Archive for May, 2010

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Quarterly Financial Tracker: Q1 CY 2010 – Software’s Back With Double Digit Gains In License Growth

Published on May 27, 2010 by R "Ray" Wang

The majority of 21 publicly traded software vendors managed to show year-over-year (YoY) gains over the dismal beating from calendar year (CY) Q1 2009.  SaaS vendor maintained their double digit gains while on-premise vendors mostly showed positive traction (see Figure 1) and (see Figure 2).  Highlights for the 2010 CY Q1 2010 results:

  • Big gains in YoY license revenue for on-premise vendors such as Manhattan Associates (188.64%) and  JDA (87.43%) reflect the investments being made in retail and supply chain.  Manhattan’s gains are the greatest across the board as they demonstrate a turnaround from last year.
  • Meanwhile, SMB bell-weathers Lawson (28.10%), Deltek (24.75%), and Epicor (23.21%) signal return of key license sales in on-premise.  Concurrently, Oracle (20.45%) and SAP (11.oo%) demonstrate a strong recovery in enterprise license revenue growth in on-premise.
  • Maintenance fee growth for on-premise vendors hold steady with mostly single digit YoY gains except JDA Software (32.71%) and SAP (11.34%).
  • SaaS vendors kept steady growth in the double digits for subscription revenue. UltimateSoftware (27.80%), RightNow (26.80%), Salesforce.com (24.47%), and SuccessFactors (24.29%) led the charge.
  • Overall growth rates on a YoY revenue basis have stabilized for most SaaS vendors at the mid teens to twenties.
  • Of interesting note, professional services fees for on-premise vendors match or double the license revenue. SaaS vendor professional services revenue are well below 1x license revenues, closer to 10% or less.
Figure 1.  Software Insider Index® On Premise Vendors: Q1 CY 2010*


(Right click to view full image)
Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.
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Tuesday’s Tip: How To Evaluate Tech Projects For Business Value

Published on May 25, 2010 by R "Ray" Wang

Today’s Evaluation Frameworks Miss The Point

Business leaders seek clarity in understanding which technology solutions drive the most business value.  Today’s frameworks often focus on a combination of:

  • Features – ability to execute, current offering, product depth, etc
  • Direction – vision, strategy, corporate leadership, etc.

Unfortunately, the intersection of features and direction only addresses potential.  Clients continue to express how potential alone no longer provides enough justification in vendor selection or understanding the overall adoption strategy.

Next Gen Evaluation Frameworks Must Start With Business Value

Business leaders seek returns on investment.  IT leaders strive to reduce cost of delivery.  ROI alone may not answer the question as business value needs to be expressed and compared.  Business impact remains the goal in building out new frameworks.  In addition, the cost of technologies must be factored.   As a result, key questions in vendor selection often include:

  • Will this product provide an ROI?
  • Where will the organization realize a business impact?
  • How do various solutions compare in delivering business value?

Organizations Must Balance Business Impact And Cost Of Technology Delivery

Based on conversations with 113 end user clients and vendors, there appears to be a market demand in building out a new framework that compares how (see Figure 1):

  • Business impact extends across the value chain. Business impact extends into 3 levels of maturity from internal to external (i.e. department, cross enterprise, and business value chain).  The greater the penetration of the solution, the greater the business value.
  • Cost of technology delivery measures against percentage of revenue. Both scaling and return on investment reduce the cost of delivery.  Reference data provided via customer references and case studies will provide key data points by industry, size, and geo.

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News Analysis: IBM Buys Sterling Commerce From AT&T

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



Merger Ties B2B Integration Tools With Selling And Fulfillment

On May 24th, IBM surprised the market with its $1.4B, all-cash, definitive agreement to buy Dublin, Ohio based Sterling Commerce from AT&T.  Sterling Commerce was purchased by SBC Communications in 2000 for its strengths in B2B integration.  As an AT&T company in 2005, they acquired Yantra for its supply chain fulfillment and distributed order management solutions (DOM).  In 2006, the company acquired Nistevo for transportation management systems (TMS) and in 2007 bought out Comergent, a leader in selling and order management solutions.  Sterling Commerce currently employs 2500 people and has 18,000 customers around the world.  According to Sterling Commerce’s CEO, Bob Irwin and IBM Websphere’s General Manager, Craig Hayman, the acquisition occurs for a few reasons:

  • Integration solutions for dynamic business networks. Sterling focuses on B2B integration and managed file transfer (MFT).  B2B integration solutions include offerings such as GenTran, Collaboration Network, Integrator, eInvoicing, Mobile Solutions, and B2B Managed Services.   MFT helps organizations move vast quantities of information quickly and securely across data networks.  Sterling delivers the services in both on-premise and on-demand.

    Point of View (POV):     Sterling’s flagship product “the VAN”, brought external business and trading partners together.  They built a reputation connecting businesses with their trading community of suppliers, customers, banks and transportation providers.  IBM built a strong platform for inter-enterprise integration and SOA governance.  Should the acquisition succeed, customers will gain integration across business networks and improve decision making through richer integration.  Key Sterling Commerce integration customers include BNP Paribas,  Union Bank, Toshiba, Tenneco, Sony, Nordstrom, True Value and others.
  • Selling and fulfillment solutions that extend the value chain.  Sterling Commerce owns the leading order selling and fulfillment suite in the market.  Solutions allow organizations to deliver configure, price, and quote complex products and services (CPQ), cross channel order fulfillment, inventory logistics, and transportation management.  Sterling often competed with WebSphere commerce solutions for customers.

    POV:     Sterling originally made commerce application acquisitions with Comergent, Yantra, and Nistevo to extend the value of the integration network.  The result – an end to end order and fulfillment suite that solved the tough issue of delivering a “perfect order”.  Sterling Commerce’s order hubs often beat out traditional ERP solutions that tried to force fit end to end processes into their functional focused solutions.  Consequently, IBM WebSphere Commerce gains key components to improve its technologies.   More importantly, on-demand delivery will play a significant role going forward.  Key order hub customers include Best Buy, Walmart, Staples, Lowes,  Guthy Renker, LifeTouch, Cabellas, and others. More…

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Event Report: Sapphire 2010 Brings Customers Back To A Sense Of Normalcy

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

(Credit: R “Ray” Wang, Insider Associates, LLC)

Co CEO’s Stabilize The Company

Both SAP Co-CEO’s Bill McDermott (Orlando) and Jim Hagemann Snabe (Frankfurt) took stage on May 18, 2010, in a simulcasted keynote.  While Bill highlighted SAP’s future vision and commitment to customers, Jim focused on communicating the SAP product strategy to match the corporate vision.  Customers, partners, and influencers sought an understanding of their road map 100 days into their jobs.  The two leaders demonstrated good synergy and gained confidence among the attendees.  In addition, CTO, Vishal Sikka took stage throughout many sessions and asserted his role as the key technologist.  Some of the main messages from the keynote include:

  • Articulating acquisition strategy in key themes.  Bill McDermott discussed three key themes for SAP: real time, unwired, and sustainable.  Each of the themes tied back to a changing shift in industry trends on business requirements and shifts in customer adoption.  Each of the themes reflected a revenue stream for SAP.  A global energy concern CIO expressed, “We’ve been waiting for SAP to get mobility to work.  We can’t wait to see mobile field service become a reality in our sustainability initiatives”

    Point of View (POV):     While the themes accurately describe SAP’s direction, the crafting of this strategy seems reactive.  In fact, it appears that this strategy builds on past acquisition decisions not concerted proactive strategy.  The good news – each of these trends represents the hot issues of the day and have finally been articulated together.   For example, real time addresses Business Objects, unwired ties back to Sybase, and sustainable supports Clear Standards.  Despite whether the strategy makes sense reactively or proactively, it does set the future direction for SAP.
  • Providing choice in deployment options.  SAP plans to offer customers choice in on-premise, on-demand, and on-device.  On-premise remains the same with new enhancement packs (EhP) adding additional capabilities.  On-demand offers both a suite offering in Business By Design (ByD) and point solutions in the On-demand offerings.  On-device will include the Sybase capabilities such as mobile CRM.  The ERP director of a large high tech manufacturer noted, “We’ll be deploying a two-tier ERP strategy for subsidiaries and SAP now makes the short-list with ByD”
    POV:     Jim Hagemann Snabe’s demonstration of Sales On Demand through the iPad highlights the convergence customers face going forward.  Choices in deployment options and platforms will guide customers on what to buy from SAP.   Users may face SAP to SAP scenarios, SAP to heterogeneous SaaS environments and complex hybrid deployments. For SAP on-premise to SAP on-demand scenarios, users will find a dependency requiring an upgrade to EhP 5 for more seamless integrations.  Others will turn to SaaS integration players such as Boomi, Informatica, SnapLogic, and Pervasive. More…

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Polls and Surveys: Sapphire 2010 – On The Ground Collaborative Research

Published on May 16, 2010 by R "Ray" Wang

Collaborative Research Process At Work

I’m pleased to say, that I’ll be joining fellow Enterprise Irregulars – Michael Cote, Larry Dignan, Michael Krigsman, and Vinnie Mirchandani; SAP Mentors – Dennis Howlett and Jon Reed, along with esteemed journalist Thomas Wailgum from CIO magazine to gauge the sentiment of SAP users.  We may be adding a few others on the ground. But mainly, we’ll be asking a range of questions that include:

  • Confidence in the leadership team
  • SAP Innovation
  • Upgrade sentiments
  • Cloud and ByD
  • Certification of ecosystem partners
  • SAP Sybase
  • NetWeaver Adoption
  • In Memory
  • Third party maintenance.

The Poll Questions

Take the poll at: http://www.surveymonkey.com/s/Sapphire2010

or Click here to take the survey

Your POV.

Ready to rumble at Sapphire 2010!  Look forward to seeing you.  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 apps strategy efforts.  Here’s how we can help:

  • Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
  • Optimizing your SAP costs
  • Evaluating SaaS/Cloud integration strategies
  • Assisting with legacy ERP migration
  • Planning upgrades and migration
  • Performing vendor selection
  • Providing contract negotiations and software licensing support

Related resources and links

Disclosure

Although we work closely with many mega software vendors, we want you to trust us more.  SAP is currently a non-retainer client of Altimeter Group and not a client of Insider Associates, LLC.  For the full disclosure policy please refer here.

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

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News Analysis: SAP Bets On Innovation With $5.8B Sybase Acquisition

Published on May 12, 2010 by R "Ray" Wang

Move Signal Seriousness To Acquire Key Innovation Driven Technologies

SAP announces a $5.8B acquisition of Emeryville, CA, based Sybase.  The acquired entity will remain a stand alone company.  At first customers, prospects, and casual observers will wonder why SAP has agreed to acquire what is perceived as an aging, legacy database company.  However, industry watchers will realize the fit in technology innovation for three main reasons:

  • Sybase is a leader in mobile platforms.  Over the past decade, Sybase has transformed its company to succeed and lead in the mobile space and has extended its BI and analytics capabilities.  Sybase delivers the complete value chain in managing, analyzing, and mobilizing information.  A key solution is Sybase’s Uwired Platform, which provides a mobile development platform, supports heterogeneous deployments on most devices and operating systems, extends back end data, and ensures security and mobility management.  Sybase also brings strong capabilities with real time decision support, predictive analytics, dynamic reporting, and high performance BI.

    Point of View (POV):     SAP and Sybase already cemented their partnership at CeBIT.  Enabling SAP CRM to work on mobile devices with ease, put some life back in the staid SAP CRM product.  The ability to deliver the same capabilities in the rest of the Business Suite will help SAP achieve a key part of its innovation strategy in mobile.  On the analytics and BI front, SAP will need to provide a clear road map on how the analytics integration will work with the BOBJ teams and NetWeaver architecture.  Customers will want a road map on 90 day, 180 day, and 1 year integration milestones.
  • Massive data volumes require in-memory databases for rapid access.  Sybase brings a high performance in-memory database (IMDB) to the table. The proliferation of information, devices, and delivery platforms require reduced response times.  Sybase delivers an integrated approach to IMDB.  The offering shares the same SQL language, drivers, and admin tools.  The result – limited code changes, reduced bugs, and quicker time to market.

    Point of View (POV):     IMDBs represent a key component in both future on-premise based applications and SaaS/Cloud based applications.  While SAP had an offering called Max DB, the product did not appeal to financial services and insurance customers who remained skeptical on its application in massive workloads.  However, Sybase has proven itself with its IMDB offerings and financial services pedigree.  Another key reason for moving to IMDB – SAP resells an estimated $1B of Oracle Database every year. (Clarification 5/14/2010:  The SAP install base buys $1B in Oracle databases every year.)  Any effort to stop funding SAP’s largest competitor is a proactive and perfect reason to move to IMDB.
  • Cloud technologies bring SAP into the future. Sybase has built a strong relationship with Amazon’s Elastic Compute Cloud (EC2), storage, and  virtualization vendors required to support cloud technologies.  Sybase products for mission critical data management, embedded and mobile database, column based analytics, and data movement and synchronization already work in the Cloud.

    POV:     SAP can take advantage of the advances made from the Sybase team to support both private and public cloud environments.  The private cloud capabilities deliver a must have requirement to meet strict European privacy laws and mitigate concerns of public sector customers.  Sybase is unique in being able to provide the same database management technologies in both the private and public cloud.

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News Analysis: Lithium’s Acquisition of Scout Labs Ups The Ante in Social CRM

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

Social Media Monitoring Addition Adds Social Customer Insight To Lithium’s Community and Social CRM Offerings

Lithium, a social CRM (SCRM) and community platform vendor announced today it had acquired Scout Labs, a social media monitoring (SMM) provider.  According to a variety of sources, the estimated purchase price for the deal ranged between 20 and 25 million.  Conversations with Emeryville, CA, based Lithium over the past week highlight the importance of two themes:

  • Actionable insight as a foundation for SCRM. As Scout Labs CEO, Jennifer Zesut, mentioned in her blog post, this acquisition is about having the right level of data for organizations to make decisions.  Social media monitoring enables Lithium to engage customers beyond the community platform and into other conversations happening in social communities.  A community platform and Social CRM offering brings life and relevance to Scout Labs’ technologies.

    Point of View (POV):     Scout Labs adds both a strong analytical platform and easy to use visualization tools to Lithium’s extensive SCRM offerings.  Lithium now has the capability to tie SMM to its customer community apps and SCRM suite which enables the foundation of social CRM –  social customer insights or F1. Should the post-merger integration be successful, Lithium’s customers can integrate Scout Labs SMM tools to monitor, map, and measure online channels to bring social conversations and interactions back into the community platform.
  • Acquisition synergies beyond technology fit. Lithium intends to not only integrate Scout Labs into the platform, but also leave ScoutLabs as a stand-alone solution.  With over 500 customers in the mix, Lithium brings organizations such as AT&T, Barnes and Noble, Best Buy, Lenovo, PayPal, RIM, Sony, and Univision to the mix. Scout Labs brings CocaCola, Disney, McDonald’s and Motorola.  Both vendors delivered SaaS based solutions.

    POV:     The acquisition provides both a technology and a significant customer acquisition play.  Lithium now has the opportunity to cross-sell its solutions into the Scout Labs customer base.  However, the more likely scenario will be up-selling Scout Labs back into the Lithium base.  Features such as BuzzTracking, Conversation Digest, Persistent Searches, and Rants and Rave often top the list of favorites among customers and prospects.  More importantly, the Scout Labs sales force and sales management will add a relationship based approach to the sales culture.

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