A Software Insider's Point of View

Who Says Support Has To Be Bundled With Maintenance?

About a decade back, vendors would offer support and maintenance as two separate line items on their contracts.  Support would run about 5 to 10% the license fee and so would maintenance.  Keep in mind, average support and maintenance fees were under 15% back then.  Here’s a quick primer on what was covered:

• Maintenance.  Traditional areas include basic bug fixes, functional and performance enhancements, upgrades, backward compatibility, and legislative and regulatory updates.
• Support.  Most requests fall in the technical support category.  Support cases typically include installation issues, integration questions, third product compatibility, and complex scenario resolutions.

Today, almost every vendor in the enterprise apps world (i.e. ERP, CRM, SCM, eCommerce, etc) has decided to bundle the two line items together. It’s now known as software maintenance and support and vendors charge between 18 and 28% of net price.

Microsoft Dynamics Uniquely Provides A Separated Maintenance And Support Option With Choice, Value And Flexibility

While many in the software industry have obsessed with locking customers into maintenance and support contracts, the Microsoft Dynamics team set out to differentiate the ownership experience around the key principles of choice, value, and predictability (see Figure 1).

• Choice.  After the initial purchase, Microsoft Dynamics has offered customers the option to purchase maintenance and support separately.  This is unique to the industry for three reasons because customers:
  1. Choose whether or not to buy maintenance.
  2. Determine who they go to for support.
  3. Separate the technical support from the maintenance decision.

• Value.  Microsoft’s maintenance plan bundles a series of customer friendly services that deliver value.  The include
  1. Unlimited acccess to eLearning.  Customers can get to any course at any time with their maintenance dollar.  There’s no requirement for expensive week long training academies.
  2. 24 hour self-service support. Microsoft’s invested in its self support community and has 1000 new users a month with 30,000 self-help posts to date.  Most questions can be addressed in the discussion forum or directly by an expert.
  3. 10 years of lifecycle support. Most vendors provide a 5 year plan with escalating costs in the 6th and 7th years.  10 years represents a reasonable life cycle for ERP.

• Predictability.  Along with the 10 years of lifecycle support, Microsoft Dynamics will use the original purchase price as the basis of calculating future maintenance fees.  Users must stay current on enhancements to qualify.

Figure 1: Microsoft Dynamics’ Delivers Choice and Value In Its Support And Maintenance Offerings

. 

The Bottom Line - Users Should Demand A Split In Maintenance And Support

Now’s the time to seek options in maintenance.  Shelfware reduction, third party maintenance (3PM), and contract re negotiations should provide some relief at the business level.   However, decoupled maintenance from support options opens up the customer base to internal and third party options.  Sticking with maintenance and not support may prove to be the best value (i.e. next to 3PM) and create a win-win between the vendors and customers.

The Bottom Line - Progressive Vendors Can Take Charge And Lead The Way.

Software vendors must reexamine their offerings to understand what customers need.  Should economic conditions worsen, more third party maintenance (3PM) options will emerge and force pricing pressures against today’s tired models.  Vendors must take action by phasing in or offering tiered maintenance offerings and minimal support

Your POV

Are you a Microsoft Dynamics customer?  Did you unbundle support from maintenance?  Are you looking at options to compare the vendors?  We’d love to hear your point of view.   Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Let us know if you need help with your enterprise apps strategy by:

• Conducting an ROI on 3rd party maintenance options
• Identifying cost reduction opportunities
• Renegotiating your software contracts
• Improving innovation via SaaS and other deployment options

Take the new and improved survey on 3rd party maintenance and

Related resources and links

20091008 Deal Architect - Vinnie Mirchandani “Third Party Maintenance Is Really 4 Decades Old”

20071120 News Analysis: Too Early to Call the Death of Third Party Maintenance

20090210 Tuesday’s Tip: Software Licensing and Pricing - Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20090622 News Analysis: Infor Flex Reflects Proactive Maintenance Policy

20090516 News Analysis: Rimini Street Launches Third Party Maintenance for SAP

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090428 News Analysis: SAP and SUGEN Make Progress on Enterprise Support

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090330 Monday’s Musings: It’s The Relationship, Stupid! (Part 2) - Stop Slashing The Quality Of Support And Maintenance

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20081012 Monday’s Musings: 5 Steps to Restoring Trust in the Vendor - Customer Relationship

20091012 Research Report: Customer Bill of Rights - Software-as-a Service

20090910 Tuesday’s Tip: Note To Self - Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090602 Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Analyzing The Demand For Use Cases In Social CRM

Since joining Altimeter Group, I’ve had the pleasure of collaborating with my colleague Jeremiah Owyang on Social CRM.  On a daily basis, the requests for Social CRM strategies escalated from all parts of the organization. In fact, requests reflected all facets of CRM including the usual sales, marketing, service and support to advanced areas such as innovation, collaboration, and customer experience.  Who’s been asking?  Well it’s our clients, blog readers, and prospects.  They represent the line of business guys, the IT teams, the marketing gurus, and the board members who have told their executives that they need to do something social.

So why all this fuss and urgency?  Customers continue to adopt social technologies at a blinding speed and organizations are unable to keep up.  Social technologies continue to proliferate.  Because the conversations about organizations increasingly occur outside of the organization’s control in social channels, organizations need to:

1. Discover where the conversations are happening in this new social world.
2. Identify who’s influential and if they are customers or not.
3. Assess friend or foe status and their willingness to engage
4. Determine a tiered approach to engagement or re-engagement.
5. Tie social channels to business value and objectives
6. Bring the social channel back to existing CRM systems.
7. Reallocate resources to support Social CRM efforts

This is the basis for the groundswell in Social CRM.  But keep in mind, Social CRM does not replace existing CRM efforts - instead it brings more value to existing efforts and should complement the uber CRM strategy.

Behind The Scenes In Social CRM - A Holistic Approach to 18 Use Cases That Show Business How To Finally Put Customers First

Social CRM reflects the new world of disruptive technologies and the related business models, processes, and organizational requirements we live in.  Hence the multi-disciplinary approach to this research.  We’ve paired Jeremiah’s expertise in social technologies and customer strategies with my background in CRM, enterprise applications, master data management, and order management.   Our goal - take a holistic approach across multiple business departments, roles, and processes.

Given the newness of this topic, we also went out to the community to collaborate and define the use case framework.  We started with the “godfather of CRM” - Paul Greenberg and worked with 11 other gurus in a concerted fashion and with some level of serendipity.  Thanks go out to the individuals below and the for putting up with endless revisions, late night skype chats, and debates about client demand and technology maturity (see Figure 1).

Figure 1.  Influencer Input

From there, we validated the framework with over a 100 Social CRM pioneers.  As a final process, we then tested out the framework with 30 vendors in the space for a sanity check (see Figure 2).  The result - 18 Use Cases of Social CRM with input from 100 pioneers and 42 influencers in the market.

Figure 2.  Vendor Input

With all this in place, additional thanks go out to Christine Tran our researcher who helped us tremendously on the production of this report and Charlene Li for her edits!

Taking The 20,000 Feet View

While we’ve taken a comprehensive assessment of the use cases,  keep in mind, the high level points of the report start with:

• Customers have moved. Organizations are Falling Behind
• Social CRM Reconnects Organizations Back to Customers
• Avoid the Hype - Deploy Social CRM for Business Value
• Get Value: Adopt the 18 Social CRM Use Cases
• All Use Cases Start with Listening

Applying The 18 Use Cases

The 18 Social CRM use cases and the seven areas of business value can be summarized as (see Figure 3):

1. Social Customer Insights Form the Foundation for All Social CRM Use Cases
2. Social Marketing Seeks to Achieve Customer Advocacy
3. Social Sales Enables Seamless Lead Opportunities
4. Social Support and Service Drives Sustainable Customer Satisfaction
5. Social Innovation Streamlines Complex Ideation
6. Collaboration Reduces Organizational Friction and Stimulates Ecosystem
7. Seamless Customer Experience Sustains Advocacy Programs

Figure 3.  18 Use Cases Show Businesses How To Finally Put Customers First

At a high level, we’ve prioritized the use cases into 4 categories by market demand and technology maturity (see Figure 4).

• Evangelizables. This category represents market demand that is less than 16 months and technology maturity between beta ready technologies and those with critical mass.
• Near Tipping Points. This category represents market demand that is more than 16 months and technology maturity between beta ready technologies and those with critical mass.
• Early Movers. This category represents market demand that is less than 16 months and technology maturity between vaporware and beta ready technologies.
• Early Adoptions. This category represents market demand that is more than 16 months and technology maturity between vaporware and beta ready technologies.

Figure 4.  Ranking The 18 Social CRM Use Cases

The Report: The 18 Use Cases of Social CRM - The New Rules of Relationship Management

The Bottom Line - Take Action Today!

1. Sign up for the webinar series. This is a deep topic, and the report is only the tip of the iceberg.  As with other disruptive topics, we’re going to offer a series of free webinars to explore each of the use cases in detail.  Sign up for the webinar now, as we can only have 1000 attendees per webinar, as our last webinar had over 1100 registrants.
2. Read, then spread this report. As with open source, the Altimeter Group believes in open research.  We want our ideas to grow, and others to take advantage of it.  So if you found the report helpful, please forward the report to internal constituents, partners, vendors, clients, and blog it.  Use it in your presentations, business plans, and road maps.  The final report is embedded below, and there are download features for your own use.
3. Have an internal discussion. Evaluate your current situation at your company, then draw up which business needs need to be tackled first, use the use cases as a roadmap by mapping out which phase comes first, and which phase comes second.  Keep business value in mind at all times!
4. Learn more and join the community of pioneers. This is new territory, we don’t have all the answers, so we’ve created at group in which pioneers can learn from each other.  It’s free, and the conversation has started already, jump into the group, and learn together.

The Customer Strategists’ POV

You can read Jeremiah’s POV.

Related Resources

20100305 Research Report: Social CRM - The New Rules Of Relationship Management

20090831  Monday’s Musings: Why Every Social CRM Initiative Needs An MDM Backbone

20100306 2020Social - Gaurav “What are the Biggest Social CRM (SCRM) Use Cases and Opportunitites”
20100306 Digital Ingredients - Stefano Maggi - “Objectives and Social CRM”
20100305 WSJ All Things Digital - Brian Solis “Customers Inspire The Socialization of CRM”
20100305 WebAnalytics Demystified - John Lovett “Social CRM = Transformation”
20100305 NewComBiz - Tac Anderson “Social CRM is the First Step To Social Business And World Domination”
20100305 BNOX - Clo Willaerts ” Tools to Catch A Lead In Mid-Air”
20100305 Customer Think/Effective CRM - Mike Boysen “The Social Media Plug-In To Make Businesses Customer Centric”
20100305 Cloud Avenue - Jacob Morgan “Report on 18 Use Cases for Social CRM”
20100305 WebMetricsGuru - Marshall Sponder “22K and Altimeter Group’s Social CRM Paper Plus a Gap”
20100305 Business Two Zero - David Terrar “Social CRM - The New Rules”
20100305 Inside The Marketer’s Studio - David Berkowitz “The Must Read Report On Social Customer Relationship Management”

Recent Software Insider data surveys of next gen IT leaders in Q3 2009 and Q1 2010 show a 10% increase among organizations considering a Two-Tier ERP apps strategy (see Figure 1).  Key drivers behind moving to a Two-Tier ERP approach stem from:

• Purpose built or industry requirements (89.61%). Next gen IT leaders remain frustrated by the lack of innovation and progress in completing out promised functional footprints.  As market competition intensifies, industry specific, purpose built solutions provide the competitive advantage needed for survival and success.
• Existing systems too expensive (70.13%). ROI calculations on existing ERP systems often show high cost factors.  The culprits - overruns in implementation, customization of reports, maintenance payments on shelfware, increasing costs to staff, and rigidity of system.
• Upgrade too expensive (45.45%). Many customers face upgrade costs equivalent to reimplementation.  Cost factors could equal up to 85% of the original implementation cost.
• Need to innovate (35.06%). Some organizations find that their vendors have not innovated fast enough. Social channels have not been accounted for.  User experiences seem dated.  Reporting and analytics require experts to deliver.  Paucity in mobile solutions hinder productivity.
• Regulatory compliance (24.68%). The need to meet industry specific regulatory compliance drive organizations to choose purpose built solutions.  Many choose SaaS to mitigate the costs of legislative and regulatory updates.
• Geographic requirements (19.48%). Country or region specific requirements may require two-tier strategies based on geography.  Some ERP systems lack the language or tax requirements and a separate instance will prove cheaper to run than customizing a monolithic large ERP solution.
• Existing systems too rigid (15.58%). Rigidity may lead to the inability to integrate and work with other systems, new channels, and emerging stakeholders.  Integration solutions can assist, but long term, next gen IT leaders will begin to surround legacy solutions with newer technologies.

Figure 1. Two Tier ERP Strategies Gain Favor In Next Gen IT Leader Apps Strategies

Figure 2.  Industry Requirements And Cost Drive Push To Two-Tier Apps Strategies

The Bottom Line - Users Should Consider Scenarios Based On Business Models And Geographic Needs

Detailed apps strategy conversations highlight 3 scenarios where Two-Tier ERP strategies make sense.  A number of vendors have proven to be strong partners in enabling Two-Tier ERP (see Figure 3).

1. Different business models. Organizations with very different lines of businesses often consider hub and spoke implementations.  The drive to standardize on a single ERP system makes little sense when one subsidiary delivers services and the other manufactures goods.  Several large multi-national conglomerates leverage more than two-tiers of ERP to handle a warranty business, financial services, and power generation manufacturing.
2. Country specific deployments. Deploying a full scale ERP solution makes little sense for new subsidiaries when options exist at lower operating costs and higher ROI.  One large Japanese manufacturer found cost savings with local based systems in North America and EMEA.
3. Phased modernization efforts. Organizations looking to upgrade and modernize their systems may keep some legacy systems in place as they upgrade to more modern systems.  One large entertainment concern has kept their financials systems and updated their retail systems with a more modern, web services based, SOA architected product.

Figure 3. Vendors To Watch In Two-Tier ERP Apps Strategies

Related Resources

20091203  Strategy: 5 Lessons Learned From A Decade Of Naught

20091222 Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091102 Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider

20091006 Tuesday’s Tip: Why Free Software Ain’t Really Free

As always, 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, and we’ve worked together in the past, don’t hesitate to reach out to me via Linked In.

Paul Alessi is now a Buyer at Universal Orlando.  Paul brings decades of purchasing and procurement experiences including work at Reed Elsevier.

Nenshad Bardoliwalla has an updated current title: Co-Founder, Products at PROFERI. The Co-Author of “Driven To Perform: Risk-Aware Performance Management From Strategy Through Execution”, he last served as the Vice President, Technology, EPM & GRC, Office of the CTO at SAP

Ivan Chong has an updated current title: Executive Vice President, Data Quality Product Division at Informatica Corporation.
Ivan’s been a veteran of Informatica, NetGravity, and Oracle.

Oliver Claude has an updated current title: Program Director, InfoSphere MDM Product Strategy / Product Management at IBM. Oliver brings significant MDM/CDI experiences from IBM and Siebel Systems.

Donna Goodwin returns to Bank of America as a Senior Architect.  Donna’s a crackshot at data modeling, SOA, and master data management with stints at IBM, COMSYS, and Check Solutions.

Mick Gunter has an updated current title: Senior Vice President, Operations at Primo Water Corporation

Matthew Halliday has an updated current title: Producer / Creative Director / Tech at CPC Live

Alp Hug has an updated current title: SVP Products & Chief Marketing Officer at The Frayman Group. Alp was formerly the Senior Vice President for ECM Suite Technology Group at Open Text.

Karla Rose Hanson has an updated current title: Business and Communication Manager, Customer Service & Support / Commercial Technical Support at Microsoft. Karla’s a 12 year veteran at Microsoft.

Dawn Habgood has an updated current title: Vice President, Global Shared Services at Forrester Research

Alex Kao is now Managing Director at Stravantage LLC.  Former roles include a stint a tStrategy & Portfolio Management for Global Information Systems at Kraft Foods, Director, Enterprise IT Strategy at Sears, Roebuck and Co, and management consulting work at KPMG.

Jim Kaskade is now Chief Of Cloud at SIOS Technology, Inc.

Koshy ALEX is now Business Development Consultant at Oracle Corporation.  Koshy brings ERP experiences as a Business Development Executive atSynaptris, Pre-Sales Consultant for MS Dynamics ERP at Mahindra Satyam, and Resource Lead for Microsoft Dynamics Competancy at Mahindra Satyam.

Ed Maguire has an updated current title: Managing Director at CLSA Asia-Pacific Markets /Credit Agricole Securities (USA) Inc.

Bill McDermott has been named Co-CEO at SAP.

Jeff Onesto has an updated current title: Director of Product Management at OptionEase, Inc.

Anil Patrick R has an updated current title: Chief Editor - India Operations at TechTarget. Prior to his new position, Anil served as an Editor for Online Initiatives & Special Projects at Saffron Media Pvt Ltd’s Travel Division, and an Assistant Editor at Indian Express.

Jeff Ralyea has an updated current title: Senior Software Executive at Apex Charter Management. Ralyea brings software product management expertise from Infor, FrontStep, and MAPICS.

Anshu Sharma has been promoted to Vice President, Product Management at Salesforce.com. A fellow Enterprise Irregular, he was the Founder & Group Product Manager of Oracle’s SaaS Platform and Senior Development Manager/Technical Staff at Oracle.

Jim Hagemann Snabe has been named Co-CEO at SAP.

Brian Swift has an updated current title: Integrated Workforce Experience - Enterprise 2.0 at Lowe’s Companies

Jozsef Terenyi has an updated current title: IT Manager - SAP Systems at NuStar Energy. Jozsef brings a strong Energy IT background with similar experiences at Valero.

Katharyn White has an updated current title: Marketing Vice President, Global Business Services at IBM. Kathryn has served in various marketing roles over her 13 year career at IBM and has also worked at HP and DuPont.

David Anthony Wilkins has an updated current title: OSS /BSS Contracting Director, EMEA at ICI - the technology people

The Year Of SaaS Shows… And Yes, In This Economy.

The recession continued to take its toll on software sales with a slight impact to the SaaS vendors.  Growth rates have come down from the high 30’s to the low 20’s.  But with “flat” the new growth metric in this down economy, SaaS vendor results remain impressive.  On the other hand, traditional on-premises vendors see some light at the end of the tunnel.  License revenues have started to stabilize on a year-over-year basis.  Major events in the 2009 Calendar Year (CY) Q4 include:

• In YoY quarterly revenue growth, RightNow (56.96%) led the pack followed by Taleo (23.29%), SalesForce (22.26%), and Blackboard (17.66%) (see Figure 1).
• Salesforce.com achieves $1.4B in revenues for CY 2009.  As the biggest SaaS vendor in the market, Salesforce.com is bigger than Microsoft Dynamics, Lawson, and Unit 4 (Agresso).  To put this in perspective, Salesforce.com’s revenue alone is at the size of all the other public SaaS vendors listed in the Software Insider Index.
  
• Most on-premises vendors stabilized declines in new license revenue (see Figure 2).  Keep in mind that on-premises vendors have remained profitable in this downturn.  Maintenance continues to provide a cash cushion for most on-premises vendors.
• License revenues versus maintenance revenues for some vendors such as Deltek, Epicor, Exact, JDA Software,  Lawson Software, Manhattan Associates, and Oracle reach or exceed 1:2 ratios.  The result - lagging growth in acquiring new customers on latest releases.
• IFS leads with a (21.38%) gain on YoY license revenue with Manhattan (3.21%), Epicor (2.32%), and Oracle (1.92%) following with positive license revenue for calendar year Q4

Figure 1.  Most SaaS Vendors Continue Break Neck Growth

Figure 2. Many On Premises Vendors Rely On Maintenance To Bolster Sagging License Revenues

The Bottom Line - Clients Now Expect On-Premises Vendors To Have A “SaaS” Option

As we tally up the winners and losers for 2009, SaaS vendors have shown to the industry what’s required for success in today’s tough economic condition.  The secret to their success transcends subscription pricing, cloud services, rapid levels of innovation, and point solutions.  In fact, the success in SaaS comes from the attention to the relationship and the willingness to take a customer friendly stance.  On-premises vendors who have delivered on a partnership with their customers have known this for years.  However, they risk being consumed by the new business models of SaaS and Cloud.   Customers expect their vendors to deliver hybrid options; and private and public clouds.  Expect on-premises vendors without a Cloud deployment option to fade away in this decade as they become the legacy vendors they replaced in the client/server and Internet eras.

Your POV.

As an end user, have you seen the pace of SaaS adoption increase in your organization?  Do you continue SaaS solutions with the same level of comfort as on-premises.  As a software vendor, do you feel you have the right go-to-market cloud strategy for 2010? Please let us know if you need help with your enterprise apps strategy by:

• Develop your SaaS apps strategy
• Assist with SaaS contract strategies and the Customer Bill of Rights: SaaS
• Improving innovation via SaaS and other deployment options

You can post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

* 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 24th, 2010.  Not responsible for currency flux.  Please read the quarterly filings yourself =)

Related resources and links

Take the new and improved survey on 3rd party maintenance

2009 Calendar Year Q3

2009 Calendar Year Q2

2009 Calendar Year Q1

2008 Calendar Year Q4

2008 Calendar Year Q3

2008 Calendar Year Q2

2008 Calendar Year Q1

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Apps Users Seek Third Party Maintenance For Cost, Value, and Service

Updated surveys from inquiries, client conversations, and user group meetings show a 113.8% increase in interest in third party maintenance (3PM) services from Q3 2009 to Q1 2010 (see Figure 1).  Key factors stem from (see Figure 2.):

• Continuing cost pressures. Budgets continue to be at flat or have been reduced.  Organizations must do more with less.  Add pressures to innovate, CIO’s must find fat without trimming bone.
• Gaining minimal value in maintenance services. Most felt they were paying too much for too little.  An 8 point jump reemphasized the issue with a lack of tiered offerings.
• Declining plans to upgrade. Worsening economic conditions from Q3 2009 to Q1 2010 led a 27 point increase in interest in 3PM.  Expect many respondents to change their point of view (POV) as economic conditions improve.
• Expecting better service. Service continues to play a key factor in decisions to go to 3PM.  Over 60% of respondents had experienced poor levels of service.
• Slowing pace of vendor innovation. Greater than half of respondents believe their vendor has been too slow to deliver new capabilities. These include SaaS deployment options or key functionality in areas such as strategic HCM and social CRM.
• Disliking the vendor. About 1/3 of the survey respondents have bad experiences with their vendor.  Many times it comes from sales person or support rep experiences.
• Delivering self support. Almost 30% of respondents already provide their own support.  These organizations have no need to pay maintenance when they are doing all the work.

Figure 1. Interest in 3PM grows 113.8% over 2 quarters.

Figure 2. Cost Pressures, Value, And Decision Not To Upgrade Drive Current Trends to 3PM

Limited Options Exist For Most Enterprise Apps Customers

Of the 101 respondents in Q1 2010 interested in 3PM, Oracle (88.1%) and SAP (76.2%) users expressed the greatest interest in seeking independent services (see Figure 3).  Over 80% of the users were from large companies greater than 1000 employees across the globe.  Most SAP users surveyed have mixed environments with Siebel, JD Edwards, and PeopleSoft joint installations.  Unfortunately, very few public options exist for sole SAP users (see Figure 4).  For example, SAP customers can only turn to Rimini Street.  Oracle customers on PeopleSoft, JD Edwards, and Siebel also have limited choices with Rimini Street, netCustomer, and Spinnaker among the options.  IBM, Infor, Lawson, Computer Associates, Epicor, Microsoft Dynamics, Oracle E-Business Suite and database customers have no options.  (Note: This data may not be completely statistically significant given the sample size of 240, but hopefully it provides some directional input.)

Figure 3. Oracle And SAP Users Drive Interest In 3PM

Figure 4. Very Few Public Options Exist For Customers

The Bottom Line For Users - Users And User Groups Must Band Together To Guarantee 3PM Rights. Don’t Take These For Granted!

Although the latest surveys show a 17 point increase in the belief that 3PM is a right, this right is under fire by big vendors such as Oracle who have taken legal actions against 3PM providers for improperly (i.e. TomorrowNow) and allegedly (i.e. Rimini Street) violating intellectual property rights.  If providers have violated such laws, Oracle rightfully should defend its positions and those providers be punished.  However, there’s a lot of money at stake.  For most vendors, maintenance represents 50% to 80% of their revenue stream.  Consequently, users and user groups have a responsibility to:

• Demand that their contracts include provisions that protect their right to 3PM
• Require vendors to work out rules on how 3PM providers can deliver services without violating software IP provisions
• Seek anti-trust class action with the US DOJ (i.e. Christine A. Varney) and the EU Compeition (i.e. Joaquín Almunia) against software vendors who hinder 3PM providers from providing services

Users and user groups must vigorously defend their positions in contracts and legal action or lose this right.  Failure will result in a continued software maintenance monopoly.  Success will ensure market competition and renewed innovation.  Attention: OAUG, Quest, and SUGEN leadership your members need your help!

Figure 5.  A Growing Body Of Users Believe 3PM Is A Right

The Bottom Line For Vendors - Proactively Address The Issue Or Expect A Groundswell Of Activism

SaaS, subscription pricing, 3PM, and the economy provide a confluence of forces that will continue to attack maintenance revenue streams.  Many legal cases have been fought over this issue including IBM vs Amdahl and Geac vs Grace Consulting.  SAP’s failed attempt to convince customers on the value of Enterprise Support led to a public relations disaster and a factor in the resignation of their CEO.  The result - many vendors considering price hikes held back.  In fact, some savvy software vendors retooled and restored the client -vendor relationship by:

• Offering more entry points and tiers to support options. The three pillars of software maintenance and support policies still apply.  However, several vendors are now offering more tiers of support as lower entry points.  Two vendors have finalized plans to offer just the bare bones legal and regulatory updates.  Other vendors have made it easier to come back with maintenance amnesty plans.
• Providing flexible maintenance policies. Vendors who change rigid policies have experienced success among customers.  Some Both Infor through Infor Flex and Micrsoft Dynamics allow like for like swap credits to migrate between existing products.
• Renegotiating existing terms. Some vendors are helping clients meet the realities of the current market conditions. Big on the list is helping clients address shelf ware without repricing of contracts.  For clients who paid full maintenance on software that’s at least 4 years old, some vendors are offering to reduce up to 20% of the overall licenses not in use.  This leads to lower maintenance revenue but engenders good will among key clients.  Further, several vendors have allowed clients to apply credit towards another module as an alternative.
• Delivering amnesty programs. Several vendors have allowed customers to return to maintenance programs after years of not paying.  Such programs play a key role in helping customers upgrade but should be used sparingly as customers may become accustomed to this practice.
• Creating better peer forums to share information. Almost every vendor surveyed has a program to improve the online support capabilities.  Applying Social CRM use cases,  user generated content in peer forums tops the list of initiatives.  Other plans focus on sharing data on benchmarks, operational metrics, and best practices.
• Assisting with vendor financing. Clients seek access to financing, especially many in the mid-market who’s credit lines have been zapped.  Microsoft has led the charge by providing 0% financing for its Microsoft Dynamics ERP and Microsoft Dynamics CRM Customers.  Other vendors such as IBM, Infor, Oracle, SAP, Sage also offer vendor led financing programs that include hardware, implementation, training, and other services.
• Lowering cost of usage and ownership. Though tops on the list as a conceptual practice, most vendors will need to roll out such initiatives over the next 24 months.  A few notable exceptions include Agresso with its VITA architecture which allows customers to rapidly make business and UI changes, Microsoft Dynamics customers who report back significantly lowered implementation and training costs compared to most vendors, and Epicor customers who report significant productivity gains with Service Connect.  SaaS customers already experience such gains.

Your POV

Take the new and improved survey on 3rd party maintenance and let us know if you need help with your enterprise apps strategy by:

• Conducting an ROI on 3rd party maintenance options
• Identifying cost reduction opportunities
• Renegotiating your software contracts
• Improving innovation via SaaS and other deployment options

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related resources and links

20091008 Deal Architect - Vinnie Mirchandani “Third Party Maintenance Is Really 4 Decades Old”

20071120 News Analysis: Too Early to Call the Death of Third Party Maintenance

20090210 Tuesday’s Tip: Software Licensing and Pricing - Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20090622 News Analysis: Infor Flex Reflects Proactive Maintenance Policy

20090516 News Analysis: Rimini Street Launches Third Party Maintenance for SAP

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090428 News Analysis: SAP and SUGEN Make Progress on Enterprise Support

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090330 Monday’s Musings: It’s The Relationship, Stupid! (Part 2) - Stop Slashing The Quality Of Support And Maintenance

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20081012 Monday’s Musings: 5 Steps to Restoring Trust in the Vendor - Customer Relationship

20100114 News Analysis: SAP Revives Two Tier Maintenance Options

20091012 Research Report: Customer Bill of Rights - Software-as-a Service

20090912 News Analysis: Siemens Cancels SAP Maintenance Contract

20090910 Tuesday’s Tip: Note To Self - Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090602 Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Chatter Represents SFDC’s Unified Move Into Social

Announced at the 2009 Dreamforce conference, Chatter represents both a collaboration application and platform.  Software built on the Force.com platform will gain the collaboration capabilities.   Solutions in AppExchange will be able to use profiles, real time streams, and other API’s.   With a 100 customers testing out user experience, scalability, and security, Salesforce.com, moves from vaporware to beta.   Some key features include:

• Aggregating streams of information. Employees can subscribe to feeds such as internal updates, social networks, and documents.
• Automating status updates. Users can receive updates from system and user generated alerts.  Alerts can include documents and related links.
• Enabling secure document sharing. Chatter feeds can be searched to find relevant information.  Document sharing is protected by a secure sharing model from the Force.com platform.

The Bottom Line For Customers - Chatter Represents A First Step Towards Social CRM

Customers seek solutions that bridge the gap between Enterprise 2.0 collaboration with enterprise applications.  Investment in solutions like Chatter fit well with Salesforce.com’s existing list of innovative customers.   Many require more in-depth social capabilities.  Should Chatter be delivered in 2010, customers will win by being able to minimize the number of SaaS platforms,  reduce the related costs of vendor management, and take a first step into Social CRM.

The Bottom Line For Vendors - Chatter Beta Buys Salesforce.com Time To Fend Of Best of Breed Competitors.

Learning from the lessons of Siebel, Marc Benioff does not intend for SalesForce.com to be a one trick pony.  Force.com represented a step to build an ecosystem and extend beyond CRM.  Success in AppExchange proves out the strength of the ecosystem. With Chatter, Salesforce.com establishes a second foothold into the world of Social CRM and Enterprise 2.0.  The pre-announcing in November bought Salesforce.com time to fend off best of  breed collaboration solutions and emerging Social CRM vendors.  Announcing a private beta with 100 customers, not only shows momentum, but also gives Salesforce.com time to prove out the solution.  In any case, they SaaS leader buys time and can keep some of the best of breed solutions temporarily out of its accounts.

Your POV

Are you a Salesforce.com customer?  How will you use chatter?  When do you plan to deploy.  Let us know if you need help with:

• Building a multi-vendor SaaS strategy
• Negotiating your Salesforce.com contract
• Crafting a SaaS integration strategy

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related resources and links

20100125 Monday’s Musings: The Hidden Value in SaaS Deployments

20091222 Tuesday’s Tip: 10 Cloud and SaaS Apps Strategies For 2010

20091012 Research Report: Customer Bill of Rights - Software-as-a Service

20090602 Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

20081028 Tuesday’s Tip: SaaS - Integration Advice

20090714 Sandhill.com - R ‘Ray’ Wang - “Opinion: Moving to a SaaS Offensive”

20070903 Trends: What’s all the fuss about True SaaS, OnDemand, Hosting?

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091109 Monday’s Musings: SaaS, SOA, Integration and How To Make A Peanut Butter And Jelly Sandwich In The Cloud

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

New Changes Hint At Hasso’s Priorities

In a not surprising update, SAP makes changes to Executive Board and management.  Here are the changes:

• Gerhard Oswald becomes COO. Gerhard has experiences in support, consulting, education, custom development, and quality.Gerhard’s contract has been extended till December 31, 2011.

  Point of View (POV):  Gerhard’s been a long-timer at SAP with 30 years of experience.  He replaces Erwin Gunst who’s been out for almost a year with medical issues.  SAP needs a strong COO in place and Gerhard has the credibility and experience to execute.  Hasso’s putting a trusted lieutenant in charge.

• John Schwarz resigns. The former BOBJ leader leaves.  He was responsible for SAP BusinessObjects, Ecosystem and Corp Dev.

  POV: After being passed up for the CEO job, it was obvious that John would be leaving.  Expect many of the BOBJ members in product management,  product marketing, and development to be reshuffled as their support will be shifted.  Those who didn’t fight hard for embedding T-Rex (inMem) and pushing out “Timeless Software” may be most impacted.

• Peter Lorenz named as a corporate officer. Peter currently is the Executive Vice President for Small and Mid-size Enterprise (SME).  He reports to Jim Hagemann Snabe.

  POV: The corporate officer position serves as an extended board member role.  This hints at the importance of SME to SAP’s strategy.  SAP also needs to build bench strength in SME.

The Bottom Line - SAP’s Making Big Changes.

Hasso’s acting fast to make changes.  John Schwarz will be missed by many of the BOBJ team. Expect a ripple of changes as the management shake out finalizes over the next 8 to 12 weeks.   Look for new product road maps to arrive prior to Sapphire 2010.

Your POV

Are you an SAP customer?   How do you feel about the transition?  Would you like to learn more about:

• Building a next gen SAP roadmap?
• Improving your SAP apps strategy?
• Augmenting SAP with SaaS?
• Putting third party maintenance and optimization to work?

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related Links And Resources

Official SAP Press Release

Here’s a list of related reports.

20100114 News Analysis: SAP Revives Two-Tier Maintenance Options

20091211 Event Report: 2009 SAP Influencer Summit - SAP Must Put Strategy To Execution In Order To Prove Clarity Of Vision

20091125 Speaker Notes: Keynote - SAP UK & Ireland User Group Conference 2009

Here’s a list of related links of news during Léo’s tenure.  They will be added on an ongoing basis and updated as appropriate.

• 20100208 Computer Weekly - Warwick Ashford ” SAP admits enterprise support plan was a mistake”
• 20100208 DestinationCRM - Lauren McKay “After CEO Ouster, Plattner’s Plea: “Please Trust SAP. We Have Not Forgotten You.” “
• 20100208 SearchSAP.com/TechTarget - Courtney Bjorlin “SAP’s new CEOs need to show vision, clear product roadmap to customers, observers say “
• 20100208 Bloomberg - Ragnhild Kjetland “SAP Upheaval Pits Plattner Against Ellison in Market-Share Spat”
• 20100208 ReadWriteCloud - Alex Williams “Will SAP CEO Shakeup Lead to a Unified Cloud Computing Strategy?”
• 20100208 Wall Street Journal - Vanessa Furhmans ” SAP Chief Quits; Co-CEOs step in”
• 20100208 Associated Press - Matt Moore “Shares slip on CEO’s ouster; questions”
• 20100208 Computerworld UK - Elizabeth Heichler and Mike Simons “SAP CEO Leaves”
• 20100208 LeMag IT - Reynald Fléchaux “SAP : Apotheker évincé, Plattner place la jeune garde sous surveillance”
• 20100208 Wall Street Journal: All things digital - John Paczkowski “SAP Board to CEO: Auf Wiedersehen, Sweetheart”
• 20100208 IDG News Service -  Joab Jackson and Chris Kanaracus “SAP Hits Reset Button With CEO Change”
• 20100208 ComputerWeekly - Warwick Ashford “SAP moves to restore customer and employee trust”
• 20100208 Information Age - Pete Swabey “SAP CEO Steps Down”
• 20100207 Wall Street Journal - Archibald Preuschat “SAP Returns to Co-Ceo Leadership, Apotheker resigns”
• 20100207 Information Week - Doug Henschen “SAP CEO Apotheker Resigns; Co-CEO’s Named”
• 20100207 Managing Automation - David Brossell “SAP CEO Resigns Suddenly”
• 20100207 ZDNet Irregular Enterprise - Dennis Howlett “SAP: Apotheker gone, Co-CEO’s in place”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Apotheker’s Contract Not Renewed.  SAP Puts Snabe and McDermott In Co-Ceo Roles.

Rumors began circulating early this weekend that Léo Apotehker’s contract would not be renewed.  The highest level sources had confirmed this early in the morning and the afternoon press release provided confirmation of the details.  A few key facts:

• SAP moves back to Co-CEO management structure. Bill McDermott, head of field organization and Jim Hagemann Snabe, head of product development become Co-CEO’s. Point of View

  (POV): For undisclosed reasons, Leo’s contract was not renewed. Both Bill and Jim have extensive experience at SAP and have been hard at work revitalizing the organization from both the sales and product sides.  Many observers may be surprised not to see former Business Objects CEO John Schwarz in the running.
  
  

• Executive Board elevates role of products and technology. Vishal Sikka, chief technology officer (CTO) now appointed to the SAP Executive Board.

  POV: Vishal has the trust and ear of Hasso Plattner and Jim Snabe.  The net result may be more unified road maps, better prioritization of R&D assets, and less issues with product development.

The Bottom Line - Timing Is Everything, But SAP’s Inflection Point Is Good News For Customers

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

Putting McDermott as Co-CEO makes sense.  He is an excellent sales guys but the issues is not sales.  It’s products.  Snabe and Vishal will need strong product vision to right SAP and point it in a forward direction.   Engineering and products need more attention to bring out trapped innovation at SAP.

Your POV

Are you an SAP customer?   How do you feel about the transition?  Would you like to learn more about:

• Building a next gen SAP roadmap?
• Improving your SAP apps strategy?
• Augmenting SAP with SaaS?
• Putting third party maintenance and optimization to work?

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related Links And Resources

Here’s a list of related reports.

20100114 News Analysis: SAP Revives Two-Tier Maintenance Options

20091211 Event Report: 2009 SAP Influencer Summit - SAP Must Put Strategy To Execution In Order To Prove Clarity Of Vision

20091125 Speaker Notes: Keynote - SAP UK & Ireland User Group Conference 2009

Here’s a list of related links of news during Léo’s tenure.  They will be added on an ongoing basis and updated as appropriate.

• 20100208 Computer Weekly - Warwick Ashford ” SAP admits enterprise support plan was a mistake”
• 20100208 DestinationCRM - Lauren McKay “After CEO Ouster, Plattner’s Plea: “Please Trust SAP. We Have Not Forgotten You.” “
• 20100208 SearchSAP.com/TechTarget - Courtney Bjorlin “SAP’s new CEOs need to show vision, clear product roadmap to customers, observers say “
• 20100208 Bloomberg - Ragnhild Kjetland “SAP Upheaval Pits Plattner Against Ellison in Market-Share Spat”
• 20100208 ReadWriteCloud - Alex Williams “Will SAP CEO Shakeup Lead to a Unified Cloud Computing Strategy?”
• 20100208 Wall Street Journal - Vanessa Furhmans ” SAP Chief Quits; Co-CEOs step in”
• 20100208 Associated Press - Matt Moore “Shares slip on CEO’s ouster; questions”
• 20100208 Computerworld UK - Elizabeth Heichler and Mike Simons “SAP CEO Leaves”
• 20100208 LeMag IT - Reynald Fléchaux “SAP : Apotheker évincé, Plattner place la jeune garde sous surveillance”
• 20100208 Wall Street Journal: All things digital - John Paczkowski “SAP Board to CEO: Auf Wiedersehen, Sweetheart”
• 20100208 IDG News Service -  Joab Jackson and Chris Kanaracus “SAP Hits Reset Button With CEO Change”
• 20100208 ComputerWeekly - Warwick Ashford “SAP moves to restore customer and employee trust”
• 20100208 Information Age - Pete Swabey “SAP CEO Steps Down”
• 20100207 Wall Street Journal - Archibald Preuschat “SAP Returns to Co-Ceo Leadership, Apotheker resigns”
• 20100207 Information Week - Doug Henschen “SAP CEO Apotheker Resigns; Co-CEO’s Named”
• 20100207 Managing Automation - David Brossell “SAP CEO Resigns Suddenly”
• 20100207 ZDNet Irregular Enterprise - Dennis Howlett “SAP: Apotheker gone, Co-CEO’s in place”
• 20091203 IDG News Service - Chris Kanaracus ” No quick resolution likely for SAP KPI saga”
• 20091201 Computerworld UK - Mike Simons “SAP users wait for vital support announcement”
• 20091201 InformationWeek: Global CIO - Bob Evans “Global CIO: Will SAP Move To Tiered Maintenance Fees?”
• 20091201 Managing Automation - Jeff Moad “SAP postpones maintenance hike”
• 20091127 IDG News Service - Phil Sayer “SAP Enterprise Support KPI Project Leader and Sponsor Resign”
• 20090429 ComputerWorldUK - Mike Simons “SAP Maintenance Fee Reversal is Big Win for Customers”
• 20090429 The Enterprise System Spectator - Franck Scavo “SAP postpones its maintenance fee price hike”
• 20090403 ZD Net Enterprise Irregulars - Dennis Howlett “Zut alors! the French are revolting”
• 20090402 Computerworld UK -Peter Sayer “Update: SAP users get tough about Enterprise Support KPIs”
• 20090402 LeMagIT - David Castaneira “Tarifs de maintenance : les utilisateurs haussent le ton face à SAP”
• 20090401 IDG News Service - Chris Kanaracus “SAP: KPIs coming soon for Enterprise Support”
• 20081210 ZD Net Irregular Enterprise - Dennis Howlett ” We Made A Mistake”
• 20081209 IDG News Service - Chris Kanaracus “SAP Makes Support Contract Concessions In Austria, Germany”
• 20081209 SearchSAP.com - Courtney Bjorlin “Many German and Austrian SAP users delay Enterprise Support contracts”
• 20081209 ZD Net Irregular Enterprise - Dennis Howlett “Breaking:SAP Maintenance Price Hike: Partial Victory”
• 20081127 IDG News Service - Chris Kanaracus “SAP User Group CEO Leaves”
• 20081126 Information Week - Mary Hayes Weier “SAP User Group Fires President”
• 20081125 ZD Net Irregular Enterprise - Dennis Howlett “Breaking: SAP User Group Fires CEO”
• 20081111 Computer Weekly - Warwick Ashford “SAP Enterprise Support dominates User Event”
• 20081110 ZDNet - Dennis Howlett “SAP’s UK users don’t get it - yet”
• 20081110 IDG News Services - Mike Simons “SAP users: we won’t pay higher prices “
• 20081110 Computing - Phil Muncaster “SAP customers told to bargain hard”
• 20081109 Information Week - Mary Hayes Weier “SAP Outlines Updated Maintenance Fee Plan”
• 20081106 IDG News Service - Chris Kanaracus “SAP tweaks support offerings”
• 20081105 IDG News Service - Chris Kanaracus “Top SAP executive grilled on support hike at software conference”
• 20081029 SearchSAP.com - Editorial Team & Axel Angeli, “SAP: What Went Wrong? Blame Marketing, NetWeaver”
• 20081024 SearchSAP.com - Courtney Bjorlin, “SAP and Oracle vs Third Party Support”
• 20081021 CIO.com - Thomas Wailgum “7 Ways to Get More For Your Increased SAP Maintenance Fees”
• 20081020 CIO.com  - Thomas Wailgum “Why SAP’s ERP Maintenance Prices Should Be Going Down — Not Up”
• 20081015 SearchSAP.com - Courtney Bjorlin “SAP Customers Should Push for Added Value in Enterprise Support, report says”
• 20081010 IDG News Service - Chris Kanaracus “Update: Forrester: Discontent persists over SAP maintenance hike”
• 20080923 ComputerWoche (ComputerWorld Germany) - Frank Niemann “AP macht in Sachen Wartung keine Zugeständnisse” Translated version courtesy of Babelfish
• 20080825 IDG News - Chris Kanaracus “SAP users seek proof of support plan’s benefits”
• 20080821 Compuerworld UK - Mike Simons “SAP extends maintenance deal to thousands of R/3 customers”
• 20080820 IDG News Service - Chris Kanaracus “SAP, user group to shed light on enterprise support”
• 20080813 IDG News Service - Chris Kanaracus ” SAP users: Support debate isn’t over”
• 20080801 IT News.com - Rosalie Marshall “SAP refuses to budge on hikes in support costs”
• 20080731 Computing - Tom Young and Janie Davies, “Fury as SAP raises support costs”
• 20080730 Enterprise System Spectator - Frank Scavo “Mad As Hell: Backlash Brewing Against SAP”
• 200807289 Enteprise AntiMatter’s Joshua Greenbaum, “Friendly Fire: SAP Flubs the Maintenance Business”
• 20080728 The Register - Chris Williams “SAP Defends Forced Price Hike”
• 20080728 MyCustomer.com - Stuart Lauchlan “UPDATED: SAP customers furious at 29% hike in support costs
• 20080728 Irregular Enterprise - Dennis Howlett “More dissent on SAP Maintenance Price Hike”
• 20080728 Information Age - Pete Swabey “SAP support costs to jump 30%, says user group”
• 20080728 IDG News Service - Chris Kanaracus “SAP, Oracle price hikes open door for license optimization”
• 20080728 CIO Magazine - Thomas Wailgum “As SAP Support Costs Spike, Users’ Group Leader Preaches Collaboration — Not Rebellion”
• 20080725 IT World - Mike Simons “SAP maintenance backlash grows in UK and Germany”
• 20080725 ITPRO - Nicole Kobie “UK SAP user group slams support pricing increase”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

• Official SAP Press Release
  

IBM Adds A Leading Customer Data Integration/MDM Pioneer To Its Master Information Management Arsenal

With arguably 10 master information management acquisitions since 2003, IBM continues to push towards its goal of adaptive master data management (MDM) (see Figure 1).  The recent acquisition of Initiate Systems comes after the heals of Oracle’s purchase of SilverCreek Systems in January 2010 and Informatica’s purchase of Siperian in January 2010.  Rapid consolidation in the MDM market has effectively removed 3 of the 4 leading vendors in MDM.  The Initiate Systems acquisition brings IBM key benefits such as:

• Strong and proven customer data integration platform. Initiate Systems brings best-in-class data de-duplication, security and privacy, and strong data acquisition capabilities to IBM.  A key hallmark of the solution is the rapid real-time matching capabilities and hierarchy management.  Among all the MDM vendors, Initiate brings the most number of productive, live customers - about 100 of its estimated 200 customer count.

  Point of view (POV): As with rival Oracle, IBM must take steps to harmonize the different MDM solutions in its portfolio.  Today, IBM offers Infosphere MDM Server for PIM based on Trigo product information management (PIM) and Infosphere MDM Server 9 based on DWL for customer data integration (CDI).  Initiate Systems adds a third and capable product into the line up that’s optimized for customer data.

• Deep healthcare and public sector experience. Initiate Systems made its mark in health care and public sector.   Today, Initiate serves over 2400 health care sites and over 40 health information exchanges (HIE).  Key clients include Alberta Ministry of Health and Wellness, BMI Healthcare (UK), Calgary Health Region, CVS/Caremark, Humana, Ochsner Health System, the State of North Dakota’s Department of Health and Human Services and the University of Pittsburgh Medical Center.  In the past years, the Chicago, IL based vendor has branched out to other verticals such as financial services, high-tech, manufacturing, and retail.  However, its gained the most ground in B2C public sector industries such as health care, law enforcement, governmental agencies, and intelligence.

  POV: Expect IBM to augment Initiate’s strengths with IBM’s InfoSphere Identity Insight and InfoSphere Global Name Recognition to address the B2C public sector industries.   In health care, IBM Global Services already serves as a key reseller and this will ease the integration of this practice area into Big Blue.  Expect Initiate to continue its lead in EMPI and role in public sector projects.  Consequently, IBM will have to address how they will work with rival partners such as Raytheon, Informatica, Carefx, Healthvision, Agfa, and dbMotion.
  

• Strong management team. Bill Conroy (CEO) and his capable management team drove an estimated $100M in revenues with a 4 year CAGR of 50% and zero debt. On top of this, they secured a $31M Series E round of funding from EMC, Informatica, Dunruth Capital, BCBS Capital, and Paladin Capital.

  POV: With arguably one of the most capable management teams in the industry and one of the sharpest sales minds, Greg Shaw, IBM adds some key assets to its management ranks.  How they navigate the Big Blue bureaucracy will be a test of how well IBM conducts integrations of high performing companies.  Given the improved collaboration culture within IBM Software Group and the rest of IBM, the future bodes well.

Figure 1. IBM’s MDM Acquisition Road Map

The Bottom Line For Users - IBM Brings Stability To Initiate’s Customers And Adds A Series Of Big Blue Capabilities

Initiate customers gain access to the assets of IBM.  Customers can expect IBM to integrate the product line over 2 years but benefit immediately from synergies with other IBM Information Management products such as its knowledge base of industry models, governance, BI & performance management tools, and identity and management tools.  As with most IBM acquisitions, key personnel in product development, support, and sales will be incentivized to stay for at least 2 years, providing enough time for knowledge transfer and account transitions.  In general, non-IBM customers will gain new resources.  Existing IBM customers will find business as usual.

The Bottom Line For Vendors - MDM Moves From Best Of Breed To Foundational Software Stack Component

Given the foundational nature of MDM in any vendor’s software stack, expect more rapid consolidation in the MDM market with very few independents by the end of 2010.  Potential acquirers include EMC, HP, IBM, Microsoft, Oracle, and SAP.  Potential targets for EMC, SAP, and HP include Datactics, Kalido, Talend, and Visionware.   With Initiate Systems in IBM’s hands,  Microsoft’s most likely target would be VisionWare or Kalido as they are the only two vendors optimized on the Microsoft stack.  SAP, EMC, and HP may be better off looking at Kalido for its strong pharma, insurance, and data governance capabilities for MDM.  MDM will move more and more vertical as domain specific issues become paramount.

Informatica Enters The Battle For Master Data Management Dominance

As with any best of breed market, only a few will survive and even fewer will succeed.  Despite a leading offering, Siperian’s faced a rocky financial situation over the past 12 months.  Many suitors pursued Siperian but in the end Informatica’s $130M acquisition of Siperian took one of the best products off the table.  Customers breathed a sigh of relief as the $500M revenue software vendor brings not only stability of product investment and expertise, but also a complementary set of related MDM technologies to market.  Key benefits include:

• Full spectrum of MDM offerings. Informatica’s Data Integration and Data Quality products combine with Siperian’s for a comprehensive master data platform.  Siperian brings some of the best data acquisition, data cleansing, relationship and hierarchy management, event management, reference data management, data stewardship, and architecture to market.  Usability and rich graphical interface are other strong points. In addition, the Identity Systems match engine and AddressDoctor postal validation already serve as best of breed solutions in many data quality initiatives.

  Point of View (POV): Informatica has been slowly tip-toeing in this market with 6 acquisitions in 4 years for almost $400M. Consequently, the Redwood City, CA vendor has assembled the key components for a comprehensive MDM offering (see Figure 1).  Informatica can now offer a wide range of entry points from smaller data quality projects to larger identity management projects enabled by a series of data integration flows.  Siperian is the crown jewel that takes Informatica directly into the MDM market and puts competitors such as Oracle, IBM, Initiate Systems, and SAP on guard.

Figure 1. Informatica’s MDM Acquisition History

• Attractive, referenceable, customer base. Informatica gains over 60 forward thinking MDM customers.  Key customers include big names in financial services and life sciences such as Bank of America, Pifzer, Shire, State Street Bank, Johnson & Johnson, and Lexis-Nexis.  These early adopters have pioneered some of the latest MDM success stories.

  POV: While the press release focuses on the financial services and life science customers, Sipeiran has taken big deals away from SAP, Oracle, and IBM in high tech and retail players in North America.   A very loyal Informatica base will most likely consider the Siperian offering in short lists, as it is now part of the family.   Many of these customers also run Oracle and SAP in the back office.

• Improved data governance. Siperian’s Business Data Director was one of the first tools in the market to address the issue of data governance.  Working with Lombardi’ s Teamworks BPM software, Siperian allowed customers to quickly manage assignment, workload distribution, state management, and event routing.

  POV: Data governance capabilities will provide a clear differentiator in the success of MDM implementations. Organizations often struggle with managing the Information Supply Chain (i.e. what data, to whom, for when, how often, and where).  Given IBM’s acquisition of Lombardi, expect Informatica to consider other BPM tools in the future.
  

• Synergies with Cloud strategy and Social CRM. The Informatica Cloud and related data integration heritage provide the pipes critical to cloud strategies.  Informatica delivers data partitioning support, data processing latency, and hybrid data integration.  Siperian provides the mechanism to manage multiple sources of information, maintain the golden record, and accommodate multiple domains.

  POV: As information continues to move into hybrid deployments and public/private clouds, MDM plays a critical role in harmonizing information across various cloud strategies.  In order to prioritize and monetize social initiatives, organizations will need to match social profile information with critical customer account information

The Bottom Line For Users - Expect More Stability And Investment From Informatica

(Source: Informatica)

Conversations with Ivan Chong, Senior Vice President and General Manager of Data Quality confirm Informatica’s commitment to invest in the Siperian offering.  From an organizational perspective, the Siperian product teams will remain in tact with the Toronto development and St. Petersberg offshoring offices in place.  Incoming product teams will function as a business unit within Informatica and the Siperian Release X (10) solution remains on track for launch in 2010.  Sales teams will stay as overlay subject matter experts augmenting the considerably larger Informatica sales force.  Siperian customers should find a good home at Informatica.

The Bottom Line For Vendors - Acquisition of Siperian Hastens MDM Market Consolidation

Expect more acquisitions to occur as the market consolidates.  Potential acquirers include EMC, HP, IBM, Microsoft, Oracle, and SAP.  Potential targets include Datactics, Initiate Systems, Kalido, and Talend.  SAP, despite the Business Object acquisition, still needs a strong MDM solution to complement its 4 or more point specific solutions.  Meanwhile, expect Oracle to spend the next 12 months finding ways to rip out any dependencies with Informatica in its vast number of MDM offerings.  Microsoft, EMC, and HP have been looking at entering this market for some time. Maybe now’s the time to act!

Oracle Rolls Out A New “Red Stack”
With EU approval out of the way, Oracle finalizes the Sun deal and resumes its quest for the largest share of the IT wallet. Oracle’s 60+ acquisitions follow a concerted strategy and Sun adds key areas such as servers and storage. The stack now comprises Vertical Apps, Horizontal Apps, Middleware, Database, Operating Systems, Virtual Machines, Servers and Storage (see Figure 1). Customers and prospects can expect more details on each of the integration points and how Oracle’s engineering teams will collaborate to bring interoperability to the stack.

Customers and Prospects Can Expect Oracle To Follow Its M&A Playbook

As with previous Oracle acquisitions, the Redwood Shores, CA vendor intends to increase the aggregate investments in R&D, support, and sales. Where possible, Oracle plans to create innovations among the stack but also significant barriers to entry. Back office functions and other inefficiencies will most likely lead to an elimination of positions. Oracle will reach out to customers with a 70 city tour to address concerns, consider feedback, and discuss future road maps. Investment in new SPARC chips represents one example of how Oracle will continue innovation post acquisition. Despite not buying any fabs, Oracle will continue the development of four new SPARC chips beyond the current US-T3. Key feature sets will include new processor cores, higher frequencies, smaller sizes (e.g. 40 nm to 28 nm). Expect more cores, higher frequencies, larger caches, next gen memory, next gen IO, improved power management.

The Bottom Line For Customers - Organizations Gain Efficiencies But Must Balance Lost Of Leverage And Choice

Charles Phillips referenced the gold standard “IBM” experience of the 1960’s. As Oracle tries to recreate the vertical stack, the software vendor promises to keep building on open standards. Given the economies of scale achieved, Oracle can commit $4.3B towards building an integrated “Red Stack”. Should Oracle succeed, they will eliminate a lot of waste that IT leaders have faced with integration, security, and scalability. “One throat to choke” brings significant appeal given complexity in today’s technology.  However, customers must carefully balance the risk (i.e. the lack of competition and the complexity of owning multiple, yet disparate technologies) with the benefits (i.e. improved integration and cost effective innovation).  Consequently, customers will want to preserve third party maintenance rights as industry consolidation will continue and they will need to keep some level of choice and balance in the marketplace.

The Bottom Line For Vendors - The “Red Stack” Creates A Major Force In Competing For IT Wallets
Vendors competing or partnering with Oracle must take note to understand the new dynamics in the technology vendor “Stack Wars”. Oracle’s model to directly sell to its top customers, ask partners to specialize to create customer and Oracle value, and increase dominance in R&D investment, will force smaller competitors to rethink relationships and potentially create new alliances. Partners must carefully think about their long term competitive strategy or else maximize exit strategies in the short term. Those partners who spend time building and providing solutions on the Oracle “Red Stack” will profit the most. Those partners in the way of Oracle’s long term tech strategy will become major competitors.

As always, 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, and we’ve worked together in the past, don’t hesitate to reach out to me via Linked In.

Roger Bottum became VP of Marketing at SpringCM, a SaaS content management player this past November.  Roger formerly served as Acresso Software’s SVP of Marketing. Other senior marketing roles include work for companies such as Axentis, Endeavor Information Systems, and Arrowsight.  Other companies include  System Software Associates, Accenture, and Pansophic Systems.

Michael Corkery was appointed as CFO for Deltek.  Previous roles include serving as the CFO and Acting CEO for ICO Global Communications.  Corkery’s experience reflects a telecommunications technology background with other executive roles at Current Group, LLC; Nextel Communications; Berliner Communications, XO Communications, and AT&T Wireless

Stephen DePooter is now Chief Information Officer at Illinois Department of Veterans’ Affairs. He brings significant IT and healthcare experience from serving as a System Director, Applications at Memorial Health System, IT Security Analyst at Horace Mann, IT Security Consultant at MSF&W, and various roles at Emory Healthcare.

Justin Floyd became the CEO and Co founder of RedCloud Bank in October 2009.  Former roles include serving as an Investor at CCL Group plc and Investor and Chairman/CEO at Vecta

Bill Geist became President at Turning Point Management LLC in October 2009 after serving as COO, Global Services at  CDC Software.com.  Other former positions include CEO at Application Partners LLC; Senior Vice President at Headstrong, Inc.; Partner, Southeast Region at Wavebend Solutions, LLC (BDO Seidman consultancy); Partner, Branch Manager at Whittman-Hart; Director, Group Manager at Cambridge Technology Partners; VP, Information Technology & Services at Scientific Atlanta; and VP, Information Services at Reichhold.

Glenn Gruber is now AVP, Market Development, Travel Technologies at Ness Technologies.  Glenn has served many marketing roles including AVP, Strategic Marketing at Symphony Services Corp.; Product Line Manager at Parlex Corporation; Director of Marketing - RFID/Smart Cards at Power Paper, Inc.;VP, Sales and Marketing at Golden Screens Interactive; and Director of Marketing and Business Development at Kyocera Electronics, Inc.

Alexis Karlin is now Digital Marketing Specialist at Neolane. Prior to Neolane, Alexis served as Web Producer from 2007 to 2009.  Former roles include work as an Interactive Developer at Feinstein Kean Healthcare and Web Adminstrator at Cognos

Tamara Mendelsohn was promoted to Director of Marketing at Eventbrite.   She brings tech marketing experiences from Apple and her work as an Senior Analyst at Forrester Research.

Michael O’Kelly rejoins as IT Director at International Aid in December 2009.  Please make donations if you care to.

Jessie Paul is now CEO at PaulWriter.  After a 5 year career as CMO of Wipro and 15 years in the corporate environment, Jessie’s teamed with Paul Writer to start her new venture.  The new concern will build on her deep marketing experiences that include Head of Worldwide Marketing at iGATE Global Solutions; Global Brand Manager at Infosys Technologies; and account executive at Ogilvy & Mather Advertising

Pascal Sero has updated his current title to VP Oracle Asia R&D Centers.  He’s been with Oracle for more than 2 decades.

Joseph Stanhope is now Senior Analyst at Forrester Research.  Stanhope brings various experiences from Alterian where he served as VP of Platform Strategy, Director of Global Product Marketing, and Director of Marketing.  Other roles include VP of Marketing at MarketerNet, LLC and Senior Product Manager at Experian

Bob Suh is now Founder and CEO at OnCorps.  Bob brings heavy technology expertise with past roles such as Chief Technology Strategist at Accenture; President, Consulting and SI at Perot Systems Corporation; and Managing Director at CSC Index

Jari Tavi became Head of Operations and Innovation at Loyalty Agent Ltd. ,a stealthy startup, in October 2009.  Past roles include CEO and Partner at Hotelzon Technologies and Development; Head of Technology at Berling Capital; and CTO at BasWare. Jari brings a passion for new ideas and crucial startup thinking.

Mitch Wagner is now Principal at Mitch Wagner Communications. Mitch brings over 25 years of tech media experiences including many of the initial web and social initiatives at United Business Media/CMP.

Zia Yusuf is now an Entrepreneur in Residence (EIR) at both Sutter Hill Ventures and  Norwest Venture Partners. Zia brings a wealth of experiences including a 10 year career at SAP and experiences at the WorldBank.

Altimeter Group Adds Supply Chain and Public Sector Coverage

Our enterprise strategy clients continue to seek advice on how to apply disruptive technologies to change their business models, innovate around their processes, or adjust their organizational structure.  We’re seeing demand for a point of view that may start with customer strategy and end with supply chain management or begin with government innovation and move quickly to social CRM.  This approach requires deep industry experience and a holistic approach that encompasses topics, industries, market sizes, and or roles.  As we grow, we will continue to add individuals with a passion for collaboration and innovation. In fact, we’ve already added Valerie Cachola as our operations manager, who will keep the planes in the air.  And as part of our growth plan for Altimeter Group and the Enterprise Strategy practice, please welcome the latest Altimeter Group partners Alan Webber and Lora Cecere!

Alan Webber, Government Innovation

With a strong focus on making organizations more efficient and more effective, Alan helps government agencies manage the impact of emerging and disruptive technologies and improve interactions between government and citizens and businesses. Returning to his roots, Alan will also be helping organizations understand the impact and role of clean technologies and sustainability in business.

Alan has more than 16 years of business and government management and technology experience working with commercial and government clients around the globe. Prior to striking out on his own and joining Altimeter Group, Alan was a Principal Analyst at Forrester Research where he covered government and the B2B user experience.  Prior, he led various strategic planning, performance management, eGovernment, and Web initiative efforts for the US government at the Department of the Interior and the National Science Foundation.

When it comes to cross collaboration, Alan will mesh well with the other Altimeter team members. Together with Jeremiah Owyang, Alan will be helping government agencies and leaders use social media to better engage with citizens and businesses. Alan and Ray Wang advising clients on the implementation of ERP and CRM systems in the public sector.

Connect with Alan on twitter at @AlanWebber, or read his blog.

Lora Cecere, Supply Chain Management

With deep experience in using enterprise applications to drive supply chain excellence, Lora provides early adopters with a first mover advantage. For software vendors, Lora provides strategic guidance in go to market strategies; reviews and designs software licensing, pricing, support, and maintenance policies; delivers competitive assessments; evaluates software partner ecosystems; and actively researches the evolution of business processes like supply chain compliance, deduction management, order-to-cash effectiveness, supply chain metrics, and emerging supply chain processes.

Her analyst experiences include Vice President roles at Gartner Group and most recently at AMR Research.  Before serving as an industry analyst, Lora was a line-of-business user/buyer and a builder of enterprise solutions.  She’s launching a new blog, Supply Chain Shaman , and is on
Twitter at @lcecere.

Your POV

Got topic ideas for coverage?   Interested in working at Altimeter Group?  Got a disruptive technology or business model?  Please post or send on to rwang0 at gmail dot com or r at softwareinsider dot org and we’ll keep your anonymity.

Related blog posts discussing this announcement.

Alan Webber’s post on his blog - Alan update – Joining Altimeter Group!

SageCircle - With expansion and professionalism, Altimeter Group raises its relevance with both enterprises and vendor analyst relations

Web Strategy by Jeremiah Owyang - Growth at Altimeter Group: Supply Chain Management, Government Innovation

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Gains In SaaS Adoption Driven By Speed And Cost Savings…

Preliminary data from Q4 earnings data show continued traction among SaaS solutions.  Expect SaaS deployments to gain steam in 2010 as organizations finalize their SaaS apps strategies to take advantage of 7 key benefits:

1. Richer user experience - SaaS apps bring Web 2.0 usability to the enterprise world through rich internet applications using Adobe Air, HTML 5, Microsoft Silverlight, and other tools.
2. Rapid implementation - SaaS applications focus on configuration and integration, not hard core implementation.  Users can be up in weeks, not months.
3. Frequent cycles of innovation - At present, most vendors introduce new functionality, enhancements, and bug fixes on frequent refresh cycles.  Some vendors provide as frequent as weekly updates, others - seasonal.
4. Minimal upgrade hassles - Users focus on minimal testing scenarios and receive updates all at once.  In applications with significant regulatory and tax updates, SaaS applications reduce the cost of compliance by as much as 77%.
5. Always on deployment - Organizations can expect average up-time levels at 99.95% or higher for most applications.  These results often exceed existing on-premise performance.
6. Subscription pricing - Subscription pricing reduces the capital burden of common on-premise payment models.
7. Scalability - Organizations can add or subtract users as needed without worrying about procuring new hardware and other infrastructure.

Moreover, latest Information Week Analytics survey reaffirms several key benefits of SaaS adoption - time to market and cost savings (see Figure 1).

Figure 1. Information Week Analytics Survey Confirms Trends In Adoption

…Yet, Aggregated Information Provides The Differentiated Value To Clients

Despite the obvious benefits with SaaS deployments, three hidden advantages will emerge with market maturity:

• Benchmarking. SaaS vendors sit on a tremendous treasure trove of data.  Participating organizations could opt-in to share secure and masked information for the purposes of business optimization.
• Trending. Organizations could also opt-in to identify larger market trends.  Trending information could be used to help organizations with planning.
• Prediction. More sophisticated organizations will take SaaS vendor trending data and design new algorithms to support predictive analytics.  The richness and consistency of the data set will improve accuracy.

The Bottom Line For SaaS Vendors - Create Additional Value As An Information Broker

The end game for SaaS vendors may not be a re-creation of the on-premise world in the Cloud.  In fact, those vendors with a true multi-tenant SaaS model may turn out to find additional revenue streams as information brokers.  Expect demand for premium information-on-demand services to begin with benchmarking and evolve to prediction.  For example, imagine the benefits gained by organizations who consume the latest buying behavior data from their CRM vendors.  Organizations could turn to HCM vendors for geographical salary or hiring trends.  Customers of financial vendors could better predict credit risk factors.  A key requirement - customers must trust their SaaS vendor’s data ownership and privacy policies before the industry makes this transformation.  With acceptance, vendors will have more reasons to move to a SaaS offense.

The Bottom Line For Organizations - Determine Your Data Rights Before You Sign The Contract

Organizations in SaaS deployments will want to preserve the their data rights and minimize their cost structures to consume aggregated information.  A few key areas should be considered:

• Data usage. Organizations generally assume that the data belongs to the organization while the software belongs to the SaaS vendor.  To be safe, organizations will want to be clear that rights to use data will require an organization’s permission.  In addition, the disposition of data should be made clear
• Data access. Organizations should expect unhindered access to raw data, queries, and extraction.  Access to data should not require additional fees.
• Aggregated data cost. Organizations participating in aggregated data programs should be given preferential treatment not only in cost, but also access to data.  The cost of this “stone soup” approach should be factored in pricing.

Your POV

Where are you in your SaaS deployment?   Have you thought about these long-term benefits? Looking for assistance with crafting, validating, or reviewing your SaaS Apps Strategy?  Do you have a different point of view? Please post or send on to rwang0 at gmail dot com or r at softwareinsider dot org and we’ll keep your anonymity.

Other Useful SaaS Strategy Links

20091222 Tuesday’s Tip: 10 Cloud and SaaS Apps Strategies For 2010

20091012 Research Report: Customer Bill of Rights - Software-as-a Service

20090602 Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

20081028 Tuesday’s Tip: SaaS - Integration Advice

20090714 Sandhill.com - R ‘Ray’ Wang - “Opinion: Moving to a SaaS Offensive”

20070903 Trends: What’s all the fuss about True SaaS, OnDemand, Hosting?

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091109 Monday’s Musings: SaaS, SOA, Integration and How To Make A Peanut Butter And Jelly Sandwich In The Cloud

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Less than 5 years ago, the mighty CIO controlled his or her organization’s destiny by shepherding multi-million dollar projects and ruling with a fist. Business leaders had to pay homage to the IT team and they hated it.  The economic crisis, advent of the cloud and SaaS, and the massive number of IT failures have rapidly changed the role of the CIO.  Saddled with the burden of maintaining legacy projects and faced with a shortage in budget and resources, businesses now move around the IT team as they must meet a flurry of business requirements.  CIO’s have lost a lot of control in guiding how technology is used in the enterprise because the world of consumer tech has out innovated enterprise class technologies.

CIO’s And Their Organizations Challenged By The Pace Of Change In The 2010’s

Similar to this past decade, organizations will face massive amounts of change in the next decade.  While change is nothing new to CIO’s and their organizations, the velocity of change has increased - to a point where the rate of obsolescence outpaces the rate of change.  Conversations with over 200 CIO’s this year reveal an anxiety in remaining nimble, cutting costs, and just keeping up with change.  CIO’s must rapidly respond to disruptive forces in the market, workforce dynamics, business models, and pace of technology adoption (see Figure 1).

Figure 1.  Four areas of change responsible for major disruptions in today’s organizations

(Source: R Wang & Insider Associates, LLC)

The Bottom Line - The CIO Role Shifts To Match Next Gen Enterprise Requirements

What’s the role of the CIO in this next gen enterprise?  Well, next gen CIO’s must help organizations navigate complexity while realizing the benefits of a solid business technology strategy.   While the immediate focus may be on hot topics such as security and risk, third party maintenance, cloud and SaaS, and email replacement and unified communications, there are significant transformations across 11 broader skill sets (see Figure 2.)  Next Gen CIO’s must begin the process of transforming themselves and organizations in 2010 to meet the demands of the decade, anticipating the disruptive business models, technologies, and processes to come.

Figure 2. Eleven Skill Shifts For The Next Gen CIO

(Source: R Wang & Insider Associates, LLC)

(Pictures For Now, More Analysis Later)

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(Photos: Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.)

Keynote Highlights Integration of IBM’s Full Set of Assets

Users Treated To Preview of Project Vulcan

The Bottom Line - Convergence of Emerging Technologies May Begin With Lotus

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Standard Support Returns After Much Deliberation

SAP announced today that they would be reintroducing their Standard Support offering.  Customers now gain choice with a 2-tier maintenance offering. Here are the details between standard support and enterprise support.

• Standard Support Offering reintroduces at 18%. Customers seeking core bug fixes, support packages, risk mitigation, and related new functionality will have choice in staying on standard support.  The program is designed for customers who seek to keep their systems up and running.  Customers with CPI clauses in their contracts will want to take note - the first set of consumer price index (CPI) price increases will begin January 1st, 2012.
• Enterprise Support remains at 22%. SAP will continue to offer Enterprise Support at 22% for new customers and a ramp up for existing customers (see Figure 1).  Enterprise support includes features such as best practices for IT operations, proactive monitoring and reporting, and transparency for business process performance.  Customers who choose to go with Enterprise Support prior to March 15th, 2010 will be eligible for ramp up.
• Supplemental offerings still available. Other programs such as Max Attention, Safeguarding, and Product Support for Large Enterprises (PSLE) will continue to be available by choice and invitation.

Figure 1. SAP’s New Support Pricing Scale

(Source: SAP)

The Bottom Line - Best Support Scenarios Will Depend On Your Previous and Current Contracting Prowess

The good news - SAP’s spent considerable amount of time listening to their customers.  The result - customers do want choice and there are plenty of choices to be made.  Decisions on which option is best can be best summarized by asking a few key questions:

• Are you expanding your use of SAP in the next 3 to 5 years? Determine your pace of adoption for SAP products.  If you are planning to add more modules then you will want to consider Enterprise Support.  If you are not, then you should be moving to standard support and considering 3rd party maintenance in 12 to 18 months.
• Do you have a CPI increase in your contract? If you do, then you’ll want to see if the total is above the inflation rate or the enterprise support ramp up of 6% per annum.  The best case is to have negotiated CPI + 0% but most SAP customers have CPI +5% as standard, well over the 6%.
• What’s your overall SAP apps strategy? How will you harness innovation within and around SAP?  What’s your plan in the next 12 to 18 months?  What will you be doing with SaaS?  How will you be incorporating portals such as Sharepoint?
• Can you make a decision on Enterprise Support by March 15, 2010? Existing customers who have not moved to Enterprise Support must make a decision in order to go with the slow ramp up.  Those who wait after March 15, 2010 will start at 22% maintenance.

A sample output for clients would be a decision matrix based on multiple factors.  Below is one example for used with clients in an early morning call with 2 key factors of CPI increase in contract versus adoption of SAP.  Other factors will include when your contracts began and what lifecycle of adoption your organization are in. (See Figure 2):

Figure 2.  Sample SAP Support Decision Matrix

Copyrighted © 2001- 2010 R "Ray" Wang and Insider Associates LLC.

Your POV

Need help with your contract negotiations?  Tap into the experience of thousands of contract negotiations.  Have a story to share about SAP contracts? 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.

Other Useful Software Contract Negotiations Links

Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

Tuesday’s Tip: Software Licensing and Pricing - Do Not Give Away Your Third Party Maintenance And Access Rights

Tuesday’s Tip: 3 Approaches To Return Shelfware

Tuesday’s Tip: Software Licensing and Pricing - Now’s The Time To Remove “Gag Rule” Clauses In Your Software Contracts

Related Blogs, Press, and Links

MUST READ - 2010017 Irregular Enterprise - Dennis Howlett “SAP’s Maintenance Cost Sleight of Hand”

News Analysis: SAP Moves All Customers Onto More Expensive Enterprise Support

News Analysis: SAP and SUGEN Make Progress on Enterprise Support

20100115 SearchSAP.com/TechTarget - Courtney Bjorlin ” Choosing Standard or Enterprise support more difficult for SAP customers with no KPIs ”

20100114 IDC - Amy Konary at IDC “Guest Post: Back by Popular Demand, A Basic Maintenance Offering from SAP”

20100114 Forrester Blogs - Paul Hamerman “SAP’s Tiered Support Announcement Diffuses a Contentious Issue”

20100114 IDG News - Chris Kanaracus “SAP shakes up support structure, executive organization”

20100114 Enterprise System Spectator - Frank Scavo “Flash: SAP backs down on 22% maintenance fees”

20100114 Information Week - Doug Henschen “SAP Reintroduces Tiered Maintenance”

20100114 ComputerWorldUK - Mike Simons “Update: SAP does U-turn on Enterprise Support”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Lawson Acquisition Brings Healthcare Focused ERP To Last-Mile Patient Management Solutions

On January 11th, 2010, Lawson Software announced it had closed a $160M all cash offer for Healthvision, a healthcare software solution headquartered in Dallas, TX.  The deal continues Lawson’s deep commitment to industry verticalization and is notable because the deal:

• Expands Lawson’s vertical footprint in the healthcare industry. Lawson currently plays a significant role in the ERP (i.e. financial and human resources) side of healthcare with an estimated 33% market share at hospitals with 250 beds or more.  Healthvision plays a complementary role in integrating patient information, enabling the growing healthcare information exchange (HIE) market, and delivering patient care systems for the Canadian market.

  Point of view (POV): Operational and clinical data often remain scattered in most healthcare organiztions.  With cost savings and compliance top of mind, the Cloverleaf Integration Suite from Healthvision provides a cost effective web services/SOA approach to integration.  Users often use Cloverleaf to replace the numerous manual point-to-point integrations.  This vertical specialization will place Lawson as an industry expert in integrating business (i.e. ERP) with patient care (i.e. clinical systems).   As a result, Lawson will extend its vertical barriers to entry among competitors.

• Enables Lawson to enter the HCIT market. Healthvision boasts 800 customers in 3000 healthcare facilities worldwide.  The Medisuite solutions focus on patient management solutions for revenue cycle, clinical care, and data access.  The Cloverleaf healthcare data integration solution remains the defacto standard in the provider space.  Successful passage of the healthcare reform bill will lead to increased demand for HIE’s.

  POV (revised 2:oo pm 1/12/2010). : While the Medisuite acquisition may put Lawson directly in competition with some HCIT vendors such as Epic, Meditech, and Siemens in Canada, the goal is to serve as a supplier or glue to clinical vendors on the integration front.  HCIT’s traditionally have had very proprietary systems that were hard if not impossible to integrate.   Lawson has an opportunity to be the “Switzerland” in the integration market.  However, if Lawson can adapt MediSuite for the US market, the acquisition will give Lawson a significant accretive growth platform in cross-sell opportunities for an estimated $30B healthcare market opportunity.  Expect Cloverleaf to be used to dislodge clunky and proprietary integration tools from existing competitors.

• Provides a significant accretive growth platform. Lawson expects the HealthVision acquisition to bring $60 to $70M additional revenues.  The M&A falls in line with Lawson’s concerted effort to focus on five key target markets that include fashion, food and beverage, equipment service and rental, public sector, and healthcare.

  POV: Over 60% of Healthvision’s revenues are recurring.  This provides Lawson with a steady cashflow as the vendor trends towards $1B in revenues milestone.  Changes in US healthcare policies benefit Lawson in reaching its goals.

The Bottom Line For End Users - Expect More Vertical Focus

Lawson users can expect additional investments in vertical solutions in the next 2 to 3 years.  Expect Lawson to continue investing in the Healthvision products with improved integration to Lawson S3.  Existing customers should seek an understanding of the future product road maps and time frames for completion.  Customers can expect Lawson to be active in cross-sell opportunities.

Your POV

Are you a Healthvision or Lawson customer in healthcare?  Always curious to your customer experiences.   What do you think of this acquisition? Please post or send on to rwang0 at gmail dot com and we’ll keep your anonymity.

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

High Cost Of Ownership And Changing Requirements Drive SAP Users To Seek Optimization Solutions

As users await SAP to regain its mojo (see Dennis Howlett’s post) and implement it’s “Voice of the Customer” strategy in 2010, users must continue to reduce their cost of ownership and complexity (see Figure 1).  In addition, rapidly changing business requirements require some users to seek SaaS alternatives, additional point solutions, and extensions.

Figure 1.  Cost Reduction Top of Mind for SAP users

Consequently, vendors providing SAP optimization and extension solutions represent one of the fastest growing parts of the $78.7B (2009 Altimeter Group estimate), 850,000 person strong SAP service partner and developer ecosystem.   SAP users already embrace many of the solutions from vendors on this inaugural SAP Optimization List as part of their business value oriented apps strategy. The living list covers seven areas including:

1. application extension and usability;
2. application life cycle management;
3. archiving, storage, and data management;
4. license management and optimization;
5. Microsoft Office integration;
6. third party maintenance; and
   
7. virtualization

1. Application Extension and Usability

Users often complain about the poor usability of SAP solutions.  These solutions allow users to change their user experience with SAP.  In some cases, the solutions provide composite app creation capabilities in other tool sets to inter-operate with SAP.

• Adobe - provides interactive forms for the SAP environment in both an off-line and on-line deployment.  Submitted forms are then entered into SAP.  Forms can include validations and other secure features.
• ERP-Link - allows users to extend the SAP environment for business intelligence, document management, content management, and composite application creation using Microsoft tools.  The i_Net platform creates SAP-Microsoft interoperability.
• GuiXT - provides users with the ability to deliver customized user interfaces in SAP applications.  GuiXT is often used by clients to simplify screens and user flows without impacting SAP code.

2. Application Life Cycle Management

Whether it may be instance consolidation, upgrades, test data management, or performance planning, these vendors ease the process of managing the SAP application life cycle.

• Hayes Technology - assists customers with replicating production application data for dev, testing, and training environments.  Gold Client allows organizations to replicate the data sets they need in SAP configuration, master data, and transcational data.
• Hyperformix - builds on SAP internal monitoring capability.   Organizations gain a performance monitoring tool that identifies hardware, infrastructure, and architecture optimization opportunities.
• Intellicorp - provides an artificial intelligence based optimization solution called Live Compare that compares version of SAP for use in testing, upgrade planning, and other life cycle activities. The solution helps clients understand their pre and post environment.
• Panaya - delivers a SaaS based optimization tool for SAP upgrades, enhancement packages, and ABAP code cleansing.  Customers generate a code analysis to determine differentials between versions.  The tool proactively tells user what will break, how to fix it, and where to test.
• Tidal Software - optimizes the allocation of SAP support resources through a root cause analysis methodology.  Performance, IT Process, and Workload automation solutions address both day to day and upgrade scenarios such as a system refresh.
• West Trax - uses a benchmark tool based on over 300 clients in 13 industries to determine system optimization opportunities for upgrades and  consolidations.  KPI Scan, KPI Optimizer, and KPI QA help organizations identify opportunities, make suggestions, and assist with compliance.

3. Archiving, Storage, and Data Management

• EMC - provides content management and archiving solutions to support compliance requirements.  Other capabilities include cloning, backup, and recovery, and information protection.
• IBM Optim - delivers a suite of integrated data management solutions that includes data privacy, test data management, archiving, retention and E-discovery, and upgrade consolidations.

4. License Management and Optimization

Solutions in this category focus on helping clients manage their license usage.  Many large enterprises lack the understanding of how much shelfware may be in production.  In addition, the used software market provides users with opportunities to unload or acquire older releases of software.

• Flexera (formerly Acresso, Macrovision) - helps clients with a software solution to understand usage, ensure compliance, centralize updates, predict future demand, and improve contract negotiation leverage.
• SUSEN Software - provides a market place to buy and sell used software or shelfware.
• UsedSoft - supports a market place to buy and sell used software or shelfware.

5. Microsoft Office Integration

Organizations require easy ways to leverage Microsoft Office as an interface into SAP.  Common scenarios include Outlook, Excel, Access, and Word integration.

• SAP Duet - represents a solution in joint partnership between Microsoft and SAP to provide interoperability.  Current users complain about the slow pace of innovation and high cost.  A new version addressing these issues will be out in 2010.
• Winshuttle - facilitates data exchange between SAP and Microsoft Excel or Access.   Winshuttle’s data management tools automate data entry, data download, and reporting tasks for the entire SAP BusinessSuite 7.

6. Third party maintenance

Customers seeking relief from maintenance choose solutions that provide maintenance, tax updates, and regulatory changes for often half the cost of existing SAP maintenance prices.  The clear leader in the market is Rimini Street though some other system integrators have been quietly providing such services.

• Rimini Street- delivers maintenance options for SAP customers who do not seek to upgrade but would like to keep their existing systems up to date with tax, compliance, and other break-fix issues.  Rimini Street’s charter program has met significant success with over 100 client cases for SAP customers.
  
• Your System Integrator of Choice - The recent Siemens SAP maintenance contract negotiations revealed that other vendors such as IBM and HCL were bidding for the maintenance business.   Many SoftwareInsider readers have shared with us that many system integrators, especially those in Europe provide such services.

7. Virtualization

Virtualization allows organizations to consolidate server infrastructure costs for development, testing, training, and production environments.

• EMC - provides virtualization solutions that include high availability (HA), backup and recovery (BR), and cloning.
• VMWare -  reduces an organizations physical infrastructure footprint with its solutions.  VMWare provides additional solutions that deliver high availability (HA) and disaster recovery (DR).  In addition to cost savings, many Software Insider readers report performance improvements.

The Bottom Line - Lots Of Proven Solutions, Expect More Details In Future Friday’s Features

Over the course of the next 6 months, we will be profiling many of these vendors.  Key questions that will be answered:

1. What’s the appropriate use case?
2. What other customers have used these solutions?
3. What are sample ROI’s achieved?

Meanwhile, let’s see what news, programs, and innovations develop at SAP’s Field Kickoff Meeting (FKOM 2010) the third week of January.

Your POV.

Have you worked with any of these vendors?  Feel free to share your experiences.  Am I missing anyone?  This list will be continuously updated so please share with us your thoughts.  Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Copyright © 201o R Wang and Insider Associates, LLC. All rights reserved.

I’ve had considerable time to catch up on reading this holiday season.  Traditionally, it’s a time for predictions, resolutions, and reflections.  But as we close out the last decade, I couldn’t help but dwell on economist Paul Krugman’s Op-Ed from December 27th titled “The Big Zero”.   He brings up good points that it’s been an “era best forgotten” and “it was a decade in which nothing good happened, and none of the optimistic things we were supposed to believe turned out to be true”.  He dives deep to rant about how we’ve achieved zero economic gains and makes compelling arguments.  However, in the world of innovation and adoption of disruptive technologies, it may be safe to say that his point on “our unwillingness, as a nation, to learn from our mistakes”, seems to be less true.

In fact, emerging organizational trends in the next decade can be well rooted in lessons learned through the boom and bust cycle of the 2000’s.  Here’s my opinion on five lessons learned from the tragedy of what we call the past decade:

• Pace of change moves from constant to constantly accelerating. Quickly evolve or die.  Organizations need to find ways to stay ahead of change or risk being obsolesced.  Organizations must organize around supporting flexibility and agility.  Disruptive technologies play a role in leapfrogging organizational models, business processes, and business models.
• Planning switches from static to iterative. Agile is the new poster child for today’s approach.  The best plans assume constant iteration.  Organizations must expect to reevaluate and assess plans in shorter cycles.  3 to 5 year plans can’t account for or incorporate the entry of disruptive technologies.  Iterations move from years to months.
• Viability shifts from size to innovation. Size does not equate to viability.  Success requires solving pain chains.  Mergers and acquisitions will continue out of necessity but must be done strategically.  Not only must organizations achieve an economy of scale that reduces overhead, funds innovation, and grabs the largest share of the customer budget, but they must also address pain chains by developing and delivering innovative last-mile solutions that dis-intermediate inefficiencies in existing business models.  If size gets in the way, then you must divest.
• Success evolves from technology adoption and process improvement to business value and business impact. Benefits should only focus  on business impact.  After a decade of technology and business process centricity, organizations must start with the business value story.  Business processes must be flexible enough to accommodate the pace of change.  Technology provides an enabler but not the complete solution.  People still matter at the end of the day so make sure the incentives are aligned.  Holistic goals such as the total customer experience, beyond real time relationships, and optimal compliance will provide the business drivers for new initiatives.
• Collaboration evolves from nice to have to essential. Plain and simple - partnerships count more than ever. No single organization can serve every market, provide every last mile solution, and deliver value in a focused manner.  Most organizations can not afford go it alone strategies.  Partnerships must be based on an understanding of what each party will not do in order to find the common ground among 4 key dimensions: product road map alignment, service and support coverage, sales coordination, and community engagement.

Your POV.

What have you learned from the past decade?  Do you feel it was for naught or were you fruitful in your pursuits?  Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Copyright © 2009 R Wang and Insider Associates, LLC. All rights reserved.

Keep In Mind Basic Rules Still Apply Regardless Of Deployment Option

The proliferation of SaaS solutions provides organizations with a myriad of sorely needed point and disruptive solutions.  Good news - business users can rapidly procure and deploy, while innovating with minimal budget and IT team constraints.  Bad news - users must depend more on their SLA guarantees and deal with a potential integration nightmare of hundreds if not thousands of potential SaaS apps.  Though the 7 key benefits of SaaS outweigh most downside risks, organizations must design their SaaS apps strategies with the same rigor as any apps strategy.  Just because deployment options have changed, this does not mean basic apps strategy is thrown out the window.  Concepts such as SOA, business process orchestration, and enterprise architecture will be more important than ever.  Here are 10 strategies to consider as organizations take SaaS mainstream:

1. Begin with the business process and desired business value. Understand the desired business value and outcome.  Map back the key performance indicators (KPI’s) to the business processes. Identify what processes will be covered by the SaaS solution.  Determine overlaps and hand-offs between on-premise and SaaS to SaaS that are required to measure the desired KPI’s.
2. Engage stakeholders early and often. Today’s apps strategies must constantly evolve. Change is happening so fast that line of business leads and IT leaders must collaborate in real time.  The result - an ever changing list of requirements.  While SaaS allows business leaders to make go-it-alone decisions, success will require close collaboration on short term and long term requirements, dependencies, and strategy.
3. Bet on future suites, SaaS platforms or PaaS (Platform-as-a-service). Winners and losers will emerge in this wave of Cloud computing.  Vendors such as Netsuite, Workday, Zoho, Epicor, and SAP have built or will be building suites.  They provide safe bets as more and more functionality will be rolled into their offerings. Concurrently, organizations should also choose vendors who bring a vibrant and rich ecosystem to the table because those vendors will win in the market.  Salesforce.com and NetSuite already provide users with a platform to build on apps.  Other vendors such as as Google Apps Engine, Microsoft Azure, IBM, and Zoho provide rich developer communities.  Partner and customers will drive innovation which is why platform adoption (i.e. today’s middleware) makes a difference.
4. Augment with best of breeds, but avoid best of breed hell. No one platform can provide every solution, but choose wisely.  Best of breeds provide deep vertical capabilities and rich last mile solutions.  However, no one wants to manage hundreds of vendor relationships.  Create frameworks that allow business users to work with vendors which support open standards, integrate well with your existing integration strategies, and follow the bill of rights.   Reduction in the number of vendors will become a priority in 2010 going on into 2011.
5. Assume hybrid will be the rule not the exception. Prepare for hybrid deployments throughout the decade.  Despite the benefits of SaaS and broad adoption in 2010, legacy apps will not go away.  Just count the number of mainframe and client-server apps still in use today.  Many on-premise apps will take time to migrate to SaaS. In some cases, legal requirements will prevent data from being stored off-site.  Software plus services offerings from companies such as Infor, Lawson, Microsoft Dynamics, and SAP may become the norm in 2010 as companies seek private and public cloud solutions.
6. Design with good architecture. Keep your enterprise architects (EA’s) or hire some more.  Inevitably, more and more SaaS solutions will enter the organization.  EA’s will proactively plan for new scenarios and account for future business requirements.  Organizations should keep some rigor in terms of standards for solution adoption while accounting for the need to rapidly innovate.  Business leaders will need some frameworks on which solutions to adopt.
7. Choose the right integration strategy for the right time. SaaS integration strategies will evolve based on the organization’s SaaS adoption maturity.  The first set of solutions will probably require point to point integration of data.  Over time, users often migrate to centralized integration services that account for process.  Some will go full enterprise service bus (ESB) and look at business process orchestration as well.  Consider solutions from CastIron, Boomi, Pervasive Software, Informatica, and SnapLogic.  Going forward customer data integration and master data management will be more important than ever.
8. Minimize long-term storage costs with archiving. Storage represents a significant long term SaaS cost.  Savvy clients can reduce the cost of SaaS storage with a myriad of technologies such as EMC, IBM Optim, and RainStor.  By archiving, organizations will experience faster transaction times, maintain compliance, and reduce storage fees.
9. Hedge risk with SaaS escrows. Most SaaS vendors will require 5 to 7 years to achieve profitability.  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. SaaS escrows work in a similar way.  Vendors such as EscrowTech, InnovaSafe, Iron Mountain, NCC Group. and OpSource can provide such services.
   
10. Protect your rights. Client - vendor relationships in SaaS are perpetual.  Organizations have one shot to get the contract right and begin the relationship with the right tenor.  Apply best practices from The Customer Bill of Rights: SaaS. Work with vendors to find the right balance in approach.
    

The Bottom Line For Customers - Build Frameworks That Support Easy Line Of Business Adoption

The broad adoption and trajectory of SaaS solutions requires organizations to rapidly replace edicts and 5 year plans with guidelines and policy frameworks.  The goal - enable anyone in the organization to procure a SaaS solution that meets key guidelines and standards.  The result - flexibility, security, and scalability that allows solutions to be used on-demand and in concert with existing applications.

Your POV.

As you work out your SaaS apps strategies, drop us a line and let us know how you are deploying, what challenges you’ve faced, and what successes have you achieved.  We’re happy to weigh in.  Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Copyright © 2009 R Wang and Insider Associates, LLC. All rights reserved.

As always, 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, and we’ve worked together in the past, don’t hesitate to reach out to me via Linked In.

Eliot Axelrod became Senior Account Exec at Graybow Communications Group in September 2009.  Eliot’s served a variety of account executive roles at technology companies such as  Unimax Systems, Saratoga Systems, Aurigin Systems, Lotus/IBM, and Apple Computer

Michelle Blackmer has updated her current title to Senior Director, Marketing - Healthcare at Initiate Systems .  Prior to Initiate, Michelle served as a marketing manager and project manager at GE Healthcare.

Scott Bonneau has updated their current title to VP IT, Service Management at Dr Pepper Snapple Group. Past positions have leveraged his management consulting skills and include VP Global IT PMO at Cadbury Schweppes plc, Principal at Booz Allen Hamilton, and Senior Consultant at Andersen Consulting.

Anirban Chakraborty has updated his current title to Analyst Relations, Strategic Marketing at Wipro Technologies. Anirban has worked as a consultant at IBM and served as a Systems Analyst at TCS

Eric Christiansen became a Director at BlackRock.  Previous roles include an 8 year stint in various architecture and technology roles at Barclays Global Investors. Eric brings extensive experience in software architecture with roles at ITT Gilfillan, Rockwell International, TRW, and Digital Equipment Corporation

Jeff Comport has become a Senior Vice President with Lawson Software for Product Management.  Jeff will be responsible for overseeing all of Lawson’s product lines.  Jeff brings to Lawson over 16 years of industry analyst experiences and software management expertise from Integral Systems, Inc (application software) and Criterion Incorporated (application software).C

Ridgely Evers is now on the Board of Directors at SCORE. Ridgely has been focused on helping small businesses succeed.  His current roles include serving as a Managing Partner at Establishment Capital Partners and Tapit Partners.  Previously, he founded NetBooks and worked at Intuit building out QuickBooks and their Online Financial System.

Deb Fitzgerald new CIO for Deltek.  Deb joins Deltek from Verisign where she served as the VP of Information Technology.

Justin Floyd became the CEO of InvestChange.com in October.  The cloud startup focuses on emerging and developing markets.  He founded the company in May 2009.  Previous executive roles include Investor and Chairman at CCL Group plc and Investor and Chairman/CEO at Vecta.

Chuck Gillespie is now Adjunct Professor at IUPUI.  He also serves as the President of Vigor and has focused on the HR technology space as VP of HR Technology at Peoplebase.

Stephen Harvey left his role as a Country Manager for datango.  Havey joined DNA Stream and builds on his management experiences at Sword DDS LTD and Crestec UK LTd.

Laurie Henneborn became Global Research Lead for Technology at Accenture in September 2009.  Previous roles include Global Research Lead for Outsourcing at Accenture, Information Specialist - Banking Channels at AT Kearney, Head Information Specialist at Bates Advertising, and Legal Research Assistant at Paul, Weiss, Rifkind, Wharton and Garrison

Michael Hickins has joined as a News Editor at the WSJ.com at Dow Jones. Michael brings significant technology media experience as the Executive Editor at eWeek, Executive Editor at Ziff Davis Enterprise, Senior Editor at Jupitermedia, Senior editor at Thomson Legal & Regulatory, Editorial Director at Multex, Senior editor at Fairchild Publications, and others.

Lauren Hong was promoted from Account Development Manager to an Account Manager at Forrester Research.

Robert Humphrey was named Infor’s Chief Marketing Officer in November.  Humphrey brings 30 years of marketing and tech experience.  He most recenlty served as Senior Vice-President of WorldWide Field Marketing at McAfee.  Other roles include executive positions at Citadel Security Solutions, i2 Technologies, and OpenDesign, Inc.

Charlie Isaacs became President at SOA Press in October 2009.  Prior to this role, Charlie served as the Chief Customer Officer and Chief Technology for KANA, CTO at Primus Knowledge Solutions, VP/GM Help Desk Lab at Computer Associates (formerly Platinum Technology, and VP of Engineering atGTE Government Systems.

Joseph Loveless joined the Board of Directors at Clear Stake Capital, LLC in August 2009.  He’s currently CEO of Clear Stake, an energy management and carbon abatement concern.  Previous experiences include roles at Product Marketing for Deltek, Product Marketing / Field Marketing Director for CA, Inc., and Director, Professional Services for Entex Information Svcs / Siemens.

Jim Lundy left Gartner to join Saba Software as their VP and GM for Collaboration Software.  Jim previoulsy served roles as Managing Vice President and VP, Distinguished Analyst at Gartner.

Ed Maguire is now Senior Analyst at CLSA Asia-Pacific Markets / CALYON Securities (USA) Inc. Ed’s served previous roles including the Director of Technology Investment Banking and Senior Director at Merrill Lynch.

Subraya Mallya became Advisory Board Member at Sage Scholars Program, UC Berkeley in August 2009

Hellen Omwando became General Manager Light & Health Venture at Philips in June 2009

John Tae Park became a Senior Business Systems Analyst at Toshiba America Medical Systems in December.  JT has served various roles including Oracle Delivery Consultant at IBM Global Services, Sr. Product Manager at Oracle Corporation, and Consultant at Accenture.

Sanjay Poonen is now EVP & GM of Business User Sales at SAP. Sanjay brings expensive managerial and operational experience from previous roles as EVP & GM of Performance Optimization Apps at SAP, Vice President of Line of Business Operations at Symantec Corporation, Vice President of Strategic Operations at VERITAS, Senior Vice President of Marketing, Corporate Officer at Informatica Corporation, and Director of Product Marketing and Strategy, Founder at Alphablox Corporation

Daniel Seaman became Director at Mongoose Cricket in September 2009.  Seaman previously headed product management at WGSN and worked in Marketing Strategy & Product Management at Forrester Research

Stefan Schulz is being promoted to chief financial officer of Lawson Software Jan. 1, 2010.  He succeeds Robert Schriesheim.

Robert Schriesheim, departs Lawson to become CFO of Illinois-based Hewitt Associates, Inc.  Schriesheim will continue to serve on the Lawson board as a non-employee director.

Kevin Schmidt became Director, Product Marketing/Management, Application Platform at Sun Microsystems in August 2009.  Kevin has extensive experience in Master Data Management and other infrastructure technologies.

David Stanley is now Vice President, Business Development and Sales at Altimeter Group.  Previous roles include VP, Sales at ARInsights, Regional Director at MX Logic, and Director, Business Development, Managed Services at Synergy International

Sriram Venkat became Practice Head, CRM at Wipro Technologies in October 2009.  Sriram has served as a practice manager for SAP CRM among his many roles over the past decade at Wipro.

Thomas Wailgum has updated his current title to Senior Editor | CIO.com at IDG Enterprise.  Tom brings over a decade of experience covering business and technology issues for the enterprise.

Jonathan Zhu is now Vice President, Asia at Ken Clark International.  Jonathan brings extensive financial services and Chinese market experiences with senior positions at HORIBA International, Asia Pacific at The EOP Group Inc, and Allied Irish Bank

(Photos by R Wang & Insider Associates, LLC.   Copyright © 2009 All rights reserved.)

Re-innovation Now At The Heart Of SAP’s Focus And Strategy

SAP has faced a rough two years.  From the continuing market pressure on new license revenue, false-start launch of Business By Design (ByD), management restructuring, and issues with user groups and Enterprise Support, one could kindly say its been a brutal period.  Looking forward to a fresh start in 2010, senior executives and key personnel have been hard at work “re-innovating” SAP at both the product and marketing level.  As intended, many of the 275 analysts, bloggers, customers, influencers, and media attendees of this year’s SAP Influencer Summit left Boston with the perception that the company is in the midst of such transition. However, the clarity of that message and the perception of innovation depended on the topic at hand.

Five key themes drove most formal and informal conversations throughout the event:

• SAP continues to be innovative. John Schwarz, SAP Executive Board Member, keynoted on stage that ” We are not your grandmother’s SAP” and addressed SAP’s aspiration to become more customer focused and innovative.  Jim Hagemann Snabe, Executive Board Member in charge of Business Technology and Solutions, touted the product vision.  Vishal Sikka, SAP’s Chief Technology Officer (CTO) focused his conversation on Timeless Software and SAP’s cloud orientation.  He emphasized the size of future data volumes and the case for why In-Memory applications would provide the access speed and key meta-data required to draw inference for usage in business intelligence and analytics.  Meanwhile, John Wookey, who leads SAP’s OnDemand for Large Enterprise effort commented on the Cloud by stating, “SAP sees On-Demand as the next major change in computing models and we’re very serious about on-demand. Innovation in on-demand (deployment options) is still largely in front of us.”

  Point of view (POV): SAP’s working hard to highlight its innovations.   With €1.6B spent a year in R&D, innovation exists in SAP Labs but management and tribal politics often keep good ideas from becoming productized.  Users will need to work closely with SAP to identify needs and requirements and help SAP prioritize what should go to market.  Cloud strategy remains hazy in specifics. In-memory approach will benefit customers but will take time to develop across all products.  OnDemand for Large Enterprises could slow in-roads by pure-play SaaS vendors.

• Business analytics and intelligence play a key role in the platform. Executive Vice-President and General Manager, Marge Breya spent much time talking about SAP’s support for heterogeneous data sources.  As the BOBJ assets integrate into NetWeaver, her emphasis would be to deliver information across new platforms and use cases.  Project Kona for business intelligence (BI) OnDemand in mobility would play a key role in changing how users access SAP information.

  POV: Customers need better information in order to make key decisions.  BI plays a significant role in delivering such value to customers and the Business Objects acquisition provides the enabler.  However, SAP users still find data quality and data governance to be a key hole in the SAP information strategy.  SAP will need to address the different approaches in master data management (MDM) and help customers understand which set of tools should be applied in each customer scenario.

• Future growth rests with success in small and medium enterprises.  With most of the large enterprise saturated with packaged apps such as ERP, SAP’s future growth rests on its ability to move down market.  The SME team led by Hans-Peter Klaey shared progress on their 3-prong product strategy with Business One (B1), Business All in One (BAiO), and Business by Design (ByD).   B1 continues to gain traction in the small end of the market and SAP has published a product road map well past 2014.  The key issues remain the future of ByD and how SAP plans to scale growth.

  POV: With hopes of getting ByD to scale, Feature Pack 2.5 promises to bring in-memory analytics, multi-tenant support, mobile device enablement, Microsoft Silverlight UI’s, and a software development kit based on Microsoft Visual Studio.  Scaling remains a big issue but now becomes technically feasible.  Conversations with Rainer Zinow, Senior Vice President for SME Strategic Solution Management; Christoph Behrendt, Senior Vice President for Midsize Enterprises; Peter Lorenz, Senior Vice President, SME Solutions; Jeff Stiles, Senior Vice President for SME Marketing; and others, highlight the advanced progression in SAP’s SME thinking.   Early indications show promise that they will eventually approach the market with the right scaling, go to market plan, and cost structure to succeed. Movement towards more Microsoft technologies will help attract B1 partners, especially many at Sage who may be disgruntled but technically competent and customer service oriented.
  
  

• Sustainability is more than a trend.  Building on its Clear Standards acquisition, SAP continues to drive mind share in the field of sustainability tracking.  Key topics include the usual suspects of carbon emissions, energy consumption, and compliance. The Business Objects Sustainability Performance Management offering showcased new areas such as product and workplace safety.  Its recent Sustainability Report highlights how SAP uses its own software to achieve its corporate objectives.  Sustainability shows growth as a board-level topic and issue of concern.

  POV: More than just buzzwords, SAP’s making a considerable investment in sustainability.  By providing the right templates and KPI’s for external reporting, SAP will transform social responsibility aspirations to reality for its interested customers.   Peter Graf, SAP’s Chief Sustainability Officer, has harnessed the do-good spirit of SAP’s employees in building out SAP’s offerings.  Expect sustainability to be a key area in repairing SAP’s current image.  Conversations with customers indicate that sustainability may not be a primary reason to choose SAP today, but SAP’s investment and commitment in this arena brings SAP into conversations with key business leaders and has led to deal flow.  However, long term success in sustainability will require good master data management (MDM) and SAP must rapidly address this issue or face the prospect of false promises.

• Partners and ecosystems matter. The partner ecosystem team continues to evolve and innovate with new programs that not only attract new partners, but also improve partner readiness.  SAP currently works with 7000 go to market partners and the SAP Developer Network boasts 2.5M developers.  Efforts such as the SAP Mentor program, SAP Partner Edge, SAP EcoHub, and SAP Community Network by Zia Yusuf and his successor, Singh Mecker, Senior Vice President of GEPG provide proof points of progress and success.
  
  POV: The EcoHub provides customers, partners, suppliers, and internal employees with a collaboration point for subject matter experts, trouble shooting, and fostering community.  SAP’s partner ecosystem remains its strongest asset.  In order to capitalize on their success, SAP must make the necessary investment in revamping the technology platforms partners build on.  Should they fail in providing an easier platform, they will lose traction and adoption.  Partner-led innovation will move to easier platforms to work with and business models that sustain profitability.

SAP’s Efforts In Strategy To Execution Rates A “B-” For Now

Applying a quick Vendor Scorecard grading system, here is a subjective evaluation of SAP’s 2009 efforts to date*:

• Leadership: “B-”. Leo Apotheker and Bill McDermott failed to show up again at a key event.  While this was Q4 and a tough quarter, customer and influencer perceptions remain low on Leo given his decision to push Enterprise Support and the lack of clarity into his vision and approach to date.  To be fair, he has faced a tough hurdle in cleaning up mistakes from his predecessor, Henning Kagermann, and has had to streamline research and development as well as a sprawling bureaucracy.  The good news - their absence highlighted the emerging bench strength of talent within SAP.  This brought some confidence to many in attendance that SAP may have the right stuff to emerge. The bad news - rumors abound on when a successor (Co-CEO) would be announced as Leo’s contract expires in June 2010.
• Product strategy: “B+”. Sustainability, integration of Business Objects componentry, Enhancement Packages (EhP), and In-Memory apps receive praise.  Meanwhile, adoption of ERP 6.0, remains slow.  SAP cites 50% of all product instances on to ERP 6.0.  However, actual customer counts may be less given the fact some customers have 25 to 50 instances of SAP.   Only 3500 customers have used Enhancement  Packages.  Customers remain confused on the value of Business Suite 7, upset with paying twice for BW and Business Objects, and disappointed with SAP’s slow approach to SaaS and onDemand.  Successful relaunch of ByD in 2010 may help SAP gain traction.  Customers await delivery on OnDemand offerings for Large Enterprise but can not wait much longer.  InMemory Apps planned for 2014 must be delivered on-time to compete with Oracle’s Fusion Apps.  Despite the lack of clarity, SAP still has the richest set of business functions and ability to handle the greatest set of complex scenarios.
• Technology strategy: “C+”. Middleware strategy remains murky at best.  SAP should revamp NetWeaver or junk it.  NetWeaver is to Blackberry as Salesforce.com’s Force.com is to iPhone.  It’s so much easier to build apps on Force.com and iPhone than it is for SAP’s NetWeaver and RIM’s Blackberry.  The decision to emphasize the NetWeaver ABAP stack over the NetWeaver Java stack will leave customers and partners confused despite how much more efficient it is to build on ABAP.  In addition, the lack of good business process orchestration at both run time and design time remains a critical hole for investment and gives vendors such as IBM and Cordys opportunities to sit on-top of SAP apps.  Mobile strategy at first seems less emphasized with the rare mention of native apps development on Blackberry and other platforms.  Nevertheless, SAP’s decision to leave mobile platform integration of Blackberry and others at the NetWeaver Mobile layer may prove to be the most efficient and effective approach.  The move to in-Memory will help with future development, yet customers lack confidence in SAP’s execution of the Timeless Software argument, despite its best intentions.  It appears that SAP will have 2 OnDemand strategies.  Lighter applications will be built on Java.  More complex applications to be built on the OnDemand stack.
• Go to market strategy: “B+”. “Best Run Now” packages deserve credit for bringing business value from analytics into core business processes.  Slow adoption can be blamed on a sales teams who treated this as a new license sales opportunity instead of an entry point to showcase SAP value.  Customers could see the sales reps salivating with each interaction for a new sale.  Kudos go to SAP for finally admitting failure with ByD and working hard with customers and partners to revamp efforts.  SAP’s marketing team remains the most innovative and effective.  Just wait till they get products that keep up with their marketing.
• Innovation agenda: “B-”. SAP’s making in-roads in the right areas.  Project Constellation, integration with Google Wave, and social networking investments highlight some movement towards disruptive technologies.  SAP must rapidly productize innovations from the SAP Imagineering team, worldwide SAP Labs, SAP COIL, and its consulting partners.   SAP needs to tap into its ecosystem and bring out innovation.
• Service and support: “C+”. Customers continue to self-support and question SAP’s value.  As more customers consider third party maintenance, SAP will have to fight harder to demonstrate value.  On the positive front, SAP’s Value Academy shows promise in helping customers optimize their SAP investments.  Initial discussions with Chakib Bhoudary, SAP’s Chief Value Officer, indicate the deep level of experience and data provided.  Customers will want to see how to access these services with minimal investment or redirected maintenance investment.
• Customer satisfaction: “C+”. Conversations with over 400 customers in 2009 highlight severe disappointment with their SAP relationship.  Sales reps compensated on net new license sales no longer invest in guiding customers through the SAP offerings.  Customers fail to adopt due to lack of knowledge.  They no longer trust their SAP sales reps nor do they have high confidence in the system integrators to guide them to the most cost effective solution.  SAP sales reps need to understand their products better.  Those customers who are able to make a trip to Walldorf (WDF), find solace that the old SAP still exists with passionate and dedicated engineers.  Customers appreciate the honesty in WDF about what can or can not be accomplished with SAP.  However, this is not a scalable model for SAP.  SAP will need to retrain and reincentivize its sales reps.  Applying social enterprise methods to the great SAP ecosystem may prove to be fruitful in scaling out more personalized approaches.
• Execution to date: “C-”. Failures abound in execution in Enterprise Support, NetWeaver adoption, ByD roll-out, Duet usage, and Solution Manager capabilities.  SAP’s current state is similar to Microsoft’s prior to the launch of Bing and Windows 7.  SAP needs a success story soon to not only raise morale, but also gain customer confidence in its ability to deliver.  Jim Hagemann Snabe’s efforts at streamlining and centralizing development provides at least a positive indicator.
• Partner ecosystem: “A”. The team has built one of the best technology partner ecosystems in the market.  The emphasis on community outreach, influencer participation, and investment in a partner’s success continues to be a differentiator.  SAP’s ecosystem strategy should be credited with saving SAP during this round of crisis.  A move towards Microsoft technologies such as SharePoint and Silverlight will help in gaining developer traction and adoption.  Fix NetWeaver and the ecosystem will have a tool they can innovate from.
• Overall reputation: “B”. SAP carries significant brand presence in emerging markets and the SME space.  Many companies equate ownership of SAP as a sign of success in their markets.  Yet, existing customers have soured on the brand and continue to wonder when SAP will innovate in their requirements and not be distracted by other pursuits.  In general, SAP still carries considerable brand equity which will buy it time as it reinnovates.

* A=4.0, A-=3.7., B+=3.3, B=3.0, B-=2.7, C+=2.3, C=2.0, C-=1.7, D+=1.3, D=1.0, D-=0.7, F=0

The Bottom Line  - SAP’s Turning The Corner

Credit must be given to SAP for charting a new course.  A shift in the management philosophy and product direction will take years to realize, however, its not too late for change.  SAP must remember its roots and become more German and less American.  The renewed focus must put customer requests and priorities ahead of SAP’s bureaucracy.  The emphasis must focus on the relationship.  When that reemerges in how SAP works with customers, partners, influencers, and its own employees, SAP will be back in good graces.  In the meantime, it’s  time to get to work and deliver.  Oracle’s Fusions Apps are coming soon and competitors such as IBM, Microsoft, Epicor, IFS, and SalesForce.com will not relent.

Your POV.

If you get a chance, let us know:

• Which SAP products do you use?
• What do you think about the progress with SAP?
• Are you considering alternatives to SAP?
• Do you feel SAP is innovating fast, ok, or slow enough?
• What do you think of SAP’s new reinnovation strategy?

Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Other related links and good resources

SPECIAL: Video clips from the SAP Influencer Summit from SAP

20091211 ZDNet Software & Services Safari - Brian Sommer “SAP Business ByDesign Update: Multi-tenancy, In-Core Memory DB and More”

20091211 MichaelFauscette.com - Michael Fauscette “SAP Coming Out From the Clouds”

20091210 ZDNet Collaboration 2.0 - Oliver Marks “SAP: The clear path forward for the supertanker…”

20091209 ZDNet IT Project Failures - Michael Krigsman “Is on-premise ERP obsolete?”

20091209 ZDNet Social CRM: The Conversation - Paul Greenberg “SAP Business Influencers Summit: A Clear Path Forward?”

20091209 Spend Matters - Jason Busch “SAP Influencer Summit, Dispatch 1: On-Demand Differentiation and Vision”

20091209 Monkchips - James Governor ” SAP: Out with the Old, Shrugging off the Tag”

20091209 Merv’s Market Strategy For IT Suppliers - Merv Adrian “SAP Promises Acceleration on a “Clear Path” - Will it Be Enough?”

20091209 CIO Reinvented Blog - Prasanth Rai “Interesting Data/Statistics About SAP…(Influencer Summit)”

20091209 DealArchitect - Vinnie Mirchandani “SAP and The Boston Park Plaza”

20091209 Cloud Avenue - Zoli Erdos “Twitter in the Enterprise - Round 56745327″

20091208 ZDNet IT Project Failures - Michael Krigsman “SAP Influencer Summit: First Impressions”

Copyright © 2009 R Wang and Insider Associates, LLC. All rights reserved.

Begin Apps Strategy Projects With Bite-Sized Entry Points

(Copyright © 2009 by R Wang and Insider Associates, LLC. All rights reserved.)

(Copyright © 2009 by R Wang and Insider Associates, LLC. All rights reserved.)