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

Courtesy of Timo Elliott: http://timoelliott.com/blog/2009/10/sap-teched-vienna-09-opening-keynote-change-integration-and-innovation.html

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.

October 30th, 2009

SOMESSO: social computing meets financial services

Posted by Dennis Howlett @ 5:16 am

Categories: Social computing, Social software

Tags: Financial Service, Social Computing, Fidor, Social Networking, Online Communications, Marketing, Advertising & Promotion, Dennis Howlett

Next Monday and Tuesday I will be attending SOMESSO in Zurich. This is an event that covers the intersection between the financial services industry and social computing. According to the blurbs:

Day 1 is reserved for corporate workshops for Finance and Banking professionals (Finance Masterclass) on the topic Web 2.0 and its application to business collaboration

On Day 2 you will hear top notch keynotes and presentations from today’s leading experts at the conference.

Financial services is where I started my career and a business sector in which I have a long term interest. If financial services can find good ways to leverage social computing then that will indicate social computing in general has moved a very long way down the track towards mainstream acceptance.

It’s not unusual to see financial services organizations as early technology adopters. However, social computing carries many potential risks and can be impacted by regulatory concerns. Compound that with the mess that banking and insurance has been in the last few years and it is hardly a surprise that this area of computing has been largely ignored.

It will be interesting to hear the discussions around what can and cannot be achieved in areas like collaboration and community. The Google Wave and Gravity demo I videoed at SAP TechEd provides one example of where this ’stuff’ can go. What might social computing bring to the analysis of risk? How might collaboration close the gap and solve the problems that exist between front and back office trading operations? Is there a place for new kinds of community based banking? Fidor thinks so. How is social computing changing access to funds in parts of the world that would traditionally found it difficult to raise money? On this last point, I am looking forward to hearing more about the Kiva story. I’m expecting a fascinating learning day.

There’s still time to book for those interested in this topic.

Disclosure: I’m driving the online presence and SOMESSO is covering my travel.

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 23rd, 2009

The maintenance renewal landscape

Posted by Dennis Howlett @ 6:00 am

Categories: Uncategorized

Tags: Revenue, SAP AG, Maintenance Fee, Maintenance Revenue, Data Centers, Enterprise Resource Planning (ERP), Team Management, Operational Accounting, Storage, Hardware

A small and therefore statistically dubious quarterly CIO survey undertaken by Kash Rangan’s team at Bank of America Merrill Lynch published earlier this month makes revealing reading. On the general spending front, it should be no surprise that the survey believes CIO’s are under spending relative to plan in 2009 albeit 2010 expectations are perhaps slightly firmer. The real interest to me though was 13 pages into the report where Ranagan’s team provide an analysis of success in negotiating better maintenance prices.

I’ve extracted the numbers for Oracle and SAP as these are the two companies where we see the greatest friction between buyers and sellers. The report included data for Microsoft and VMWare.

I was particularly interested in relative success rates between the two companies. It should be no surprise that success at Oracle increased dramatically between Q1 and Q2 as Oracle’s year end is May 31st. As is well known, you always stand a better chance of getting a better deal as sales people seek to close out the year. I was slightly flummoxed by the Q1 comparison because this came after SAP’s year end and so the same pressures should not have applied. Without more data it is difficult to assess the reason or for that matter whether it is a particularly accurate reflection of reality. What is more interesting though is that these respondents appear to be getting a consistent 58-60% success rate from both companies.

That’s a surprise. The way the two companies spin their maintenance story to the street, you’d think they were paving the roads to their HQ’s in maintenance gold.

As I said at the top of this post and which BOA/ML caution, the sample is small so one can’t be certain the trends found in this data are reflective of the wider world. However, in a report from Peter Goldmacher’s team at Cowen published in September (PDF), part of which was reproduced by Vinnie Mirchandani, it was said that:

“We believe that application software vendor maintenance fees are at risk. Our research indicates that companies continue to tighten their belts around IT spending, and ERP upgrades are not a priority. This is not a macro issue that we expect to diminish as the economy strengthens. We believe ERP upgrades, the primary motivation to pay maintenance fees, are on the wane because it’s a mature market. Vendor investments in R&D are on the decline, innovation is lagging and redeployment costs are multiples of the license fee. As a result, customers are increasingly questioning the value of paying annual maintenance fees of 20% of the cost of the original license for the occasional use of technical support. We believe that as the value proposition around maintenance fees diminishes, there is significant opportunity for third party service providers to offer low cost tech support. While there are only a small number of these third party providers today, we believe that as Apps sales continue to decline, there is a significant over capacity of consultants with ERP expertise looking for opportunities to leverage their skills. We believe these dynamics will result in the creation of a number of businesses designed to chip away at the exorbitant revenues and margins associated with vendor maintenance fees.”

[my emphasis added]

On yesterday’s Enterprise Advocates webinar, we pointed out that maintenance is only one (albeit important) part of the TCO equation and that data center economics along with SI costs are equally worthy of review. However, BOA/Cowen’s analysis should give the vendors pause for thought and encourage buyers to think positively about getting more balance into their vendor relationships.

Maintenance revenue is a huge contributor to bottom line profit. Both companies know it and are anxious to protect that revenue stream. However, it is that very reliance on super profitable revenue that renders them vulnerable. I have long said that it is unsustainable as a growing line item set against mature products and mature implementations.

SAP did not pre-announce Q3 results which are due October 28th, just as TechEd Vienna is in full swing. One can only assume they’ve no nasty surprises since SAP is pretty good at breaking bad news early and that hasn’t happened this time around. That’s in sharp contrast to last year’s Q3 train wreck. That still leaves a tricky couple of months during which we’ll see whether SAP is resilient to the pressures of change. If the lively Q&A on yesterday’s webinar is anything to go by, there is plenty for both buyers and sellers to consider.

October 22nd, 2009

SAP and Siemens: kiss and make up?

Posted by Dennis Howlett @ 8:35 am

Categories: Uncategorized

Tags: Siemens AG, SAP AG, Purchasing & Procurement, Business Operations, Dennis Howlett

The other week news broke that Siemens planned to can its estimated €40 million plus annual maintenance agreement with SAP. What a difference a few weeks makes. According to a press release issued by SAP:

SAP…today announced that Siemens AG, a global leader in electronics and electrical engineering, has expanded its strategic relationship with SAP through its selection of the SAP® Supplier Relationship Management (SAP SRM) application for Siemens’ worldwide e-procurement operations. Also announced was the completion of Siemens’ contract renewal for SAP maintenance support services for all SAP solutions based on SAP’s maintenance standards for large customers for a duration of three years.

[my emphasis added]

Colleague Vinnie Mirchandani was on the case with his old Gartner buddy Helmuth Guembel:

He [Helmuth] hears Siemens got the deal at under euro 20 million a year compared to the euro 35 million they were paying earlier. They also got perks such as MaxAttention, extended maintenance on some Siemens specific  enhancements thrown in and also got some shelfware off maintenance.

SAP will, of course, publicly deny this and Siemens will, of course, publicly not confirm it. And they are very justified in not sharing the gory details.

SAP cannot be happy seeing these issues raked over in public. I already know Siemens does not intend for this to become a media issue and SAP doesn’t want to say much beyond the press release although they question whether Helmuth got it right. That’s completely understandable if frustrating. As Vinnie says: ‘he said, she said.’

Fact of the matter remains that those of us who support the buyer in the buy/sell relationship hear about discontent day in and day out. The language at times is anything but ‘family friendly.’ RiminiStreet and other third party maintenance providers would not have a reason to exist if the main vendors were more flexible in their arrangements. Whatever really happened, Siemens must have got something substantial out of the negotiations otherwise SAP would not have gone to the trouble of making the point. That should send a strong signal to buyers: think before you sign up for another 1,3,5 year deal.

At 9am PT today, Vinnie, Ray Wang, Frank Scavo and myself will be sharing a webinar session discussing SAP maintenance TCO. It won’t be easy for SAP to hear what we have to say but then this is only one company within the enterprise arena. We are an equal opportunity flamethrower so in future sessions we will be addressing similar issues around Oracle, Infor and so on.

October 20th, 2009

Gartner in the dock over Magic Quadrant

Posted by Dennis Howlett @ 9:00 am

Categories: Uncategorized

Tags: Quadrant, Analyst, Vendor, Gartner Inc., Vinnie, MQ, Blogging, Operational Accounting, Marketing Research, Internet

Friday October 23rd will see Gartner argue a motion to dismiss a complaint by ZL Technologies Inc about the famed Gartner Magic Quadrant. According to court papers, Gartner will argue to dismiss based on First Amendment rights citing that the Magic Quadrant is not meant to represent statements of fact but is based on pure opinion.

I’m not qualified to argue the legal ins and out of the case and so if anything I say here veers in that direction then you can safely ignore it. However, ZL’s plaint is not really about constitutional rights but about what it sees as an abuse of market power.

In a statement sent to me, ZL says of its original plaint:

ZL claims that Gartner’s use of their proprietary “Magic Quadrant” is misleading and favors large vendors with large sales and marketing budgets over smaller innovators such as ZL that have developed higher performing products. The complaint alleges: defamation; trade libel; false advertising; unfair competition; and negligent interference with prospective economic advantage.

This is a topic that from time to time gets aired by those who believe Gartner (and other industry analysts) are in what some regard as an incestuous ‘pay-to-play’ arrangement with vendors. Earlier in the month, Gartner analyst Tom Bittman hit out at those who argue ‘pay to play:’

As an analyst at Gartner, I can’t describe how angry I get when I read bloggers spouting as “fact” their opinion that I and my teammates have no integrity. That we can be “bought.”

In my 14+ years at Gartner, I have never, ever allowed a vendor to influence my opinion with anything but facts. Period. They have certainly tried to influence me with non-facts. I can say this definitively – it has never worked.

I don’t think there is a single vendor that I have dealt with who has not been very angry with me at some point. Tough. I’ve been yelled at by many IT executives – including the CEOs of Microsoft and HP, and many other firms. I can’t think of one of those cases when I changed my analysis one bit. I can’t speak for other firms, but at Gartner, getting yelled at by a CEO is a badge of honor. Being proven right as time goes on – priceless.

I certainly spend time helping vendors with their strategies and their marketing messages – and I enjoy doing it. Frankly, the ones who yell at us the most seem to respect our opinion the most. We can spot holes a mile away, and engaged early enough, we can help vendors fill those holes with real product offerings – that not only help the vendors, but help our end user clients. And my primary business is helping end users.

The post attracted 33 comments including several from Vinnie Mirchandani and myself. Vinnie argues pretty much the same thing that ZL is saying (you need to check the post as there are no comment links): Read the rest of this entry »

October 19th, 2009

Future ERP

Posted by Dennis Howlett @ 7:00 am

Categories: Uncategorized

Tags: Innovation, Salesforce.com Inc., Financial, SAP AG, ERP, Brian Sommer, Brian, S-curve, Cloud Infrastructure, BRP

Brian Sommer’s provocative post that juxtaposes SAP’s technology thinking around the ‘old’ and ‘new’ worlds provides insights into something SAP was talking about last year - the two speed world of ERP. At the back end there is still plenty to do, hardening applications, winkling out recurring bugs and fine tuning. At the edges we see an explosion of business generated data that somehow needs drawing into the ERP orbit. Brian concludes that:

We need visionary ERP vendors who will take the fresh piece of paper and envision what a new generation of software product should look like. The technology maturity curve for ERP solutions has run its course. The S-curve has hit its apex and has flattened. It’s time for a new kind of product. It’s time for some real innovation and not more of this innovation at the margins.

It’s a point well made when you contrast that to Paul Greenberg’s head scratching around FinancialForce.com:

I’m not clear on what market they are going after yet.  If its the same market as  NetSuite goes after - the midmarket to upper midmarket, with some bleeding into the larger enterprises, that means that Financialforce is going to put itself squarely in the wheelhouse of SAP also - and Oracle for that matter though SAP probably has more to worry about. But it doesn’t stop there.  On the lower end, Financialforce might be competing with financial software juggernaut Sage - which as you may know is much larger in the backend systems market then they are in CRM - not that they’re slouches in CRM either. But the bulk of their nearly 6 million customers is ACT! and their varying financial packages.  Plus we got Intuit in the mix here too - who are arguably the small business leader - period. Then there’s Microsoft…. In other words, this is not going to be easy for this new venture

A more traditionalist view you could not wish to see reinforced to some extent by Dave Turner of FinancialForce.com in his remarks about visibility and market awareness. (see video above) One view of Paul’s assessment is that it reflects the relative immaturity of enterprise class cloud offerings and their need to play functional catch up before the cloud infrastructure can be used to bring the kinds of innovation of which Brian speaks. Assuming that is where the innovations will occur.

Over at Enterprise Advocates, I argue that the cloud computing debate I witnessed in London suggests that we’re far from the starting line of Brian’s nascent vision. In that article, I quote colleague Richard Messik who said:

The subject was simple enough – what are the business benefits of Cloud Computing. However, left to the main vendors that were speaking, the subject could just as easily been “Quantum physics for beginners”. There were so many acronyms and jargon speak used that to the uninitiated the topic was the most complicated issue.

And this, surely, is the point. Cloud Computing is on the cusp of something major, I am sure, and in a few years time most of us will probably be amazed that we ever used anything else. But the majority of potential users are not technically minded and are not really that interested in what is under the bonnet [hood]. They want to get in the car and drive knowing that it is going to get them from A to B safely.

In other words, if cloud computing is to deliver then business needs to know in simple terms that baseline functionality and benefits are in place. We already know the cloud computing economic argument is largely settled. In talking to Dave Turner, he said that speed to functionality is driving significant interest in large enterprises looking for rapid deployment and that the bare subscription price of cloud computing applications as a comparison to on-premise is no longer a significant discussion topic. But again, that only gets you to the starting point. Read the rest of this entry »

October 16th, 2009

Why I moved to iPhone

Posted by Dennis Howlett @ 8:40 am

Categories: Enterprise applications

Tags: Apple iPhone, Phone, Smart Phones, Consumer Electronics, Personal Technology, Dennis Howlett

The other day I was griping about the non-availability of the iPhone in Spain. I solved that in the UK by buying a pay as you go model and then jailbreaking it. Why would I do that when there are perfectly good Blackberry’s or Android phones?

A couple of years back, Robert Scoble opined that the iPhone was the way to go for mobile devices. At the time I felt it was a distorted view of the world, based, as I saw it, on the Silicon Valley culture of Mac everywhere. In the wider world Mac is far from everywhere but iPhone is a different story. Om Malik says:

Our favorite technology analyst, Ashok Kumar, in a note to his clients this morning points out that shipments of the iPhone in September exceeded Wall Street estimates of 7 million units by 25-30 percent. According to Kumar, the iPhone now accounts for 15 percent of the smartphone segment.

That’s incredible progress given its relatively short time in the market.

Blackberry could have been a reasonable choice but then I’m not sure I want a device where many of the useful apps carry a significant premium. I also find I’m making less and less use of email and even then I’m on Gmail. As we saw recently, Google is making steady progress in the enterprise. Rentokil announced it is moving up to 35,000 users to GAPE. More apps are going the web route so that means I need a decent browser. As far as I can tell, the iPhone browser beats everything else hands down plus I can consolidate devices because the iPhone is really an iPod with a phone.

I could have gone for an Android phone and saved a good chunk of change in the process. But then the choice of Android phones out there is limited (at least to me) as is the number of applications. While the HTC Magic looked a contender - James Governor I know loves it - the phone quality is not up to snuff and the camera is poorly rated. But what really swung it for me towards iPhone is that I can get all the applications I need on a single device.

In a back channel conversation with other ZDNet’ers the old chestnuts of being tied to AT&T (or O2 in the UK, Telefonica in Spain etc) came up but as we know, that exclusivity is ending soon. The issue of Apple’s policies regarding what applications can go onto their distribution network was also raised but then what geek doesn’t want to operate in a totally free environment? Even so, when I see so many apps in the AppStore, including useful business applications, then it all starts to make sense. At least to me.

I may grow to regret my decision but then having been a perfectly happy iPod Touch user the last several years, I can’t see why I should end up regretful. As always in these things, time will tell.

October 15th, 2009

Oracle Fusion - a damp squib

Posted by Dennis Howlett @ 3:16 pm

Categories: Uncategorized

Tags: Oracle Corp., Larry Ellison, Jim, Revenue Recognition, Team Management, Public Relations, Operational Accounting, Strategy, Financial Services, Management

Earlier in the week I speculated that Larry Ellison, CEO Oracle would make a monster announcement about Fusion apps. I was wrong. According to Sam Diaz, it’s worse:

Ellison spent some time talking about new Fusion applications coming down the pipeline. But first, Ellison said he recognized that companies have invested in other apps - PeopleSoft, Seibel, JD Edwards and so on - and there Oracle is committed to supporting those technologies for the long-term.

That’s code for: ‘You’re paying us 22% for the pleasure - enjoy. - in case you didn’t already know.’

Parts of the analyst community have been sucking up the Fusion Kool-Aid with scant regard to whether there is value for customers. I was especially taken aback by Josh Greenbaum’s gushing thoughts.

The lid is finally off on a 12 month-old NDA for Fusion Applications, and in this case the long delay between when analysts were first shown Fusion Apps in the fall of 2008 and when we were given free hand to describe what we’ve seen now looks like a impressively smart move.

Vomitworthy…

What was smart was that, while the apps looked pretty snazzy a year ago, the go-to-market strategy wasn’t as zippy. In fact, it really didn’t exist at all. Now, in anticipation of a 2010 release date (new revenue recognition rules at Oracle have clamped down on any specifics, but you can be sure that the Fusion team would be less vague if the lawyers would let them) Oracle’s Fusion team not only showed off a well-designed set of applications: they’ve got a pretty well-designed GTM strategy as well.

Yada yada…PR…puff and fluff.

As I always say when it comes to new product: show me the money. In this case it would be nice if they showed us some code. Per Sam Diaz:

Ellison clearly was excited about Fusion apps and brought some folks on stage to provide a demo - but, by now, the crowd has grown pretty thin.

It’s THAT exciting??

I got pretty uppity about this in the Twitterstream remarking to analyst David Dobrin: ‘tell me when happy customers  are running it.’ His response was a good hearted: ‘Well, part of our job is to figure out if happy customers will ensue.’ Right -except that’s what I describe as a retarded model that almost always plays to the vendor first and the buyer second. David graciously said: ‘There’s a lot of truth in that.’

In the back channel I was batting the same issue around with Jim Holincheck from Gartner. Jim is one of the ‘good guys’ who plays fair. He said: ‘I agree that much less detail discussed than could have or should have been about Fusion Apps.’ In a later message Jim referred me to his comments from last year where he said:

I could not help thinking during these sessions of a software joke told to me by Brian Sommer a long ago.  It goes like this:

Think about the answer to two questions: ”Can I see it?”  and “Does it exist”?

• If I can see it and it does exist, then it is Real.
• If I can see it, but it does not exist, then it is Virtual.
• If I cannot see it, but it does exist, then it is Transparent
• If cannot see it and it does not exist, then it is in the Next Release

So, let’s ask these questions about Fusion Applications.  Can I see it?  The answer is yes, sort of.

More seriously though - millions of dev dollars later is Oracle still stuck? In response to my goading, Jim updated his position as follows:

There is a firmer delivery date (sometime in 2010).  We also know that some customers have been testing the solution.  However, testing parts of the solution is not the same as implementing it.  As I said last year, early customers that implement and go live are the real litmus test for “does it exist”.  So, does the first release of the full suite of Fusion Applications exist?  Not yet.  Will it exist in 2010?  I think it will.

I suppose that’s firm as in jello. In the meantime, my partner in enterprise apps grime Frank Scavo had this to say:

Those counting on Fusion to be a comprehensive successor for Oracle’s existing products, however, will be disappointed. According to Ellison, when Fusion first reaches general availability, it will not provide the breadth of functionality currently available in Oracle’s existing portfolio. This has been self-evident, but now Oracle has made it official.

If ever there was a case of caveat emptor - this is it.