Irregular Enterprise

February 8th, 2010

SAP: Hasso Plattner back at the helm. Job no.1: rebuild trust

Posted by Dennis Howlett @ 6:32 am

Categories: ERP, Enterprise applications

Tags: SAP AG, Leo, Team Management, Human Capital Management, Management, Human Resources, Workforce Management, Dennis Howlett

After the weekend’s news of Leo Apotheker’s abrupt departure and the re-establishment of co-CEO’s in Jim Snabe and Bill McDermott, SAP hosted a webcast on the situation with Hasso Plattner talking as chairman of the supervisory board. He started off straight talking and continued in that vein as far as his handlers would allow.

The key takeaway is that SAP is a contrite company that has to rebuild trust : “I will do everything possible to make customers happy and employees happy. In order to be profitable you have to be a happy company,” said Hasso.

Talking further on the trust issue and in particular as it relates to maintenance, he said: ”Trust is a complicated thing. Don’t look so faraway, I was part of the decision to raise maintenance fees. The 100 largest customers were very happy with what we were doing…We made some mistakes in some legal and political issues in Germany. I lost sight of the smaller customers…We made a mistake.”

At last - someone has admitted what many armchair quarterbacks already knew but which SAP could not bring itself to acknowledge until it was crystal clear the planned rise was not going to fly in important territories. Now comes the question - what to do about it? That will be the subject of a separate discussion but it won’t go away as a talking point, either for customer or Wall Street focused analysts.

Explaining the Co-CEO arrangements, he said: “This was never a short term solution for SAP…This is a common setup…For many years we have lived that way…The best years was with that structure…Before we went public we always had a multi-head approach.” He justified this by harking back to ‘the best years’ when Ray Lane and Larry Ellison ran Oracle, Bill Gates and Steve Ballmer ran Microsoft and he with Dietmar Hopp and more latterly Henning Kagermann ran SAP as a team.

I don’t think anyone should read anything unusual into this at this stage. ”Both Jim [Snabe] and Bill [McDermott] will keep their responsibilities in sales…actually they will probably increase the scope,” sends a strong signal that SAP’s revival is going to be a team effort, lead by a much admired co-founder and strong technology influencer.

Talking about the more general product direction: “We are at the advent of the largest, most significant changes in the industry…The next years will be dominated by massive parallel computers. We will see a massive shift. It will be a catastrophic move to be on maintenance without innovation. We have to maintain and innovate.”

This will disappoint many who were hoping for detail on technology direction but these are very early days in the transition. Leo’s sudden departure will be leaving many bemused inside SAP.

Looking at the Twitter back channel which included analysts and SAP Mentors, the general sense I get is one of relief. Questions around whether Snabe and McDermott are capable of leading the company are now on the sidelines. At least for the time being.

February 7th, 2010

SAP: the challenges ahead

Posted by Dennis Howlett @ 10:50 pm

Categories: ERP, Enterprise applications

Tags: SAP AG, Vinnie Mirchandani, Consulting Operation, Vishal Sikka, Software As A Service (SaaS), Managed Hosting, Middleware, Strategy, Emerging Technologies, Enterprise Software

It’s started. Speculation around whether SAP ex-CEO Leo Apotheker jumped or was pushed, a trawl through past failures, an implied writing off of SAP because its strategy seems muddled and as for SaaS? Pfft.

This is what SAP insiders are telling me. The last few weeks have seen an increase in internal email traffic around various policies and technologies accompanied by people re-aligning themselves. In other words, this has been on the cards for a while (no surprise) especially given it is widely known Leo’s internal staff ratings were poor. Power play? You bet, and with the goal of positioning the tech/product groups in control. As one person said of the latest announcement in this context: ‘It all makes sense.’

Did he jump? Very unlikely. Most likely he realized the poisoned chalice he’d been asked to hold was one from which he could no longer sup. It only needed a faint nod from co-founder Hasso Plattner as his cue to go. Like him or otherwise - I like the fellow - he deserves our respect. Not our vilification. Onwards.

I can’t find a single Wall Street analyst who thinks anything other than the wheels are falling off SAP. It’s a classic case of panic now, think later. That should be a reason in itself for tomorrow’s (today’s my time) analyst conference as an opportunity for newly minted co-CEO’s Jim Snabe and Bill McDermott to put a stake in the ground. I’m not holding my breath. I am however anticipating some hostile questioning. What next?

Larry Dignan points to three things SAP should be considering. In turn:

Buy up software as a service companies. SuccessFactors, Workday and others up-and-coming threats. SAP has its own SaaS adventure in Business ByDesign, but a series of acquisitions would eliminate future threats and bring in fresh blood to the management bench.

Read the rest of this entry »

February 7th, 2010

SAP: Apotheker gone, co-CEO's appointed

Posted by Dennis Howlett @ 11:44 am

Categories: ERP, Enterprise applications

Tags: Board, SAP AG, Leo, Corporate Governance, Product Development, Sales Strategy, Business Operations, Corporate Law, Research & Development, Sales

In a tightly worded press release, SAP has announced that Leo Apotheker has resigned as CEO with immediate effect:

“The SAP Executive Board, in agreement with the SAP Supervisory Board, has appointed two Co-CEOs: Bill McDermott, head of field organization and Jim Hagemann Snabe, head of product development, both already members of the SAP Executive Board.

In addition, Vishal Sikka, Chief Technology Officer, has been appointed to the SAP Executive Board. At the request of the SAP Supervisory Board, Hasso Plattner, Co-Founder of SAP and Chairman of the SAP Supervisory Board, will continue to play a strong role in advising the new leaders on technology and product development.”

It won’t take a nano-second for the enterprise pundit tongues to start wagging. I’ll kick it off. Leo’s departure has long been predicted. In private conversations stretching back to last fall, I initially thought he would survive through SAPPHIRE but more recently thought the company would get the Q4 earnings out the way and then make changes. So it seems.

The choice of new leaders should not be surprising but hardly imaginative. In effect, SAP has chosen ‘last men standing’ rather than taking what some of us thought might be a bold move by appointing an outsider.

Leo won’t be missed at Walldorf. As a sales person there was no way he could realistically bring the powerful engineering groups under control. Under Jim Snabe’s leadership, supported by Vishal Sikka and underpinned by Hasso Platter, there is reason to hope that this group will be brought into the 21st century rather than continuing to behave as the entitlement group they had become.

Including Bill McDermott as co-CEO is a smart move. It reinforces the need for SAP to be seen as more sales led, especially as it gears up for the general release of Business ByDesign.

There will be a conference call on Monday 8th February at 8.30am ET to discuss the changes. More later.

UPDATE 1: Ray Wang’s assessment of what led to Leo’s demise:

Though a seasoned executive with over 20 years with SAP, Leo was in the wrong time wrong place.  He was responsible for doing a bang up job in sales when Henning Kagermann (i.e. the former CEO) was around.   In fact, he made Henning look good despite the difficulties in launching mySAP ERP 2007, SAP ByD, and a host of other failed projects.  Unfortunately, he entered a down market while in charge of a sinking ship.  Low morale among the Walldorf engineering team, the issue with Enterprise Support and maintenance, and uncontrollable poor quarterly performance proved to be factors beyond his control.  Customers over the past 2 to 3 years began to wonder how to tap SAP’s innovation.  A clear need emerged for having more technologists at the helm.

UPDATE 2: Forrester’s Paul Hamerman says the co-CEO route seems a ’stopgap’ and that outside visionary leadership is needed:

What SAP needs at this time is more charismatic and visionary leadership. In this new configuration, McDermott will evidently provide the charisma and Snabe the vision for innovation. We shall see how well this works over the next year or so. For SAP to get back on track and reassert market leadership on all fronts, it may need to continue to look for a strong leader from the outside.

UPDATE 3: Vinnie Mirchandani talks about the impossibile position in which Leo found himself and challenges the new leadership to change:

Are they ready to dismantle the past, seriously put their weight behind cloud computing and take on the partners who add little value?

Other reactions:

Thomas Wailgum talks about SAP’s succession planning that seems to have gone wrong. It went wrong a long time ago.

February 5th, 2010

Forrester crimps bloggers: epic E2.0 fail

Posted by Dennis Howlett @ 5:21 pm

Categories: industry analysts

Tags: Analyst, Blog, Forrester Research Inc., Blogger, Goodness, Blogging, Internet, Dennis Howlett

According to Sage Circle, Forrester plans to crimp its analysts from expressing themselves on personal blogs. I first heard of this (where else?) on Twitter via Jim Holincheck, Gartner Analyst. From SageCircle:

Forrester CEO George Colony is well aware that savvy analysts can build their personal brands via their positions as Forrester analysts amplified by social media (see the post on “Altimeter Envy”). As a consequence, a Forrester policy that tries to restrict analysts’ personally-branded research blogs works to reduce the possibility that the analysts will build a valuable personal brand leading to their departure. In addition, forcing analysts to only blog on Forrester-branded blogs concentrates intellectual property onto Forrester properties increasing the value of the Forrester brand.

Given I know several ex-Forrester analysts reasonably well this is no surprise. Jeremiah Owyang and Ray Wang were both considered Forrester rock stars. Internally, George Colony, Forrester CEO loved what they were doing…until they jumped ship. What staggers me is that Colony didn’t see it coming. Jeremiah and Ray were (and continue) providing incredibly valuable market information and analysis for free. Unfortunately, that was not going back to Forrester. At least not directly.

Instead, both Jeremiah and Ray were generating huge interest in Forrester thinking. Not bad for a distant second placed player in the analyst community. Crucially and largely as a result of their solo efforts, Forrester was getting a LOT of new, incoming revenue. But equally crucially, neither Jeremiah nor Ray were rewarded for their efforts, often on top of 80+ hour working weeks.

I won’t discuss the precise numbers here but let’s say that neither the people I mention were benefiting more than 5% of the revenue they brought in, often with zero support from sales. In other words, Forrester had 90-95% margin on the back of personal blogs but against which it was not prepared to compensate two hard workers. The same was true for Charlene Li the year before. Given what Ray and Jeremiah were doing, that should have sent a loud red flag signal to Forrester exec. Apparently not.

Fellow ZDN’er Mike Krigsman opines that:

Forrester will lose star analysts over restrictive social media policy, but they already factored that into the plan (cc @carterlusher)

That is a one dimensional view based on what? Forrester cannot reasonably prevent anyone of its employees from presenting an opinion. If they try overtly then @fake…you-name-it will soon be popping up. The same holds true for Gartner and for any other analyst firm that tries to muzzle its best people. How do you factor that sort of random behavior into any plan? But let’s do a sound check here and review the reality.

SageCircle grandly states in the post to which I have linked above that:

For analyst relations (AR) teams with Forrester analysts ranked high on their lists, this new Forrester policy could be a benefit by decreasing the number of blogs that AR has to monitor. If the Forrester policy is success, it could spark similar policies at other firms again leading to fewer blogs to monitor. However, this policy and potential imitators could cause an increase in the volume of posts on firm-branded blogs, which would require careful monitoring by AR.

[My emphasis added]

Oh heck. Goodness knows that analyst firms might need be careful what they say. Especially given the large firms are in a Pay Per View death march with vendors. But then I also think - keep giving that advice. Good for independents.

Contrast this with Redmonk and James Governor in particular. Redmonk is a sell side crew that largely advocates from within the developer community. There is nothing wrong with that. James often complains his firm is not taken seriously but even given its small size it grew organically by 15% last year. Recession is supposed to hit the small fish first but….? Take seriously? I won’t take words out of James’ mouth but I bet they would not be ‘ZD Net family friendly.’

Redmonk - and largely through James, is ridiculously active on Twitter - the place where its constituents meet. A good percentage of what James says is barely ’safe for work’ or even relevant to any work. It’s definitely not stuff I could directly quote on the pages of ZDNet. But…and this is THE point…it works. Clients benefit and developers love the firm. In other words, the Redmonk model of personal brand promotion combined with rock solid analysis/support for developers is proven as a business model. Can that be transmuted to the likes of Forrester or Gartner?

In further Tweet conversations with long time correspondent and Gartner analyst Jim Holincheck, he reminded me that Gartner started with a no blog policy. True. But I’d hardly regard most current Gartner blogs as exactly illuminating. And let’s be totally fair. I know that is not a reflection of the individual analyst but a reflection of the firm level problem of matching revenue with value in the context of an outdated business model. Jim also says that blogs are not the only form of social media - heh - we were exchanging on Twitteer - right on !!

But whichever way you look at this sudden shift in Forrester policy, it represents an epic E2.0 fail.

Enterprise 2.0 mavens consistently argue that bottom up adoption of Enterprise 2.0 will make business better. That’s fine except in one crucial regard: pre-existing success history dictating future policy. There is plenty of evidence for that. Forrester’s belated but still knee jerk reaction confirms. Worse still. Rather than behaving as the doyen of what it preaches regarding social media, Forrester is showing itself as hypocritical in the worst possible way. It is sad that SageCircle is implicitly supporting that position. From which everyone - with the possible exception of the Redmonks of this world - will lose.

February 4th, 2010

NetSuite hits record earnings

Posted by Dennis Howlett @ 3:08 pm

Categories: Enterprise applications

Tags: Revenue, NetSuite Inc., Zach Nelson, SAP AG, Earnings, GAAP, Operational Accounting, Financial Accounting, Finance, Dennis Howlett

Having had a dreadful start to 2009, NetSuite announced record earning for the fourth quarter and year ended 31st December, 2009. From the release:

“Total revenue for the year was $166.5 million, a year-over-year increase of 9%. Total revenue for the fourth quarter was $43.0 million. Revenue from the Americas for the fourth quarter of 2009 was $35.0 million, while revenue from international regions was $8.0 million. NetSuite added approximately 295 new customers in the fourth quarter.

On a GAAP basis, net loss for the fourth quarter of 2009 was $6.5 million, or $(0.10) per share, compared to a net loss of $4.5 million, or $(0.07) per share in the fourth quarter of 2008. On a GAAP basis, net loss for the year ended December 31, 2009 was $23.3 million, or $(0.38) per share, compared to a net loss of $15.9 million, or $(0.26) per share in 2008. GAAP operating loss for the year ended December 31, 2009 was $23.5 million, compared to a GAAP operating loss of $18.4 million in 2008.”

Using the more flattering non-GAAP measure, NetSuite recorded net income of $1.3 million for the fourth quarter (loss $534,000 in 2008) and $3.4 million for the year (loss $2.5 million.)

NetSuite forecasts 2010 revenues of $180-185 million or growth of 8% over 2009, accompanied by further sales into the mid-market. On the flip side, there is a planned shifting of resources to the higher end of the market which will likely leave income relatively flat. “We are putting a lot more resource on the installed base…to help them understand the value they can get from parts of the suite they may not be using,” said Zach Nelson, NetSuite’s CEO.

While NetSuite acknowledged wasn’t immune to the economic environment, the company was able to replace low end value business with higher value OneWorld sales. That was accompanied by increases in support and services revenue.

Nelson believes the mid-market on-demand ERP market will be dominated by NetSuite, SAP and Microsoft. As night follows day, Nelson took the now customary swipe at SAP, referring to the shoot out with SAP. He also took a pop at Microsoft. On the channel, Nelson added “The channel will bite the (cloud) bullet or go out of business.” Today, the channel is doing very little cloud related business but Nelson believes there will be significant growth in the coming year. However, he acknowledged that as yet, it is not clear which emerging channel business model or models will be dominant.

Coincidentally, NetSuite announced its largest SAP replacement, RedBuilt, an engineering wood products business. From the release: “NetSuite allows RedBuilt to avoid $275,000 in annual salary costs for SAP and database administration, as well as costly ongoing server maintenance charges.” While this sounds spectacular, RedBuilt was under the gun to do something about its ERP environment following it becoming independent from another group. This is not unusual.

There are many companies that, in the past, have had SAP foisted upon them as a result of central IT policies. Often, as in this case, the fit was not so good and whenever there is an opportunity to replace, it happens. In the past, replacements often went to a Microsoft or Infor solution. On this occasion, NetSuite not only replaced back office ERP, it also replaced PeopleSoft  payroll and expense reporting. That puts something of a stake in the ground and gives NetSuite a solid reference point for multiple vendor replacement in the short term.

As and when SAP gets Business ByDesign into volume production, that effective 100% replacement will become a much more competitive space. That may sound strange given the pain which leads to such replacements. However, SAP’s brand power cannot be under-estimated in any market in which it plays.

February 4th, 2010

Oracle: let's all play fair

Posted by Dennis Howlett @ 6:30 am

Categories: Uncategorized

Tags: Oracle Corp., Vinnie Mirchandani, Rodrigo, E-mail, Business Ethics, Policies And Procedures, Online Communications, Leadership, Management, Human Resources

Yesterday evening, Vinnie Mirchandani, Frank Scavo and I had an email exchange about an interesting ‘incident.’ Responding to this post from Vinnie about Rimini Street and its offering for SAP customers, ‘Rodrigo’ said:

Vinnie: Why you have not mentioned a single word about the lawsuit that Oracle filed against Rimini Street? Suddenly you decided to mute about this topic that you have always commented on promptly. Regards

The minute you see a comment like that you just know there’s a rat somewhere. Vinnie’s response:

Rodrigo or whoever you really are - I did post promptly see below.

http://dealarchitect.typepad.com/deal_architect/2010/01/why-the-software-industry-needs-a-j1962.html

I am waiting from Rimini’s legal response to report more.

And btw, I also defended Charles when others were crucifying him -

http://dealarchitect.typepad.com/deal_architect/2010/01/my-friend-charles.html

and to close the loop I also warned customers what is coming next with Oracle’s expanded vision with Sun

http://dealarchitect.typepad.com/deal_architect/2010/01/oracles-new-deal.html

so, yes, I will continue to call it as I see it. Tough, but fair.

I hope you join the conversation - openly.

BTW. I checked the IP address you posted from. It is from Oracle. At least have the decency to use your real name. Usually, I don’t allow anonymous commands, but since you used a false email also, this is the only way I can communicate with you.

It is not without reason that Oracle is regarded by some as one of the toughest, if not the toughest player in the enterprise software market. But it’s coming to something when not only do they pour millions of dollars into the coffers of pliant analysts in an effort to ‘influence’ market perceptions. Or more recently engage lawyers as their prime competitive defense strategy. It now seems they have employees too cowardly to openly express an opinion but willing nonetheless to bait those of us who comment on such matters. Perhaps I’m being unfair on the last one. Maybe there is an ethics clause along the lines of Google’s ‘Do No Evil’ mantra in employee contracts. If there is then someone from Oracle will surely let me know.

Frank was a lot more sanguine. He opined that: “It could be some low level flak in AR, or even a grunt in some obscure services group or something. Doesn’t mean it is necessarily a concerted effort by Oracle to try to promote coverage of the lawsuit. If it were, I would expect a more “professional” effort, with a full court press to multiple bloggers.

It was a ham fisted effort given that Vinnie emailed me an image that shows Rodrigo attempted to post pretty much the same comment twice. Or that Vinnie could easily track down said person’s location. Perhaps he (or she) was getting a tad impatient. Maybe Rodrigo couldn’t escape Redwood towers to find a Starbucks with free wifi? But then I’ve come to expect such things. Only last week joeblow345@hotmail.com (that’s not the address but just to give you an idea) sent me an email looking for SAP specific competitive market intelligence. Sure dude - have it all (not)! There’s plenty more from that locker room.

The only burning question that remains is whether Larry Ellison, Oracle’s CEO will hunt down Rodrigo and give him (or her) a bonus for their influencer efforts.

The racing certainty is neither Vinnie nor I expect to be on Larry’s Christmas card list.

February 3rd, 2010

NetSuite to crack the cloud channel?

Posted by Dennis Howlett @ 10:37 am

Categories: Enterprise applications

Tags: PaaS, NetSuite Inc., Channel Announcement, Cloud Computing, Software As A Service (SaaS), Emerging Technologies, Dennis Howlett

In what otherwise might be regarded as an innocuous announcement, NetSuite has entered into a partnership with Hein & Associates. It means Hein’s “professional consultants will deliver sophisticated, vertically focused solutions for needs ranging from tax and financial reporting to growth plan development.” So what you might think?

Channel announcements are ten a penny but what makes this important is that NetSuite appears to be getting closer to cracking the channel code for SaaS vendors. Traditionally, SaaS has been viewed as channel unfriendly. A lack of big margins compared to traditional on-premise solution vendors combined with incumbent inertia play into that. Instead, we’ve seen the rise of so-called ‘platform as a service’ or PaaS as an alternative way to reach the market with a direct appeal to developers rather than distributors. Examples include Intuit and Salesforce.com.

Earlier in the day I was in conversation with Intacct executives where distribution was one of the agenda items. Their marquee relationship is with AICPA where they say there are more than 1,000 inquiries in the pipeline and that keeping up with demand is hard work. And we’re in a recession?

The fact is that despite the recession, most SaaS companies I speak with are growing nicely, albeit from relatively small installed bases. Most are going it alone rather than investing in traditional channel activities. However, it seems to me that if they are to safeguard their future, then capturing the hearts and minds of the many thousands of channel VARs is going to be critical.

Intacct talks about the vast opportunity to hit the ‘white space’ between QuickBooks and whatever the next solution might be preferred. I see that as a common aspiration among vendors. The perception is that the market is so large there is enough to fuel growth for years to come. I agree. But it won’t come without making channel investments of the kind NetSuite announced today. It is bound to lead to channel disruption but it will be end users who benefit from cloud economics, agility and a new focus on vertical market requirements. The question remains whether it will also lead to consolidation among channel players in the volume land grab required to compensate for declining revenue and thinner margins. Or maybe the channel erodes and PaaS becomes the dominant distribution model? Thoughts?

February 1st, 2010

Nine common SaaS marketing mistakes

Posted by Dennis Howlett @ 8:38 am

Categories: saas

Tags: Software-as-a-service, Third Party, Marketing Research, Software As A Service (SaaS), Marketing, Emerging Technologies, Dennis Howlett

This is a bit of a cross post from my personal weblog so forgive the apparent laziness, but there is method in the Monday madness.

Along with several of my colleagues, I’m a bit of a software-as-a-service (SAAS) fan. I see it holding distinct value in many markets and if much of the current tech writing is anything to go by, the world of on-premise is all but over. That’s a massive overstatement but even so, the SAAS vendors would have us believe the on-premise world as we know it is being swept aside. Grand statements but with the ring of truth in at least some segments of the IT market.

Again and with colleagues in mind, I find it distressing that SAAS vendors are so often on the back foot about security, uptime and so on. It’s all a part of their marketing which sometimes falls woefully short and leaves them open the the relentless FUD of the incumbents. Perhaps the SAAS vendors would do better if they could avoid these nine errors I found today as I started to compile a wiki of SAAS apps that are making their presence felt in at least one market:

1. No contact phone no – OK, so the phone is a bit outdated but we do business with people, preferably those with whom we can speak
2. No Twitter account reference – maybe not so important to you but it is to those who comment on your stuff
3. Lack of clear pricing information or in some cases any pricing information – this is de rigeur in today’s market. Instant #fail
4. Links to glitzy win story at third parties but no link to the third party itself – doh!!
5. No links to third party partners who might be sources of business – you can have as many partners as you like but if we don’t know who they are then what possible traction do you expect to get for your hard spent marketing money?
6. No links to third party reference stories written by third parties – these are gold. If you’ve got them, flaunt them.
7. Providing video that can’t be embedded anywhere – not much good if a high traffic site wants to show off some of your stuff
8. Lack of information about key markets – if we don’t know who you want to sell to, how do you expect people to know your value proposition?
9. No information on the management team or when founded – OK, so you might have been a rocket scientist for NASA or successfully launched a clutch of start ups. But if I don’t even know your name then what can I possibly conclude about you or your credentials?

Frank Scavo tweeted that these problems are not unique and he is absolutely right. But from what I’ve seen, one of the defining aspects of the new providers is their claimed obsession with the customer. Almost all the above points (except likely no. 2/7) have something to do with matters that impact the customer, either at the evaluation stage or further down the track. They represent the sort of information buyers will want to see on standard evaluation check lists.

I’m not going to point the finger at individuals because in reviewing some 60 vendors/service providers, I saw at least a clutch of these problems occurring time and again. Far be it of me to tell any vendor what they should be doing, but as I said in the originating post: much of this is Marketing 101. It’s the sort of thing you learn in the first semester at business school

In other circumstances I might say ‘up yer game.’ On this occasion I’d prefer ‘get in the game.’

January 25th, 2010

Sage launches X3 v6 but to barely a cloud in the sky

Posted by Dennis Howlett @ 8:59 am

Categories: Enterprise applications

Tags: Software-as-a-service, Solution, Sage, Software As A Service (SaaS), Managed Hosting, Cloud Computing, Research & Development, Emerging Technologies, Business Operations, Dennis Howlett

Last week, Sage launched X3 v.6, its mid-market ERP solution. For those that are unfamiliar with X3, it is the acquired Adonix solution that has since been re-engineered and re-branded.

Sage is hoping that it can break out of its French country speaking enclave with a solution that addresses the needs of mid-market companies requiring a product that is readily customizable, easy to use and which can benefit from some web services. It has for instance partnered with NetVibes to offer a drag and drop portal style dashboard that allows drilling directly into X3 data. I would have been more impressed if the company had partnered with Google for iGoogle but that, apparently, is not on the agenda, despite the two companies have a pre-existing relationship.

What is truly surprising is that Sage claims it doesn’t see much traction or interest for cloud based solutions, but hedging the discussion with references to ‘customer choice.’ It is surprising to me because I see demand almost daily. In a recent report Saugateck Research, said: “When fifty percent of any market indicates this level of near-term interest, consideration, and planning, the time for waiting is clearly over, and the time for software vendor action – including transitioning to SaaS / Cloud-based solutions and business models – has arrived. Our research suggests that at least 35 percent of traditional ISVs have begun transitioning to SaaS – with more than half already generating SaaS revenues / profits. By YE2014, 70 percent or more of traditional ISVs will offer Cloud-based Business solutions.”

per Saugatech Research

Seeing finance and accounting tip over the 50% barrier Saugatech references is interesting because finance has traditionally been a bastion of technology conservatism. Assuming the research is correct then I can envisage a significant take up in SaaS/cloud solutions.

In the video above, Emmanuel Obadia, Sage SVP X3 and ERP talks about provisioning for users, RIA and mashups. The implication is the company is making ready for the cloud ’should it take off’ but there is as yet no sign the company is likely to take advantage of cloud economics for its customers.

My take: Vendors like Sage are battling with acquired legacy code. They want to eek out as much revenue as possible from existing solutions but cannot convince themselves the world has changed enough for them to make the SaaS leap. In a later conversation with Paul Walker, Sage’s CEO, he said the company has committed R&D to the topic. If that’s the case then much of it is invisible. Even then I doubt whether we’re talking significant sums given Sage’s R&D spend as a percentage of revenue hovers around 10%, much of which is dedicated to back filling existing applications. The company has promised it will open the kimono on what it is doing around SaaS but that’s for the future. In the meantime, I see X3 v.6 as an opportunity missed. They could have been far more aggressive in their commitment to cloud computing but chose to partially side step the issue with an argument that is not overly convincing. Using the ‘customer choice’ argument is fair enough if you are seeing those choices being made. I don’t. As I said to Mr Walker, it is the vendor’s job to offer innovation to its customers. Cloud economics falls into that category.

Disclosure: Sage covered most of my T&E to the launch event

January 22nd, 2010

SAP: Voice of the Customer

Posted by Dennis Howlett @ 5:20 am

Categories: implementation

Tags: Voice, SAP AG, Corporate Communications, Public Relations, Sales Force Management, Sales Strategy, Marketing, Sales, Dennis Howlett

Last week I was in Belgium meeting some smaller SAP customers. The idea was to get them talking on camera about their early experiences with SAP products. This is the first one I produced. It is about ECOVER, an ecological cleaning products business with presence in 26 countries. The main talking points:

• While some benefits are visible today, the customer believes it will see more in the future as SAP supports its growth.
• The software encourages the company to think differently about how it manages inventory, based on sales forecasts rather than historical inventory levels.
• The importance of having a partner who will do much of the heavy lifting.
• The need to allocate enough time to make the project a success.
• Recognizing that while SAP delivers much of what the company needs, it isn’t perfect.

The back story to this is that SAP is wanting 2010 to be the year when its focus is clearly placed on meeting customer needs. You can’t do that unless you know what customers are thinking and are seeing an honest assessment of how projects are working out. It asked me to produce some video that would address those issues while endeavoring to discover what it is that keeps customers engaged with SAP solutions. I’m not sure I fully achieved that but then you can only play with what you’ve got.

It is an interesting exercise at many levels not least because it allows SAP the opportunity to present an unvarnished face to the world from the perspective of a videographer who unashamedly takes the buyer perspective. This is very different to the ‘canned’ PR driven material usually found on vendor websites.

The theme about time is commonplace. I see many customers who find themselves time constrained as they implement solutions. I am surprised SAP has not latched onto this with partners and tried to figure out a way of communicating to customers the need to be conservative in setting time limits. Of course, that can quickly become an excuse for laziness or cost over-runs but there has to be a practical middle ground somewhere.

More important, I’m interested in knowing what you think.

• Does this video come close to something you can trust as authentic?
• What more would you like to know?
• Do you think this style of questioning works for those considering solutions generally?

Disclosure: SAP covered my travel expenses for visiting its customers but is not remunerating me for filming or production.