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Wednesday’s Whispers: People Whispers – February 2010

Published on February 24, 2010 by R "Ray" Wang

PEOPLE WHISPERS: MOVES, PROMOTIONS, AND MILESTONES*

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

Your POV

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

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

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

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Quarterly Financial Tracker: Q4 CY 2009 SaaS Vendors Continue To Trump On Premises Vendors In YoY Growth

Published on by R "Ray" Wang

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, Taleo (23.29%) led the pack followed by 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

screen-shot-2010-03-18-at-94656-pm

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

screen-shot-2010-02-23-at-24228-am

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.

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Monday’s Musings: Why Users Must Preserve Their Third Party Maintenance Rights

Published on February 22, 2010 by R "Ray" Wang

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.

screen-shot-2010-02-20-at-44436-pm

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

screen-shot-2010-02-20-at-44448-pm

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

screen-shot-2010-02-20-at-44457-pm

Figure 4. Very Few Public Options Exist For Customers

screen-shot-2010-02-20-at-100912-pm

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

screen-shot-2010-02-20-at-44509-pm

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.

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News Analysis: Salesforce.com Announces Private Beta Of Chatter

Published on February 17, 2010 by R "Ray" Wang

Chatter Represents SFDC’s Unified Move Into Social

screen-shot-2010-02-18-at-15959-am

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.

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News Analysis: Hasso Brings More Changes to SAP’s Management Team

Published on February 11, 2010 by R "Ray" Wang

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.

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

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News Analysis: SAP’s CEO Léo Apotheker Resigns

Published on February 7, 2010 by R "Ray" Wang

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

gl_apotheker_clr1

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.

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

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News Analysis: IBM Acquires MDM Leader Initiate Systems For Public Sector and Healthcare Prowess

Published on February 3, 2010 by R "Ray" Wang

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

IBM's MDM Acquisition Roadmap

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.

Your POV

Are you an IBM or Initiate Systems customer?   How do you feel about the acquisition?  Would you like to learn how to:

  • Develop an MDM strategy?
  • Select an MDM solution?
  • Negotiate an MDM contract?
  • Design a data governance program?

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 resources.  They will be added on an ongoing basis and updated as appropriate.

Official IBM Press Release

20100203 Spend Matters – Jason Busch “IBM Takes the CDI/EMPI Initiative with its Initiate Acquisition”

20100203 ZD Net: Between the lines – Larry Dignan, Sam Diaz, Andrew Nusca “IBM buys Initiate; Bets on Healthcare IT”

20100203 IDG News Service – Chris Kanaracus “IBM Buying MDM Vendor Initiate Systems”

20100203 SearchCRM.com – Jeff Kelly “IBM to Acquire MDM Vendor Initiate Systems”

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

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