Archive for March, 2010

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Wednesday’s Whispers: People Whispers – March 2010

Published on March 31, 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.

Ashesh Badani became Sr. Director, Middleware/JBoss at Red Hat in January 2010 escaping the clutches of Oracle.  Previous roles include a 3 year stint at Sun Micro Systems as a  Director for Product Management/Marketing & Middleware Solutions.  Other product roles include Director of Marketing at 3VR.

Jason Busch became Partner at Spend Matters Group, LLC in January 2010.  A fellow Enterprise Irregular, he previously served as the Managing Partner at Azul Partners.  Jason is one of the world’s leading authorities in Spend Management.

René Bonvanie became a Board Member at Active Endpoints in March 2010.  He serves as the VP of Worldwide Marketing at Palo Alto Networks and has a rich history in many marketing chief roles in the tech industry.

Tami Casey became Board Member at Social Media Club – San Francisco Silicon Valley Chapter in January 2010.  Tami currently serves as a Social Media Strategist, Public Relations Manager at Kulesa Faul.  Other experiences includes 11 years in PR at Intel Corporation.

Steve Cole has served as the Chief Marketing Officer at Gladson since February 2009.  Other roles include key marketing positions as VP of Solutions Marketing for SPSS, SVP of Marketing and Strategy at Click Commerce, and VP or Marketing at ClearCross.

Todd Craig has been promoted from Director of Market Intelligence and Analyst Relations to Senior Director of Reputation Management at Manhattan Associates.

Phil Fersht has launched his own star analyst firm focused on the outsourcing industry. Horses For Sources builds on a cadre of nine seasoned industry experts.  Phil previously worked at Cognizant and at AMR Resesarch.

Laura “@Pistachio” Fitton has left Pistachio Consulting to found and become CEO of oneforty inc.

Sanchit Vir Gogia has been promoted from Senior Analyst of IT Services to Associate Research Manager at Springboard Research. Springboard is a rapidly growing industry analyst and research firm covering the APAC market.

Ronda Pitts Krier has an updated current title: Master Principal Solution Architect at Oracle. Ronda’s been an expert in Master Data Management for the past 5 years with various increasing roles of responsibility at Oracle.

John Kreul has become a VP for Global Business Applications at Pepsi Beverages Company.  John has devoted more than 13 years to technology and business applications at Pepsi Americas.

Felton E. Lewis, IIII (FEL) has been promoted from Managing Principal for Distribution, Logistics, and Transportation Practice to Client Relationship Officer – Sr. Account Executive at Sterling Commerce an AT&T company.

Lafe Low is now Writer and Editor for Hire at LWL Media.  Lafe bring decades of experience with roles as Editorial Manager at CXO Media, Executive Editor at 1105 Media, and Manager of Conference Development/Features Editor at CXO Media

Lauren McKay is now a Freelance Writer at BG+H.  In addition, she currently serve as a Contributing Author at Greenwood Publishing Group and Associate Editor at CRM Magazine

Rajesh Nair now serves as Head of MS: Information and Communication Services at Swissgrid

Paul Papadimitriou has an updated current title: Social Technologies Strategist at TEDxTokyo. Paul serves as one of the key go to guys for Web2.0 and emerging technologies in Tokyo, Japan.

Krishnan Parasuraman became Chief Architect, Digital Media at Netezza in January 2010. Krishnan brings 5 years of practitioner experience in information management from his work as Principal Architect and Practice Leader at Infosys.

Tri Phan is now a Senior Prod Mgr at AT&T Wireless.  Previous roles include VP of Business Development at ScanControl, Director of Marketing and Business Development at Somotsoft, Inc., and VP of Business Development at Kinemo.

Jeff Prillaman has an updated current title: Director & DIO-HR, Business & Technology Solutions at Capital One

Nitin S has an updated current title: Practice Head at Consult HR Solutions

Mitch Wagner became Internet Marketing Director at Palisade Systems in February 2010.  Mitch’s deep online journalism experience includes roles as Executive Editor at InformationWeek.com and other titles at United Business Media

Andy Warzecha is now VP, Strategy, Software Solutions Group at IBM. He was previously a VP for Strategy in the IBM Information Management Software group at IBM. Prior roles include serving as an SVP and Group Manager for Research at Meta Group.

Lisa Whelan became Member, Advisory Board at Open Mobile Solutions and Business Devleopment Consultant at Chomp in Feburary 2010.  She’s served as a business development consultant for various startups in social media and mobile strategy.

Mary Hayes Weier became Editor, Enterprise Ready Series at Workday in February 2010.  Prior to her new role, Mary provided in-depth and award winning reporting at InformationWeek.

Kara Wilson has an updated current title: VP, Collaboration Solutions Marketing for Cisco Systems.  Other marketing roles include serving as the CMO at Network General and Group Vice President, Corporate Communications at PeopleSoft.

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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Friday’s Feature: Workday Release 10 Moves Users One Step Closer To ERP Replacement

Published on March 26, 2010 by R "Ray" Wang

Workday Continues To Pioneer SaaS Success In The Enterprise

Founded by Dave Duffield and Aneel Bhusri in March 2005, Workday has grown the company to over 135 customers with 80+ companies in production, 17 enterprise payroll companies, and over 400 employees in 50 countries worldwide.  Key industries include services, technology, financial services, manufacturing, healthcare, and others.  Unlike other ERP pure play True SaaS vendors (e.g. NetSuite, Intacct, and Ultimate Software), Workday uniquely serves the mid-size to very large enterprise clients.  Large production clients range from 26,000 employees at Chiquita to 200,000 employees at Flextronics.  Workday’s roots began with HR but Release 10 bolsters key financial and spend management capabilities, highlighting aspirations to be the SaaS option for Oracle, PeopleSoft, and SAP ERP replacements over the next 3 to 5 years.

Design Points Reflect The Principles Of Social Enterprise Apps

With the business user in mind, Workday incorporates 8 of the 10 essential elements for social enterprise apps.  These include (see Figure 1):

  1. Role-based design. Software designed around how users perform work including applicable security models.
  2. Consistent experience across channels & deployment options. Software that is agnostic to where or how that software is deployed and accessed.
  3. Contextual & relevant delivery of information. Software which understands what information to provide users at a point in time
  4. Configurable & adaptive. Software that can be modified to meet changing conditions.
  5. Outcome-focused & results-oriented. Software that tracks key metrics across an end to end process.
  6. Proactive, predictive, & actionable. Software that anticipates requests and supports decision making.
  7. Engaging for all stakeholders. Software that opens up the system to new types of users, collaborators, networks, and communities.
  8. Secure & safe. Software that meets security and disaster recovery thresholds.

Figure 1.  Workday’s Design Incorporates 8 Of The 10 Elements of Social Enterprise Apps

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

(Source: Workday)

Release 10 Features Move Users Closer To An ERP Suite

  • HCM adds Succession Planning and expands geographic reach. HR managers gain new functionality with succession planning by candidate names and positions.  Succession profiles track potential, achievable levels, and retention risk.  Improved enhancements touch absence, benefits, compensation, performance management, and staffing.  Cuba and Guernsey are added as 2 new countries.   Global personal data already supports 297 countries and all UN member nations.   Employee contracts now support Chinese and EMEA requirements.
  • Financials expands horizontal capabilities. Key updates include improved customer contracts, scheduled billing, revenue recognition, and milestone recognition.  New financial reporting features allow cost center and regional managers to run reports.  Users receive new project billing, basic VAT, sales tax, and customer statement capability.
  • Payroll augments existing capability.  New features include new off cycle calculations, worker history enhancements, gross-up, and off cycle billing.  Payroll remains focused on primary processing.  Multiple job processing is not available yet but planned for future releases.
  • Spend management adds a supplier invoice workbench. Additional enhancements span procure to pay, contingent worker procurement, resource tracking, and purchase order review.
  • User experience focuses on role based designs. Worker and talent profiles receive new looks that build off of the design elements in the “All About Me” and “My Team” pages in Release 9.   Multi-currency display for compensation now displays local and preferred currencies.
  • Analytics and reporting simplify data creation and consumption. Simple enhancements such as default values for report inputs, report tags for categorizing and search, and data creation from any source accessible by the user improve the ability to turn data into information.  Export now supports CSV, XML, and GData formats.
  • Ecosystem integration expands to new partners. New linkages include MrTed TalentLink, 15 new providers to the Workday Benefits Network (WBN), and improved integration security in the Enterprise Interface Builder

The Bottom Line – Consider Workday In Shortlists For HCM Upgrade/Replacement And Two Tier ERP

With the bulk of most HCM solutions deployed prior to Y2K, many organizations now actively consider upgrade/replacement strategies.   Most users expect upgrades to result in expensive replacement scenarios.  Hence, organizations must determine whether or not to continue with incumbent vendors or pursue a two-tier ERP apps strategies using SaaS deployment.  For mid-sized to large enterprises, Workday provides a unique option to take a phased approach with HCM and grow into the full suite as the product matures.

Your POV

Are you considering an ERP replacement? Will Workday 10′s new features compel you to migrate from your existing apps?  If you are a Workday customer, how’s your experience been with the SaaS vendor?  Add your comments to the discussion or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity. Please let us know if you need help with your apps strategies.  Here’s how we can help:

  • SaaS/Cloud strategies
  • Crafting your next gen apps strategy
  • Short listing and vendor selection
  • Contract negotiations support
  • Market evaluation

Related resources and links

20100316 The Enterprise System Spectator – Frank Scavo “Workday pushing high-end SaaS for the enterprise”

20100324 InformationWeek – Doug Henschen “Workday 10 boosts HR capabilities”

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

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Tuesday’s Tip: Understanding The Many Flavors of Cloud Computing and SaaS

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

Confusion Continues With Cloud Computing And SaaS Definitions

Coincidence or just brilliance must be in the air as three esteemed industry colleagues, Phil Wainewright, Michael Cote, and James Governor, have both decided to clarify definitions on SaaS and Cloud within a few days of each other.  In fact, this couldn’t be more timely as SaaS and Cloud enter into mainstream discussion with next gen CIO’s evaluating their apps strategies.  A few common misconceptions often include:

  • “That hosting thing is like SaaS”
  • “Cloud, SaaS, all the same, we don’t own anything”
  • “OnDemand is Cloud Computing”
  • “ASP, Hosting, SaaS seems all the same”
  • “It all costs the same so what does it matter to me?”
  • “Why should I care if its multi-tenant or not?
  • “What’s this private cloud versus public cloud?”

Cloud Computing Represents The New Delivery Model For Internet Based IT services

Traditional and Cloud based delivery models share 4 key parts (see Figure 1):

  1. Consumption – how users consume the apps and business processes
  2. Creation – what’s required to build apps and business processes
  3. Orchestration – how parts are integrated or pulled from an app server
  4. Infrastructure – where the core guts such as servers, storage, and networks reside

As the über category, Cloud Computing comprises of

  • Business Services and Software-as-a-Service (SaaS) – The traditional apps layer in the cloud includes software as a service apps, business services, and business processes on the server side.
  • Development-as-a-Service (DaaS) – Development tools take shape in the cloud as shared community tools, web based dev tools, and mashup based services.
  • Platform-as-a-Service (PaaS) – Middleware manifests in the cloud with app platforms, database, integration, and process orchestration.
  • Infrastructure-as-a-Service (IaaS) – The physical world goes virtual with servers, networks, storage, and systems management in the cloud.

Figure 1.  Traditional Delivery Compared To Cloud Based Delivery

screen-shot-2010-03-22-at-105927-pm

The Apps Layer In The Cloud Represents Many Flavors From Hosted To True SaaS

SaaS purists often challenge vendors on delivery models in the cloud at the apps layer (see Figure 2).  Often classified as OnDemand, there are 3 common approaches:

  1. Single Instance – (a.k.a. “On Demand”). Think traditional apps deployed one cusotmer per app or per server. Many vendors provide hosting capabilities. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, customize, and in most cases choose when they want to change the code. All customers can use different versions of the software
  2. Multi Instance – (a.k.a. “Server Virtualized”). Think “VMware” like. Apps deployed into a shared-web hosting environment. A single instance copy of the app is configured and deployed into a web directory for each customer. Vendor benefit from easier to manage multi-instance environments. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, customize, and in most cases choose when they want to change the code. All customers can use different versions of the software.
  3. Multi-tenant – (a.k.a. “True SaaS”). Apps in a multi-tenant deployments provide a single operating environment shared by multiple customers. Config files are created and deployed each time a customer request services. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, configure but NOT customize the code. Customers usually receive upgrades at the same time. Everyone shares the same code.

Figure 2.  Different Strokes Of OnDemand For Different Folks

screen-shot-2010-03-22-at-112728-pm

The Bottom Line – Different Models Bring Varying Degrees Of Trade Offs In Cost Versus Flexibility

Keep in mind there are cases where one deployment option is more favorable than another. Just because you are multi-tenant SaaS doesn’t mean you are better. On the other hand, when vendors tout OnDemand as a SaaS offering, then the SaaS bigotry begins. Be on the look out as more vendor provide mix-mode offerings to support disconnected modes, SaaS and On-premise, Public and Private clouds, as well as other improvements in integration with stronger client side ESB’s. Expect many vendors to put their offerings into the Cloud as Cloud/SaaS moves beyond the mainstream for apps strategy.  Let’s take a look at a two decision criteria:

Scenario 1: From least expensive to most expensive to run for a vendor:

  1. True SaaS
  2. Server Virtualized
  3. Hosting

Why is this important? Let’s see, you choose a Hosted solution and the vendor’s costs to run the app goes up with each new customer as it has to manage the different environments. No matter how hard the vendor will try to “fit” everyone to standard configurations and deployments, that’s not always possible. Flexibility has a cost. In a “True Saas” solution, the cost to add an additional customer is minimal and each customer reduces the overall cost for everyone. Ultimately, a True SaaS deployment will have the lowest cost/user/month fee. What will you do 5 years into an Hosting scenario when you are locked in?

Scenario 2: From most customizable to least customizable for a customer:

  1. Hosting
  2. Server Virtualized
  3. True SaaS

Why is this important? Your may have specific needs in an area where the SaaS vendor has not provided the deepest level of configurations. You can’t just go in and modify the code unless everyone else wants it or the vendor’s has it on the roadmap. The cost of comformity is the lack of flexibility. What will you do 5 years into a True SaaS scenario when you are locked in and the vendor won’t add the feature or functionality you need?

Your POV

What’s your view on SaaS vs Cloud?  Does this help clarify the definitions?  Are you looking at private, public, or hybrid cloud options?  Add your comments to the discussion or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Please let us know if you need help with your SaaS/Cloud strategies.  Here’s how we can help:

  • Crafting your next gen apps strategy
  • Short listing and vendor selection
  • Contract negotiations support
  • Market evaluation

Related resources and links

Take the new and improved survey on 3rd party maintenance

20100322 Monkchips – James Governor “Defining Cloud is Simple. Get Over It. The Burger”

20100319 ZD Net: Software as Services – Phil Wainewright “Is SaaS the Same as Cloud”

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

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User Group Event: SAP Australian User Group (SAUG) Summit 2010

Published on by R "Ray" Wang

screen-shot-2010-03-22-at-114833-pm

Title: SAUG Summit 2010
Location: Sydney Convention and Exhibition Centre Darling Harbour, Sydney
Link out: Click here
Start Date: 2010-08-03
End Date: 2010-08-05
Description: Learn: Collaborate: Innovate

The SAUG Summit is the largest SAP event in the Asia-Pacific region and 2010 promises to be no different. This gathering for SAP professionals attracts a wide range of attendees from all levels within the organisation.

This year will include a full day CIO Forum, 26 exhibitors, the SAP Partner/Customer Awards of Excellence, a BusinessObjects specific stream, new SAP products, technology gurus and mentors and a steady procession of customers sharing their learnings with attendees.
The agenda is in the process of being built by SAUG Committee, customers and SAP experts. A glimpse of what is to come is below.

Keynotes for 2010 will include:

Ray Wang
Enterprise Strategist and Disruptive
Technologies Expert
Altimeter Group

Martin Riedel
Head of Global Upgrade Office
Global Head of Maintenance Portfolio
Solution Management, SVP
SAP AG

Scheduled Topics:
Business Intelligence
Travel Management
Testing tools
Cloud computing
Business Process Consolidation
Virtualisation
SaaS and SAP
Workforce automisation
GRC & Risk Management
Sustainability
SAP Support
Upgrades & Enhancement packs
and more…

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

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Software Insider Index™ (SII): 2009 SII Top 35 Enterprise Business Apps Vendors™

Published on March 18, 2010 by R "Ray" Wang

2009 Results In Major Revenue Declines For On Premise And Officially The Year Of SaaS

A review of last year’s financial performance should erase any doubts about the viability of SaaS as a deployment option and a business model.   Traditional on-premise business apps vendors took the brunt of the beating earlier in the year but have slowly recovered.   This year’s Software Insider Index™ (SII) highlights two major themes:

  • Legacy On-Premise Vendors Retain Operating Margins But Lose Revenue Share. Almost every on-premise software vendor lost revenue on a year-over-year (YoY) basis in 2009 (see Figure 1).  IFS (3.87%) and SAS Institute (2.21%) grew in the midst of the financial onslaught.  SAP is still double the size of Oracle in apps revenue!  Vendors such as QAD (-31.42%) and Manhattan Associates (-26.84%)saw the worst YoY declines (see Figure 2).  Most vendors relied on their maintenance and support to bolster their revenues. For example, CDC, Epicor, Exact, Lawson, Manhattan, Oracle, QAD, and SAP exceeded a 1:2 ratio in new license to maintenance revenue.  Why?  Customers chose not to upgrade, purchase new licenses, and expand their footprint.   Despite the downturn, most vendors survived with operating margins between 10% an 50%, well above those achieved by SaaS vendors.   Traditional vendors clearly felt pressure from SaaS/Cloud.
  • SaaS Models Prove Themselves In 2009. Meanwhile, every SaaS vendor grew, from Ariba with the lowest YoY revenue growth (0.44%) to SuccessFactors with the highest (38.73%). Overall the SaaS vendors tracked in the 2009 SII grew 7.98% in YoY revenue. SaaS deployments expanded in all areas from CRM to HCM to spend management. Of note, Salesforce.com exceeded the $1.3B mark, a milestone for the SaaS industry.

Figure 1. Software Insider IndexTM (SII) Top 35 Enterprise Business Apps VendorsTM (Calendar Year Revenue)

screen-shot-2010-03-18-at-110717-am

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

More…

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Monday’s Musings: Avoiding Failure In Social CRM Projects Requires Ecosystem Coordination

Published on March 15, 2010 by R "Ray" Wang

Recent Conversations With Executives Confirm Demand For Social CRM

Good news! Organizations see an opportunity to tap into the proliferation of social networking channels for their CRM initiatives.  Speaking with 23 business leaders over the past 10 days, it became obvious that Social CRM initiatives were top of mind for a few reasons:

  • Pressure from the boardroom. Social networking achieves top of mind status.  Board of directors have asked their executives to “look into the issue”.
  • Success through internal pioneers. In every organization, a few Social CRM pioneers have emerged. They kick-off small pilots, test the waters, and fund new projects from their successes.
  • Fear of falling behind. Organizations that have survived the past two business cycles know that they need to respond to change or be changed.  e-commerce provided good lessons learned in how channels could transform business modes.

Social CRM Must Move Beyond ‘Just Another Channel’ Status

Bad news!  Most executives believe that Social is just another channel and often liken Social CRM to e-commerce.  Others felt this was just an extension of CRM with a social flavor.  Those that take this point of view miss the point because Social CRM:

  • Reflects a customer driven cultural shift. Organizations should realize that customer behavior has changed and social networking puts the power into the hands of the customer.  Conversations occur unfettered at a peer-2-peer level and proliferate as each new social medium emerges.  Organizations must influence not control.
  • Requires an internal transformation. Existing customer facing processes must adapt to these rapid changes.  Staff must be trained.  Management teams must build a good socialgraph and foundation (SCRM Use Case F1 – Social Customer Insights) to constantly reassess where to allocate and reallocate resources.   Organizations will have to invest in training and change management to tie back to existing CRM processes.
  • Realizes the limitations of and synergies with existing CRM solutions. Without accounting for new behaviors, patterns, and processes, legacy CRM solutions lack a social design.  Built for automation, most lack social relationship management features.  Social CRM will have to integrate back to legacy systems and master data management to succeed.  However, existing CRM solutions will need an upgrade.

The Bottom Line – All Social CRM Ecosystem Players Must Do Their Part

Social CRM requires significant organizational transformation for success.  In fact, Social CRM projects can fail in the same manner as other CRM projects have in the past (via Michael Krigsman). However, the customers and the industry can ensure success through better ecosystem coordination.   Each side must describe and balance the holistic dependencies required for success.  For example:

  • Customers. With the most at stake, customers must acknowledge the upfront risks.  As pioneers, they must invest in the change management required for success, challenge the vendors on their promises, and push their system integrators to close the gap between vendor promises and customer requirements.
  • Advertising and marketing agencies. Because the creative teams have mindshare with the CMO and line of business executives, care must be given to highlight the technology dependencies to existing systems and the constraints in today’s technologies.  Many have been burned by previous promises from CRM.  Advertising and marketing agencies should partner with the social CRM vendors and system integrators to ensure that expectations can be fulfilled.
  • System integrators (SI’s). Often close to the CIO and IT side of the house, system integrators need to enable the requirements from the advertising and marketing agencies.   SI’s should partner with the agencies to coordinate on proposals to deliver the technology that supports business vision and value.  Partnerships with the Social CRM vendors should focus on understanding road map, direction, and vertical opportunities.
  • Social CRM vendors. Most vendors start with their purpose built best of breed solutions.  Over time these solutions will evolve into suites. In the meantime, social CRM vendors need to stay close to meet customer requirements, partner with system integrators on vertical opportunities, and work closely with the creative teams to understand emerging requirements.

Your POV

Share with us your successes in the Social CRM ecosystem.   You can post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity or better yet, join the community!

Please let us know if you need help with your Social CRM efforts.  Here’s how we can help:

  • Assessing social CRM readiness
  • Developing your social CRM  strategy
  • Vendor selection
  • Implementation partner selection
  • Connecting with other pioneers
  • Sharing best practices

Related resources and links

20100305 A Title Would Limit My Thoughts – Mitch Lieberman “Is Business Culture Required To Find Value in Social CRM?”

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

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

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

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Monday’s Musings: Decoupling Support From Maintenance – What Apps Vendors Can Learn From Microsoft Dynamics

Published on March 8, 2010 by R "Ray" Wang

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

.  screen-shot-2010-03-08-at-10320-am

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.

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