November 15th, 2009

Before you do that BPO, Audit, Consulting or other services deal, check out these costs

Posted by Brian Sommer @ 8:25 pm

Categories: Contracting, ERP, GRC - Governance Risk Compliance, Implementing Technology, Notable Research, Outsourcing, PSA - Professional Services Automation, Professional Services, Selling Professional Services, Service Providers, Sourcing, The Application Software Buyer, expense management, expense reporting

Tags: Rental Car, Hotel, Audit, BPO, Consulting, Business Services, Business Process Outsourcing (BPO), CAD, It Operations, Software

Is your services partner wisely spending its/your money????

I’ve spent a lot of money on travel. Over one 10-year period, I went through $2.5 million just on airline travel alone. I think I understand travel well.

I always look through the annual Business Travel News top 100 travel spending report. Companies are ranked by the amount of air travel spend they incur annually in the U.S.

In reviewing the latest issue, I was pleased to see several systems integrators, software companies, hardware vendors and other technology related firms have instituted some great practices in recent years. I even compared this year’s report with data in a prior year (see graphic).

Where the Money Goes

Now, some firms are spending more on air travel and total T&E (travel and entertainment). Why? Well, last year’s fuel costs drove air fares up demonstrably and that got reflected in higher travel costs. Some firms grew organically and some took on substantial acquisitions (e.g., SAP buying Business Objects, HP buying EDS, etc.). Growth should trigger higher travel costs as more headcount usually translates to more travel cost.

But, buyers of services need to look a bit deeper and question potential service providers as to the measures they are taking to ensure that the money they spend on travel and T&E is worthwhile and cost-effective.

Here are some areas to probe:
- Are training trips booked with 21-day advance purchase fares?
- Do employees use the lesser of the integrator or the client’s negotiated rates with carriers, hotels, rental car companies, etc.?
- Do employees car pool/share rental cars on long-term out of town engagements?
- Do employees stay in apartments or extended stay facilities in lieu of hotels for long-term engagements?
- Do employees use 7-day advance (or longer) fares for internal meetings?
- Are internal meetings scheduled for days when employees would normally be in their home office location (e.g., Friday)?
- Does the integrator/software firm aggregate travel spend globally to maximize its pricing power?
- Do the integrators/software firms utilize closer-in personnel so as to avoid air travel altogether?
- What percentage of trips are booked for travel that will not be chargeable/billable? How can this number be reduced further?
- What class of travel is being booked for short-haul, long-haul and international travel?
- Are service workers allowed to choose the carrier? How can a client be assured that the lowest fares are being selected?
- Does the service firm discipline employees who violate travel policies? Does the client have to pay for these excesses?

Beyond airfare, the size of the T&E numbers is what really gets my attention. Admittedly, I’m surprised when my rental car bill or my hotel bill exceeds my airfare. It happens more frequently these days as rental car rates have shot up in many markets. You’ll really see it when you stay more than a day in a given market (I rarely get that luxury).

I’ve seen service people charge in some whoppers on their time reports. Usually, they get nailed for it. You know what I’m talking about. Staffers taking clients out for mega-expensive dinners and charging it in. Lazy staff who don’t book travel until the last second. Staffers who insist on staying in resort hotels, use valet parking, etc. I have a name for those folks: ex-employees.

I once had a boss who insisted on only staying in the absolute finest hotels and dining in restaurants that only the most well-heeled gourmet could afford. And, of course, he only flew first class.This person was an empirious cad without empathy. This ultimate narcissist was hell to work for and a major expense control problem for his clients.

I spend a lot of time in software and service negotiations outlining the rules of the road, so to speak, on how service providers will operate when engaged with my clients. Trust me, if you don’t have these conversations, you will lose a lot of money.

So, what are the most egregious T&E sins of service providers you’ve seen?

October 20th, 2009

Demand this from software vendors

Posted by Brian Sommer @ 4:49 pm

Categories: Analytics - Performance Management, ERP, Financial Software, Future of Application Software, Notable Research, SaaS and Beyond, Selling & Marketing Software, Software Vendors, The Applications Market, software. applications

Tags: Vendor, Customer, Sales Strategy, Tools & Techniques, Software As A Service (SaaS), Sales Force Management, Enterprise Software, Sales, Management, Emerging Technologies

I was getting a briefing last week from a software executive. We got to a point in the conversation where the discussion was focusing on existing products. I moved the conversation to a different space, though. If you’re getting a pitch from a vendor, you should move the conversation, too!

Still Market Relevant - When the vendor dialogue is all about existing customers buying more of the old product line, it’s not all that intriguing. Yes, it tells me that the vendor is still relevant to its customer base but these sales are mostly in-fill sales. You remember these sales, don’t you? They’re like those customers who had previously bought most of the ERP suite but now need the CRM (customer relationship management) modules.

Gaining Market Share - When a vendor is getting all-new customers for its existing products, then that’s a bit more newsworthy. This means that the products are appealing to new buyers and these just aren’t the existing customers. That means the products are still fresh and delivering competitive advantage. Alternatively, this market momentum could also signal that the software vendor has a great sales and marketing organization or is buying its way into ever greater market share. Wall Street likes this quadrant but a vendor can’t stay here forever as its products will age and lose their market appeal or luster.

Re-enlistments – These are the customers who are re-affirming their commitment to the vendor. They are choosing to upgrade their applications to the all-new application suite, new platform, etc. These firms are making a major financial commitment and their decision to do so is not trivial. Re-enlistment scenarios often occur with major technology platform changes (e.g., going from client-server architecture to Web 2.0 applications).

Hot Space - The top right quadrant is the really high-interest zone. This is where all-new products are attracting all-new customers. This stuff is red-hot! It’s the kind of software that makes the customers of other software vendors abandon their old products and switch to the new stuff. When you think of this quadrant, don’t just think of replacement technologies. Think about the products you bought for the first time. Think about your first cell phone, spreadsheet program, MP3 player, etc.

I want to hear more Hot Space stories. They are undoubtedly more interesting than the other stories and they are really rare. If a vendor has been around a while and has 1000 customers, probably 900 are in the Still Market Relevant quadrant. The rest are scattered across the three remaining quadrants with fewer than a dozen or two in the Hot Space quadrant.

Over the last few years, the numbers of customers and stories in the Hot Space has been in decline and, worse, as a percentage of total customers, experiencing a very real decline.

Innovation in ERP, for example, has been so bogged down in technical infrastructure changes (e.g., middleware/SOA platform changes) and business model changes (e.g., from on-premise to SaaS (software as a service)) that real value-adding, business-relevant improvements to products are far and few between. Look at the ‘amazing’ value that business analytics hasn’t brought in to date. Analytic applications are still crunching internal transaction data. The lack of imagination and innovation here is an embarrassment to the technology sector.

When a software vendor comes knocking on your firm’s door, ask them to segment their customer base along the lines of the four-quadrant picture above. Then, only ask them to describe the value derived and experience of these all-new customers buying all-new solutions. If they struggle with this exercise, this vendor is selling you yesterday’s technology. Your users will love this old-time solution the vendor is pitching as much as they’d want to buy a newspaper from last week. Even if the vendor has some stories in this quadrant, these may actually reference old technology. Watch out for this. If it doesn’t have sizzle, differentiation and freshness, then it’s old news. Don’t reward vendors for re-packaging an old product in new wrapping. Make them innovate or make them get out of the way.

** UPDATE **
I read the comments many of you post to these blogs. Thanks.
A reader of this post raised a couple of points I’d like to clarify. Were a vendor to approach your firm about an existing product, one that has been on the market for a while, am I suggesting you not consider it? No, I’m not but I would caution you that the product you could be considering may be a bit long in the tooth. I wouldn’t pay too much for old-tech. But also remember that the vendor that has nothing in the top right quadrant is also a vendor with a limited future. This is an area where the vendor’s future sales momentum will occur. Without something to entice new customers into the fold, this firm will be lucky to make in-fill sales to existing customers. So, if you need something now, any product in any quadrant will do. But, if you want a product with a future, find a vendor who is building for the future.

October 16th, 2009

Two Views of the Software Market

Posted by Brian Sommer @ 11:07 am

Categories: Current Affairs, ERP, Future of Application Software, Notable Research, Software Vendors, The Applications Market, software. applications

Tags: ERP, Vishal Sikka, S-curve, Enterprise Resource Planning (ERP), Enterprise Software, Software, Brian Sommer

A Bridge Too Far?

In a blogger briefing this week at SAP’s TechEd, SAP CTO, Vishal Sikka, drew a chart of the application software market and what new areas of technology are of interest to the firm. I’ve tried to reproduce his freehand drawing into the following PowerPoint rendering. I believe I have captured the essence of his points but apologize in advance if I omitted some of the subtleties of his sketch.

Vishal discussed how new technologies, like social networks, are forcing ERP vendors to process new kinds of information (i.e., unstructured data that may exist in great volumes with little organization), understand the explicit and tacit insights within this data and connect it to the decision making processes of modern companies.

I agree that new kinds of information are presenting themselves to businesses. Sadly, most ERP vendors have often ignored new kinds of information and, instead, focused single-mindedly on those transactions that eventually end up in a general ledger.

Now, let’s look at the broader picture. ERP vendors are behind the eight-ball on several data fronts. Here’s my abbreviated list on this subject:

- event data – Businesses make all kinds of decisions based on external (and many internal) events that are never found in an ERP. For example, sourcing personnel make a number of decisions as to how much to buy, what to pay, etc. based on current commodity price movements. If a key commodity your firm needs suddenly jumped up in price, would your ERP system notify a buyer? I doubt it. Other events are triggered by legislators, competitors, regulators, the press, bloggers, employees, etc. Does your ERP monitor and assess the changing market share and business fortunes of your competitors or is it still trying to perfect last year’s financial statements?

- the context behind data – Can your ERP system scan non-structured data, like blog posts, and determine whether your firm (or a competitor) has suddenly got a product reliability or customer service issue? I doubt it. Most ERP’s are still stymied with problems like how to reconcile the company’s headcount in the HR module with the headcount used in the Budgeting module or the headcount figures in the company’s EEO reports. If an ERP can’t understand structured, accounting data, how can it deal (credibly) with data from less structured sources or data from external sources?

- data for non-traditional users – Your ERP probably makes a bunch of accountants, clerks, data entry people, outsourcers and systems integrators happy. But what does it really do for the significant number of other data-hungry people who are constituents of your firm? Does your ERP have dedicated applications for your board of directors? Your suppliers? Your customers? Different regulatory agencies? Your external auditors? The activist shareholders who are watching your management team? ERP products were designed to satisfy an internal, mostly accounting/Finance user group. While lots of vendors tout ‘analytics’, ‘business intelligence’ or ‘data warehouses’ to address some of these new constituencies, these are mostly bolt-on reporting tools that simply re-work existing, internal transaction data. I really doubt any ERP was designed as ‘business operating system’. Recently, I saw a picture of a horse-drawn cart where the owner had so overloaded the cart that it tipped backward and lifted the horse off the ground. That’s ERP today – an overloaded horse cart. We need vendors who will take a fresh perspective at the totality of a business and its information needs. The incremental approaches of late may work for a while but if left unchecked, create a poor long-term solution.

I got the impression that SAP’s leaders are looking at many of the right kinds of data and business questions but their self-imposed need to do so within the context of keeping everything in the original ERP wrapper may be limiting their vision and potential.

Their desire to push everything into the same technology, same business construct, etc. may not be correct. It feels like they are pushing, a la Montgomery’s Operation Market Garden, for a bridge too far. I’m unconvinced that a solution designed for manufacturers and designed to report, process and store internal transaction data is necessarily the best platform for the businesses of today and tomorrow.

Don’t believe me? I give you a couple of things to ponder. When most ERP systems were designed, technology was heavily constrained. Memory, throughput, processor speed, disk storage, etc. were all in short supply and expensive. ERP designers created systems that worked within these constraints. They intentionally constrained their products to have less than a whole, world view of business. Their products cherry-picked a few key computationally intensive or labor intensive internal tasks and automated them. Over time, as computing became less constrained, more function points and process components were automated. But, at its core, these solutions are still constrained as they were designed as internal systems, using internal transaction data that creates backward looking reporting data.

ERP vendors could create better, more relevant solutions now if they’d just envision a technology world without constraints. When you create systems assuming you have unlimited storage, terabytes of in-core memory, etc., you realize that business information doesn’t have to be internally generated data only. You realize that work is not just comprised of internal work processes (just watch how a sourcing professional does their job – they spend much of their time checking prices of suppliers, analyzing the financial statements of suppliers, etc. – they spend just minutes a week actually keying in a purchase order) but a mix of internal and externally facing tasks. When you realize that the old systems’ views of processes were artificially constrained and limited to an internal view of the world, then you understand that the old data model for ERP is just obsolete, irrelevant and desperately in need of a new perspective.

Data isn’t the only sticking point. ERP systems were designed for internal users. They weren’t created to serve other constituents like board members, activist shareholders, customers, regulators, suppliers, external auditors, etc. Many corporate constituents were never part of the original data model of these products and bolt-on efforts to mollify/pacify these non-traditional users are ‘limited’ by design.

Bolting data from social networks, group-think collaborations, web crawling activities, etc. into ERP solutions may tax the ERP data model to the breaking point. Even if these solutions have the technical elasticity to support these new data types, the basic limitations with the inwardly focused old ideas of business, business information, etc. will remain within old ERP solutions. The old ERP design is ready to be replaced with one more relevant for today’s firms.

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.

Vishal’s vision looks good and SAP has the R&D resources to make big things happen. But will we see a vendor brave enough to re-imagine what ERP should really be? Or will we see more stuff bolted to the exterior of the old ERP and business thinking of yesteryear? I’ll keep hoping for the former.

October 5th, 2009

The troubling thoughts re: outsourcing

Posted by Brian Sommer @ 4:35 pm

Categories: Contracting, Current Affairs, India & Services, Mergers & Acquisitions, Notable Research, Outsourcing, Professional Services, SaaS and Beyond, Selling Professional Services, Service Providers, Think About IT, deal

Tags: Solution, BPO, Outsourcing Company, Customer, BPO Deal, Business Process Outsourcing (BPO), Outsourcing, It Services, Managed Hosting, It Operations

Watch this space for future problems!

There’s a lot going on in the outsourcing world lately. Things like:

- Perot Data Systems being acquired by Dell

- ACS getting bought by Xerox

Add to these deals, consider that:

- Accenture is providing guidance suggesting zero growth

- Accenture cutting back its executive ranks

- A colleague telling me that outsourcing, traditional & BPO outsourcing, is on the way out

Let’s look at that last supposition. BPO, business process outsourcing, is built on the idea that an outsourcer can assemble a great collection of technologies, design & enable them with a specific set of business processes and deliver a step-change improvement in a customer’s business operations. Generally, BPO providers can take a customer experiencing 3rd or 4th quartile performance levels to 1st or 2nd levels and at a lower cost than the customer was able to deliver on their own.

BPO deals are tough, though. Customers fight the urge to adapt standardized processes and often end up with processes that have some best processes and some of their old bad habits (and cost structures) embedded within them.

BPO solutions have traditionally been built around older ERP solutions. They’ve been constructed with the stuff your firm was using before it went to BPO. Many use older client server software and not newer SaaS (software as a service) products. These solutions may or may not have a SOA (service oriented architecture). They may be built from the parts of several ERP and specialty software firms. Sure, the vendors are selling an outsourced process and not a technically elegant solution. But, what happens when BPO buyers are looking under the hood and see a solution that’s long in the tooth technically? Just last week, I spoke with a vendor whose firm is still selling a COBOL-based, HR Payroll product with a runtime compiler in it. Oh, did I mention it was a green-screen solution that an outsourcer is using.

There’s another issue with the traditional BPO solutions. They may not be economical for the solution providers and their customers anymore. True SaaS products can be great deals for the provider and the customer as they have multi-tenancy properties. Multi-tenant solutions permit the provider to operate one-version of the code for all customers while logically (not physically) separating each customer’s data. In contrast, many BPO solutions are not multi-tenant. Actually, they are far from it. Each customer has their own configuration and version of the code. Their data is logically and physically separated. BPO solutions in this fashion are more expensive to update and operate. Every time an old-school BPO provider needs to update their software (e.g., scheduled maintenance, new functionality, security patches, etc.), they have to do it one customer at a time. It’s expensive and, ironically, it’s inefficient.

Buyers are going to look at other solutions. Solutions that come with best practices built in and are capable of instant updating. They can be updated simultaneously for all customers. New processes can be enabled immediately. Buyers will want solutions built for cloud platforms and offered by vendors who can really get their cloud costs down. They’ll want a solution provider who uses Linux and not some proprietary operating system. They’ll want a provider who builds their own servers using commodity parts. Likewise, they’ll want a provider who offers disk storage at prices closer to the sub-$100/terabyte prices you and I pay at mass retailers and not prices form factors higher from brand name hardware vendors.

Pricing will fall for the hardware, software and services in the mostly back office enabled BPO world as these are all commodities now. SaaS will just exacerbate the drops.

Traditional outsourcing, that space where clients transfer entire data centers to a third party, may be on the way out, too. Non-core applications will go to the cloud as more and more of the hardware in a data center is scheduled for retirement. It’s a predictable route given the need to free up capital and labor. Customers will continue to move troubled, non-strategic apps to outsourcers or SaaS solutions. They will do so just as many of us trade-in our messed up old cars for newer ones. Problem is, too many traditional outsourcing solutions aren’t too different from the old cars…

Traditional outsoucing made sense when labor arbitrage was a key value driver. It isn’t anymore.

Today –
Today, outsourcers are taking calls from acquirers, private equity firms and others. They know tough times are ahead and are looking for an exit strategy for their investors. Who wins? Well, the investors in the outsourcer might see a bump in their stock price but it won’t be long lasting. Structural changes introduce turmoil in markets and we should see some here.

Gartner recently published an analysis of this space and predicts 25% of outsourcers are going to disappear.

That’s a lot of change and it will disrupt a number of firms. Just make sure yours isn’t one of them.

I’m concerned that some of the buyers of outsourcing firms may have rose-tinted glasses on and their employees (and clients of these firms) could get hurt. Let’s hope not.

August 13th, 2009

When Consultancies Feel the Pain of Recession

Posted by Brian Sommer @ 12:23 pm

Categories: Current Affairs, Notable Research, Outsourcing, Professional Services, Service Providers, Sourcing, deal

Tags: Recession, Consultancy, Phil Fersht, Managed Hosting, Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Brian Sommer

Phil Fersht, an AMR analyst and blogger, wrote yesterday about the bad year that major outsourcing consultancy TPI is having. He went further and checked with other consultancies about how they are doing. In short, he found that some firms were doing more outsourcing consulting and some less. But, he also found that many management consultancies were doing this work when they weren’t during a more robust economy. He also notes that many customers are doing outsourcing evaluation work on their own.

Let me add some additional insights re: Phil’s piece.

Just before the tech crash of 2000, a colleague of mine, Vinnie Mirchandani, and I launched a dot.com business. We saw the difficulty that companies were experiencing when trying to get economically priced services proposals from systems integrators. In 1999, labor was scarce, demand was through the roof and integrators were charging obscene billing rates. We thought the market needed a better way to contract for this work. So we launched a business to do just that.

The business’ purpose was to help large companies structure, bid and select software implementation partners. We built an exceptionally rich, robust system chock full of intellectual property (IP). That IP alone, we thought, would be the real driver of business. Well, just as the dot.com came online, the tech bust occurred.

It turns out that any IT person could wrestle a great deal from system integrator in a down economy. We found that buyers in a down economy value discounts (or low price) above all else. We found that buyers had to be more self-sufficient/self-reliant as they had less operational, discretionary budget to spend on services like ours.

Now, a decade later, I see similar actions affecting the outsourcing consulting business. Businesses will try to do more by themselves and avoid the use of consultancies. When they do use consultancies, businesses will use less expensive and smaller consultancies and bypass the big, higher-priced ones. All-new competitors will come crawling out of the woodwork to hang out their ‘outsourcing consulting’ shingle. In a down market, demand is down, competition is fierce and growing.

Phil’s observations are in-line with past down economy experiences.

Readers should also note that some consulting services often lag economic conditions. Take systems integration services as an example. When an economy starts to slow down, businesses often finish these huge capital-intensive projects instead of shelving them. As a result, systems integrators often fail to see any material impact on their business at the beginning of a recession. However, when the economy is returning to a more robust state, these same consultancies will experience a continued lack of demand for their services. Why? Some big IT projects have long ramp-up or lead times. Just because management is ready to start a new initiative doesn’t mean that systems integrators will get immediately to work on it. Companies will likely send out RFIs, RFPs, ask for a couple of presentations, negotiate terms, etc. before doing a new deal with a consultancy. That elapsed time could run into several months. Bottom line: some consultancies are the last to feel the pain of a recession and the last to feel the effects of a recovering economy.

I believe Phil is seeing this situation in action with the outsourcing consulting firms.

Not all consultancies are affected equally by a recession though. Some track exactly with the recession. Often these firms sell short duration projects. Other firms experience financial results exactly opposite the direction that the economy is moving. For example, consultancies that handle bankruptcies do well in a down market.

Good service executives know exactly how their firm will fare in changing economy. Great executives anticipate the needed changes and make sure their firms are always relevant in the current economy. Is your firm relevant (or surprised)?

June 4th, 2009

Are Services lifting the economy out of the recession?

Posted by Brian Sommer @ 10:24 am

Categories: Current Affairs, Notable Research, Selling Professional Services, Service Providers

Tags: Recession, Economy, Strategic Planning, Sales Strategy, Recruitment & Selection, Collaboration, Strategy, Management, Sales, Human Resources

The folks at TechMarketView put out a nice daily newsletter. One of today’s items contained this graphic:

It would appear that the services market in the UK has bottomed out and is starting to rebound. Click here to see the entire article.

Depending on whose statistics you trust, the U.S. economy is now approximately 70% services based. If the same uptick in services is occurring here, the economy could be poised for a comeback. Better economic news is driving rising stock prices and may be triggering the run up in the price of oil. Oil speculators are always watching for signs of rising economic activity as this drives up demand for a constrained resource.

If Services are indeed about to resurge, then Service companies need to assess their readiness to compete in the economy about to come. Do these firms:

- possess the appropriate number of personnel and skillsets needed for the new economy?
- possess the personal and business productivity tools needed to efficienty and effectively compete in this economy?
- have the appropriate recruiting mechanisms in place to find additional resources in the right markets globally?
- have the sales capabilities needed to grab their fair share of the new work to come?
- understand how buyers of services have changed over the last few years?

It’s one thing for the economy to improve. It’s an entirely different matter to be able to take advantage of this environment. Is your Service organization poised to succeed?

April 30th, 2009

Twitter Dropoff

Posted by Brian Sommer @ 2:46 pm

Categories: Current Affairs, Marketing, Notable Research, Selling & Marketing Software, Selling & Marketing Software, Software Marketing, software

Tags: Retention, Site, Twitter, Brian Sommer

Is the service sustainable? New data makes you think

The Chicago Tribune today reports some interesting statistics regarding Twitter (see: “Twitter Quitters”, 4/30/2009, by Steve Johnson). According to the story:

- 40% of users who sign up for one month will return for the next
- previously, only 20-30% of users who signed up would return for the second month

In contrast, the article cites that other sites like Facebook and MySpace have retention rates in the 50-70% range.

A poor retention rate is an expensive and limiting issue for any site. Here’s why - First, the costs required to acquire new users continues to rise. A site with great retention spends little to replace customers and only focuses on net new customers. A site with poor retention has to replace the old customers and get net new customers. These sites must work much, much harder to grow market penetration. Second, in the quest to get either replacement or net new customers, the company will exhaust the available customer base very quickly and, once exhausted, will reach the limit of its growth.

If Twitter’s numbers are indeed akin to those that the Tribune reported, then growth will be an issue for this site.

April 14th, 2009

Tech – the new knowledge worker

Posted by Brian Sommer @ 6:45 am

Categories: Current Affairs, Future of Application Software, Notable Research, Professional Services, Software Vendors, Web/Tech

Tags: Asset, Deloitte LLP, Knowledge Worker, Axeda, Asset Management, Operational Planning, Business Operations, Brian Sommer

Axeda, Deloitte and the future of business

I had a great call the other day with Doug Standley of Deloitte and Brian Anderson of Axeda. The two firms have worked out an alliance but it’s the nature of the solution they are taking to market that’s so intriguing.

This may come as a surprise to all of the ERP and bean counter types out there but systems should and could be about more than accounting events. Yes, there is more to a business than a bunch of debits and credits.

To start with, businesses possess a lot of assets and serve a lot of constituents. Many of the assets would be even better used if someone or something communicated with them. Imagine what would happen if a manufacturer’s machines ‘communicated’? What if they relayed real-time events to other systems and key personnel?

Axeda is in the business of turning assets into intelligent assets. Deloitte is taking the knowledge captured via these assets and creating the actionable systems, dashboards, events, etc. that deliver value to businesses. Together, these two companies will help clients do remote diagnostics, configure devices, optimize business processes, etc.

I’ve written before how event-driven technologies (like the Progress Software’s Apama product) can radically re-define business. In my conversation with these two executives we discussed how intelligent asset systems can be used to detect ‘unplanned’ events as well as ‘planned’ and ‘related’ events. In this capacity, technology becomes a knowledge worker – an all new, virtual knowledge worker that never sleeps, requires no vacations, etc.

If your firm is looking for ways to do something new, competitively differentiating and potentially very strategic, then you might want to open up to the possibility of new ways of management, new management and control systems and a new operating system for your operations. Yes, it’s different and it could make your firm a fortune.

April 13th, 2009

Help with Raising Capital

Posted by Brian Sommer @ 6:06 am

Categories: IPO, Notable Research, Software Financial Stats, Software Marketing, Vendor Financing, Web/Tech

Tags: Slide, Venture Capital, Service-Oriented Architecture (SOA), Web Site Development, Web Services, Investment, Middleware, Finance, Financing Startups, Enterprise Software

Great starter deck from major VC firm

I’ve pitched for venture capital before and I appreciated a sample pitch deck a colleague sent me ahead of time. I’ve since helped others prep for their pitch sessions and most of the time, it helps.

If you’re going to pitch for venture monies, at least check out this slideshow that Canaan Partners put on their website. Structurally, it’s right on the money.

But, here’s some advice that’s not on their site. Specifically, you’ll have trouble pitching if:

- you get easily distracted. If a VC asks you a simple question about your technology, do not go off on a 30 minute tangent discussing why your SOA architecture stack is superior. No one cares.

- you like to tell people what you’re interested in talking about instead of discussing with them the things they want to know. ‘nuf said

- you read every word on your slides to the audience. I’ll bet that everyone you’re pitching to has a college degree or two. Trust me, they can read. So, you shouldn’t read for them. Instead, cut out the verbiage from the slides and focus on the story/message you really need to get across.

- you speak in three-letter-acronyms. No one knows what every TLA stands for and you’re usage of them doesn’t impress anyone. If the VCs don’t understand you, they know that prospective customers will never get you either. No sale here.

- you aren’t professional. Try wearing a tie, lay off the swear words and polish those shoes. When you’re asking someone to give you a few million, is it that hard to show a little respect?

Good luck pitching.

April 5th, 2009

Client Incompetence: why there will always be a need for consultants

Posted by Brian Sommer @ 7:19 pm

Categories: Books, Current Affairs, GRC - Governance Risk Compliance, Notable Research, Professional Services

Tags: Consultant, CEO, Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Brian Sommer

40th Anniversary of the Peter Principle

Inc. magazine has reminded us this month that this is the 40th anniversary of the publication of the Peter Principle. This book laid out the premise that people continue to get promoted until they reach their level of incompetence. At that point, they are stuck and their employers suffer.

In Inc.’s current article, Leigh Buchanan interviewed Robert Sutton, a professor who wrote the introduction to the original book. I was very struck by this comment of Sutton’s:

“We can’t give incompetence all the credit for what’s gone wrong with the economy. But it’s clear that the CEO’s at financial firms had no idea what they were leading. Do you think they really understood all those complex instruments? The Peter Principle didn’t cover what happens when systems are that complex. Everyone is always at his or her level of incompetence because the system is so bad.”

Incompetence may actually be gaining ground in business. Complexity in business is increasing and the ever-narrow focus of workers means fewer people know (or have a chance of knowing) what’s really going on in their firms.

When I read this article, I thought about the CEOs at other companies and how they aren’t understanding their firm, the competitive environment it’s in, the debt load they undertook, the effect that prvate equity firms or hedge firms have on their firm, etc. No, CEOs aren’t winning competency awards and pity the workers and executives who work for these CEOs.

Consultants, who have the luxury of time (to contemplate) and a broad tableau of industry knowledge may have the advantage. Moreover, consultants don’t get sidetracked with pesky things like inventing new products, delighting Wall Street, delivering short-term operational numbers, etc. Those factors make the future for consulting (that’s management or strategic consulting NOT systems integration) look really good.

Maybe it’s time for someone to write “The Peter Principle: Modernized”. We can include all of these great examples from AIG, Satyam, Merrill Lynch, Bear Stearns, and on and on.