Welcome to a part 2 of a multi-part series on The Software Insider Tech Ecosystem Model.  Part 2 describes how the cloud fits into the model.  Subsequent posts will apply the model to these leading vendors:

• Overview
• Cisco
• Dell
• HP
• IBM
• Microsoft
• Oracle
• Salesforce.com
• SAP

The aggregation of these posts will result into a research report available for reprint rights.

Cloud Computing Represents The “New” Delivery Model For Internet Based IT Services

Technology veterans often observe that new mega trends emerge every decade.  The market has evolved from mainframes (1970′s); to mini computers (1980′s); to client server (1990′s); to internet based (2000′s); and now to cloud computing (2010′s).  Many of the cloud computing trends do take users back to the mainframe days of time sharing (i.e. multi-tenancy) and service bureaus (i.e cloud based BPO). What’s changed since 1970?  Quite plenty — users gain better usability, connectivity improves with the internet, storage continue to plummet, and performance increases in processing capability.

Cloud delivery models share a stack approach similar to traditional delivery.  At the core, both deployment options share four types of properties (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 manifests in the four distinct layers 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 Delivery

Cloud Computing Encourages Users And Vendors To Focus On Value Added Solutions

Applying The Software Insider Tech Ecosystem Model to Cloud Computing highlights where buyers, sellers, and partners can deliver value (see Figure 2).  As cloud computing adoption increases, users can expect that:

• Solution providers and partners will invest in value added solutions over commoditized infrastructure. The continued commoditization of technology results in richer and more relevant Cloud stacks.  As a result, a handful of larger players will emerge to drive down the costs of computing while encouraging ecosystems to deliver value added solutions.  Buyers can expect packaged apps, vertical apps, last mile solutions, and implementation partners, to invest in specialized and higher value intellectual property (IP).
• Customers will care more about service level agreements than the brand name of technology components. The cloud commoditizes the infrastructure components for both tools for creation and tools for distribution.  Users shift their priority for brand components in favor of outcomes based delivery.  Consequently, users will not care about the brand name of hardware, database, middleware, and even business intelligence systems in use.  Client success shifts to the monitoring of pre-agreed upon service level agreements (SLA’s)
• Integration will emerge as the key enabler and choke point. End users need an enterprise apps strategy for cloud computing that addresses the “I” word – Integration.  SOA principles must be enforced including support for canonical data models and business process haromonization.  Integration must focus on data mapping, business process orchestration, quality of service, and master data management.

Figure 2.  The Software Insider Tech Ecosystem Model For The Cloud

The Bottom Line For Buyers  – Use The Tech Ecosystem Model To Build Out Your Technology Roadmap And Procurement Strategy.

The Software Insider Tech Ecosystem Model can provide a key tool in mapping out the long term apps strategy.  Use the suggested five step approach to determine how cloud computing can support existing and future business requirements:

1. Start by listing the vendors in each category. Jot down the names of every vendor you own into each category (see Figure 3.)
2. Identify the key business processes supported. Place business processes at the high level and line them back to the vendors.
3. Evaluate the application portfolio.  As consolidations occur, business strategy should align with applications strategy.  Applications strategy will then align with procurement strategy to optimize the Business Technology Value equation.
4. Build out your solution ecosystem plan. In some cases, you will consolidate vendors. In others, you will acquire new solutions.  Sometimes, the last-mile will require custom development.  Take a balanced approach to the portfolio.  Keep in mind how you sunset legacy applications and solutions.
5. Apply model to the contract strategy. This model applied to Seven Simple Steps To Successfully Negotiate Software Contracts will drive business value in technology projects.

Figure 3.  Sample Solution Providers Across The Four Layers Of Cloud Computing

The Bottom Line For Sellers (Vendors) – Use The Tech Ecosystem Model To Plan Partnerships and M&A Strategies

Use the Software Insider Tech Ecosystem Model  to determine when to partner, build, or acquire a capability. Determine which category to invest in Cloud Computing based on R&D budget and organization’s size.  Evaluate each category by:

1. Examining the current footprint. Fill in the model to see what you own (see Figure 3).
2. Identifying adjacent profit pools. Look at potential install base up-sell, cross-sell, and attach rate opportunities.
3. Determining potential profit margins and ROI. Look at average profit margins.  Identify and rank the top categories.
4. Ranking opportunities by competitive threat. Determine which piece to commoditize next in the value added solutions.  Figure out which areas are high growth value added solutions to invest.
5. Put together 3 year strategy. Face it, 3 years is too long but you need a time frame.  Identify acquisition prices and partnership criteria.

Your POV.

Buyers, do you need help with your Cloud and SaaS strategy?  Ready to put the expertise of over 1000 software contract negotiations to work?  Give us a call!  Sellers and vendors, want to expedite your ability to effectively partner or test your M&A idea?  You can post 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 next gen apps strategy, overall apps strategy, and contract negotiations projects.  Here’s how we can help:

• Designing a next gen apps strategy
• Providing contract negotiations and software licensing support
• Demystifying software licensing
• Assessing SaaS and cloud
• Evaluating Cloud integration strategies
• Assisting with legacy ERP migration
• Planning upgrades and migration
• Performing vendor selection
• Renegotiating maintenance

Resources And Related Research:

20100621 A Software Insider’s POV – R “Ray” Wang – “Research Report: How SaaS Adoption Trends Show New Shifts In Technology Purchasing Power”

20100322 A Software Insider’s POV – R “Ray” Wang -”Understanding The Many Flavors Of Cloud Computing/SaaS”

20091222 A Software Insider’s POV – R “Ray” Wang “Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010″

20091208 A Software Insider’s POV – R “Ray” Wang – “Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value”

20091012 A Software Insider’s POV – R “Ray” Wang – “Research Report: Customer Bill of Rights – Software-as-a Service”

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

20090602 A Software Insider’s POV – R “Ray” Wang ” Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows”

20081028 A Software Insider’s POV – R “Ray” Wang “Tuesday’s Tip: SaaS Integration Advice”

Next In The Series

• Overview
• Cisco
• Dell
• HP
• IBM
• Microsoft
• Oracle
• Salesforce.com
• SAP

Reprints

Reprints can be purchased through the Software Insider brand or Altimeter Group.  To request official reprints in PDF format, please contact r@softwareinsider.org.

Disclosure

Although we work closely with many mega software vendors, we want you to trust us.  For the full disclosure policy please refer here.

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

Welcome to a multi-part series on The Software Insider Tech Ecosystem Model.  Subsequent posts will apply the model to these leading vendors:

• Cisco
• Dell
• HP
• IBM
• Microsoft
• Oracle
• Salesforce.com
• SAP

The aggregation of these posts will result into a research report available for reprint rights.

Business Models Converge During Recessions

Is your technology provider a hardware vendor or a software vendor? Does your System Integrator now provide solutions in the cloud? These questions will continue as models converge.  Hardware, software, and system integration vendors must reinvent new models of revenue.  The economic recession has forced business model shifts at the major technology companies.  The goal – own the largest share of both the business and IT technology budget,  As these sellers attack new profit pools, buyers can expect continued convergence of business models because:

• Hardware companies seek higher margins. Most hardware vendors face single digit margins in their core business.  To bolster margins, many vendors acquired system integration firms.  For example, HP purchased EDS and Dell acquired Perot Systems.  The next logical step requires the hardware vendors to get into software.  Software margins hover from 10% to 50% depending on the market.  Expect a hardware vendor such as Cisco, Dell, or HP to acquire a SaaS based company to move into the software business.
• Service providers build differentiated intellectual property (IP) using the Cloud. Service providers should go on the SaaS/Cloud offensive if they want to deliver rapid innovation to customers and break the cycle of dependence on packaged apps vendors.  Service providers can take market share through SaaS by investing in white spaces in the solution road map with verticals and other pivot points that have not been well served.  In addition, expect forms of SaaS BPO to emerge as clients seek best of breed SaaS and hybrid deployments.
• Software companies use Cloud to transform into information brokers. SaaS and Cloud deployments provide companies with hidden value and software companies with new revenues streams.  Data will become more valuable than the software in the Cloud.  Three areas of growth will include benchmarking, trending, and prediction.
• Companies by-pass software vendors for competitive advantage. Roper Industries acquisition of iTrade Networks on July 26th, proves a key point.  Smart and innovative companies will put custom development in the cloud to meet last-mile solution needs that packaged apps vendors or system integrators fail to deliver.  Companies may also acquire software vendors if they can’t build the solution.

Budget Authority Shifting From IT To Business

A recent survey of 23 companies shows that while the IT budget appear to have shrunk, the overall technology spend has increased.  Key findings:

• IT budgets trending down. CIO’s focused on cost savings and efficiency.  Among the 23 CIO’s, few IT budgets have increased and most have decreased between 3 and 8 percent.  IT departments must do more with less.
• Business technology spending up. Growing SaaS and cloud adoption improve the outlook by business units to procure their own solutions.  Among the 23 organizations surveyed, most line of businesses grew technology spend by 5 to 7%.  Business leaders now call the shot on more and more technology decisions
• IT to BT spending ratios nearing 50-50. Survey showed that the average percentage of tech spend for IT was 53.7%.  The average percentage of tech spend for business reached 47.3%.  Expect the business technology budgets to surpass IT in 2012.

The Tech Ecosystem Model Provides Multi-dimensional Insights

The Software Insider Tech Ecosystem Model examines technology solution categories on 4 dimensions (see Figure 1):

• Tools for creation. This category describes technologies that can be reused to create new solutions.
• Tools for distribution. This category describes channels and distribution models to deliver client value.
• Value added solutions. This category describes high margin, high value solutions for clients.  A plethora of vendors by industry, geography, market size, and role populate this category
• Commoditized infrastructure. This category describes technologies that should be optimized.  A handful of vendors typically dominate this category.

Figure 1.  The Software Insider Tech Ecosystem Model

The Bottom Line For Buyers  – Use The Tech Ecosystem Model To Build Out Your Technology Roadmap And Procurement Strategy.

The Software Insider Tech Ecosystem Model can provide a key tool in mapping out the long term apps strategy.  Use the suggested five step approach:

1. Start by listing the vendors in each category. Jot down the names of every vendor you own into each category.
2. Identify the key business processes supported. Place business processes at the high level and line them back to the vendors.
3. Evaluate the application portfolio.  As consolidations occur, business strategy should align with applications strategy.  Applications strategy will then align with procurement strategy to optimize the Business Technology Value equation.
4. Build out your solution ecosystem plan. In some cases, you will consolidate vendors. In others, you will acquire new solutions.  Sometimes, the last-mile will require custom development.  Take a balanced approach to the portfolio.  Keep in mind how you sunset legacy applications and solutions.
5. Apply model to the contract strategy. This model applied to Seven Simple Steps To Successfully Negotiate Software Contracts will drive business value in technology projects.

The Bottom Line For Sellers (Vendors) – Use The Tech Ecosystem Model To Plan Partnerships and M&A Strategies

Use the Software Insider Tech Ecosystem Model  to determine when to partner, build, or acquire a capability. Evaluate each category by:

1. Examining the current footprint. Fill in the model to see what you own
2. Identifying adjacent profit pools. Look at potential install base up-sell, cross-sell, and attach rate opportunities.
3. Determining potential profit margins and ROI. Look at average profit margins.  Identify and rank the top categories.
4. Ranking opportunities by competitive threat. Determine which piece to commoditize next in the value added solutions.  Figure out which areas are high growth value added solutions to invest.
5. Put together 3 year strategy. Face it, 3 years is too long but you need a time frame.  Identify acquisition prices and partnership criteria.

Your POV.

Buyers, do you need help with your apps strategy and vendor management strategy?  Ready to put the expertise of over 1000 software contract negotiations to work?  Give us a call!  Sellers and vendors, want to expedite your ability to effectively partner or test your M&A idea?  You can post 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 next gen apps strategy efforts.  Here’s how we can help:

• Providing contract negotiations and software licensing support
• Evaluating SaaS/Cloud options
• Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
• Designing end to end processes and systems
• Comparing SaaS/Cloud integration strategies
• Assisting with legacy ERP migration
• Engaging in an SCRM strategy
• Planning upgrades and migration
• Performing vendor selection

Next In The Series

• The Cloud
• Cisco
• Dell
• HP
• IBM
• Microsoft
• Oracle
• Salesforce.com
• SAP

Reprints

Reprints can be purchased through the Software Insider brand or Altimeter Group.  To request official reprints in PDF format, please contact r@softwareinsider.org.

Disclosure

Although we work closely with many mega software vendors, we want you to trust us.  For the full disclosure policy please refer here.

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

(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.

Rapid SaaS Adoption Will Lead To A Repeat Of 1990′s Best Of Breed Integration Challenges

The proliferation and rapid adoption of SaaS solutions stems from 7 key benefits: richer user experience, rapid implementation, frequent cycles of innovation, minimal upgrade hassles, always on deployment, subscription pricing, and scalability (see Figure 1). Despite these benefits, organizations head full circle towards the same best of breed dilemma they faced in the late 1990′s.  In that era, organizations sought innovation from more nimble and agile competitors.  The result – a concerted effort to deploy a number of on-premise, point solutions.  Willing to sacrifice not having a single instance for functionality, they invested heavily in integration.  Almost a decade later, organizations will encounter similar challenges with harmonizing a plethora of SaaS entry points in the next 2 to 3 years. Given the growing number of SaaS solutions at cost-effective price points and easy adoption, today’s organizations face problems in a geometrically larger scale.

Figure 1. Seven Benefits of SaaS Deployments

Modeling How To Make A Peanut Butter And Jelly Provides Key Insights Into The Integration Challenge

Today’s integration challenges move beyond data integration to include process level and meta-data requirements that span across a range of business processes and relevant key performance indicators (KPI’s).  As more solutions are added, organizations will want to model their end to end business processes as web services and support synchronous and asynchronous communication protocols across hybrid deployments.   Organizations can expect canonical data models play a key role in harmonizing business objects.  To put this in real world terms, imagine describing how to make a peanut butter and jelly sandwich using a hodgepodge of solutions.  Let’s take a look:

Example 1:  Modeling in a .NET application

1. Bread: take 2 slices of bread
2. Peanut butter: spread peanut butter on one slice
3. Jelly: spread jelly on the other slice
4. Assembly: put the bread together
5. Assembly: slice down the middle
6. Delivery: serve on plate

Example 2:  Modeling in Force.com

1. Bread: take 2 slices of bread
2. Bread: determine whether or not to toast the bread
3. Peanut butter: choose chunky or creamy
4. Peanut butter: spread peanut butter on one slice
5. Jelly: choose type of jelly
6. Jelly: spread jelly on the other slice
7. Assembly: put the bread together
8. Assembly: determine if the slices is in half or diagonal
9. Assembly: slice down the middle
10. Delivery: choose type of plate (e.g. paper or plastic)
11. Deliver: serve on plate

Example 3:  Modeling in NetWeaver

1. Bread: take 2 slices of bread
2. Bread: determine if the bread is organic or not
3. Bread: determine whether or not to toast the bread
4. Bread: determine how light or dark the bread should be toasted
5. Peanut butter: determine if the peanut butter is organic or not
6. Peanut butter: choose chunky or creamy
7. Peanut butter: spread peanut butter on one slice
8. Peanut butter: determine thickness of spread
9. Jelly: choose type of jelly
10. Jelly: determine if the jelly is organic or not
11. Jelly: spread jelly on one slice
12. Jelly: determine thickness of spread
13. Assembly: put the bread together
14. Assembly: determine whether you want the crust or not
15. Assembly: determine how to slice the bread (e.g. diagonal, half, 4 cubes, etc.)
16. Delivery: choose type of plate (e.g. paper or plastic)
17. Delivery: determine garnishes with the sandwich
18. Delivery: serve on plate

In these examples, notice how they granularity of processes become deeper and deeper within more complex solutions.  How would you take the peanut butter web service from the .NET example and harmonize this with the NetWeaver example?  Now take this real-life example at a hypothetical global pharma:

• SAP financials (on-premise)
• Oracle JD Edwards manufacturing (on-premise)
• Salesforce.com CRM (SaaS)
• Workday HR and Payroll (SaaS)
• Concur Expense Management (SaaS)
• Xactly Incentive Comp (SaaS)
• NetSuite OpenAir Project Management (SaaS)
• Ariba Spend Management (SaaS)
• Gmail and Google Docs(SaaS)
• Jive Community Platforms (SaaS)
• SocialText (SaaS)
• WebEx (SaaS)

Recommendations

As organizations consider SaaS adoption they must put into place an integration framework to support the competing forces of innovation and harmonization.  These integration frameworks must consider not only data, but also process, metadata, and business intelligence.  Key suggestions include:

• Begin with the end in mind. Identify the key performance indicators.  Determine how to measure business value
• Understand your key business processes. Classify your business processes into 3 buckets: commoditized, mission critical, and innovative.  This way you’ll know which processes can be put into an outsource, shared service, or internal ownership.
• Map the granularity of the business processes.  Group similar processes across different solutions and understand the levels of granularity.  Identify points for harmonization.
• Determine the data integration requirements. Identify the key business objects associated with the business process.  Ensure that the right data arrives to the right process at the right time for the right person.  Map key meta data to process and business objects.  Build out your canonical data models.
• Build loose frameworks for evaluation of SaaS solutions. Give line of business teams guidelines to determine how SaaS solutions fit into existing processes.  Use this to jump start integration and proactively identify integration challenges.
• Determine approach and SaaS adoption policies. In some cases, point to point will make more sense. In others, greater levels of integration and control may be required.  Avoid a one-size fits all methodology in setting up policies.  Consider the business case first and foremost.

The Bottom Line – SOA’s Not Dead And Integration Is Key To Successful Hybrid Deployments

Given these scenarios, CIO’s and line of business apps will need to rely on stronger enterprise architecture and integration in hybrid deployments.  In fact, au contraire on the death of SOA!  Introduction of next generation social enterprise apps will only accelerate the need for good architecture and services design. Expect solutions from Boomi, Cast Iron, Informatica, Pervasive, SnapLogic, and Talend to play a key role going forward.

Epicor Succeeds On Delivering A Converged Product Line

Epicor’s latest release, Epicor 9, provides a proof point that an acquisition intensive vendor can keep their promises to both acquire and deliver on innovation.  Under the themes of “Protect, Extend, and Converge”, the Irvine, CA based mid-market software provider committed to its customers to support prior releases, standardize key apps and infrastructure to deliver common solutions, and complete a super set solution.

Epicor 9 became generally available (GA) as of December 10th, 2008.  After almost 11 months in the market, most customers and prospects confirm that Epicor has delivered on their three promises.  More importantly, they have achieved a converged super set of solutions from Avante, Clientele, DataFlo, Enterprise, Manage 2000, ManFact, iScala, Vista, and Vantage.  Key suites in Epicor 9 include:

• Financial management
• Customer relationship management (CRM)
• Sales management
• Production management
• Supply chain management (SCM)
• Planning and scheduling
• Product data management
• Service management
• Human capital management (HCM)
• Enterprise performance management (EPM)

Point of view (POV):  Epicor’s business strategy to grow via acquisition may seem to mirror the business models of Oracle, Infor, and Sage.  However, Epicor is the first to deliver on a converged solution while supporting all existing releases.  This is no small feat as the first phase of convergence brings together the largest base of its acquired products.  In addition, Epicor consolidates a multitude of Microsoft and Progress technology platforms via ICE 2.0, an SOA based foundational middleware.  Epicor rolled out Epicor 9 with significant beta testing from 70 customers and 13 partners.

Phase 2 of the convergence strategy will most likely involve the Epicor Retail line and Epicor’s Enterprise Services Automation.  Other details of Phase 2 may involve greater adoption of the Azure platform for delivery in a Software plus Services model.

ICE Architecture Bridges The Gap Between Web 2.0 Innovations And Enterprise Class Requirements

ICE 2.0 is Epicor’s business architecture built to SOA design principles and Web 2.0 sensibilities.  As a next generation middleware, ICE 2.0 separates the applications layer from the presentation and logic layers – enabling flexibility to update and modify the middleware and presentation layer at separate times from the applications through different release cycles.  Server and client logic outputs as business services that can be made available and modified by users.  These loosely coupled business services improve connectivity and integration and carries critical XML metadata.  Users benefit from much desired Web 2.0 capabilities that support application to application integration and business to business collaboration (see Figure 1).

Figure 1.  Epicor Innovations Stem From Strong Middleware Foundation In ICE 2.0

<iframe align=center src=http://www.flickr.com/slideShow/index.gne?user_id=35408001@N04&set_id=72157614091349617&detail=yes frameBorder=0 scrolling=no width=500 height=450></iframe>
(Source: Epicor Software)

Consequently, ICE 2.0 delivers on many of the 10 elements of Social Enterprise Apps and includes dynamic user experiences, business process focus, and community connectedness.  Key tools include a technology platform based in Microsoft .NET and business logic via Progress’ Open Edge offering.   On the usability front, Epicor 9 addresses role based design, consistent experiences, and contextual and relevant delivery of information through:

• Improved user experience.  Epicor 9 takes advantage of new Microsoft Office UI/UX paradigms and portal design elements to provide themes, styles, skins, tooltip controls, drag-and-drop designs, and floating palettes & previews.  Users may also drill into and around reports and data. Key personalization features include favorite groups, sheet and toolbar layouts, options windows, short cut bars, and a theme maintenance wizard.

  POV: Users immediately gravitate towards the Office- styled ribbons.  Leveraging the XML schema, Epicor Portal enables role specific content and allows users to craft queries and personalize access to information.  Personalization capabilities smartly tie back to the user ID and persist throughout all solutions.

• Consistent user experience. Regardless of the user interface, customization and user personalization remains intact because everything starts from the same meta data.  Consequently, Epicor 9 can run on a C#.NET Smart Client, any web client, and mobile devices on platforms such as Blackberry, Windows Mobile, Symbian, and Apple iPhone

  POV: Epicor’s Everywhere Framework smartly stores client business logic as XML metadata and generates AJAX base forms.  This allows client agnostic rendering of the apps in any UI presentation layer and personalization format using the same source code.  The result – a consistent user experience across any channel and even operating system.

• Business Activity Management (BAM). BAM tools enable users to track changes, create even triggers, and send alerts based on parameters and rules.  Out of the box, Epicor 9 supports auto print reports or labels, BAM rules, change logs, custom global alerts, and custom procedure extensions.

  POV: BAM tools provide contextual and relevant delivery of information across the enterprise.  By being able to monitor changes to database fields and tables, useful alerts can be set up for scenarios such as a customer exceeding a credit limit, a workflow approval that’s on hold because of a approver’s vacation, or the automation of defined and common outcomes.

• Software-as-a-Service.  Customers can choose among various deployment options from on-premise, hosted, to multi-tenant SaaS.  Epicor 9 is designed to support multi-tenancy and metadata configuration.

  POV: Today’s mid-market organizations share strong opinions on whether or not to take a SaaS deployment option or stay on-premise.  For this reason, Epicor wisely offers a choice to its customer.  Unlike most of Epicor’s competitors, Epicor 9 delivers a true SaaS solution because it supports multiple customers sharing a single shared instance.

On the business process side, Epicor 9 meets key criteria in configurability and adaptability, outcome focused & results oriented, and proactive – predictive – actionable categories with:

• Business process management (BPM). Epicor BPM exposes all business services so customers can apply business rules, monitor actions, and modify processes.  The system uses a Microsoft Outlook style rules engine which allows business users to make changes without painful customization or coding. Users can define actions, condition statements, holds, and set data triggers.

  POV: Next generation apps utilize BPM tools to enforce controls and enhance policies and processes.  Epicor provides a rich BPM tool that not only extends base capabilities without customizations but also saves time and money by reusing common established processes.  Existing users find the system easy to use and note the ease of use with HTML e-mail formats, Microsoft .NET Action Content, Property Bag Support, and XML Data Nodes.

• Epicor Service Connect. Using the graphical workflow designer, users can map out and modify business processes.   The system automates business processes such as task assignments, logical routing, and human interaction points.  Epicor Service Connect delivers on message based SOA through XML messages and mapping and leaving a complete audit trail.

  POV: Customers who have used Service Connect rave about the ease of use in copying and sharing common processes.  The system makes these changes without modifying source code and the Visio-like usability is key to its successful adoption.  Customers benefit from BPM without the complexity.

• Role based dashboards provide actionable insight. Users are treated to a series of role based interactive dashboards.  Dashboards take advantage of Microsoft UI metaphors such as the outlook navigation pane and ribbons. Users can drill into and around data, export to excel, make changes, and come back to the same screens. Role based security at the field level ensures the protection of confidential information.  More importantly, the dashboards support offline disconnected scenarios as well as mobile EPM delivery.

  POV: Users immediately find value in the support for ad-hoc reports, monitoring tools, workbenches, and alerting capabilities.  Existing Epicor users will take for granted the large number of out of the box reports.  New customers will be surprised by the quality and relevance of the 100 dashboards and 250+ key performance indicators (KPIs).

On the community connectedness end, Epicor 9 meets many of the key criteria to engage stakeholders, foster collaboration, and provide enterprise class security via:

• Epicor Information Worker integrates with Microsoft Office technologies.  Information worker usability leverages Office Business Applications.   Users improve access to business data through this desktop productivity solution and can work in native applications such as Outlook, Word, and Excel. Other key features include disconnected lists and offline transaction support.

  POV: Most users expect Microsoft Office integration but remain disappointed with what’s been delivered by most vendors to date.  Clients express amazement with the ability to use Epicor Portal to work within Office and execute actions that propagate into Epicor 9.

• Epicor Enterprise Search.  The solution builds off of Microsoft Search capabilities such as SQL Full Text indexing to return structured results such as Epicor data and unstructured information such as a Microsoft Excel spreadsheet. Search results can be ordered by relevance and tuned to meet role based requirements and priorities.   Key features include advanced searches, business activity query searches, named searches, and user configurable quick searches.

  POV: Users gain quicker access to information resulting in increased productivity and knowledge sharing.  Existing clients enjoy the tag clouds and ability to directly access the application from the search results.

• Epicor Presence and RSS.  Out of the box support for really simple syndication (RSS) feeds gives users the ability to consume information at their own pace.  Support for presence will enable collaboration via tools such as instant messaging (IM).  Key containers include the Windows Gadgets and the Outlook Syndicated Content Directory within Microsoft Office.

  POV: With growing use in mobile form factors, expect presence capabilities to play a greater role as next generation apps incorporate this design element.  Support for RSS feeds delivers on a key Enterprise 2.0 capability representative of next generation apps.  Most users will access this via the Epicor Portal or Outlook to monitor any changes to subscribed topics or sources.

Layered Client Stack In ICE 2.0 Provides Flexibility Across Markets, Sizes, and Industries

The Epicor layered client stack provides a key framework for organizations and partners to make modifications regardless of business size, country and industries.  The seven levels include:

1. Base Form – provides the foundational source
2. Productization – allows different editions of Epicor 9 to be created
3. Verticalization – stores industry specific functionality and terminology
4. Localization – delivers geo specific capabilities and terminology
5. Extension – gives partners and orgs the ability to change look and feel
6. Customization – supports standard customization capabilities
7. Personalization – allows end users to make modifications to their environment

POV:  Through the layered stack, Partners and companies claim that Epicor 9 is easy to modify and provides a strong framework to deliver last-mile solutions.  Technically inclined business users can also use Epicor Composite Applications to create mash-ups that bring web forms, analytical web parts, search queries into a portal served up in Microsoft Office SharePoint Server.   Key industries with deep support include:

• Aerospace and defense
• Automotive
• Consumer goods
• Distribution
• Electronics and electrical equipment
• Fabricated metals
• Financial services
• Furniture and fixtures
• Industrial machinery
• Measuring and controlling devices
• Medical devices
• Primary metals
• Rubber and plastics
• Stone, clay, glass, and concrete

Epicor 9 Designed For Organizations With Global Requirements And Ambitions

Epicor 9 provides growing mid-market companies, subsidiaries of large enterprises, and aspiring ventures capabilities to conduct global commerce.  Key capabilities include:

• Global Engines. Epicor ships a number of global engines designed to support global deployment and adoption.  Using a series of interlocking global engines, configuration rules determine postings, regulatory support, tax rules, rounding, books, and multi-currency.  For example, the global posting engine provides rule based capability.  The global tax engine supports country and local specific tax rules.
  
  POV: With each country roll-out and localization, Epicor enables the mid-market organization to span geographies while meeting key regulatory and local requirements.  Even domestic companies with expansion aspirations will gain the capacity to truly conduct global business.
• Global Capabilities. On the localization front, the solution currently supports 18+ languages for 30+ countries delivering unicode and double byte support throughout the product.  Mulit-currency addresses exchange rate effective dates and multi-book integration.  Multi-company supports intercompany requirements.  User’s can determine their language as a personalization preference.

  POV: Epicor currently supports a limited number of localizations with a goal of 30 languages in 50 countries by 2010.  However, partners have been able to cost-effectively and rapidly deliver on localizations due to the configurability of Epicor 9.

• Global Multisite Management. Organizations with federated production or distribution capabilities and centralized shared services can take advantage of the multisite capabilities for key areas such as financial consolidation, forecasts, inter-company trading, plant scheduling, and global customer management.  Multisite management allows customers to synchronize master data and goods across multiple sites.

  POV: Multisite capabilities are often provided as workarounds.  Epicor’s approach applies an SOA philosophy to supporting this level of complexity.  Support for visibility across multiple facilities gives Epicor 9 the ability to move into the large enterprise space over time.

Customer feedback to date has been mostly positive.

As with each new release, beta customer often find the bugs and unexpected deployment issues.  Most complaints about Epicor 9 come from clients who chose to self implement or provide a considerable amount of implementation resources.  Not surprisingly, early issues focused on a need for more detailed documentation, best practices, and Microsoft technology skill sets required to self deploy.  With almost a year under their belt, newer customers have mostly expressed satisfaction with the productivity gains, ease of use, and ability to scale up as their business expands.

The Bottom Line For Customers – Consider Epicor 9 For Mid-Market Organizations And Subsidiaries/Divisions of Large Enterprises

Continued enterprise software vendor consolidation has resulted in limited choices for enterprise.  Vendors such as Epicor who acquire, streamline, and adequately reinvest will most likely emerge as leaders in their markets.  Epicor 9 provides customers seeking an alternative to large enterprise apps force fit to meet mid-market requirements.  As customers consider replacement strategies for old generation enterprise apps, Epicor 9 should be considered in short lists for vendor selection.  Organizations betting on Microsoft platforms will also want to evaluate other offerings built on Microsoft .NET tools and technologies to gauge their level of adoption and sophistication.  In general Epicor meets the key needs that SMB organizations have expressed (see Figure 2.)

Figure 2. Mid-market organizations seek enterprise class solutions but lack the resources to support complex deployments

The Bottom Line For Vendors – Middleware Matters, Invest or Perish

Enablement of Social Enterprise Apps and their related Enterprise 2.0 capabilities require rich middleware platforms.  In each advancement from mainframe, mini-computer, client server, web based, to this current phase of social enterprise apps or social business solutions, vendors who wait to late to invest will relegate themselves to the has-been pile of vendor companies who failed to make it.  (e.g. Burroughs, Wang, Control Data, MSA, McCormack and Dodge, etc.).  Success and survival requires a software vendor to deliver across the 10 elements of Social Enterprise Apps in the next 2 to 3 years.

Quick Facts: Epicor Software

Location: HQ in Irvine, CA, globally located in 50 countries

Founded: 1984

Revenues: FY 2008 $495M

Employees: 2,800

Customers: 22,000

FORWARD AND COMMENTARY
“An Enterprise Software Licensee’s Bill of Rights (LB0R) V2″ brings the 10th installment of an on-going series to provide clients with insight on how to better align their packaged apps strategies.  Version 2 of the LBoR updates the original groundbreaking list of 36 best practices for software licensing and pricing and provides a good check list for contract negotiations strategy.  Eleven new rights have been added that reflect support for new deployment options, cost savings beyond the current recession, mitgation from future lock-in, and client best practices.

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

1. Why You Need A Long-Term Apps Strategy
2. Forrester’s Long-Term Packaged Applications Strategy Framework
3. Does Your Apps Strategy Support Your Corporate Business Drivers?
4. Packaged Apps Strategies Take A Back Seat At Most Enterprises
5. The ROI Of Packaged Apps Instance Consolidation
6. Five Steps To Building A Recession Proof Packaged Apps Strategy
7. Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends
8. Third Party Apps Maintenance Rebounds
9. Craft Your Negotiations Strategy To Reflect New Packaged Apps Licensing And Pricing Trends
10. An Enterprise Software Licensee’s Bill of Rights, V2

RESEARCH HIGHLIGHTS

A. Introduction

Since publication in December 2006, the LBoR has played a key tool in enterprise software contract negotiations and packaged apps strategy for over 1000 of my software licensing, pricing, and contract negotiations at Forrester.  During the update of the LBoR, over 100 end users and 70 vendors contributed to the addition of 11 new rights.   This document remains a must read for all those engaged in software contracts.

B. Research Findings

Changing market conditions result in new rights

Four themes emerged among the 11 additional rights added (see Figure 1):

• Support for new deployment options. Virtualization and SaaS transcend interesting pilots and concepts and become the norm in mainstream adoption. Users will expect to achieve savings in virtualized instances, the ability to swap user and usage rights among new deployment options, and protection from SaaS vendor bankruptcies.
• Cost savings beyond the current recession. Renewed focus on cost reduction drive enterprises to identify short- and long-term opportunities. These roles expect choice, value, and predictability in their vendor’s support and maintenance programs.
• Mitigation from future vendor lock-in in a less competitive environment. Consolidation results in less competition. Users should seek leverage in contract negotiations beyond the initial purchase.
• Additional client input into best practices. More than 70 software vendors and 100 Forrester clients and Software Insider blog readers provided similar suggestions for improvements in the selection and implementation phases of the software ownership life cycle.

Figure 1. Eleven New Rights Reflect Changing Market Conditions and Client Input

Figure 2. An Enterprise Software Licensee’s Bill of Rights, V2

Recommendations – Use the bill of rights as the centerpiece in contract negotiations

Now’s the time to review existing relationships and renegotiate contracts using the LB0R V2 as a reference guide.  Apply seven simple steps to successfully negotiate enterprise software contracts and build a long-term packaged apps strategy:

1. Assemble the right team.
2. Identify the key business drivers.
3. Apply the software ownership life cycle and the licensee’s bill of rights.
4. Determine the product adoption plan.
5. Align product adoption strategy with contract negotiation objectives.
6. Identify main leverage points.
7. Finalize the negotiation strategy.

C. Report Links

To read the details about each end-user right, seven simple steps, recommendations and the “What It Means” cycle, click here for the Forrester Report: An Enterprise Software Licensee’s Bill of Rights, V2 . For media courtesy requests, please send me an email to rwang@forrester.com

Read other POV on the Enterprise Software Licensee’s Bill of Rights

• 20090723 Next Gen Enterprise – Dennis Moore “Enterprise Software Buyer’s Bill of Rights and Pricing”
• 20090714 Deal Architect – Vinnie Mirchandani “Bill of Rights – and other amendments to the ‘Enterprise Software Constitution’”
• 20090713 Software Licensing & Master Service Agreements – Sam Conforti “Licensee Bill of Rights by Forrester’s R. Ray Wang”
• 20090713 ZD Net – Enterprise Irregulars – Dennis Howlett “A buy side response to the enterprise buyer’s Bill of Rights (and a partial solution)”
• 20090713 ZD Net – IT Project Failures – Michael Krigsman “Analyzing the enterprise software buyer’s ‘bill of rights’”
• 20090709 Ragsdale’s Eye On Service – John Ragsdale “Forrester’s An Enterprise Software Licensee’s Bill of Rights”
• 20090708 CIO Magazine – Thomas Wailgum “Enterprise Software LIcensing Negotiations: Insider Tips”
• 20090708 IDG News Service – Chris Kanaracus “Forrester expands ‘software bill of rights’”

Your POV.

Would love your feedback on the report.  Looking for help with your SAP, Oracle, Infor, Lawson, Microsoft Dynamics, or other enterprise software contract?   You can post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.

(Photo: Main show floor for Dreamforce 2008 at Moscone Center, San Francisco, CA. Copyright © 2008 R Wang. All rights reserved.)

Over 9,000 attendees made it to the annual San Francisco pilgrimage to hear the high priest of SaaS kickoff the event.  This year’s theme focused on the future of Cloud Computing, a focus on success, and  how much Salesforce loves its customers.  Key product, technology, and partnership announcements from the November 3rd to 5th event include:

• Force.com expands usage to new product and services. Force.com sites allows customers to publish Force.com data and apps to any site, basically supporting customer built web apps. SFDC will take care of domain, URL, RSS management, etc when customers run their Web apps on Force.com.  Other expansions include Force.com for Amazon and Force.com for Facebook.  On the Amazon front,  SFDC also will support applications being built using Amazon web services, in effect creating a mega cloud.  Facebook support allows developers to tap into the Facebook Platform and Facebook Connect. POV: Movement to expand the platform into new B2C facing markets give SFDC credibility in new social media markets as well as taking the Cloud wars to the consumer.  Consider this a continuation in the battle for dominance of IDE’s in the cloud.
• CODA showcases its financial package on APEX for the North American market. While Coda2Go was launched at Dreamforce Europe in London last May, attendees at Dreamforce 2008 in San Francisco had a chance to see first hand how the 30 year old vendor had completed its rewrite.  With enterprise financials built on this new platform, Salesforce.com customers now have more choice in financial solutions within the ecosystem.POV: Like many mid-market vendors, CODA had the opportunity to bet on the next platform and chose a SaaS approach over an on-premise middleware platform.  Most mid-market vendors bet on a Microsoft VS.NET “Rainbow” Stack, IBM Websphere,  or Progress Software.  These middleware platforms allow companies to spend 10 to 15% of budget on tools and technology instead of a staggering 33% that many would spend if they built their own middleware.  CODA’s decision is market leading for the industry and is reflective of its groundbreaking historical bets on HP3000 in the 70′s, VAX (DEC) in the 80′s, and AS/400′s (IBM) in the 90′s.
• Glovia, a Fujitsu Company, builds order management on Force.com. Customers seeking lead to billing solutions in order management can now turn to the Glovia solution for order management, inventory, fulfillment, and billing.  Glovia takes the order from Salesforce.com and brings it into the order management system giving it visibility from prospect to invoice.  Enterprises can also check status via the web or on a mobile device via Salesforce mobile. POV: Salesforce.com’s ecosystem strategy allows other vendors to build key back office end to end processes.  As more companies add to the ecosystem, SalesForce will continue to gain market relevance against enterprise vendors struggling to move to a true multi-tenant on Deman delivery model.The bottom line – SaaS platforms continue to morph into cloud computing

The bottom line – SaaS platforms continue to morph into cloud computing

Recent decisions by CODA, Glovia, and a host of software vendors show that the transition from on-premise middleware platforms to cloud-based platforms has begun. Application development and delivery professionals seeking new delivery models can benefit from these new platforms. Force.com is gaining momentum and given its history will emerge as one of the top 3 platforms for both customers and software vendors. The real question out there – what will vendor lock-in look like in the world of cloud computing? Will it be like the mainframe lock-ins 40 years prior?

Your POV.

Are you considering a SaaS deployment? Will you move to the cloud? Are you a software vendor looking at ditching your on-premise middleware platform? Feel free to share with me your thoughts. You can post here or send me a private email to rwang0@gmail.com.

(Photo: Entrance into the show floor for Dreamforce 2008 at Moscone Center, San Francisco, CA. Copyright © 2008 R Wang. All rights reserved.)

Copyright © 2008 R Wang. All rights reserved.