A Software Insider's Point of View

Fusion Middleware 11g launch starts countdown to 100 days of innovation until Oracle Open World

In short, Oracle is putting forth a suite of middleware solutions that not only enable developers and software publishers to build their future solutions, but also deliver the middleware tools that will serve as the foundation for its go forward Fusion Applications.  There are a number of product updates in this Fusion Middleware 11g launch.  They include the Oracle Application Grid, Oracle SOA and Process Management, Oracle JDeveloper and Oracle ADF 11g, Oracle Applied WebCenter, Oracle Identity and Access Management, and Fusion Middleware Enterprise Manager.   What’s positive about this release is the number of customers who have already tested and proven that these solutions can work. In each one of the components, there are a list of customers who already use these solutions in their production environments.  Here are some high level product details:

• Oracle Application Grid puts forth a foundation built on the WebLogic Suite (WebLogic Server 11g ) that adds GridLink for RAC, enterprise grid messaging, real operations automation, real operations insight, active cache, and enterprise manager.
  POV: Oracle pulls together their integrated platform for application development in a high performance computing SOA world.  This will prove to be the Oracle internal foundation for hosting and other OnDemand capabilities.
• Oracle SOA and Process management brings together technologies such as JDeveloper, the BPA Suite, BPM Suite, BAM, BPEL, CEP, Oracle Service Bus, Enterprise Repository, Registry, and web services manager.
  POV: These common infrastructure components provide a way to mediate, orchestrate, manage business events and processes that support external integration, process governance, customizations, and change.  These will prove critical in hybrid deployments that bring the Web 2.0 world to Enterprise 2.0
• Oracle JDeveloper and Oracle ADF 11g -the new team center and application development framework provides desktop integration to office and java apps; new faces such as hierarchy viewers and carousels, SCA/SDO integration’ and mobile development.
  POV: Hopefully, Oracle customers can benefit froma richer set of dev tools that can be used in custom development and for Fusion Apps.  This could provide the foundation for extending Fusion Apps or building apps on JDeveloper in a PaaS platform.
• Oracle Applied WebCenter solutions pulls together their Oracle WebCenter and Oracle Fusion Middleware architecture for collaboration in content management, business process management, analytics.
  POV: Oracle customers get treated to a unified environment to deliver a consistent user experience for a Web 2.0 and more social enterprise experience.  The new Applied WebCenter may provide customers a unified UI strategy they have been looking for.
• Oracle Identity and Access Management 11g includes features such as identity management, provisioning and role management, web access management, Federation, entitlements management, fraud prevention, applications centric, and identity platform.
  POV: Oracle focuses on addressing reliable security, regulatory compliance, and help desk efficiencies for identity and access management.  Customers seek this level of single accountability and role based access as they keep adding SaaS and other deployment options.  With best of breed coming back in the form of SaaS, enterprises must move beyond single sign on (SSO).
• Oracle Fusion Middleware Enterprise Manager builds management and monitoring across the stack including apps, middleware, database, and Virtualized Host/ OS / Network
  POV:  Oracle showcases a more unified attempt at managing the entire Oracle stack and environment.  Will it replace your HP, BMC Remedy or IBM Tivoli tools? No. Not completely, but it’s a good start.

The bottom line - Oracle raises the stakes in the stack wars with IBM and showcases its middleware foundation for Fusion Apps

Announcements today by Charles Phillips and Thomas Kurian provide insight into the compendium of Oracle product investments in Middleware. Oracle Fusion Middleware provides the critical “glue” to tie Oracle’s acquisitions back into a cohesive IT strategy for not only its customers but also Oracle’s “Red Stack”.  The stack wars with IBM, Microsoft, and Oracle focus on gaining the greatest percentage of the IT budget.  Oracle’s investments today and pending acquisition of Sun will change the landscape from a perceived apps rivalry with SAP to more a stack competition with Microsoft and a battle for the IBM “Blue Stack”.  In fact, as Oracle continues to acquire and invest in the service based industries IBM dominates today, expect Oracle to make the case for a “Red Stack” and create “Purple” stacks in the years to come.  The eventual prize - converting IBM “Blue Stack” clients to the “Red Stack”.  Don’t expect IBM to stand still so let’s see what the next move is in the continuing Stack Wars!

Your POV

What do you think about Oracle Fusion Middleware 11g?  Vaporware or real competition in the stack wars?  Will you be more compelled to bet on Oracle as part of your apps strategy?  Please post or send on to rwang0 at gmail dot com and we’ll keep your anonymity.

Copyright © 2009 R Wang. All rights reserved.

Infor announced two new maintenance options for its customers today. These actions represent a proactive approach to provide its customers with new ownership models.  The key offerings include:

• Flex Upgrade: customers move to the latest application version, no change to existing maintenance and support costs, little or no license fees
  POV: Support and maintenance fees should often cover the rights to future versions.  The key issue - can my vendor innovate quickly enough? Customer’s should find progress in Infor’s investment in Open SOA and MyDay.  These solutions will help clients find a path to modernization from their existing applications.   Flex upgrade allows customers to move at their own pace.

• Flex Exchange: switch to another related Infor application of similar size and scope, no change to existing maintenance and support costs, nominal transaction fees
  POV: This offering provides access to Infor’s portfolio.  A customer on one ERP product can migrate to another product with minimal switching costs.  Only a handful of vendors allow this today.  Imagine buying PeopleSoft ERP and switching for Oracle EBS.  Only one other vendor is unique in this - Microsoft Dynamics provides this today by allowing customers to move between its acquired products.

Each offering also provides discounted and bundled project services and incentive pricing for additional users, modules, and extended applications.

The bottom line - Infor Flex provides unique value in a rapidly consolidating market

In many recent surveys, the top customer priorities for 2009 include upgrading, updating, or replacing legacy applications.  Many enterprises face decisions as to which vendors to keep and upgrade with; and which vendors to jettison and migrate from.  Amidst this move to upgrade, many vendors have imposed maintenance support increases or vendor imposed upgrade time lines based on support costs.  Infor’s policy adds a fresh perspective by offering choice, value, and predictability.  In fact, these new policies may engender good will among loyal customers and be just enough incentive to keep competitors from poaching existing accounts.   The only thing that would make this offering better would be flex down options for lower tiered options akin to third party maintenance, but that might be asking too much!

Your POV

Are you ready to flex?  What Infor products do you own?  Would you benefit from Flex UPgrade or Flex Exchange? Please post or send on to rwang0 at gmail dot com and we’ll keep your anonymity.

Related links

See additional coverage from different POV’s

Infor’s Flex Release

Frank Scavo’s Favorable View

Vinnie Mirchandani’s Preference for Flex Down

Dennis Howlett’s Pragmatic Perspective

2009622 IDG News Service - Chris Kanaracus “Infor Rolls out New ‘Flex’ Upgrade Policy”

Copyright © 2009 R Wang. All rights reserved.

A new secondary market for used software has emerged

Some time back in December 2006, we wondered why enterprises could not resell unused and used software and transfer related services to a willing buyer under a perpetual license.  Enterprises could resell hardware, telecom equipment, and other services contracts.  So why couldn’t a licensee retain the right to sell their software in the secondary market?  In addition to licenses, this could include maintenance agreements, support contracts, training, and consulting services to either an unrelated third party, joint venture, partnership, or subsidiary.  In fact, we even put this in as the 36th right in the landmark Enterprise Software Licensee’s Bill of Rights.  Well, since that time, several German vendors such as Preo Software, SusenSoftware and UsedSoft in EMEA have pioneered such a capability in the German market.

Recent lawsuit with SAP highlights some tactics vendors have tried to mislead customers

German copyright law (UrhG) upholds the principle of the “Exhaustion Rule”, which means that the developer’s copyright expires at the time of sale.  This legal foundation was upheld in the German Federal Court of Justice (BGH) on July 6th, 2000.  In summary, a developer can only make money on the initial sale and any attempt to restrict trade of used software through specific trade terms conflicts with the exhaustion rule.  Experts cite that this rule applies throughout the EU and Switzerland based on recent case law.

In the most recent case against SAP, apparently an SAP employee told a customer that they must seek permission from the software vendor to purchase used software. Based on a previous ruling between UsedSoft and Microsoft in the Hamburg courts on June 29, 2006, vendors can not mislead customers on the legality of used software.  In specific, “It is forbidden (416 O 103/08) to the software producer to spread misleading statements for the legal standard of the using software trade”.  The provisional order won by SusenSoft over SAP also reinforces the previous legal challenges.

Ruling also applies to the U.S.

To date, the “Exhaustion Rule” also known as the “First-Sale” doctrine has been upheld most recently in the June 2nd 2008 case of Timothy S. Vernor v. Autodesk Inc.  In fact the specific ruling cites, “This doctrine is stated in the following statutory provisions: “Notwithstanding the provisions of section 106(3) [17 USCS § 106(3)], the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” 17 U.S.C. § 109(a).  Because a first sale exhausts the copyright holder’s distribution right, future distributions of the copy do not implicate the Copyright Act. Opinion, p.7, citing United States v. Wise, 550 F.2d 1180, 1187 (9th Cir. 1977).  A first sale does not, however, exhaust other rights, such as the copyright holder’s right to prohibit copying of the copy he sells. Id. For example, the first sale doctrine permits a consumer who buys a lawfully made DVD copy of “Gone With the Wind” to resell the copy, but not to duplicate the copy. Id.

The bottom line -  consider the secondary market as part of your long term apps strategy

Enterprises seeking to optimize enterprise software costs may want to consider the used software or secondary market as an option.  It appears that the legal precedents have been set in EMEA (we’re hearing mixed things in the US (revised 6/22/2009 8:05 am PT).  Now may be the time to pick up additional SAP R/3 4.7, Oracle 11i EBS, or Infor Baan 4CIV licenses!  Resellers, VARs, and distributors should take the opportunity to create this new market.  Pressure from vendors will most likely be limited as the sentiment in the courts now side with the customer.

Your POV

Wondering when you can unload your used software licenses?  Are you looking to unload an acquired entities assets to use?  Would you want to benefit from the secondary enterprise software market? Please post or send on to rwang0 at gmail dot com and we’ll keep your anonymity.

Related research and links

June 12, 2009, Channel Partner, “Used software - SAP suffers defeat”

June 9, 2009 Channel Partner, “UsedSoft obtains a provisional order against Microsoft”

December 22, 2008, Forrester Research - Peter O’Neill  “The Spread Of Remarketed Software Could Be A European Response To The Economic Crisis”

June 2, 2008, Law Updates - “Federal Judge Approves eBay Auction of Copyrighted Autodesk AutoCAD Design Software”

December 18, 2006, Forrester Research - R “Ray” Wang “An Enterprise Software Licensee’s Bill of Rights”

Copyright © 2009 R Wang. All rights reserved.

* This post provides an alternative that must be vetted by proper legal professionals.  Please consult your own legal counsel for specific advice on legalities.

PEOPLE WHISPERS: MOVES, PROMOTIONS, AND MILESTONES*

Starting this month, we’ll be splitting the trends in Corporate Whispers from the People Whispers series.  Catch the latest monthly random thoughts, trend points, and corporate trends here.   For the latest on career moves, promotions, and milestones, stay tuned here.

Congratulations to all!  Thanks for your emails and alerts.  If you’ve got a change or know of a promotion, keep dropping me a line!  If you need a referral, don’t hesitate to reach out to me via Linked In.

Jean-Sebastien Bardet became Application Portfolio Manager at Orange Business Services in March 2009.  He is responsible for the Management of Portal and Business Intelligence domains within the health business unit of Orange Business Services - Almerys.  Jean-Sebastien formerly was an advanced technology architect at Michelin and has served consulting roles at Steria, Sylis Group, and Cambridge Technology Partners.

Brian Benedict became Business Development Director at Aite Group in January 2009.  Brian was a Star sales professional at Forrester Research and joins former Forrester Research alumni such as Ron Shevlin. Previous experiences include serving as the Board Member at AIIM International, Board of Directors at ARMA International, and Business Development Lead at InfoCurrent.

Sally Cohen leaves Forrester Research where she last served as an analyst for Environmentally & Socially Responsible Consumer Product Strategy at Forrester Research.  Her new roles will be a User Experience Researcher at AnswerLab.

Brian Carpizo joins as CEO of Eventric.  Brian formerly led Junction Solutions, Inc. as the Founder and CEO.  Previous roles include management positions at consulting practices such as Charter Consulting, Future Next Consulting, Horizon Consulting, and Accenture.  Eventric focuses on technologies to improve the live event experience.

Aileen Chen is now an Integration Manager for Strategic Accounts at Marin Software.  Her previous position includes multiple roles at RedEnvelope.com.

Guy Courtin joins as the Director of Marketing at SmartOps.  Guy leaves i2 Technologies where he served as a Senior Manager in marketing.

Ned Desmond became President at GoSportn, Inc. a new online community for outdoor sports enthusiasts.  Ned has served senior roles as President at Time Inc. Interactive, President and Editor at Business 2.0, and a Vice President at Infoseek.com.

Madhu Ghosh takes on a new job with ADP as the Sr. Director, Marketing.  Madhu was previously the Executive Director for Product Management & Business Operations at The College Board.  Other roles include seving as an Assistant Vice President for Program Management and Product Strategy at Dun & Bradstreet.

Kosin Huang moves from her Senior Manager, Competitive Strategy role into the newly created Office of Marketing Excellence at SAP role.  Her focus will be to design and build global initiatives to drive pipeline acceleration for SAP’s Global Field Marketing organization and define KPIs and benchmark best practices for measuring marketing success.  Kosin previously held analyst roles at The Yankee Group and Harbor Research.

Abhyudaya Kanoria became Manager, Corporate Strategy at Aditya Birla Management Corporation in March 2009.  He previously served as a Business Analyst for Tata Consultancy Services Ltd.

Esteban Kolsky became a Consultant at Managed Experiences, Loyal Customers in April 2009.  Esteban’s a Star Analyst in the field of customer service and previously served as a Vice President and Practice Leader at eVergance, Research Director at Gartner Group, and CTO of Tiedosta.

Ashwani Kumar left Oracle in January 2009 to become the CEO of a stealth analytics reinvented company.  Ashwani held product strategy and development management responsibilities for industry specific BI initiatives at Oracle.

Paul Lambert in February became the Global Head of Architecture at Hoffmann-La Roche.  He now leads the Information Architecture, Application Architecture and Technology (Infrastructure) Architecture groups for Roche Pharma.  Previous roles include Global Head of Application Architecture at Hoffmann-La Roche and Astra Zeneca.

Eric Lundquist has been named Vice President for Strategic Content at Ziff Davis Enterprise. Eric previously served as Content Director for New Media Products at IDG.  Eric brings decades of experience from serving as the Editor-in-Chief at eWEEK Magazine (formerly PC Week, Editor-in-Chief at Ziff Davis Enterprise, and Editor-in-Chief PC Week/eWeek at Ziff-Davis

Michael McDermott has been promoted from Director to Vice President of Corporate Development at QL2 Software.  Mike’s served roles as Senior Product Manager at Amazon.com, Competitive Intelligence Manager at Microsoft, and Competitive Intelligence Senior Manager at PeopleSoft.

Michael Murphy is now Vice President Business Development at Martiz Research Canada.  Mike served as Star Sales Professional at Forrester responsible for the Canadian IT Vendor market.  Prior to Forrester, Mike was at IBM.

Thomas Raschke has left Forrester Research to join Verizon Business as a  Senior Product Marketing Manager in Government, Risk, and Compliance.  Thomas served as an analyst at both Forrester Research and IDC in previous career experiences.

Yuval Shavit is now QA Engineer at Kiva Systems.  He formerly served as an assistant editor at Tech Target for searchITChannel.

Inhi Cho Suh was promoted in January 2009 to a Vice President of Product Strategy at IBM.  She’s responsible for driving portfolio strategy, marketing, and industry solutions for IBM’s information management division which is comprised on DB2, Informix, Optim, Filenet, InfoSphere, and Cognos.  Previous roles at IBM include serving as a Vice President of Management Marketing and Director of BPM and strategy.

Doug Topken becomes the Director of Global eCommerce Programs at Elsevier - Division of Reed Elsevier. Previous roles include serving as the Vice President for Business Relationship Management.

Donna Troy was promoted to VP and GM of Large Enterprise Americas at Dell in January 2009.  She previously served as the Vice President and General Manager for Corporate Accounts Division.  Donna brings a wealth of channel and sales experience as EVP of Global SME Indirect Channels at SAP, EVP of Global SMB and channel sales at McAfee, and CEO of Partnerware.

Carl Zetie has become a Member of Foundation Strategy Committee at Eclipse Foundation.  Carl currently serves as a strategist at IBM and Advisory Council Member at Utest, the usability community.  Previous roles include serving as a Star Analyst at Giga Information Group and Forrester Research.

Enterprises continue to transform themselves from the functional fiefdoms of the past and move towards a business process orientation.  As organizations begin that process of documenting business processes, they must differentiate among the 3 major types of business processes.  In key flows such as order to cash, hire to retire, incident to resolution, procure to pay, etc, remember to categorize key processes into three buckets:

• Mission critical business processes. Core to the identity and mission of the business, these processes represent trade secrets.  No one in their right mind would let someone else manage mission critical processes.  To be clear, email is not a mission critical process unless you have top secret content.  For example, payroll is not a mission critical process.  This is something that could be done by someone else without much market differentiation.  However, revenue cycle management with complex risk algorithms would be a mission critical process that would not necessarily be outsourced.
• Commoditized business processes. Often the “best practices” of the 1990’s that vendors profess to bring to an engagement, these processes represent well-defined, common industry practices.   Lack of unique intellectual property forces organizations to take the time to optimize these processes to achieve operational efficiencies.  Payroll is an example of a commoditized process.  Financial close is another one where there should not be too much variation among competitors.
• Innovative business processes.  Processes focused on solving a unique challenge or provide a competitive advantage fall in this category.  In addition, processes that deliver a unique customer experience or provides differentiators in the market place represent innovative business processes.  Often, these processes have not yet been defined as they will be created.

The bottom line - optimize commoditized processes to fund mission critical and innovative business processes

If an organization can identify their commoditized business processes, they can generate cost savings through a variety of technology and business strategies.  Top of mind technology strategies will follow the business process and include, shared services, data center consolidation, business process outsourcing, third party maintenance, and instance consolidation.  With those savings in hand, enterprises can shift the two-thirds of their budget keeping the lights on to the one-third of their budget focused on new projects.  After each project, this business process approach will shift the spending towards new projects and fund the innovation required to meet today’s business challenges.

For more details, read the 9 part Forrester series on Long Term Apps Strategy starting with:

1. Why You Need A Long-Term Apps Strategy
2. Forrester’s Long-Term Packaged Applications Strategy Framework
3. Does Your Apps Strategy Support Your Corporate Business Drivers?
4. Packaged Apps Strategies Take A Back Seat At Most Enterprises
5. The ROI Of Packaged Apps Instance Consolidation
6. Five Steps To Building A Recession Proof Packaged Apps Strategy
7. Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends
8. Third Party Apps Maintenance Rebounds
9. Craft Your Negotiations Strategy To Reflect New Packaged Apps Licensing And Pricing Trends

Your POV.

Have you thought through your core business processes or are you still functionally oriented? Can you identify the commoditized business process? Have you seen any cost savings based on business process transformation Please post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.

Infor surprised many software industry veterans this morning with its acquisition of SoftBrands. Why?  Well, Infor competitors have been spreading FUD that the company was out of cash, the company was in severe debt, and the company could not execute any more acquisitions.  Well, this acquisition puts a kabash on such talk.  In fact, having had the privilege of reviewing Infor’s financial health a few months back and hearing from Infor Chairman Jim Schaper about his go forward strategy, this acquisition falls in line with how Infor has executed previous acquisitions.  The acquisition adds new capabilities to Infor’s line up because:

• Significant opportunities exist in hospitality. Infor will gain the assets of Hotel Information Systems (HIS), a major global property management solution provider.  Today, this concern generates $43M in revenue across 4000 hotel properties.  Key capabilities include reservation systems, rate and channel management, food and beverage, property management, and golf and spa.

  POV: HIS will give Infor significant up-sell and cross-sell opportunities in its existing hospitality and gaming verticals.  For example, most Las Vegas casinos run Infinium for their financials and a hodge podge of legacy IBM legacy applications such as Lodging Management System (LMS) owned by Agilysys. (Note: Agilisys was the old Infor name and this company was also based in Alpharetta, GA. They are not related).  This microvertical capability will expand Infor’s reach into this growing industry with a market leading solution.

• FourthShift gives Infor a strong small enterprise offering across discrete and process. Infor adds a strong manufacturing offering for midmarket enterprises that serves 2000 customers.  FourthShift targeted process industries such as Chemicals, Consumer Products, Food & Beverage, and Pharmaceuticals.  Discrete manufacturing verticals included high tech and medical devices that required make-to-stock and strong lot traceability.

  POV:  Along with the assets of FourthShift, Infor could gain new capabilities to defend against or sell into the SAP market.  In fact FourthShift edition for SAP Business One serves subsidiaries of large enterprises running SAP and vendors an customers of SAP install base customers.  It remains quite doubtful that SAP would maintain this relationship over time.

• BPM expertise from Evolution and Infra:NET. Both Evolution and Infra:NET products provided rich sets of process expertise.  Evolution focused on providing process flexibility across production, purchasing, sales, and accounting via its BPM capabilities.  Infra:NET served a primarily German based market with strong make-to-order (MTO) process expertise.

  POV: Infor will gain a strong MTO solution that handles low-volume runs, one-offs, mixed-mode, variant parts, and prototyping scenarios.  Infor customers can potentially expect some of these core capabilities to trickle into OpenSOA components.

The bottom line - expect more and more targeted vendor consolidation around verticals and micro-verticals

As seller expectations on valuation come back in line with reality, expect acquirers to expand their presence in new micro-verticals.  This will open the gates to more acquisitions with an industry bent towards hospitality, healthcare, construction, real estate, public sector,and retail.  Expect other acquirers such as Oracle, IBM, and Epicor to soon jump into the fray as market conditions improve.

Other Points of View (POV)

See Frank Scavo’s take on the acquisition

Your POV.

What do you think of the continued consolidation in the ERP market?  Were you surprised Infor still was acquiring companies?  Please post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.

Collective support and maintenance, constant innovation, best practices, and improved ROI represent the key arguments that led enterprises to packaged applications such as ERP. Today, this promise appears to be broken as enterprises question the value received for their support and maintenance monies.   In addition, on-premise upgrades require painful testing and down time to innovate via upgrades.  Meanwhile, new SaaS entrants deliver innovation with try before you buy ease and subscription pricing that business users can embrace.  The question remains - how do you know if your vendor innovates quickly enough?

One approach - determine the total percentage of support and maintenance monies reinvested into the product?  Identify what percentage of R&D investment and the amount of innovation vendors have delivered to date.  Conversations with over 47 current and former enterprise software executives reveal seven tell tale signs a vendor has slowed down their innovation agenda.  Enclosed is the checklist.  See if your vendor meets any of these criteria.  If they hit four or more, then your vendor’s entering a period of decline:

1. Failing for years to deliver on promised functional enhancements. This represents a common problem among older ERP customers. If you poll the top 25 customers of an industry vertical for their list of functional enhancement requests, it would be common to see an 70% or higher overlap of requests that have not yet been delivered by the vendor over the past 5 years. Assume the average enterprise pays $4M a year in maintenance and support, that’s $100M a year over the past 5 years. Half a billion dollars later, it’s hard to believe the vendor could not deliver on a common list of requests. What’s happened? The vendor may have invested in new markets like SMB or new verticals instead of your industry and vertical.
2. Repackaging existing products to sell back to you. It’s true. This happens when the functionality in a product you own ends up in a “new” module. Suddenly, the sales reps are calling you trying to sell you a product you already own with 20% new capabilities. Isn’t that the incremental enhancement you should have gotten with your maintenance dollars?
3. Acquiring complementary solutions to push into the install base. Call them “tuck-in”, “edge”, and “micro-vertical”, vendors often make acquisitions when the product well runs dry. With no new product in pipe, vendors must find a way to raise their new license numbers and penetrate existing install bases. This happens a lot with vendors who only compensate their sales reps for new license sales.
4. Diverting customer attention with the latest fad. Instead of building out core new products, vendors may suddenly take an interest in a hot area like social media, green technologies, or political causes. Not there’s anything wrong with this, but quick fixes may not solve core-underlying issues in product technology or roadmap. The lack of clarity and direction may often seem baffling especially when the basic needs have not yet been made and customers remain outraged.
5. Substituting professional services and custom development for new license sales. Declines in new license revenue have vendors looking at professional services to make up the difference. One trend - engage customers in custom development work which then gets booked as license revenue. However, this ends up diverting valuable product development resources that should be focused on existing enhancement requests.
6. Lacking the inclusion of key Enterprise 2.0 design principles in future road maps. Vendors with confusing usability and user experience strategies, lack of a support for new deployment options including true multi-tenant architecture, rigid business process composition tools, poorly designed middleware architectures, etc will pay the price. Expect customers to defect towards more modern solutions that bring the Web 2.0 world into the enterprise. If your vendor hasn’t made the shift, your maintenance truly has been squandered.
7. Over-relying on partners for core capabilities. While solution centric partners play a key role in delivering the last mile solutions for customers and vendors, a heavy reliance on partners to deliver core capabilities highlights innovation issues at a vendor. Should a vendor increase reliance on partners to deliver solutions in a core business process or a capability that should be in the middleware, users should ask why the vendor can not deliver this capability. While many vendors OEM other solutions, to accelerate innovation, over reliance on partnerships and OEM’s raises red flags.

The bottom line - users need to demand greater accountability for support and maintenance paid.
Users must reclaim back the discussion on how their support and maintenance dollars will be reinvested or expect those monies to be repurposed to investor profits and share holder value. Take the following steps:

• Start by building formal alliances among industry colleagues to discuss common standards and requirements
• Identify commoditized processes that should be delivered in the software.
• Work with user groups to take an active role in setting the product roadmap and customer agenda.
• Engage vendors in back channels but do not be afraid of sharing with the media industry specific concerns when at an impasse.
• Don’t be surprised to find most vendors open to such discussions in improving the client-vendor relationship.
• For those vendors who fail to seriously take user input, organize and campaign in public. You’ll be surprised to find out what a publicly traded software vendor will do to defend share price.

Updated with Lists from Vinnie Mirchandani and Dennis Howlett.  Add your seven and send me your link!

20090608 Deal Architect - Vinnie Mirchandani “More Signs Your Software Vendor Can’t Innovate Fast Enough”

20090610 ZDNet Enterprise Irregulars - Dennis Howlett ” Even More signs Your Software Vendor Can’t Innovate Fast Enough”

Your POV.

So let me ask you, what do you expect from your software vendor?  Do you think they will innovate quickly enough?  Will SaaS be the Best of Breed option of the 2010’s?   Please post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.

With 2009 rapidly becoming the “Year of SaaS” and the tipping point for Cloud Computing, it’s hard not to notice the growing number of SaaS start ups (along with the legacy application vendors rushing to provide an “On-Demand”, but not really multi-tenant deployment option).  My snarky SaaS bigotry aside, we can expect hybrid deployment options to be here to stay.  As with the early days of on-premise packaged apps, we have to ask the question, “What to do about the risk in working with fly-by-night SaaS vendors who might not be around in 2011?”  In fact, this was an interesting part of the panel disucssion at the “Honeymoon and Divorce: Changing SaaS Providers” session at Interop with Jerry Smith (CTO of Symphony Services) , Michael Topalovich, (CTO of Delivered Innovation), and Rick Nucci (CTO of Boomi).

SaaS escrows provide a key safety net for the SaaS users

End users often demand software escrows in the on-premise world when they are concerned about vendor viability, takeover threats, and other related breaches to performance or service level agreements. Software escrows vendors serve as the trusted third party independent organization which holds a copy of the software code.  This often includes user data, source code, documentation and any application executables.  For SaaS escrows, expect a few unique distinctions such as:

• More frequent intervals of version updates, almost similar to live data backups.
• Hot backups that the end user can immediately and legally swap to the escrow version without business disruption
• Requirements for SaaS vendors to provide detailed software configuration management and data management

The bottom line - SaaS code is rented so protect yourself

With no access to the code or application when a SaaS vendor goes bankrupt or fails to meet performance requirements, now’s the time to ask your SaaS provider if they provide a SaaS software escrow.  This should be included in all criteria during SaaS vendor selection.  Those who provide SaaS escrow deliver an additional benefit - peace of mind that data will be doubly backed up both by the vendor and the software escrow company.

Companies providing SaaS Escrow Services

Here’s a list of a few vendors in the market.  They have not been rated or reference checked so caveat emptor.  If you provide SaaS escrow services and weren’t listed, feel free to add a comment to the post.

• EscrowTech (Added 6/3/2009)
• InnovaSafe
• Iron Mountain
• NCC Group
• OpSource

For more about how to shape your apps strategy to include SaaS, read the Forrester Report found here.

Your POV

Have you worried about whether your SaaS vendor will be around in 2011?  Did you successfully enter into a SaaS Escrow agreement?  Considering a SaaS Escrow?  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.

Here’s the context…after a week at Forrester’s IT Forum in Las Vegas, clients kept coming back to us saying that in general it was refreshing seeing how much experience our analysts had and also how fun it was to meet the analysts in person. So on Friday May 28th, I posed the question, “Having an int conv w/a client on their expectations on analyst work experience. How much exp do you expect from your analyst?”  Now the going hypothesis was that experience would matter, but as you can imagine, there was quite a bit of private chatter along with the public tweets which you can see below:

In a quasi-scientific poll of 37 responses, the general arguments fell into to a few camps:

• Vendors seek seasoned analysts they could put in front of their executives and clients with confidence (45.95% or 17/37). As one software vendor AR manager put it, “How can I put my C-level executives in front of a junior analyst who never worked in the industry and tell them that this person is evaluating you?”  Alain Breillat (@alain7), a director of product management at Nielsen reinforced this point by stating, “in my experience the truly useful analysts have deep experience working with the tools (3-5 yrs min) and 3-5 yrs observing industry”  Star analyst and guru Naomi Bloom (@InFullBloomUS) chimed in with, “To analyze current devs in their historical context & w the perspective of broad/deep industry knowledge takes at least 10 yrs exp.”
• End users expect that the analysts bring seasoned expertise to the table (35.13% or 13/37). While there isn’t an expectation an analyst can wax technical about the party models and tables in the latest Oracle or SAP app schemas, there is an expectation that analysts can provide actionable advice.  Most expect this to be honed by years of experience.  One large customer told me at a client site when I first walked into the room, “Son, you look too young to know what the heck you are talking about.  I’m giving you 15 minutes”.  An hour later, he apologized but the point was well taken.  I probably should gray my hair and wear some glasses.
• Vendors look for smart, bright analysts who haven’t been jaded and can take a fresh perspective (18.92% or 7/37). A few vendors commented that at times the world order of analysts needed to be broken.  Politely and professionaly epitomized by Dawn Crew (@dawncrew), a Solution Marketing Director at SAP focused on HCM, she raised the point that ” work experience 20 to 30 years ago is irrelevant anyways.  I want an analyst that can consume and digest volumes of info w/o bias”

The bottom line -industry analysts have to be able to call BS when there’s BS.

It’s all in the eye of the beholder what analyst best meets a stakeholder’s needs.  Josh Weinberg (@kitson) at CRM Magazine summarized the situation as, “Didn’t u *expect* vendor&end-user clients to want different qualities in their chosen analysts? The respective needs are different.More curious about different desires (a) by industry and (2) length of client engagement (how long they’ve been w/you).” Different strokes for different folks!  One would expect that industry experience probably helps, especially when a few vendors outright tell tall tales about their technology claims. However, this probably doesn’t preclude someone very bright from figuring it out over time.  But as a trusted adviser, one would expect industry analysts need to have the context to separate the marketing from the message and make a call.  Now nobody wants a jaded curmudgeon, so the solution - side with the gray hairs and their experience.  Also, encourage them to be open to new ideas as they come along.  Keep the faith! Once in awhile someone a bit younger may actually know what their talking about!

Your POV.

So let me ask you, what do you expect from your industry analysts?  Identify yourself as a vendor, end user, media professional, etc.  Please post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.

Most software vendor license revenues took a beating this CY Q1 when compared to 2008.  SaaS vendors managed to post double digit gains while only a handful of on premise vendors eeked out a positive gain.  Major highlights in the 2009 Calendar Year Q1 include

• Big losses in YoY license revenue for on premise vendors such as Manhattan Associates (-73.12%), QAD (-54.37%), Deltek (33.99%), CDC Software (33.77%), and SAP (32.80%) signal significant long term weakness in attracting new business.
• Few winners in YoY license revenue for on premise vendors.  IFS (13.41%), Intuit Quick Books (5.23%), and Sungard (2.53%) showed positive traction amidst a morass of bad news.
• On premise vendors stabilized maintenance revenues from major losses.  Some vendors including Epicor (49.25%), Deltek (26.09%), and IFS (20.25%) managed to show significant gains.
• SaaS vendors cleaned house despite the challenging market.  Taleo (34.20%), Blackboard (26.25%), Concur (25.61%), Salesforce.com (23.14%), and NetSuite (21.83%), led the growth race in YoY total revenue.
• Growth rates on a YoY basis have slowed for most SaaS vendors, though when factoring the economic forces, these gains reflect truly substantial success.

Software Insider Index® Q1 CY 2009 On Premise Vendors

Software Insider Index® Q1 CY 2009 SaaS Vendors

The bottom line - SaaS goes mainstream in 2009 and on-premise vendors must offer hybrid deployment options

SaaS vendor growth continues to defy the ball and chain forces of the macro economy.  Though overall growth rates are less than the year before, the SaaS model gains favor with all sizes of enterprises and in all industries.   Rapid implementation, subscription pricing model, and constant innovation drive significant interest. This leaves on premise vendors in a precarious situation.  Without support for SaaS or other hybrid deployment options, expect customers to wall off their current vendors and pipe in new innovation around the edges with SaaS.

Your POV.

Do you find your vendor sales person becoming more aggressive with their sales tactics?  Have you held back on new purchases or upgrades?  Is this the year you go full out on SaaS? Feel free to post your comments here or send me an email at rwang0 at gmail dot com .

* Not responsible for any math errors or erroneous revenue information.  Calendar year estimates based on the quarter nearest the calendar year.  Exchange rates as of February 25th, 2009.  Not responsible for currency flux.  Please read the quarterly filings yourself =)

PEOPLE WHISPERS: MOVES, PROMOTIONS, AND MILESTONES*

Congratulations to all!  Thanks for your emails and alerts.  If you’ve got a change or know of a promotion, keep dropping me a line!  If you need a referral, don’t hesitate to reach out to me via Linked In.

Bronwyn J. Allen became Director, Analyst Relations at Fujitsu America, Inc. in January 2009.  Bronwyn brings over 20 years of AR and marketing communications experience for professional services firms.

Scott Azzolina is now VP Marketing at Connectria, an IT outsourcing and hosting company.  Scott brings over 25 years of experience from roles at Primavera Systems, Gemplus(Axalto), PECO Energy Company, Unisys, Scott Paper, and NCR.

Jonathan Bennett became Sales Executive - West at Astadia, a SaaS professional services firm, in March 2009.  Bennett is a driving force in solutions selling in the enterprise software industry with SaaS pedigree as a Managing Director at EnablePath and Sr. Account Executive at Salesforce.com. Previous roles include Manager of presales at Pilot Software (now SAP), Manager of Professional Services (BSG) at E*TRADE Financial, Senior Technical Sales Consultant at Personify, Inc. and management Consultant at PricewaterhouseCoopers

Jim Bork named Senior Vice President of World Wide Sales for Epicor Software. Jim brings 16 years of sales and sales management experience including international sales for Epicor. Jim’s expertise includes go-to-market strategies and sales management experience.

Sean Cantelon is now Managing Director at O.C. Tanner.  Sean last served as a seasoned star sales professional focused on building relationships and delivering solutions to his clients for Forrester Research and Giga Research.  Other experiences include working as an Account Manager at MCI Systemhouse.

Stephane Carrez became Head of Planzone R&D at Augeo Software in November 2008. Stephane has held many technical roles at Solsoft, Sun Micrososystems, and Chorus Systems.

Chayson Comfort is now Business Development Executive at Statera, a professional services firm focused on business performance.  Chayson served as as star sales professional and National Account Executive at Forrester Research. Chayson also worked at Verizon Information Services.

Pete Daffern became CEO at ClairMail, Inc in January 2009.  As CEO of Pursima, he led the successful acquisition by D&B in October 2007.  Pete brings executive experiences as President of AIM technology, VP of Business Development for Vitria, and General Manager of Seagate EMEA.

Mike Frichol became Principal at Ingistics, LLC in February 2009.  Mike brings a wealth of executive level industry marketing and product marketing experiences from Infor, Microsoft Business Solutions, ESI, and Dun & Bradstreet Software.

Jason Gatoff in March 2009 became Director of Marketing and Strategic Alliances at M-Factor, Inc. a profit and revenue optimization software firm.  Jason previously served as Program Director and Peer Forum advisor for AMR Research’s SAP clients.  Other marketing roles include work in Analyst Relations and Corporate Marketing for PeopleSoft and i2 Technologies.  Jason also served as a Client Relationship Manager at Forrester Research.

Rob Howes is now Assistant Director of Admissions / International Recruitment at DeVry University. Rob served as an Account Manager for Federal Government at Forrester Research.  Previous higher education experience include roles at CDI College.

Alp Hug became President & CEO of Alpland in February 2009.  Alp was formerly the Senior Vice President at Open Text for ECM Suite Technology.  He came to OpenText via the Hummingbird acquisition where he was the VP for Strategic Business Development.  Alp served other high tech executive roles at Delano Technology and TOR Computerized Systems.

Narayan Iyer is now Director at Cognizant Technology Solutions. Prior to his new role, he was the head of banking, financial services & insurance sales in India for Tata Consulting Services and had served various roles there for 5 years.

Charlotte Marchand is now Directrice Commerciale Adjointe at Neteven.  Charlotte served sales roles at Forrester in Australia and France.

Suhail Maqsood became Board Member - Projects SIG at Oracle Applications Users Group in February 2009

Tamara Mendelsohn became Community and Marketing Manager at Eventbrite in January 2009.  Tamara was Forrester’s star analyst in eCommerce.  She’s currently finishing her last year of her MBA at The Sloan School of Management (MIT).

Doug Merritt was promoted to EVP & GM Premier Customer Network at SAP in January 2009.  Doug also serves as the President of SAP Laps and is a Corporate Officer for SAP.  Senior executive roles throughout the tech industry include VP & GM of HCM at PeopleSoft, CEO and Founder of Icarian, and Sales Manager at BMC.

Clark Newby joins Workday as the CMO and Vice President of Marketing.  Clark joined Workday from Fortify where he served as a Vice President of Marketing.  Other marketing roles include Poly Serve, Mercury Interactive, Kintana, and Silicon Graphics.

Michael Pietrini named CFO and EVP of Finance and Administration at Epicor Software in April 2009. Pietrini’s 14 year tenure at Epicor includes roles in sales management, consulting, customer service, product development, marketing, and business development.  His responsibilities include sales operations, legal, human resources, IT and investor relations.

Eduardo Sanchez returns to MicroStrategy as the Executive Vice President for Strategic Development.  Sanchez previously was the EVP for Global Sales at Lawson, the COO of Cartesis, and a Corporate Vice President for World Wide Sales and Services and Vice President for International Operations at MicroStrategy

Brian Shelver became Senior Sales Engineer at Topaz Bridge in February 2009.  Brian played industry marketing and solutions selling roles at Kineticsware, Inc., Microsoft Business Solutions, and SAP America.

Shivani Shinde has been promoted to Principal Correspondent at Business Standard.  Shivani brings a rich set of journalism experience serving as a Senior Correspondent and Acting Bureau Chief of the Indian Express group and Senior Reporter at the Times of India.

Eric Steele joins Veritude, A Fidelity Investments Company in Business Development.  Steele was a star sales professional at Forrester focusing on building strong relationships and solution selling.  Other sales experiences include sales roles at Innovative.

Patric Timmermans now serves as a VP Marketing at KPA, LLC a boutique HR and Environmental Compliance professional services firm. Patrick’s previous roles include serving as a Senior Director Industry and Product Marketing at Infor, and various marketing roles at SSA Global and a a Principal Architect at Baan.

Joel Wecksell became Managing Director at The Skills Connection in January 2009.  Joel served as a Global Managing Vice President, Global Research Group Vice President and Vice President and Services Director for Business Applications at Gartner Group Inc.

Hannah Young was promoted to Senior Account Executive at Waggener Edstrom. Hannah has served many high tech sales professional positions including Account Executive at Forrester Research, Oracle Corporation, Cydcor, and Opinion Research Corporation International. Hannah focuses on building strong relationships and finding win-win solutions.

CORPORATE WHISPERS
Hearing from twitterati, software execs, and industry experts about:

• High demand for third party maintenance option for Oracle Database, Oracle EBS, Infor, and SAP products.
• SaaS acquisition being sought by IBM, Oracle, HP and SAP.
• Hardware vendors such as Cisco and HP looking at adjuncts into the software space.
• Telecom vendors such as AT&T, Bell Canada,  BT, and France Telecom looking at enterprise software plays to complement services and data center operations.
• Micro-vertical vendors being drawn into more partnerships with Microsoft, IBM, SAP, and Oracle (MISO).
• Partner opportunities with the large vendors at an all time high.  Lots of MDF and support unlike in past eras.

Got a scoop or something to share? Please post or send on to rwang0 at gmail dot com and we’ll keep your anonymity.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Copyright © 2009 R Wang. All rights reserved.

Economic Downturn Challenges Enterprise Software Executives To Uphold The Sanctity Of The Vendor - Customer Relationships

Conventional wisdom would assume that in a challenging economy, strong relationships would be a key success factor to retaining business and mitigating loss of revenue.  Unfortunately, this does not appear to be the case for many companies, including vendors in enterprise software.  Blame it on the economy, fear of depending on their people, or plain greed, but a good number of executives have taken an approach that attempts to preserve shareholder value at the expense of their vendor - stakeholder relationships (i.e.employee, customer, and partner).  Now in their defense, these muckety mucks face dire times and hard decisions need to be made.  However, they are not in a unique situation and risk jeopardizing brand value, trust, and market credibility for short term gain. Let’s look at five common value destruction strategies:

• Part 1: Commoditizing the client facing workforce at the expense of the client
• Part 2: Slashing the quality of support and maintenance while failing to deliver value
• Part 3: Pushing products that clients don’t need in order to grow revenues
• Part 4: Under-investing in R&D and then repackaging existing content as new innovation
• Part 5: Living in denial by ignoring stakeholders

Part 5: Living in denial by ignoring stakeholders

Successful relationships often span across key stakeholders that include partners, employees, suppliers, investors, and of course customers.  Lately, management teams at enterprise software vendors have chosen to placate investors over other key stakeholders.  As a short term strategy, boards will succeed in meeting the short term quarterly whims of investors.  But in the long run, these management teams risk alienating customers, partners, and employees - a slap in the face of a prime source of funding and innovation required to meet current and post recession challenges.  Conversations with over 47 stakeholders highlight some key findings including:

• Forcing Kool-Aid down the throat of employees. “Our customers kept telling us that we were losing credibility given the rash of aggressive sales tactics over the past few years.  An increase in pricing or maintenance would be the straw that broke the camel’s back!  Most customers chose the lowered tiered offering.  There was really no additional value in the new offerings yet we kept pushing.  Many of us complained to our management teams but the decision was already made.  We must have lost 20% in deal flow in the past 2 quarters.  The resulting backlash could have been avoided.” Customer Support Technician for Global Support Services - Big 4 ISV
  
• Glossing over channel partner concerns. “They kept telling us that customers had asked for this new SME product.  Extensive customer research had been incorporated.  And, any customer let alone employee who didn’t see the value in the new offering needed to be re-educated.  Despite being late to market, the product would sell itself because of our reputation and brand.  What they failed to understand was that country managers had already discounted the flagship enterprise product to a point where it was creating huge channle conflicts with sales of our SME product.  We warned them this would happen.  They kept ignoring our concerns over the past 12 months.   Amidst such confusion, our best and long time partners now are leaving for competitors.  For those that have stayed on, our biggest challenge has been trying to help them understand their role and input into our product strategy. “ Vice President of Software Partnerships - Global Systems Integrator
  
• Ignoring customer requests.  “We need more choices in our user license options.  We used to have concurrent users, then we had named users, and now they want to move us to processor based licenses.  While they have been giving us conversion credits to the new models, we feel that each approach seems to benefit the vendor and not us the customers.  We have raised this issue with the management team each year.  They continue to ignore our requests.  After our recent acquisition, we now are in a position to leave the vendor next month.  It’s all lip service and they don’t value our input or relationship enough, even though we have spent $4M in 5 years.” - Global Director for Packaged Apps - APAC High-Tech Manufacturer
  

The bottom line - relationships matter despite the chaos around us.

Strong relationships are crucial for success, particularly in a difficult economy.  Vendors and customers need to find win-wins in order to succeed through this current down turn.  For vendors, they need to get a better grasp on what’s top of mind with key stakeholders.  Executives should walk the halls and directly solicit feedback from employees.  Management team members need to reach out directly to stakeholders and have honest conversations.  Too often, the fear of managing up prevents a company’s execs from hearing about the issues.  Instead, they think everything is working out fine despite how much middle management has quelled the groundswell of opinion.  Once these relationships can be reestablished, stakeholders will be there to assist by providing valuable feedback, seeking advice in solving business problems, and serving as references.  In the meantime, this trust needs to be reestablished.  Its truly the relationship that will pull you out of this downturn!

Your POV

Got a success story where your vendor has put a value creation strategy based on keeping good relationships? Or got a great story on the bone-headed thing your vendor or your employer has done to destroy value in the relationship!  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.

(Photo: Rimini Street movable billboard outside SAPPHIRE 09.   Courtesy of Rimini Street.  All rights reserved)

Almost one year after Rimini Street announced its intention to provide third party maintenance, on May 11th, 2009, the ground breaking support services provider announced that it had signed its first SAP clients and launched immediate availability of its support services for SAP products.  Rimini Street promises to deliver more than 50 percent cost savings in annual fees compared to SAP.  Conversations with 83 Sapphire 09 attendees confirm significant interest (79/83) in alternatives to SAP’s Enterprise Support offering, despite the SUGEN announcement.  Key elements of the software offering include:

• Inclusion of older and current releases. Support for the SAP R/3 4.x, ECC 5.0, ECC 6.0, and BW 3.5 and earlier releases Named, local senior support engineers assigned to each client (no off-shoring of support calls)
  POV: In Rimini Streets original announcement, the vendor had intended to provide support for pre ECC products.  The move to support the full line will come as a pleasant surprise to many SAP customers who have upgraded to SAP ECC 5.0, SAP ECC 6.0, SAP NetWeaver 7.0,  and SAP NetWeaver 7.1 looking for leverage and options to SAP Enterprise Support.
• Support through 2020 and beyond. Rimini Street has committed to providing tax, regulatory, and other updates for existing releases without any required upgrades.  This includes application fixes for serious issues and tax and regulatory updates as needed and flexible contract offerings.
  POV: Rimini Street has demonstrated success to date with acquire Oracle products to deliver such capabilities for existing customers.  Multinational customers will want to eavluate details about regulatory support especially in countries such as Brazil, Poland, and Russia.  Customers will want to undestand what Rimini Street defines as a serious issue.
• Follow the sun coverage by a senior engineer. The announcement states 24×7 support coverage with 30-minute or less guaranteed response by a senior engineer.
  POV: A 30 minute response rate by a senior engineer may put Rimini Street in the top echelon of support capabilities.  Most vendors and support organizations promise response times of 60 minutes or less with no guarantee of whom may show up on the other line.
• Comprehensive support with no additional fee. Support for client customizations, interoperability and performance at no additional fee
  POV: No tall order, this third party maintenance provider intends to handle the hairy task of supporting complex environments of spaghetti code and a patchwork of SAP integrations.  One would expect Rimini Street to also offer services to streamline environments in order to reduce their cost of support and increase application efficiency.

Conversations with Seth Ravin (CEO) and David Rowe (Senior Vice President of Global Marketing and Alliances) affirm Rimini Street’s
intentions to invest in this SAP practice.  Demand for third party maintenance and interest in working for a 3PM company appear to be strong.  Many long time SAP employees and support experts have reached out to both Rimini Street and the Software Insider
to seek employment positions.

The bottom line - include third party maintenance (3PM) options as part of apps strategy

Customers must carefully consider when to use third party maintenance as part of their long term apps strategy.   When effectively used, saivngs on maintenance fees can be applied to reinvestment and fund new innovation as opposed to feeding the beast!  Here’s a quick guide as to what scenarios to use third party maintenance:

1. Stable apps environment. Often enterprises in this maintain as is scenario find few change requests from the business.  Internal support teams already deliver most fixes and changes.  A 50% or more cost savings to maintenance makes most sense here.
2. Post upgrade savings. After completing an upgrade and achieving stability, customers can take the opportunity to enjoy new capabilities without having to pay full maintenance.  Customers take a risk here of not receiving any additional functionality and access to new enhancements.
3. Redeployment “upgrade”. Clients who have made significant customizations and modifications requiring reimplementation for an upgrade will consider third party maintenance for both cost savings and negotiations leverage.  Moving to 3PM allows the client to fund the reimplementation or replacement while considering other vendor alternatives.

Third party maintenance may be appealing to most customers.  However, there are caveats to third party maintenance that include:

1. Zero access to future upgrades. Movement to 3Pm means being cut-off from the vendor’s stream of innovation.  Customers seeking functionality in future SAP Enhancement Packages (EhP) should not consider third party maintenance at this time.  Upgrade to the latest requirements before considering 3PM.
2. Potential back maintenance issue. Expect vendors like SAP to pressure customers about potential back maintenance.  Vendors customarily require customers to true up their maintenance fees should they come back.  However, recent amnesty programs by some vendors and the market pressure make this tactic less and less likely.  Moving to 3PM actually provides leverage to the customer.  Will SAP really threaten back maintenance payments when you are choosing among other vendors now that you are not beholden to them?
3. Dependency on a third party. As with any other services contract, carefully consider the key SLA’s around metrics, performance, and unforeseen conditions.

Your POV.

Will you be calling Rimini Street in the next 3 months?  Do you believe that third party maintenance from SAP is feasible?  Does market place choice give you more leverage with SAP? Do you wonder why your system integrators do not offer third party maintenance?  Post your thoughts or send me a private email to rwang0 at gmail dot com.

(Photo: Rimini Street movable billboard outside SAPPHIRE 09.   Courtesy of Rimini Street.  All rights reserved)

Copyright © 2008 & 2009 R Wang. All rights reserved.

(Photo: Sapphire 09 Outside the South Concourse of the Orange County Convention Center.  Copyright © 2009 R Wang. All rights reserved)

Despite the unusual heat wave in Orlando, FL, the SAP faithful and prospects gathered for ASUG’s Pre-Conference Seminars.  These hard core users came to learn more from the detailed educational sessions and to network with other users around the Americas.  Conversations with over 41 attendees and partners revealed a cautious sense of optimism amidst the global economic crisis.  Key questions on everyone’s minds:

• Would ASUG take a more active and vocal role in future disputes or would they remain working in the background?
• What did the KPI agreement with SUGEN and SAP mean regarding when maintenance would be increased.  Will the KPI’s be fair?
• How to achieve lower operating costs for running SAP?
• Was there more behind the developments and innovations of Business Suite 7?
• What was in the future for Business by Design?
• What Best Run Now packages would be of interest and relevance to me?
• What Best Run Now packages could be implemented without buying new products?

The bottom line - SAP customers seek clarity in its solutions and future business practices

In this age of risk mitigation and a desire to reduce operating costs, customers will be asking SAP for its clarity in both business practices as well as product road map.  User groups will hopefully become more engaged in the process of providing feedback and partnership in the vendor’s success.  Stay tuned for more analysis from Day 2!

Your POV.

What do you hope to gain from Sapphire?  Any new learnings on your end?  Will SAP deliver on your expectations? Post your thoughts or send me a private email to rwang0 at gmail dot com.

Follow on Twitter at #Sapphire09

Copyright © 2008 & 2009 R Wang. All rights reserved.

Oracle President Charles Phillips pleasantly surprised Oracle Applications User Group (OAUG) Collaborate 09 attendees this morning during his keynote with the decision to waive Extended Support fees for a number of product lines through 2010 and 2011. As customers and prospects face one of the worst global economic crises, proactive relief on support and maintenance fees could not come at a better time.  Summary details of the program can be found in Figure 1.

Figure 1. Oracle’s Revised Support Policies

(Source: Oracle Corporation)

Proactive change in support offering creates a win-win

Oracle’s move to address the support issue may stem from a variety of reasons but the main focus centers around improving the vendor-client relationship for a few reasons:

• Responding to the global economic crisis.  Oracle has taken the initiative in listening to customers, partners, and industry watchers about customer reactions to the escalating costs of software maintenance.  Oracle’s Applications Unlimited and Lifetime Support Programs have been successful in retaining acquired customers and have shown customers that acquisitions need not be slash and burn with minimal reinvestment.
• Providing more time for customers to adopt Fusion Apps. With the slow down, Oracle may be anticipating slower upgrade rates.  While no clear date and product road map has been communicated to customers, removing the price pressure on extended support fees provides customers with some breathing room on upgrade timing.
• Mitigating attention on high profit margins and its M&A strategy. After touting record profit margins near 50% and continuing its M&A strategy with the announcement to acquire Sun, customers have become concerned about the impact of less choice in the market.   This move may appease regulators and industry watchers and show that Oracle has some self regulating policies.

The bottom line - user groups should now determine the minimum R&D percentage of investment from revenues

Oracle continues to gain economies of scale with each acquisition.  The good news - Oracle has the capacity to reinvest $2.6B per year into R&D and the real dollar amount has increased from 1.9B in 2006.  While this is a large figure, the bigger and more important issue - what percentage of the maintenance revenues have been reinvested?  Here’s where we find a slight drop from 12.6% to about 11.6% in 2008.  Consequently, like SAP’s users and user groups, OAUG and the other Oracle users and user groups should begin to track the ratio of R&D dollars that tie back to the amount of maintenance revenue.   In fact, they may want to take a look at the SUGEN KPI’s and see if they are applicable to Oracle’s environment.  R&D spend from maintenance and the need for Third Party Support options will be the key ownership issues for the next 5 to 10 years.  In any case, the need for preserving and strengthening independent user groups will be one effective check and balance in the consolidating world of enterprise software.

Your POV

Do you feel Oracle made the right move?  What have your experiences been like with Applications Unlimited and Lifetime Support?  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.

Usability and User Experience Matter in Enterprise 2.0 Apps

Welcome to the fifth in a series of Friday’s Features showcasing the latest and greatest in enterprise apps usability. Many ERP software vendors including Epicor, Eshbel, IFS, Infor, Lawson, Microsoft Dynamics, and Syspro have made significant progress in improving usability as they progress to Enterprise 2.0 apps. As mentioned in a December 29th, 2008 post, customer expectations for Enterprise 2.0 apps include users rich user experiences, actionable insight, and business process orientation. The impact of overall user experience and user interaction often tie back to seven key Enterprise 2.0 characteristics:

1. Richer user experiences - role based scenarios across various usability paradigms
2. Business process orientation - support for end to end business processes
3. Configurable change - designing with flexible models and rules instead of customizations
4. Actionable insight - pulling all the key information to make a decision in the context of business process and user role
5. Collaboration - providing secure private interactions and open and innovative connection with stakeholders
6. Intelligent response - responding to contextual models and business events
7. Hybrid deployment - deploying all models from on-premise, hosted, instance virtualization, multi-tenant SaaS, and cloud based BPO.

Part 5: Eshbel Technologies Leaps Ahead With Intuitive Usabilty and Workflow

Israeli based Eshbel Technologies delivers an update to its venerable Priority ERP product line.  Priority has served over 3000 customers in the past 20 years.  Built on Microsoft Visual Studio .NET 35 tools and the Windows Presentation Framework (WPF), Priority 13 WPF designs with many user roles in mind and delivers actionable insight from the beginning.  The unique UI/UE provides a competitive differentiator in the highly competitive SMB ERP market.  Key to the success of the product includes the deliver of many Enterprise 2.0 aspects such as:

1. Richer user experiences - users gain a cockpit like access to key information and navigation.  Innovative layout can be personalized with configuration and takes advantage of the latest Microsoft .NET capabilties.
2. Business process orientation - embedded in the core product, Eshbel includes a rich business process modeling tool that gives end users the capability to modify workflows without expensive customizations.
3. Configurable change - most personalizations and modifications can be configured without expensive programming.
4. Actionable insight - Reports generated via drag and drop without intricate coding knowledge.  User dashboard provide key visualization paradigms.
5. Collaboration - leveraging WPF, Priority improves its synchronization with Office apps and most importatnly outlook.
6. Intelligent response - easy to configure rich BPM modeler enables end users to set triggers and thresholds for key workflows and processes.
7. Hybrid deployment -  users will find support for multiple deployment options such as on-premise, on-premise and web enabled, or hosted.

Software Insiders Point of View Photo Stream (click image for details)

(Source: Eshbel Technologies)

Your POV.

Do you like how your apps UI currently look? Will user experience lead to cost savings for you? Is this enough to make you want to switch? What do you think of Eshbel’s approach to usability and workflow? Post your thoughts or send me a private email to rwang0 at gmail dot com .

Friday’s Feature: Snapshots in Enterprise 2.0 UX/UI

1. Epicor 9
2. Eshbel Priority 13
3. IFS Applications 7.5
4. Lawson SmartOffice 9.0x
5. Microsoft Dynamics AX and NAV

Next Friday’s Feature

We currently have openings for the next Friday’s Feature on UI. Send a proposal to rwang0 at gmail dot com

Copyright © 2009 R Wang. All rights reserved.

More details have emerged on the actual 10 or 11 KPI’s that SUGEN and SAP have agreed to as well as the SAP’s targets for showing value.  To start with, here are the main KPI’s for each category:

SUGEN KPI’S

Business Continuity

• Increased business solution availability
• Reduced amount of work related to all SAP incidents (including reduced mean time to resolve and reduced overall SAP incidents)

Business Process Performance

• Reduced number of emergency changes.
• Reduced amount of work for post-go-live stabilization and optimization.
• Reduced number of failed changes, which must be backed out of business solutions in productive use.

Protection of Investment

• Deployment of the latest innovation for application and technology stacks.
• Reduced maintenance costs by elimination of unnecessary modifications.

Total Cost of Operations:

• Decreased hardware costs (e.g. CPU).
• Decreased storage costs.
• Reduced total work of deploying support and enhancement packages.

Approach shows rigor in the cost justification and value process

According to user group members, measurements will be conducted quarterly with the first one occurring in every six months.  SAP must also show the following in order to prove value:

1. Demonstrate tangible cumulative cost savings for customers exceeding the increase in support fees
2. Prove KPI index decrease by 30 percent within the next four years, aggregated over the100 customers participating in the benchmark program
3. Use cumulative savings over the four years using a pre-define schedule of four percent in 2009, 12 percent in 2010, 22 percent in 2011, reaching the full 30 percent by 2012

The bottom line - user groups should now determine the minimum R&D percentage of investment from revenues

The SUGEN KPI’s provide a great framework for other user groups to begin a discussion on the value of the new SAP  Enterprise Support offering in comparison to today’s programs.  Keep in mind, these are only useful when vendors must justify a maintenance fee increase.  The bigger and more important issue - how are the maintenance revenues reinvested?  Consequently, users should begin to track the ratio of R&D dollars that tie back to the amount of maintenance revenue.  This will be key issue for the next 5 to 10 years.

Your POV

Do you think SAP met its promise to SUGEN?  Will this help you with your commitment to SAP?  Do you feel SAP has now done the right thing?  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.

Since SAP’s announcement of its single tier Enterprise Support plan last July, customers have continued to express dissatisfaction.   In response to such complaints, the SAP User Group Executive Network (SUGEN) of 12 SAP user groups and SAP have been engaging in discussions around the value derived from this new offering.  This morning SAP and SUGEN announced an agreement on three key areas of the Enterprise Support offering:

• Defined list of key performance indicators to measure the results of SAP Enterprise Support (ES) services. As part of the agreement, the value of ES will be measured by through the jointly agreed SUGEN Key Performance Indicator Index (SUGEN KPI Index).
  Based on the press release and informal conversations, the four areas covered include business continuity, business process improvement, protection of investment, and total cost of operations.  No public details have yet been provided on the specific metrics but there is an expectation for customers to realize value within a four year time frame of the benchmarking program

  POV: The four areas measure how choice, value, and predictability of investment come together in the overall maintenance offering.  If successful, this represents a unique and transparent approach to demonstrating value in maintenance.  In the coming weeks, SAP users will want to seek details of the specific KPI’s and determine how those KPI’s will be measured on a consistent basis across different types of organizations.

• Joint benchmarking program to define and measure how SAP customers may derive value from ES. With agreement on the KPI’s in place, a formal benchmarking program will be instituted to provide baselines to quantify value.   SAP and SUGEN have agreed on the parameters of the representative customer sample.  SUGEN will choose the customers.   Importantly, an independent party will validate results will conduct quality assurance and independent validation of the results.

  POV: Benchmarking remains the critical factor in this program.  SAP customers should pay close attention for balance in the representative customer sample.  Key variables include level of internal SAP competency, size of organization, complexity of environment, number of instances, industry, and geographic focus.   One can not overemphasize the importance of this program.  The results not only impact future maintenance fee increases, but also provide important benchmark data on SAP operations.

• Changes to the 2008 pricing program for current contracts that may will be migrated to ES. Based on the KPI program, SAP agrees to postpone subsequent price increases pending the realization of targeted improvements measured by the SUGEN KPI’s.  These changes have been made to the 2008 pricing program for ES.  Instead of ongoing increases until 2012, the new program ends in 2015.  As stated in the press release “Starting in 2010, the price of SAP Enterprise Support for existing customers will continue to increase based on individual contract terms but will not be higher than a yearly fixed upper cap. This translates to an increase average of no more than 3.1 percent per year from 2010 onwards. The price of SAP Enterprise Support will be capped at 22 percent through 2015. “

  POV:  Two scenarios emerge.  Should the value of ES not be realized, then the price increase will not pass.  However, customers will more likely face a more gradual price increase to the 22%.   This may prove to provide some relief for recession strapped customers.

The bottom line - progress on Enterprise Support issue may result in a win - win for  SAP customers

Expect customers to take the news with cautious optimism.   Should the benchmarks succeed, customers may gain value.  Failure to meet targets meet a freeze on maintenance.  In any case, this is welcomed news and provides a hard fought win-win for the customer and the vendor-client relationship. Congratulations go out to SUGEN and SAP for coming to a common ground!  This shows the importance of preserving independent user groups and the role active users play in shaping the overall agenda.  The one thing left in the choice, value, predictability equation is choice - meaning a tiered maintenance program or access to third party maintenance.  With the less than positive Q1 earnings report announced today, let’s wait to see how other chips will fall into place.

Your POV

Do you think SAP met its promise to SUGEN?  Will this help you with your commitment to SAP?  Do you feel SAP has now done the right thing?  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

For more POV’s:

Dennis Howlett - April 28, 2009 “SAP software revenues plummet, announces new deal on maintenance”

Copyright © 2009 R Wang. All rights reserved.

Economic Downturn Challenges Enterprise Software Executives To Uphold The Sanctity Of The Vendor - Customer Relationships

Conventional wisdom would assume that in a challenging economy, strong relationships would be a key success factor to retaining business and mitigating loss of revenue.  Unfortunately, this does not appear to be the case for many companies, including vendors in enterprise software.  Blame it on the economy, fear of depending on their people, or plain greed, but a good number of executives have taken an approach that attempts to preserve shareholder value at the expense of their vendor - stakeholder relationships (i.e.employee, customer, and partner).  Now in their defense, these muckety mucks face dire times and hard decisions need to be made.  However, they are not in a unique situation and risk jeopardizing brand value, trust, and market credibility for short term gain. Let’s look at five common value destruction strategies:

• Part 1: Commoditizing the client facing workforce at the expense of the client
• Part 2: Slashing the quality of support and maintenance while failing to deliver value
• Part 3: Pushing products that clients don’t need in order to grow revenues
• Part 4: Under-investing in R&D and then repackaging existing content as new innovation
• Part 5: Living in denial by ignoring stakeholders

Part 4: Under investing in R&D and then repackaging existing content as new innovation

Back in the heady days of the 80’s, custom dev teams faced challenges with primitive tool sets, constantly changing business priorities, and escalating costs of internal maintenance.  The cost to keep up with change seemed unsurmountable.  Consequently, packaged apps vendors offered businesses the promise of economies of scale so that the long term cost would be less.  Client would benefit from best practices in various industries.  In turn, the software vendor would provide the scale to take over bug fixes,  enhancements, new functionality, staffing, and future innovation. The promise of packaged apps appeared to solve the issues that custom development failed to address.  With Y2K in full force, everyone rushed to put their latest ERP system to beat the crunch.  Upon reflection, it may seem that we traded one set of cost for another.  Here are four customer examples as to what’s been happening.

• Forcing clients to re-pay for the same functionality ” They delivered some supply chain planning capabilities in the old modules.  With each release and our input, the product improved.  One day they moved to an engine pricing.  When they launched XXX, they decided to come back and charge us for the new product.  We had access to 80% of the functionality already.   We had the old product for 10 years and should have been entitled to the new release after millions of euros in maintenance and our feedback.  This was the beginning of the downturn in our relationship.  Today they keep trying to sell us on their new suite and its just a repackaging of all their disparate products!”  EMEA Discrete Manufacturer,  CIO
• Failing to deliver on promised roadmaps ” We sat on these Vendor X Customer Boards (i.e. industry peer groups) where we worked out future capabilities with some competitors, system integrators, and other technology partners.  After 5 years of talk, we still have not seen 85% of the functionality requests we put into play.  Instead, the company has focused on the low end of the market segment and in other industries.  We spent all this time talking and now we have very little to show for it.  We’ve paid over 16M in maintenance in the past 5 years.   What happened to realizing the customer input into the product design process?  Its been an outrage!  We could have built everything on our own and maintained this for the same cost or less.  Yes, we could rebuild our ERP and be more successful and cost effective and just might as the tooling has significantly improved and PaaS platforms provide potential.”  CPG,  Senior Director for Business Apps
  
• Charging for technology uplifts. “After using Vendor X’s Business Intelligence product for 7 years, we finally decided to upgrade to the next version.  We compared the upgrade and functionality wise, the new release had less capabilities than the old release.  They had built the product on a new technology platform.  While it could be more advantageous for us, we were shocked that they had the nerve to charge a replatform fee for us to use the new product.  They demanded additional money for the same functionality.  This is absurd!  We moved to Vendor Y a year later because they did not seem like they would be acquired and avoided this scenario. “  Global Financial Services,  VP Analytics and Business Intelligence
  
• Responding at a snail’s pace to innovative technologies. ” I’m miffed that the large ERP vendors keep missing the boat on new technology.  Why can’t they deliver a multi-tenant SaaS offering?  What’s up with hosting and mega tenancy? We seek new cost effective deployment options and everything comes back more expensive each year.  We also can’t understand what’s so hard about improving usability.  Why don’t they just take Adobe AIR and Flex and rebuild the screens?  We don’t really care what’s in the back end!  We just need something that is role based and carries the relevant data that are people need to make a decision.  After paying these guys over 100M in maintenance in 10 years, we could have built this faster, better, and cheaper.  How come they can’t deliver better use of collaboration technologies?  At the rate we’re going, we’ll be using more SharePoint than Vendor X’s portal”  Major Oil and Gas,  Director ERP Project
  

The bottom line - failure to deliver on promised functionality jeopardizes hard won trusted relationships

Clients made strategic bets with key software vendors to go with packaged apps.  Many shared with them their best practices in the development and improvement of the vendor’s product.  These were trusted relationships.  In the end, vendors achieved economies of scale but under invested their profits back into the product.  Clients had a good start with some basic apps.  But with an average of 80% of all maintenance and support fees going back to profit and not the product, the client vendor promises may be too broken.

Initially, most clients took this in stride and gave the vendor some grace period in delivery of key functionality.   After a series of excuses, many vendors failed to deliver as they were distracted with satisfying investors or engaged in M&A.  In such cases, clients and vendor user groups should take action and engage in deeper conversations about what ratio of revenue goes back to R&D.  How quickly should enhancements be prioritized.  What ratio of R&D would the clients expect reinvested from license and maintenance fees?

For those clients, its time to apply some leverage on those vendors badly behaving to be more forthright with their commitment on promised roadmaps and more responsive to client enhancement requests.  Clients should be more proactive!  Clients may need to be more public.

Your POV

Got a success story where your vendor has bucked the trend and delivered more than expected.  Got a POV on how they are keeping good relationships? Or got a great story on the bone-headed thing your vendor or your employer has done to destroy value in the relationship!  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.

Keynote highlights include themed presentations around value

Customers, partners, and prospects gathered together in the always spectacular San Diego Convention Center for Lawson CUE 2009.  Moments before the keynote, the team unveiled the latest Lars Larson video, “Lost and Found”!  In true Lars Lawson fashion, the final solution reflected simplicity.  The keynote then kicked off with a series of classic Harry Debes jokes to warm up the crowd.  Amidst a back drop of “Who wants to be a Billionaire?”, Harry began an interview of his show guests which included Lawson customers and executives.   Armed with new words such as ‘interlutions’ and ‘liquid applications’, Guenther Tolkmit,  Senior Vice President of Product Development shared how Lawson has moved to agile development cycles of 4 to 6 weeks for new interlutions.  Ed Sturdivant, County Auditor of Ft. Bend County of Texas detailed how they achieved a revenue & cost-savings of a combined $4.9 million over 3.5 years with Lawson.  Meanwhile, Catholic Healthcare Initiatives described how their roll out of Lawson to 45,000 employees realized a $125M savings across 77 hospitals in just their first year.

(Photo: Lawson CEO Harry Debes with Lars Lawson.  Copyright © 2009 R Wang. All rights reserved)

The Day 2 keynote kicked off with Dean Hager’s Extreme Makeover - Lawson Edition.  The audience got a glimpse of his ice fishing house as he highlighted new announcements in the Microsoft based User Productivity Platform.  Smart Office 9.03, enterprise search, and M3 analytics led the charge for new developments announced at CUE09.  With the makeover complete, attendees saw the new Hager household.

(Photo: Lawson Senior Vice President of Product Management,  Dean Hager and his “Fish House” Extreme Makeover-Lawson Edition.  Copyright © 2009 R Wang. All rights reserved)

Major announcements include new product offerings

In addition to the new M3 analytics and PLM capabilities for Fashion, key development and related analysis from this year’s CUE include:

• Vertical industry and target capability focus. Despite presence in 15 vertical industries, Lawson now actively targets seven industries including food processing, fashion, distribution, equipment services management and rental, health care, and public sector.  True to its heritage, Lawson also targets the human capital management (HCM) horizontal with an integrated talent management suite and workforce management solution.
  
  POV:  Software vendors below $1B in revenue have the bandwidth to focus on just 5 to 10 verticals.  Lawson’s strategy makes sense as industry relevance and capability provides a key barrier of entry from larger ERP players.  Lawson’s strength in HCM provides it with the opportunity to go deep on vertical HCM requirements.

• Lawson Smart Office 9.0.3. First delivered to M3 customers in 2008, this latest release delivers the same attributes of intuitive role focused design, personalization, integration BI, process automation, and Microsoft Office integration for S3 customers.  Smart Office builds on Microsoft tools and technologies such as Windows Presentation Foundation and Groove.  This latest release adds interactive charting and analysis tools to list views, a new ad-hoc query tool called InfoBrowser, and better enterprise mash up support.  Additional enhancements include personal history, type ahead, personal watches (DVR or Tivo like feature), off-line editing in Microsoft Excel, export to Microsoft Outlook Tasks, embedded learning, and custom widget creation.
  
  POV: Lawson’s continued focus on usability and user experience may help improve overall productivity for the customers.  Form must follow function and in this case, these screens show a movement towards the fundamentals of Enterprise 2.0 applications.
  4

• Lawson Enterprise Search. Based on the popular Apache open source search solution Lucene, the new search appliance serves S3 customers today and M3 customers next year.  Search features span across both structured and unstructured data from Lawson apps and Lawson BI to the user’s desktop.
  Lawson Enterprise Search appliance is a connected as a virtual machine using VMWare.  User security is enforced and individual user history can be stored and searchable.

  POV: Customers seek tools and techniques to quickly find information.  Enterprise search plays a key role in accessing items such as transactions, purchase orders, assets, and customers.  Lawson’s new offering may provide such a proactive solution.  However, the real test will be its ability to serve up non-Lawson data with ease and relevance.

• New global maintenance and support offerings. Lawson revised its maintenance and support offerings and now offers a two-tiered precious metals based support and maintenance plan.  Bronze provides customers with providing product updates, access to MyLawson.com and access to support consultants during the customer’s business hours. It also provides 24/7 critical issue support, access to upgrades, tax and regulatory updates, and corrections - as well as remote diagnosis, rapid technical response, customer-focused “hot topics” web sessions, and electronic reporting.  Silver adds on to Bronze offerings but includes a Lawson Global Support Account Manager, a scorecard activity review to track progress on support cases, and software update planning services.  Silver customers gain access to senior support resources within the Lawson Global Support and Product Development teams, priority case queuing, and an exclusive track event during the Lawson CUE event.
  
  POV:choice, value, and predictability,  Lawson’s move here demonstrates a willingness to apply customer feedback in making revisions. While Lawson did raise maintenance fees last year in December 2007 (corrected April, 28, 2009) to the chagrin of some customers, the new offering does provide better clarity and tiering of options.   Because customers continue to seek

• Lawson Online Learning Suites.  New learning management tools for S3 and M3 are directly delivered to the desktop.  Four types of course include the OnDemand collection which provides self paced courses, the Simulation Collection which delivers step-by step realistic scenarios, the Interactive Webcast Collection which engage with demos and q&a sessions, and the Virtual lab collection which offers online, instructor led courses.
  
  POV:  With travel freezes and crazy work schedules, customers seek training options that not only match their learning style, but also meet their schedule and availability.  Lawson’s Online Learning Suites provide a cost effective and flexible approach to training.  Course content quality does vary according to some clients but overall the feedback is positive.

The bottom line - vertical orientation and move towards Enterprise 2.0 add needed innovation and relevance

The Intentia acquisition continues to bring Lawson economies of scale in R&D, back office functions, and sales and marketing.  More importantly, strong vertical beach heads for M3 in Fashion, Food & Beverage, Equipment Services Management & Rental, and Distribution balance out the s3 product line’s dominance in health care, public sector, and human capital management.  The result - a focus on user productivity amidst a growing vertical focus.  Customers in the key target verticals should keep Lawson in short lists.

Your POV

How was your Lawson CUE experience?  Does Smart Office or enterprise search compel you to upgrade to the latest Lawson release?  What’s your view on the merger of Intentia? Post your comments here or send me a private email to rwang0 at gmail dot com. Thanks and looking forward to your POV!

Catch the tweets from the keynotes at Lawson #CUE09

Featuring: Merv Adrian

Naomi Bloom

David Dobran

Larry Dunnivan

Jim Holincheck

Paul Howard

Dennis Howlett

Michael Krigsman

Aaron Pearson

Lisa Rowan

Frank Scavo

Thomas Wailgum

Josh Weinberger

Copyright © 2009 R Wang. All rights reserved.

Oracle announces a $7.4B deal for SUN just a few weeks after the IBM deal fell through.  If completed, Oracle will control a significant major open source alternative and a nice piece of the high end computing business.  These open source components have been viewed as the alternative to the dominance of the Big 4 or MISO (Microsoft, IBM, SAP, and Oracle).   Oracle will also gains an innovation engine with the assets of Sun’s Labs groups which pioneers a series of innovations that include potential enterprise solutions for the virtual world.  The deal puts Oracle on a continued path to acquiring deeper components of the enterprise computing stack, including appliances.  Here’s how the stack looks:

• Middleware - While Java and Solaris may appear to be the crown jewels in the deal, Oracle has managed to slowly buy out other stack competitors (i.e. BEA and now Sun) and integrate them into the Fusion Middleware suite of tools for custom development and its own Fusion Applications product lines.   Sun complements BEA.  In addition, the open source stack will also provide Oracle with a new avenue to the SMB market .  (added 4/22)
• Database - Oracle takes out the low cost competitor to SQL server on the low end and gets a shot at converting them to Oracle DB instead of IBM.  Control of mySQL adds to an SMB entry point and the removal of a competitor .  (added 4/22)
• Hardware - Oracle gains another great recurring revenue (maintenance) base with Solaris.  This complements Oracle’s large and profitable database installations on Solaris that would have fallen prey to the IBM DB2 team.  While there’s some talk about Oracle selling the hardware side, this seems unlikely as Oracle focuses in on the appliance market.  More importantly, Oracle can take Sun’s tools and build a purpose built appliance running database, middleware, and apps.  (added 4/22)

The bottom line- Oracle succeeds at post merger integration where others often fail

Despite skepticism, Oracle has made these acquisitions work from a financial perspective, with year-over-year quarterly profit growth that has generally been well above 20%. Some key success factors include:

• Acquiring companies for the recurring revenue. Oracle’s first set of deals (i.e., PeopleSoft and Siebel) focused on installed base acquisitions that provided a strong foundation of support and maintenance customers. This base of recurring revenues provided Oracle with the room to continue strong R&D investment while reducing overall costs.  Oracle takes out another highly profitable maintenance base adding pressure to competitors.  In this acquisition it gains the profitable Solaris revenue stream while moving into a maintenance business for open source software.
• Eating its own dog food. In the late 1990s, Oracle made a major commitment to re-engineering its back-office processes using its own applications. As a result, Oracle has become highly efficient, with a ratio of general and administrative expenses to revenues of 3% to 4% - in most calendar quarters, one percentage point lower than SAP’s and even lower than other large software vendors like Microsoft and Symantec.  Expect Oracle to put the Sun assets into its arsenal of tools for delivering software innovation.
• Mastering post-merger integration. With two former investment bankers at the helm, Oracle has one of the best post-merger integration teams in the business. Oracle’s profit performance signals that it has been able to add new companies and their stream of revenues while keeping costs down.   Sun will provide considerable synergies in the short and long run.

See related coverage:

• 20090420 CNBC - Squawk Box with Karen Tso & Maura Fogarty “VIDEO -Oracle Snatches Sun, Foils IBM’s Bid”
• 20090420 The Associated Press - Jordan Robertson and Michael Liedtke “After IBM dalliance, Sun goes to Oracle for $7.4B “
• 20090420 USA TODAY - Jon Swartz and Leslie Cauley “Oracle to buy Sun for $7.4B after IBM drops bid”
• 20090420 SearchOracle.com/TechTarget - Ed Scannell “Will Sun help Oracle eclipse IBM?”
• 20090420 DestinationCRM - Lauren McKay “Oracle Takes a Shine to Sun Microsystems”
• 20090420 Managing Automation - Emily-Sue Sloane “Oracle to Spend $7.4B to Buy Sun Microsystems”
• 20090420 The Guardian - Andrew Clark “Oracle’s takeover of Sun Microsystems comes as surprise to software industry”
• 20090420 Computer Zeitung - Hans-Thomas Hengl “Mit der Kontrolle über Java sitzt Oracle am Schalthebel des Softwaremarkts”
• 20090420 Internet News - Alex Goldman “Oracle Buys Sun in IBM’s Wake”
• 20090420 Infoworld -  Tom Sullivan “Can Oracle make sense of Sun’s hardware?”
• 20090420 eWeek - Nicholas Kolakowski “Oracle, Sun Deal Strengthens Competition Against IBM, HP, Cisco”

Your POV

What do you think abou the acquisition of SUN?  Did you count on SUN as your open source stack alternative to the Big 4? Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.

Blogosphere highlights broken software vendor business models

What a crazy few days in the blogosphere!  Economic pressures force clients to become more attuned to the business models of software vendors.  Vendors have amped up sales tactics as they face earnings pressures.  Fellow colleagues in the analyst/blogger/media world have responded in full force to the observations we see as hurting both the vendors and clients in the software industry.  In fact, these recent posts stem from a love of the industry.  They serve as warnings that something must change.  Nothing resembles spite, just a hope that the industry will shift and respond with a win-win.  Vendors please take note as this is not an attack on you, but an out for you to change the business and make a case with your investors.  End users will also have to play their role.

Industry luminaries add their insight and wisdom

Michael Hickins kicked it off with his April 15th post on “SAP, Oracle Abusing Customer Relationships”.  Says the BNET guru, “Indeed, most customers have a love-hate relationship with their vendors that is heavily weighted towards hate”.  Shortly after, Dennis Howlett on April 16th then piled on with a piece about how the spin from the major vendors MISO (i.e. Microsoft, IBM, SAP, Oracle) is out of control.  Says Howlett, ” MISO PR wants to massage, control, dumb down or just ignore but when you’ve got fearless analysts… in play what can they realistically do to combat the ever increasing stream of criticism coming their way? The usual answer is to summon up the vendor/analyst/journalist/blogger relationship but that’s starting to wear thin as a veiled threat. There are just too many sources prepared to spill their guts. See more in his post about “Enterprise vendors: in pursuit of reality”.

Thinking that most of the storm had passed, today (4/17/2009), both Industry Guru Michael Krigsman and Star Analyst James Governor brought some fresh and related perspectives.  Michael in his piece on “Ugly Enterprise Sales Tactics” took a view that as a client advocate analyst, “… it’s also important to recognize Ray’s bias. Although he’s one of the most knowledgeable, diligent enterprise analysts out there, Ray’s role is to protect his clients, and he does benefit from negative press about vendors”.  Rounding out the day James Governor brought his point of view with “Enterprise Software Sales as Corporate Pathology: The World’s Greatest Dog and Pony Show”.  He was inspired by his colleague “…in a post about Zend’s new enterprise PHP server Stephen my business partner summed up the tragedy of enterprise software sales so well I thought to myself I really need to reiterate it…”  He built on Krigsman’s points and added “Here is the bottom line.  We already thought vendor sales tactics were aggressive in a market that was growing for pretty much everyone - so what about now, in a downturn?  Frankly things are worse now.  Maintenance fees are hiking while customer profits are disappearing.  Aggressive tactics are the norm.”

The bottom line -vendors can achieve win-win’s but clients must also do their part

There is good news insight.  Harmony among clients and vendors can be found in Jon Collins , Neil Macehiter, Dale Vile, and  Neil WardDutton’s book “The Technology Garden: Cultivating Sustainable IT Business Alignment” (Note to Dale Vile at Freeform Dynamics, Limited: please send me a cut for each referral j/k..)  Other factors in play include points about Total Account Value. On an April 5th post, we added,”This illustrates the case why the industry needs a frank dialogue to clients about the true cost of ownership; how Total Account Value (TAV) impacts the vendor; and what ramifications exist for recession time software vendor business models.

Clients will play a role.  In today’s economic climate, industry leaders need to lead in striking the right balance with customers, or face more “Le Rebellions“.   If they over step their push for discounts, they may force greater consolidation, leaving them with fewer choices and potentially higher long term prices.  If they fail to receive value from the software, well, they too may go bankrupt.

The software industry should take this as a notice to  change or be changed.  New business models will emerge to meet end user client needs.    Good luck and please heed this with the best of intentions.  We all need a win-win.

Your POV.

Software customers would love your comments about vendor sales tactics.  Vendor sales reps, chime in with your point of view.  You can post here or send me a private email to rwang0 at gmail dot com.

Follow these industry luminaries on twitter as you can be sure there will be more POV’s about what’s next:

James Governor - monkchips

Dennis Howlett - dahowlett

Michael Hickins - michael_curator

Michael Krigsman - mkrigsman

Dale Vile - dale_vile

(Please note that modifications were made to this blog post between its original post at 2:28 pm and the update at 8:58 pm.  I was on a plane and of course had to re-edit!)

Copyright © 2009 R Wang. All rights reserved.

FORWARD AND COMMENTARY
“Shape Your Apps Strategy To Reflect New SaaS Licensing and Pricing Trends” represent the seventh report in an on-going series to provide clients with insight on how to better align their packaged apps strategies.  As more and more clients seek SaaS solutions as options to pipe in innovation and potentially control costs, clients should be aware of how to build a SaaS strategy that remains sustainable and prevents vendor-lock in.

Other documents as part of the ongoing series on packaged apps strategy include:

1. Why You Need A Long-Term Apps Strategy
2. Forrester’s Long-Term Packaged Applications Strategy Framework
3. Does Your Apps Strategy Support Your Corporate Business Drivers?
4. Packaged Apps Strategies Take A Back Seat At Most Enterprises
5. The ROI Of Packaged Apps Instance Consolidation
6. Five Steps To Building A Recession Proof Packaged Apps Strategy
7. Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends
8. Third Party Apps Maintenance Rebounds
9. Craft Your Negotiations Strategy To Reflect New Packaged Apps Licensing And Pricing Trends

RESEARCH HIGHLIGHTS

A. Introduction

Recessionary forces drive applications professionals to seek new delivery models such as software-as-a-service (SaaS), platform-as-a-service (PaaS), and other XaaS (X-as-a-Service) models. But with these options’ upfront benefits in choice, value, and predictability come new ownership risks that applications professionals and business stakeholders should explore. Forrester’s review of 11 vendors in SaaS enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM) confirms that, motivated by heavy competition for new customers, these vendors remain vigilant in mitigating such end-user concerns. In fact, SaaS vendors continue to improve and refine subscription models for new buying scenarios beyond cost/user/month. Forrester recommends that all applications professionals include SaaS in their firm’s long-term packaged apps strategy and that they take five key actions to mitigate risk while avoiding lock-in.

B. Research Findings

The Recession Is Driving Increased SaaS Adoption 

Faced with impending IT budget cuts, increasing business demands, and the encumbrances of legacy packaged apps, enterprises are increasingly turning to true multi-tenant SaaS delivery options during the downturn.  SaaS adoption as part of a long-term apps strategy keeps growing because:

• Subscription pricing reduces capital expenditures (capex).
• SaaS enables more-rapid deployment.
• Enterprises expect frequent updates with new functionality.
• Business leaders drive more and more software decisions.
• Vendor success generates buzz and increased interest.

Vendors Demonstrate Continued Evolution And Value of SaaS Pricing Models
Forrester analyzed the completed, work-in-progress, or ongoing initiatives for the latter half of 2008 for seven SaaS applications vendors. The software licensing and pricing trends Forrester found include refined pricing models, new bundling and unbundling options, and a focus on fixed-price implementations. Specific trends for these SaaS apps vendors include:

• Amitive delivers a usage-based model to foster collaboration and community participation.
• Intuit attaches a SaaS services model to on-premise QuickBooks Enterprise Solutions.
• Intacct reduces the barrier of entry for SMBs while simplifying channel pricing.
• NetSuite continues to expand vertical-edition bundling and flat-fee pricing for add-ons.
• QuickArrow delivers choice with tiered and bundled user-based pricing models.
• salesforce.com provides more value for existing license fees and more user tiers.
• Workday maintains a simple subscription pricing model based on company size.

Recommendations - Adopt SaaS Benefits While Mitigating Risks In Your Long-Term Apps Strategy

Keep in mind that while cost/user/month SaaS pricing models may seem simple at first, factors such as connection points, storage, support, and module-based pricing can quickly add to their complexity. In addition, true multitenant SaaS models leave users without the software code should the vendor go bankrupt or the client choose to end its relationship with the vendor. While considering SaaS as part of a long-term apps strategy, enterprises should follow these simple suggestions to get the most out of SaaS and mitigate risk:

• Balance pay-as-you-go month-to-month terms with long-term contracts.
• Compare SaaS versus on-premise over an appropriate period.
• Understand long-term ownership implications.
• Seek more than just refunds for outages in service-level agreements.
• Choose a financially viable SaaS vendor or seek a software escrow-like mechanism.

C. Report Links

Click on the link for the detailed report along with the “What It Means” and “Alternate View” for: Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends. For media courtesy requests, please send me an email to rwang@forrester.com

Your POV.

Would love your feedback on the report.  You can post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.

Economic Downturn Challenges Enterprise Software Executives To Uphold The Sanctity Of The Vendor - Customer Relationships

Conventional wisdom would assume that in a challenging economy, strong relationships would be a key success factor to retaining business and mitigating loss of revenue.  Unfortunately, this does not appear to be the case for many companies, including vendors in enterprise software.  Blame it on the economy, fear of depending on their people, or plain greed, but a good number of executives have taken an approach that attempts to preserve shareholder value at the expense of their vendor - stakeholder relationships (i.e.employee, customer, and partner).  Now in their defense, these muckety mucks face dire times and hard decisions need to be made.  However, they are not in a unique situation and risk jeopardizing brand value, trust, and market credibility for short term gain. Let’s look at five common value destruction strategies:

• Part 1: Commoditizing the client facing workforce at the expense of the client
• Part 2: Slashing the quality of support and maintenance while failing to deliver value
• Part 3: Pushing products that clients don’t need in order to grow revenues
• Part 4: Under-investing in R&D and then repackaging existing content as new innovation
• Part 5: Living in denial by ignoring stakeholders

Part 3: Pushing products that clients don’t need in order to grow revenues

At this point in time, clients really need their vendors to propose options to help theme save money.  Clients seek assistance in reducing their cost basis of running their software.  Though in some cases, new products may help clients create operational efficiency or meet regulatory requirements, clients increasingly report their sales people pushing a number and not a product that meets their needs.  Three cases in point:

• Forcing clients to spend more to keep a low rate for maintenance. “Our sales rep told us we needed to spend a total of 5M euros for maintenance in order to keep the lower tiered rate of maintenance.  We were short by 500,000.   He then gave us a list of items we had not purchased to date.  Nothing on that list was beneficial to us.  We did not need BI.  We did not need compliance.  He said this was of no consequence.  We needed to come up with the difference and he would not make any exceptions.  We also wanted to reduce the number of instances of ERP.   He even got angry at us!  Our experience with this vendor showed us how much they took our relationship for granted.  We now have a concerted focus to limit our exposure to this vendor “  Global Oil and Gas,  ERP Director
• Selling additional products that have no future road map because of post acquisition road maps. “We were told that we needed to upgrade to the latest version of our XXX product.  Post acquisition we were left confused as to the final product road map.  Our contract renewal came before the final decisions were made.  We asked for a 60 day extension.  The sales rep told us we would be out of compliance should we wait.  Against our better judgment we went forward with the purchase of additional licenses only to find out the product would be discontinued.  We asked for credit towards the new product and were told none would be given.  We have put a freeze on all future spending with this vendor for the next 8 months “  North American Manufacturer,  CIO
• Suggesting additional consulting services that require additional product purchases. “They came to us with a consulting offering that would help us identify and benchmark how we were doing compared with other companies in our cohort.  We thought it might be a good idea.  After spending 150K with them, we received good insights.  However, at every step, they tried to get us to buy additional products in BI and compliance or upgrade to their latest suite release.  We called members in our local user group and they told us that other members have complained as well but the user group had been over-influenced by the vendor and was not able to assist”  Global CPG,  ERP Program Manager
  

The bottom line -relationships should focus on solution selling and not meeting total account values.

Strong relationships are crucial for success, particularly in a difficult economy.  Despite the pressures to meet unrealistic revenue forecasts, clients should expect their vendor sales teams to take a solution selling approach to identifying options to reduce costs.  Those that fail to do so will face a wrath of rebellion when clients have the opportunity to take action.  The good news, vendors who understand how to craft real solutions that provide ROI and immediate impact, have already implemented programs to provide assistance .  Examples include improving existing peer forums, renegotiating existing terms, offering more entry points to support and maintenance options, assisting with vendor financing, and lowering cost of usage and ownership.  Kudos to those vendors!

Your POV

Got a success story where your vendor has put a value creation strategy based on keeping good relationships? Or got a great story on the bone-headed thing your vendor or your employer has done to destroy value in the relationship!  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.