SAP insiders, it is anticipated that there will be further restructuring in early 2010.

In a prepared statement that company said:

“Despite the continued tough spending environment, we are pleased to see further progress in the evolution of our volume business as a result of smaller deals,” said Léo Apotheker, CEO of SAP. “In addition, we are driving more multi-year agreements, where customers buy and consume software over many periods, which we believe is a positive transition for both SAP and our customers. We have the benefit of many years of experience in facilitating the purchase of our software in this manner, including the success we had in signing multi-year, Global Enterprise Agreements with our largest customers. We have now started to leverage this approach with a bigger group of customers. And, most importantly, our solutions are built on a highly flexible and modular architecture allowing us to easily adopt this model.”

SAP has been offering its largest customers an ‘all you can eat’ model which, for a fixed price, allows those customers access to all SAP tools and technologies. This is a form of subscription based model in that SAP recognizes revenue over the life of the agreement. It gives SAP revenue certainty over long periods, typically five years. The flip side is that customers have cost certainty plus the opportunity to consume technology at a pace that suits them without the constraints of long sales negotiation cycles. The extent to which this is a buyer win is not entirely clear. Senior managers I have spoken with say that SAP can only make these arrangements work successfully by ensuring that customers have quality access to the technologies, consultants and product roadmap such that customers can plan for adoption.

Apotheker is fielding a Q&A at 11am CET and an analyst call at 3pm CET.

October 27th, 2009

SAP regaining its mojo?

Posted by Dennis Howlett @ 8:35 am

Categories: ERP, Enterprise applications

Tags: Blade, SAP AG, Operational Planning, Blade Servers, Utility Computing, Roi/Tco, Servers, Business Operations, Hardware, Finance

Earlier today at SAP TechEd Vienna, Jim Hageman Snabe, SAP senior vice president in charge of products said: “Business ByDesign will be multi-tenant.” It was almost a throw away line in a broad conversation discussing SAP’s slow conversion to all things SaaS and cloud computing. I thought I was hearing things until Jim confirmed this is the case. I asked whether this means the end of the much criticized mega-tenant model where tenants are not shared on server blades. Apparently not: “We can accommodate both. Right now we can get around 10 customers on each blade if that’s acceptable.” This translates to something like 250 users per blade.

When SAP first introduced ByDesign in the winter of 2007, it could get 50 concurrent users per blade. By the Spring of this year, the concurrent user number had reached 100 so this current number represents a significant engineering achievement albeit helped by the continuing operation of Moore’s Law. Even so, Jim was keen to ensure that ByDesign delivery expectations are not overstated. “We got burnt by being overly ambitious and won’t repeat that mistake. We’re still working on getting the TCO right. I have an interim milestone for the end of the year which looks good right now but I can’t commit to a specific date in 2010.”

In other news, SAP confirmed it will be using in-memory database technology to deliver ByDesign’s analytics. This is the first step in a broader move towards making in-mem databases the center of application development. Jim quoted the example of a complex business planning scenario that would normally take 20 minutes to execute being run in 7 seconds. That level of performance improvement is welcome but in-mem gives the potential to do much more.

“Once you insert the in-memory database into the application itself then you can start to do things that today are impossible for example you can ask almost unlimited ‘what-if’ questions about what’s happening in the business,” said Jim. This is in contrast to what happens today where large enterprise has to build large data cubes that give a limited view based on pre-defined queries.

For those of us interested in SAP TCO, the company believes there are significant potential savings in code development and maintenance: “We think [code cost] savings of 40% are possible,” said Jim.

Later in the day, SAP surprised us by offering the stage to Lars Rasmussen, software engineering manager with Google and one of the team behind Google Wave. Lars provided a demonstration  of Wave and then handed over to SAP which showed a demonstration of a collaboration scenario in financial services that uses a business process modeling gadget operating inside Wave as a way of fast track developing new processes that can then be punched out to the SAP Netweaver execution platform.

While the demo, code named Gravity, is nowhere near ready for prime time, it shows how consumer style services can co-exist comfortably with the enterprise world. In talking with developers, it seems a number of SAP business process experts are finding collaborative uses for Wave that hold promise for bringing the development of process models much closer to end users. But whether corporate IT departments are ready to let loose cloud services that talk to buttoned down SAP systems is another matter. For its part, Google is aware that it needs to develop services inside Wave that reflect enterprise needs: “We are working on having the ability to restrict people’s rights inside a Wave to say ‘read only’ or no ‘delete,’” said Lars.

October 5th, 2009

SAP's feet put to the fire

Posted by Dennis Howlett @ 8:53 am

Categories: ERP, Enterprise applications

Tags: SAP AG, Enterprise Resource Planning (ERP), Enterprise Software, Software, Dennis Howlett

Helmuth Gumbel, ex-Gartner and generally sharp chap has opened a blog. Who’s Helmuth you might think? I’ve known him maybe 6-7 years and he’s always been one of those shadowy types who prefers to keep away from the limelight. Even so, he knows his SAP-stuff like very few others and especially the detailed situation in the German speaking territories. Anyhoo - in the opening salvoes, Helmuth takes SAP to task on a variety of issues:

Exhibit no. 1: for not being flexible about maintenance in an insolvency:

Most of the 350 users of their SAP system are gone. Only about 50 are left and, of course, the HR-system is required to pay the residual staff. Closer to year end, a few legal updates will have to be fitted to the SAP-HR-installation.

The administrator, in an attempt to make sure that staff can be paid, asked SAP to accept a partial maintenance cancellation for 300 seats…

SAP refused to accept the partial cancellation. Either you cancel in full or you pay in full. Under German law, the maintenace bill ranks way lower than salaries in an insolvency. SAP, however, has apparently found a way to circumvent this.

Not nice.

Exhibit no. 2: SAP penalizes loyalty

In a few days, SAP will send out letters to all those German customers who have remained on standard support. Recent surveys indicated that this is over 60% of the installed base. In this letter, SAP will enforce a hitherto never used clause in their maintenance agreement. This clause allows for a salary-index based increase of maintenance.

SAP plans to apply this clause retroactively. This means: old agreements will see a higher increase. Hence, loyalty is not rewarded – rather, it is penalized — a first in the industry.

Novel to say the least, perfectly legal but is this what one would expect in the teeth of a recession?

Exhibit no.3: Helmuth is running a two day conference in Cambridge MA under the title Sapience 2009:

The conference explores strategies for moving to a more heterogeneous environment by leveraging existing investments. Featuring best practices from companies who have already started the process, sessions on the legal implications as well as the impact on maintenance contracts, and other key considerations such as augmenting SAP through cloud offerings, the conference is designed for IT executives looking to reduce expenses and their reliance on a SAP as their sole ERP vendor.

The kicker? The first day coincides with SAP’s Influencer conference just down the road in Boston. Sapience details can be found here. It has a solid line up of speakers which is being added to over the coming days. I’d expect the conference to do well.

Soundings in territories with which I am more familiar suggest the ongoing rumblings around the SAP maintenance issue are not going away. I see more CXO’s willing to ask some of the hard questions and engage with experts prepared to argue the case or at least guide the client towards a more satisfactory conclusion.

Finally - you all thought I was tough on SAP? These are just samples. Mark Helmuth down as one to follow.

September 29th, 2009

Is the enterprise market tipping towards SaaS?

Posted by Dennis Howlett @ 3:24 am

Categories: ERP, Enterprise applications

Tags: SuccessFactors Inc., SAP AG, ERP, Workday, Ray Wang, Enterprise Resource Planning (ERP), Workforce Management, Operational Accounting, Enterprise Software, Software

Ray Wang’s informative scorecard for SaaS vendor revenues versus the on-premise vendors is worth deeper study:

For a better view of the numbers, click the scorecard to enlarge (or hop to Ray’s site). What’s interesting to me is that even the so-called specialist minnows in the SaaS space are doing well in comparison to more established names in the broader ERP space. That could be a function of being in the right place at the right time: Taleo and SuccessFactors, both talent management players are benefiting from the downturn as customers seek to rightsize while retaining the best skills they can. It reminds me of i2’s heyday when demand planning was all the rage so perhaps we shouldn’t read too much into reported relative success. But as I said in an earlier post, SuccessFactors massive win at Siemens was certainly a warning sign that incumbent ERP players are not getting it all their own way. On the quiet however, I am hearing that Q3 for at least some of the SaaS players is not going to be as rosy as the market might expect. We’ll see in a few weeks’ time when they all start to declare earnings. Let’s not be too hasty in declaring premature SaaS victory even if it can sound compelling. There is a long way to go.

In his analysis Ray says:

Continued economic pressures force customers to choose best of breed and purpose built solutions. SaaS vendors appear to be the beneficiary as the overall business model aligns with client pain points. On-premise vendors will also win as they reduce the cost of entry and provide effective price points for purpose built solution modules in demand by clients. With very little hope for a recovery in 2009, vendors will have to adjust their go-to-market strategies to deal with waning deal sizes. It’ll take more than a hat trick in 2009 to stabilize revenues. With 4 months to go, vendors should rethink their 2010 strategies to address price points, financing options, and module availability.

Over the last few months, offline conversations between Ray, VInnie Mirchandani and myself have in part focused on the need for white space apps the large scale vendors don’t seem able to build quickly enough. In the SME space I see more concentration on the provision of vertically oriented SaaS products. They’re all doing moderately well, in part because the way SaaS is built provides a much faster way of getting services into the market than the traditional on-prem guys. Having an opex spend model to dangle in front of cash strapped CIO’s makes a helluva difference when compared to the million dollar deals that SAP/Oracle want to pluck.

Read the rest of this entry »

September 22nd, 2009

Zoho's Next Big Thing

Posted by Dennis Howlett @ 11:39 am

Categories: ERP, Enterprise applications, cloud computing

Tags: Zoho, Smb/Sme, Sales Force Management, Sales, Dennis Howlett

Zoho has announced the availability of Zoho Discussions. Of itself you might think this is a smallish me-too announcement given that it can be construed as support forums-reinvented for the new millennium with some bells and whistles thrown in. That would be a gross underestimate of the company’s offering or its longer term intent.

Looking at the extensive feature set alone should provide some clues. At a high level - and I’m cherry picking:

• Integrated chat
• Profiles
• Private messages
• Watchlists
• Profilies
• Search
• Related topics
• Sticky posts
• Topic status
• Announcements
• Email to post/drop box
• Public/private forums

In pointing Discussions in the direction of customer support, Zoho is opening the door to pro-active customer service that can be executed in a number of different ways, according to both the business problem and the user’s preferred method of handling. That could be an invite only chat session, internal and/or outbound email or forums. At that level it sounds a bit like our new good friend Social CRM but again that would only be a piece of the equation.

Before moving on I’d like to say that making forums explicit is a really smart move. Despite all the talk of blogs etc, many of those I interact with ask ‘What’s wrong with using forums?’ Nothing at all but in extending the metaphor Zoho is appealing to a ready made audience with something that’s fresh and intriguing.

In order to understand where this is going you really need to take a 10,000 foot view of the whole Zoho suite of applications and ask yourself: What have they been doing? Keen observers will have noted that up until this release, Zoho has had a quiet 2009. That’s because it’s been spending much of its time integrating different Zoho applications. Step forward a few paces.

Imagine that the functionality contained in Discussions is now accessible to Zoho CRM, Projects, Sheet and Writer via a single mouse click. Now you have the start of a very rich collaborative business environment in which you can do one heck of a lot more than simply flog ’stuff.’ Take another step and imagine that Zoho integrates with QuickBooks. Now you’re into a whole new league where Zoho might have the capability of turning transactional data into valuable information that can be mined in real time and merged with data that’s emerging in the more social styles of application, forums and so on.

When Zoho goes this route (not if), then we see the emergence of what I’ve been arguing for several years: content and process in context = transformational value. No more blog/wiki/RSS etc siloes to be hand integrated into the transactions that drive bottom line success but real time in-flight information that can be used as the kernel for the kinds of alert systems needed to drive transformational value in/around and across collaborative teams.

Zoho isn’t going on the record with this but it doesn’t deny the direction either. Given the company’s development history, I’m betting this is where they go. They’ll integrate third parties along the way so watch how they do it. Zoho always integrates first and develops later as it learns how users interact. It also spends time eating its own dogfood as the beta test bed for what you see today. With a 1,000 internal users focused on saas apps to pick from, they can easily test, debug, retest and polish before any service sees the light of day.

What does this mean? Those of us who have bemoaned the feet of clay state of enterprise apps have long held the view that we have as yet to see the emergence of a credible alternative to traditional ERP or for that matter the current saas incumbents like Salesforce.com and NetSuite. Zoho is not ready for prime time. But it can scale, has a burgeoning set of ‘good enough’ integrated applications and now, with Discussions, the jump off point to start hammering at the doors of SMEs who might otherwise be tempted by a combination of Salesforce.com, Google Apps for Enterprise and possibly a bit of CODA2Go thrown in.

Zoho will say that it is firmly rooted in the SME space and will most likely play a bit below the place where Salesforce.com and NetSuite position themselves. That’s a huge whitespace but one where it is possible to articulate a coherent and valuable story.

Aside and Update: for a bit of fun I asked the Twitterati what they understand is the direction with Discussions. @lehawes nailed it: They’re becoming a Business Operating System.