Posts Tagged ‘Oracle’

News Analysis: Rimini Street Vs Oracle Ruling Has No Negative Impact on Third Party Maintenance Rights

Recent Oracle vs Rimini Street Ruling Is About Customer Software License Rights Not Third Party Maintenance

On February 13th, 2014, the United States District Court , District of Nevada Judge Larry Hicks issued a partial summary judgment in the Oracle vs Rimini Street Case. Here’s the executive summary to key questions about the ruling*:

Is Third Party Maintenance still valid for Oracle products or anyone else? Yes.  Users should make sure this right is explicit in all future software deals.

Can a customer give a copy to a third party? Yes if you have this in your license agreement.   Users should negotiate this in  contracts to ensure this right exists and remains as part of the ownership experience.

Do you have to read every contract detail before a third party maintenance provider can host the software? Yes. If there are site restrictions  and if you want to host it in a vendor’s own data center.  Make sure you have the right to a site change or site license change.

Can copies of software from customers that are loaded onto the server that are identical to what another customer’s rights be used or reloaded. Yes, the software license goes to intellectual property not to the media.  Third party maintenance vendors can use the same instance in setting up their clients and this will drive down the cost.

Does this ruling impact other businesses? Yes.  If you have no site specific rights, you can’t have a third party outsource or host.  This could have major legal ramifications for Oracle and other vendor’s existing hosting and outsourcing businesses.

Four Customer Cases End In A Draw For Oracle and Rimini Street Based On Contract Law Technicalities

The ruling includes cases from four customers each with unique contract language:

  • City of Flint – US District Court rules In Oracle’s favor. “Based on the court’s ruling s above, none of Rimini’s asserted license provisions (Sections 1.2(b), 1.2( c), or 14.2) expressly authorize Rimini ’s copying of Oracle’ s copy righted PeopleSoft branded software a s a matter of law. Therefore, the court finds that Oracle is entitled to summary judgment on Rimini’s express license affirmative defense as it relates to the City of Flint, and the court shall grant Oracle ’s motion accordingly.

    Point of View (POV):
    The City of Flint’s PeopleSoft contracts were pre-Internet and did not allow for third parties to copy licenses onto other servers on their behalf.  In fact, the licenses only allowed for the City of Flint to provide “access to and use of the Software” to a third party.  The ruling makes sense and is based on how the license contract is written.
  • Pittsburgh Public Schools – US District Court rules In Oracle’s favor. “Based on the rulings above, the court finds that none of Rimini’s asserted license provisions (Sections 1.1, 1.2, or 10.2) expressly authorize Rimini’s copying of Oracle’s copy righted PeopleSoft branded software as a matter of law. Therefore, the court finds that Oracle is entitled to summary judgment on Rimini’s express license affirmative defense as it relates to the Pittsburgh Public Schools, and the court shall grant Oracle’s motion accordingly”.

    (POV):
    Despite Oracle granting the Pittsburgh Public Schools “a nonexclusive, nontransferable license to make and run copies of the Software, “the right to access and use the Software is a separate right from the right to copy or reproduce software”.  The ruling makes sense as with City of Flint based on the language in the original PeopleSoft contract.

Trends: 10 Trends for #Cloud Computing in 2014 To Dominate #Digital Disruption [Slide Share]

Ten Trends For Cloud Computing In 2014 To Dominate Digital Disruption

Constellation’s cloud computing research falls under the Tech Optimization and Innovation business theme and throughout other areas where applications are applied.  The trends for 2014 cover across the entire cloud stack.

Holger Mueller, VP and Principal Analyst, covers the impact of Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) as well as HR Technologies in the Future of Work.  R “Ray” Wang researches the impact of Cloud Computing on business strategy and the application landscape.

Below are the 2014 trends for Cloud Computing.  Join the Constellation experience as we set to help our clients dominate digital disruption.

<iframe src=”http://www.slideshare.net/slideshow/embed_code/29546510″ width=”600″ height=”400″ frameborder=”0″ marginwidth=”0″ marginheight=”0″ scrolling=”no” style=”border:1px solid #CCC;border-width:1px 1px 0;margin-bottom:5px” allowfullscreen> </iframe> <div style=”margin-bottom:5px”> <strong> <a href=”https://www.slideshare.net/rwang0/10-trends-for-cloud-computing-in-2014-to-dominate-digital-disruption” title=”10 Trends for #Cloud Computing in 2014 To Dominate Digital Disruption” target=”_blank”>10 Trends for #Cloud Computing in 2014 To Dominate Digital Disruption</a> </strong> from <strong><a href=”http://www.slideshare.net/rwang0″ target=”_blank”>R “Ray” Wang & Holger Mueller</a></strong> </div>

Your POV.

Do you have a cloud strategy?  Can you see how the cloud will help enable digital business disruption?   Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Please let us know if you need help with your Cloud and Digital Business transformation efforts.  Here’s how we can assist:

  • Assessing cloud computing readiness
  • Developing your digital business strategy
  • Connecting with other pioneers
  • Sharing best practices
  • Vendor selection
  • Implementation partner selection
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing
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Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

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

Copyright © 2001 -2014 R Wang and Insider Associates, LLC All rights reserved.
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News Analysis: Acquisition Of Fiberlink Fills Key Gap In IBM’s One-Stop Mobile First Strategy

IBM Acquires Fiberlink (MaaS360) For Mobile Management And Security

On November 13th, Blue Bell, PA based Fiberlink Communications signed a definitive agreement to be acquired by Armonk, NY based IBM for an undisclosed sum.  Fiberlink has over 3500 clients in key verticals such as financial, retail, public sector, education, and healthcare.  IBM expects to close the acquisition at year’s end.  The deal is significant to customers because:

  • IBM is committed to deliver one stop mobility via acquisitions and organic growth. IBM has made eight acquisitions in the last 18 months (see Figure 1).  In 2012, IBM acquired Emptoris, Worklight, and Tealeaf Mobile. Urban Code, The Now Factory, Xtify, Trusteer, and Fiberlink formed the 2013 acquisition list.  Along the way in 2012, IBM launched three mobile offerings: IBM Endpoint Manager for mobile devices, IBM Connections Mobile, and IBM Security Access Manager for Cloud and Mobile.  In 2013, IBM made the IBM Mobile First announcement along with the IBM Message Sight solution.

    Point of View (POV):
    Mobile is the key onramp to digital business.  The average individual is no further than three feet from their devices and always on 14 to 15 hours a day.  Unfortunately, today’s mobile offerings often are piecemeal and incomplete.  IBM has made a strategic bet to provide the end to end mobile first life cycle.  IBM sees four key entry points for mobile: build, engage, transform, and optimize.  Worklight and Urban code addresses build.  IBM Connections Mobile, Tealeaf CX Mobile, and IBM Xtify enable human interaction for engage while IBM MessageSight enables machine to machine (M2M) communications.  Meanwhile, the Now Factory provides big data insights to support the transform entry point.  Emptoris Rivermine Telecom expense management, IBM Endpoint Manager, IBM Security Access Manager, Trusteer end point security, and IBM Urban Code release automation are part of the optimize entry point.
  • Mobile management is a critical function for successful BYOD and IBM’s Mobile First strategy. MaaS360 provides a cloud based mobility management platform and an on-premises version will be available shortly.  The solution is policy based to support a wide range of BYOD security and privacy requirements.  MaaS360 supports mobile device management (MDM), mobile content management, and mobile applicant management including containerization.

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News Analysis: Sitecore Acquires Commerce Server In Quest Towards Customer Experience Management

Commerce Server Finds Its Logical Home

On Wednesday November 20th, 2013, Copenhagen, Denmark based Sitecore acquired Ottawa, Canada based commerceserver.net for an undisclosed price.  Originally known as the Microsoft Siteserver and Commerce Server 2000, the product was orphaned by Microsoft,  then Ascentium, the key development partner were given the rights to further develop and market the product.  Adding to the lore, Ascentium changed their name to SMITH in the Fall of 2012 and the product group was rebranded to commerceserver.net.

Sitecore’s acquisition continues a consolidation trend in the Matrix Commerce market where vendors are aggregating technologies to support a buyer centric approach to customer experience.  Constellation believes customers should pay attention because Sitecore:

  • Signals seriousness to deliver on end to end customer experience. Sitecore’s portfolio includes its core web content management offerings and an emerging set of digital marketing assets.  Commerce Server adds key B2C functionality for hard goods, digital goods, and web based services; B2B capabilities in trading communities and e-procurement; complex B2X scenarios; and personalized portals.

    Point of View (POV):
    Addition of commerceserver.net fills one key hole in Sitecore’s customer experience management portfolio.  Customers and prospects can expect additional acquisitions from the new management team.   In fact, the company has brought in heavy hitters such as a new CRO and CMO over the past 12 months.  Constellation believes that Sitecore is serious in completing key holes in the end to end customer experience story and moving up the stack to support a range of small to large enterprise customers.  In fact, Commerce Sever 10 scales up to support 220,000o orders/day on a 12 hour peak, 60 million user profiles, 10 million item catalogs, 100,000 catalogs and virtual catalogs, and hosting support for 100 active, 1000 provisioned.  Constellation believes the acquistion places Sitecore in the direct battle with Adobe, IBM, Oracle, and SAP for customer experience and commerce.
  • Ensures Commerce Server a friendly and natural home. Commerce Server brings its core Microsoft heritage.  Dependencies include Microsoft SQL Server, .NET,  Commerce Server Staging (CSS), and Component Object Model.  Commerce Server also plays well with other Microsoft server stack components including Biz Talk Server and Microsoft Office SharePoint Server.  Sitecore’s software is built on a Microsoft.NET platform.  Deployable in Microsoft Azure, the core CMS can use Oracle or Microsoft for the database and content can be stored in either .NET or XML objects.

    (POV):
    Customers should find relief that the Commerce Server assets return back to a product centric company.  While SMITH (formerly known as Ascentium), a digital experience agency, served as a reasonable owner and even delivered the latest version 10 release, software cultures and services business models often clash.  Why? The research and development investment required to take products to market work against the resource utilization and project focus required for successful services.  Constellation will measure integration success by how well the team builds and accelerates the original major release plans (see Figure 1).
  • Gains critical ecosystem assets. Commerce Server brings 3000 customers and 25 partners around the world.  Partners range from 17 enterprise providers, hosting providers, training, ISV, and consultants. Key industries for Commerce Server include retail, manufacturing, and e-government.  Sitecore brings over 3000 customers, 1000 certified business partners in 50 countries, 8,000 certified developers, and 17,000 active members in the developer ecosystem.

    (POV):
    Prior to the acquisition, Commerce Server product holes included content management, search, analytics, campaign management, and other key customer experience management capabilities.  Sitecore fills many of these product gaps and adds a larger ecosystem.  Customers can expect significant cross-training among the partners as they integrate the Commerce Server assets into their portfolios.

Figure 1. The Pre SiteCore Acquisition Commerce Server Road Map More…

Event Report: Day 1 At Oracle Open World 2013: The Quest For Innovation #oow13

Past Oracle Open Worlds Have Disappointed Customers and Partners

Let’s be frank.  The past five years at Oracle Open World have disappointed even the faithful.   The over emphasis on hardware marketing and revisionist history on cloud adoption bored audiences.  The $1M paid advertorial keynotes had people walking out on the presenters 15 minutes into the speech.  Larry Ellison’s insistence on re-educating the crowd on his points subsumed the announcements on Fusion apps.   Even the cab drivers found the audience tired, the show even more tiring.

Oracle went from hot innovative must attend event to has been while most industry watchers, analysts, and media identified shows such as Box’s BoxWorks, Salesforce.com’s DreamForce, and Exact Target’s Connections as the innovation conferences in the enterprise.  These events such as Constellation’s Connected Enterprise, capture not only the spirit of innovation but also provide customers a vision to work towards.  Hence, most believe Open World could use much needed rejuvenation and a shot of innovation juju (see Figure 1.)

Figure 1. Oracle Open World Lights Up San Francisco From September 22nd to September 27th

“Next Slide Please”: Oracle Enters A Period Of Reinvention At #OOW13

Walking through the event on Saturday (Day 0) and today (Day 1), one will notice a slight change in the spirit of the event. While half the base is die hard Oracle Red Stack customers (i.e. those who grew up from database to middleware to apps), the good news is the other half of the Oracle customers who came in through acquisition (i.e. or some say by accident) are present in larger numbers.  These customers by acquisition sought best of breed, took more risks, and fought in some cases not to be on the Oracle Red Stack.

For Oracle to win the innovation battle, the company must win over the mind share of the Oracle customers by acquisition.  In fact, these customers represent the early adopters representing market leaders and fast followers while the core Oracle Red Stack is more cautious adopters and laggards (see Figure 2).  Market leaders and fast followers have key components required for successful building blocks of corporate IT and often have line of business leaders that push the envelope.  Oracle must tap into that spirit in order to move its base forward towards innovation.

Figure 2. Organizational DNA Determines Pace And Appetite For Disruptive Tech Adoption

Open World 2013 Attempts To Change The Tenor Of Oracle’s Outward Conversation

In the spirit of innovation, attendees can expect six distinct mega themes to emerge from this uber event catering to 60,000 physical attendees and potentially 100,000 online.

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Monday’s Musings: NSA PRISM Scandal Hurts US Cloud Companies And Hastens The Return Of On-Premises Software

Non-US Based Organizations And Even Some US Organizations Will Not Tolerate Snooping In A Post PRISM World

Since the Edward Snowden PRISM revelations, Constellation has received a steady stream of inquiries on cloud strategy.   In fact, nervousness runs high among many non-US based companies using services from US based cloud companies across the cloud stack.  In early August 2013, the Information Technology & Innovation Foundation put out its report “How Much Will PRISM Cost the U.S. Cloud Computing Industry” Assuming that 20% of current clients switch to a non US based provider,  the report estimates a loss of $22 to 35B by 2016.

Constellation agrees.  All signs point to an anti-US stance until the security issues is addressed.  The odds on the US government moving fast on this issue are as good as Major League Baseball players or Tour de France Cyclists honoring a performance enhancement drug use ban.  In fact, Constellation is aware of at least 50+ contracts that have been put on hold or cancelled in the past 30 days.  With the EU’s Nellie Kroes already sounding the alarm bells in a way she only can, cloud buyers have taken notice.

The Bottom Line: Clients Should Consider Alternatives To Pure Cloud Models And Encryption Technology

Interesting enough, fifteen years into the cloud revolution, talk has rekindled about building on-premises software in light of this scandal. Unfortunately, the last major on-premises software company to receive funding squandered it all in 2005 and retooled to the cloud. Furthermore, a few entrepreneurs are looking at VC funding to take some key systems back on-premises.

However customers do not have time to wait for new software to arrive in the on-premises deployment option.  In the meantime, a few near term strategies have emerged:

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News Analysis: Oracle’s Cloud Disruption Webinar Recording

Oracle’s recent partnership announcements to supply Oracle technology to key cloud vendors such as Microsoft, NetSuite, and Salesforce.com create serious implications for the market. 

On June 28, 2013, Esteban Kolsky, Holger Mueller, and R “Ray” Wang discussed the implications  of Oracle’s recent partnerships for:

  • Salesforce customers
  • Microsoft customers
  • NetSuite customers
  • Oracle customers
  • Cloud competitors such as Amazon, Google, IBM, SAP, VMWare, and Workday

Join us at Constellation’s Connected Enterprise, October 30 - November 1, 2013

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News Analysis: Oracle’s Cloud Strategy – Revisionist History or Cloud Genius?

This is a joint post with my colleague Holger Mueller who looks at IaaS/PaaS and Future of Work technologies for Constellation Research.

At a press conference on June 24th, 2013 with Microsoft’s CEO, Steve Ballmer ,and Oracle’s President Mark Hurd announced a cloud partnership where Azure customers will be able to run Oracle Database (no version mentioned, but Constellation expects this to be 12c), Oracle Weblogic, and Java.

Oracle also announced availability of Oracle Linux for Azure customers. Constellation believes that the deployments of the Oracle 12c, Weblogic and Java stack pieces will be deployed on Oracle’s Linux.  Should this be true, the approach makes sense, as this is a tested and proven hardware and software combination. Further, Microsoft has already begun to run parts of Azure on Linux.

The partnership alliance poses significant implications for both vendors and more importantly customers moving to the cloud for three reasons:

  • Java comes to Azure, a sign of pax in the .NET vs Java wars. For Applications to run on Azure, they needed to be built in C# or compatible languages. Now, with the licensing of Java by Microsoft as part of this partnership, Java applications will run on Azure. This opens doors for Java applications on the Azure cloud, as well as general more portability for Java applications. And Azure becomes a friendly cloud for the 9 million+ Java developers out there. .

    Point Of View:
    Microsoft and Oracle strike a win-win here.  Microsoft gains more language derived potential for expanding Azure and Oracle adds a marquee cloud stack to support Java.  Given the substantial overlap of enterprise customers on both Microsoft and Oracle, customers will benefit from more cross cloud compatibility for Java while supporting Azure for IaaS.
  • Azure will run Oracle Weblogic and the Oracle Database. Microsoft will support Oracle Linux in Azure as the foundation to run the middleware and the database stack.  Though the press release and the press conference did not specify which Oracle database, Constellation speculates this is for Oracle Database 12c. In addition, Oracle announced license mobility for customers who want to run software on Azure and bring Oracle Linux to Azure..

    (POV):
    Interesting enough when Larry Ellison spilled the news for this announcement during the Q4 Oracle earnings call, this was not about the Oracle Database, but very specifically about Oracle 12c. It’s not clear why 12c is not specifically referenced in the press release – but with the ORacle 12c general availability slotted for June 25h, 2013, this moment may not have been the time to steal the thunder.  Of note, it is not only the database, but also the Weblogic application server which will be deployed on Azure. This comes as a surprise at first, but given the work Oracle has done to integrate the former BEA flagship product with 12c and Java – it was a question of taking whole technology building and avoiding too many interfaces. Why run Java apps through Biztalk to an Oracle database?  Constellation views this as a smart move by both companies, as it allows Azure customers to utilize more of the Oracle products, that are more and more entwined due to the Fusion and Exaxxx products.
  • The hypervisor is where Microsoft and Oracle draw a line in the sand. Oracle will support Microsoft’s hypervisor Hyper-V to be the demarcation line between higher level application code and the Oracle products that now run in Azure.  The combined offering will be running on Hyper-V, which creates some headaches for Oracle on the hypervisor level as Constellation predicted, and will be supported by Oracle support as running on Windows Azure. .

    (POV):
    This poses some engineering work for the Oracle hypervisor teams, but nothing impossible to achieve. And the benefits are tangible, Hyper-V built applications will now be able to run on the Oracle Database (12c, and on Oracle Linux). This will give a lot of performance critical (think Dynamics) applications that were limited by SQL Server scalability before, new breathing room.  Microsoft was able to protect higher level applications of its technology stack with this agreement and at the same time Oracle benefits from a whole ecosystem of Hyper-V compatible applications. The cost of supporting Hyper-V for Oracle, which is tangible, is however dwarfed by this additional market potential. And it gives Mircosoft an important leg up against VMware’s vSphere.  Constellation believes this has significant implications in the cloud stack wars among Amazon, Google, HP, IBM, and VMware.  In unusual candidness for these  Oracle listed the current and future deliverables for the alliance in an blog post here.

Why did this happen?

As previously mentioned, this would have been a very good April Fool’s headline – even back on April 1st 2013. So this alliance comes as a surprise pretty much to all industry observers, at least we have not seen anyone claiming to see this one coming.

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News Analysis: Mr. N R Narayana Murthy Returns To Infosys As Executive Chairman of the Board

Will There Be A Come Back For NRN and Infosys?

Infosys announced on June 1st, 2013, that Mr. N R Narayana Murthy (NRN), the legendary co-founder of Infosys who retired in August 2011 as Chairman Emeritus, has been appointed by the board as Executive Chairman and a director.  From the press release:

Mr. N R Narayana Murthy said, “This calling was sudden, unexpected, and most unusual. But, then, Infosys is my middle child. Therefore, I have put aside my plans-in-progress and accepted this responsibility. I am grateful to Mr. K V Kamath – the Chairman, the Board, and every Infoscion for giving me this opportunity. I intend to do my best to add value to the Company in this challenging situation.”

Mr. K V Kamath said, “The Board has taken this step keeping in mind the challenges that the technology industry and the Company faces and in the interest of all stakeholders, particularly shareholders large and small, who have asked for strengthening of the executive leadership during this challenging time. Murthy’s entrepreneurial and leadership record and the long experience he has had as a technology pioneer makes him eminently qualified to lead the company and provide strategic direction at this point in time.”

Key points from the announcement include:

  • Board seeks shareholder approval for five year term. Company shareholders must approve the appointment of Mr. Murthy as a director and Executive Chairman at the Annual General Meeting (AGM) on June 15, 2013.  The current Chairman of the Board, Mr. K V Kamath would step down and remain on the board as a Lead Independent Director effective June 1, 2013.  Mr. Murthy will take a token annual compensation of one rupee.

    Point of View (POV):
    Most expect the confirmation to be swift and non-controversial.  Infosys seeks a stronger leadership team to address challenges in both its business model as well as direct competitors.  With Cognizant and TCS overtaking Infosys on many fronts, the selection of NRN comes at a very critical juncture.
  • New Chairman’s office group to be created. The new team is designed to provide a central war room to assess the situation, propose solutions, and drive impact on strategy.  At Mr. Murthy’s request, his son Dr. Rohan Murthy will serve as his executive assistant.

    (POV):
    Sensing the magnitude of the challenge, Mr. Murthy approach to put a tiger team together indicates a realization that Infosys must solve their predicament as a multi-disciplinary problem.  The appointment of his son, Dr. Rohan Murthy, as executive assistant provides Rohan with an interesting front row seat.

Bottom Line: Infosys Needs To Shake It Up For Transformational Change

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Tuesday’s Tip: Putting the Kibosh On ERP Vendor Sales Reps Who Troll For Indirect Access

Constellation Sees An Alarming Increase In Inquiries

Constellation has received an alarming increase in inquiries about an unethical vendor sales practice coined as “trolling for indirect access”. Indirect access is when a vendor claims that a client is accessing their perpetually licensed software in an unintentional manner or inappropriately licensed manner.

One vendor uses a definition of, “any individual or machine that accesses the computing capabilities of the software must be a licensed user”.

Another vendor sees it as “any time a system is accessed by a non-vendor system, a license is required to access that data”

In fact, a rash of inquiries over the past two quarters has raised the alarm bells among software customers.

Unethical Sales Leaders Endorse This Practice To Make Their Numbers

While this practice is nothing new, the pickup by vendors raises serious issues as to why this practice remains in their sales play books. Constellation identifies five reasons why vendors continue this practice:

  1. Open up dormant accounts. After pleasant introductions, new sales reps will use this technique to further deals.  Former sales reps agree this is a shake down for cash technique.
  2. Drive sales through fear of audits. Audits are used to start the discussion.  Unsuspecting customers who no longer have context about the original contract may fear breach of contract.
  3. Scare customers into making additional purchases. Threats are used to set expectations.  The vendorsoften waives the issue if the customer buys additional licenses as a “compromise”
  4. Force compliance into new licensing policies. Vendors use this as a way to drive conformity to new license models.  The move from concurrent usage to named users was one example.
  5. Meet territory sales goals. Unscrupulous sales managers suggest this technique to meet their numbers.  Sales reps are told they are defending the vendors license rights.

It All Starts With An Innocent Sales Call From A New Sales Rep

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Monday’s Musings: The Controversy Surrounding Gartner’s CRM Market Share Analysis

The Gartner Market Share Analysis:CRM Software Report Raises Questions On Accuracy of Market Sizing Reports

The recent Gartner report “Market Share Analysis: Customer Relationship Management Software, Worldwide, 2012” has generated some controversy among the enterprise software set.  The report and other reports such as these, are often used for bragging rights by vendors and for buyers to gauge vendor viability.

This specific report attempts to rank CRM software spending by vendor using total software revenue worldwide.  The good news – the numbers are directionally correct with Salesforce.com claiming the top mantle from SAP this year with $2.525 billion in CRM revenue (see Figure 1). The bad news – many question the accuracy of the actual revenues numbers as listed in the press release, especially for the Microsoft Dynamics CRM business.

As Scott Bekker at Redmond Magazine reported, “Gartner put Microsoft’s CRM revenue at $1.1 billion, up from $900 million in calendar-year 2011.  That’s a sizable bump. As of May 2012, Microsoft was only claiming that all of Dynamics, which includes Microsoft’s established ERP products as well as CRM, amounted to $1 billion in annual revenues.”

Mssr. Bekker makes a polite but astute point.  The 26% bump in CRM revenue is significant.  However, the total revenues are questionable.  In any modest observation, that kind of overall growth in the Microsoft Dynamics unit would have Microsoft CEO, Steve Ballmer, shouting from the tops of Mount Ranier and probably have Kirill Tatarinov next in line to be Microsoft’s CEO.

Figure 1. Gartner’s Recent CRM Software Spending by Vendor, Total Software Revenue Worldwide, 2012 (Millions of Dollars)

Not to violate any copyright laws, despite fair use laws, here’s a link to the full table found in their press release. A recreated table below shows the rankings.

Bottom line it shows Microsoft in 4th place for CRM with over 1.1B in revenue.

Organization 2012 revenues 2012 marketshare (%) 2011 revenues 2011-2012% growth
salesforce.com 2,525.6 14.0 2,004.6 26.0
SAP 2,327.1 12.9 2,325.1 0.1
Oracle 2,015.2 11.1 1,870.0 7.8
Microsoft 1,135.3 6.3 900.9 26.0

The Market Sizing Game For Vendors And Legacy Analyst Firms Flawed With Faulty Methodology

In reality, the market sizing game for enterprise software is both an art with some science.  Having played this role as a vendor in an Analyst Relations capacity in a past life, one knows that executives can not disclose such financial information directly to a research or market sizing firm.  The research analysts must play a guessing game with the software executive and ask 100 questions to zero in on a number.  Unlike hardware, where individual counts are more obvious, software revenue sizing requires analysts to dig deep into financial statements and any conversation where growth rates have been discussed.  Revenues are hidden in bundling, suite sales,  discounting schemes, channel revenue deals, OEM arrangements, and inter-company transfers.  To complicate matters, SaaS revenue calculations can differ from how on-premises revenues are calculated.  Analysts must also determine the truthfulness of vendors who are trying to indirectly guide analysts to the “right” numbers.  In short, this is hard work.

As assumptions are built on previous numbers, one false guess in a previous year, cascades and geometrically inflates or deflates a set of future numbers.  In the case of these CRM numbers, one may speculate that past executives may have provided a higher number than actually generated, resulting in the current alleged inaccuracies.  Another speculation may come from previous and current analysts who may only focus on one area of the business and not have the total picture on the Microsoft Dynamics overall business.  There are many points of inaccuracy that can occur with software revenue market sizing and every legacy analyst and market sizing firm works hard to avoid these situations.  For market analysts, dissecting revenue from vendors such as SAP and Oracle is often difficult as these numbers and break outs are masked with multiple acquisitions and product lines.

To be clear, the SAP and Oracle numbers also seem inflated.   These numbers have been inflated over decades.  Given that these vendors also have many other lines of revenue aside from CRM, it’s hard to gauge the accuracy of their numbers without some digging.  Now one would assume a market sizing firm should be doing this right?

The Microsoft Dynamics CRM Revenues Do Not Meet The General Sniff Test

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News Analysis: SAP Business Suite on HANA

Next Stop On The Road To HANA: SAP Business Suite

In a global announcement in Palo Alto, New York and Frankfurt, SAP’s top executives Dr. Vishal Sikka, Rob Enselin, Jim Haggeman Snabe, and legendary founder and chairman Dr. Hasso Plattner announced availability of SAP’s Business Suite powered by SAP HANA.  SAP has rewritten the Business Suite to work on SAP’s HANA platform and believes that customers will benefit for four reasons:

  • Smarter. The embedding of intelligence at the transactional level opens up new business models and process transformation.  SAP’s customer Derek Dyer, Director of Global SAP Services for Deere and Company, emphasized that SAP ERP powered by SAP HANA has “revolutionized” how products and services are introduced to the market, especially in the MRP world.  They see some transformational innovation as a result to faster MRP runs.

    Point of View (POV):
    Embedded intelligence has been a key failure in today’s existing transactional applications.  Customers have sought access to not only real time reporting, but also prediction.  The goal is to get to smarter decisions at all levels of the organization. Customers will benefit from embedded intelligence.  However, this will require people and technology training of the system to identify the patterns and algorithms required to serve up insight on demand.  This will require intelligence at every vertical and micro vertical business process.  Moreover, right-time requirements for in-context computing will turn out to be the surprise benefit as relevancy becomes more important through time, location, role, relationship, sentiment, and intent.  Relevancy and context provide the smartness that is missing in today’s systems.
  • Faster. SAP Business Suite powered by SAP HANA addresses the need for speed.  The in-memory columnar database reduces the input/output (I/O) time and allows for fast access to information.  The result – faster processing and faster scenario evaluation.  Fast transaction management times lead to faster decision making.

    (POV):
    The analytics and crunching capabilities is what’s driving organizations to seek faster speed.  Speed is the difference between a five day drug recall and a five minute drug recall.  Speed is the difference between a 30 day supply chain plan versus the ability to reroute 2 iPhones to your store in 30 seconds.  The impact is huge for customers if SAP does succeed.  SAP’s not the first to do this as Workday has already done this for HR and Finance.  However, for the entire SAP suite and given SAP’s market share, this is a big deal as this reduces the need for separate business intelligence systems.  The performance difference will create a huge competitive advantage for those who adopt versus those who do not.
  • Simpler. SAP Business Suite on HANA delivers consumer grade user experiences.  The goal is to embed live insight into business processes to drive immediate action.  Today, people expect consumer-grade user experiences and the power to translate their live insight into immediate action. Enzo Bertolini, CIO, Ferrero Group expects to improve the trade promotions and supply chain planning process through both better simulation and mobile access.

    (POV):
    SAP Business Suite on HANA provides SAP an opportunity to rethink how information is created, consumed, and shared.  The push to a design thinking focus within SAP has led to significant improvement of the user experience throughout their portfolio of products.  SAP Business Suite on HANA will be an opportunity to show case this new user experience.
  • Open. SAP plans to support database technology and vendor choice for its customers.  Many database partners have committed to work with SAP support in-memory optimizations and provide the necessary support to ensure that customers will succeed.  SAP is providing rapid deployment solutions, trained implementation consultants, and a comprehensive set of services to help clients make the migration to SAP HANA.

    (POV):
    SAP has the opportunity to drive down database costs and improve performance.  While the pricing model will be based on the percentage of application value, SAP must find a way to drive down overall costs if it is serious about improving adoption.  This licensing requirement must be addressed as it will emerge as the most significant barrier to adoption.

SAP Faces A Challenge of Adoption Not Because of Technology, But Because of Customer Vision

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