Posts Tagged ‘upgrades’

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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Research Report: Constellation’s Research Outlook For 2011

Organizations Seek Measurable Results In Disruptive Tech, Next Gen Business, And Legacy Optimization Projects For 2011

Credits: Hugh MacLeod

Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability and market differentiation.  Cutting through the hype and buzz of the latest consumer tech innovations and disruptive technologies, Constellation Research expects business value to reemerge as the common operating principle that resonates among leading marketing, technology, operations, human resource, and finance executives.  As a result, Constellation expects organizations to face three main challenges: (see Figure 1.):

  • Navigating disruptive technologies. Innovative leaders must quickly assess which disruptive technologies show promise for their organizations.  The link back to business strategy will drive what to adopt, when to adopt, why to adopt, and how to adopt.  Expect leading organizations to reinvest in research budgets and internal processes that inform, disseminate, and prepare their organizations for an increasing pace in technology adoption.
  • Designing next generation business models. Disruptive technologies on their own will not provide the market leading advantages required for success. Leaders must identify where these technologies can create differentiation through new business models, grow new profit pools via new experiences, and deliver market efficiencies that save money and time.  Organizations will also have to learn how to fail fast, and move on to the next set of emerging ideas.
  • Funding innovation through legacy optimization. Leaders can expect budgets to remain from flat to incremental growth in 2011. As a result, much of the disruptive technology and next generation business models must be funded through optimizing existing investments. Leaders not only must reduce the cost of existing investments, but also, leverage existing infrastructure to achieve the greatest amount of business value.

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Research Summary: Software Insider’s Top 25 Posts For 2010

Themes In 2010 Reflected The Buy Side Demand For Both Optimization and Innovation

Technology buyers in 2010 focused most of their priorities on finding cost savings through legacy optimization, navigating a flurry of disruptive technologies, and designing/experimenting with new business model innovations.  Consequently, the top 25 posts for 2010 reflected these 3 major themes:

Legacy Optimization

Disruptive Technology

Business Innovation

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Event Report: SAP Australian Users Group Summit 2010



SAUG Summit Delivered Great Networking Opportunities And Information Exchange

Over 550 attendees converged on Sydney August 3rd to 5th, 2010 for the annual SAP User Group Summit.  Members were treated to 28 session, 7 keynotes, and 4 SAP 101 educational sessions.  The smart design of the conference gave attendees ample opportunities to connect and share ideas between sessions.  Kudos to Kim Salter and team for a great event! In conversations with over 100 attendees, four trends emerged:

  • Excitement in putting Business Intelligence (BI) to work. A combination of pent up demand, SAP marketing of Business Objects, and early adopters of BW led to many interesting conversations about the future road map.  Users sought clarity on the future direction and for the most part received it around BEX support and future investments.  Many continued to wonder if SAP would clean up its master data management strategy and address the need for a stronger next generation BI platform.
  • Considerable interest in how the Cloud can be used with existing SAP investments. Several sessions on the cloud were given.  Jeff Word, President of SAP Product Strategy provided an SAP Session on Cloud Computing.  The 6th  keynote on “Ready for the Cloud and SaaS?” provided users with 10 strategies to use Cloud Computing with or without SAP.  With so much confusion on Cloud terminology, attendees wanted a reset on the definitions and categories of cloud computing.  In each conversation, cost savings and flexibility drove the interest to consider cloud options.  A good mix of both technology and business leaders instigated the conversations.  Considerable disappointment emerged when they found out Business by Design would not be available to Australia until late 2011.
  • Concern about negotiating leverage in SAP contracts. In both the CIO session and in passing conversations, the majority of attendees expressed a concern about waning leverage in contract negotiations for the acquisition of new licenses or dealing with maintenance fees.  A few attendees expressed frustration that the SAP Australia head office ignored them when their contracts were written by the corporate entities in countries abroad.  They felt that SAP should act with one face to the world.
  • Questions on when to upgrade. Many attendees expressed concern on when to upgrade.  A large number on 4.6 and 4.7 saw no need to make the shift yet despite a few key features in Enhancement Packages.  In fact, many of these users augmented the gaps with SaaS solutions today in expense management, CRM, business intelligence, and strategic HCM.

A photo collage of the event can be seen below (see Figure 1):

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Tuesday’s Tip: How To Compare Total Ownership Costs

Apps Strategy Options Abound And Organizations Need Accurate Comparison Methodologies

Recent inquiries from blog readers and client engagements highlight a growing need to compare the cost of apps strategies.  Common comparison scenarios often include:

  • SaaS versus on-premise
  • Upgrade versus customization
  • Single instance versus two-tier
  • Vendor maintenance versus third party options
  • Custom apps versus packaged apps

Cost Comparisons Should Encompass The Software Ownership Lifecycle

An inventory of costs should comprise the phases of application ownership (see Figure 1).  License fees, implementation, and maintenance often define the most common costs.  However, additional factors by phase should include:

  • Phase 1 – Selection. Costs include services such as requirements gathering, vendor selection services, contract negotiation fees, and program management.
  • Phase 2 – Implementation. Costs include projects such as change management, business process reengineering, integration, customization, and testing.
  • Phase 3 – Adoption. Costs include, training, testing, configuration, report creation, and customizations.
  • Phase 4 – Optimization. Costs include upgrade, testing, custom development, and other integration fees.
  • Phase 5 – Renewal. Costs include third party maintenance, management, and vendor selection.

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

Confusion Continues With Cloud Computing And SaaS Definitions

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

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

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

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

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

As the über category, Cloud Computing comprises of

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

Figure 1.  Traditional Delivery Compared To Cloud Based Delivery

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

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

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

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

Figure 2.  Different Strokes Of OnDemand For Different Folks

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

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

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

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

  1. True SaaS
  2. Server Virtualized
  3. Hosting

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

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

  1. Hosting
  2. Server Virtualized
  3. True SaaS

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

Your POV

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

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

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

Related resources and links

Take the new and improved survey on 3rd party maintenance

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

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

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

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

Apps Users Seek Third Party Maintenance For Cost, Value, and Service

Updated surveys from inquiries, client conversations, and user group meetings show a 113.8% increase in interest in third party maintenance (3PM) services from Q3 2009 to Q1 2010 (see Figure 1).  Key factors stem from (see Figure 2.):

  • Continuing cost pressures. Budgets continue to be at flat or have been reduced.  Organizations must do more with less.  Add pressures to innovate, CIO’s must find fat without trimming bone.
  • Gaining minimal value in maintenance services. Most felt they were paying too much for too little.  An 8 point jump reemphasized the issue with a lack of tiered offerings.
  • Declining plans to upgrade. Worsening economic conditions from Q3 2009 to Q1 2010 led a 27 point increase in interest in 3PM.  Expect many respondents to change their point of view (POV) as economic conditions improve.
  • Expecting better service. Service continues to play a key factor in decisions to go to 3PM.  Over 60% of respondents had experienced poor levels of service.
  • Slowing pace of vendor innovation. Greater than half of respondents believe their vendor has been too slow to deliver new capabilities. These include SaaS deployment options or key functionality in areas such as strategic HCM and social CRM.
  • Disliking the vendor. About 1/3 of the survey respondents have bad experiences with their vendor.  Many times it comes from sales person or support rep experiences.
  • Delivering self support. Almost 30% of respondents already provide their own support.  These organizations have no need to pay maintenance when they are doing all the work.

Figure 1. Interest in 3PM grows 113.8% over 2 quarters.

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

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

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

Limited Options Exist For Most Enterprise Apps Customers

Of the 101 respondents in Q1 2010 interested in 3PM, Oracle (88.1%) and SAP (76.2%) users expressed the greatest interest in seeking independent services (see Figure 3).  Over 80% of the users were from large companies greater than 1000 employees across the globe.  Most SAP users surveyed have mixed environments with Siebel, JD Edwards, and PeopleSoft joint installations.  Unfortunately, very few public options exist for sole SAP users (see Figure 4).  For example, SAP customers can only turn to Rimini Street.  Oracle customers on PeopleSoft, JD Edwards, and Siebel also have limited choices with Rimini Street, netCustomer, and Spinnaker among the options.  IBM, Infor, Lawson, Computer Associates, Epicor, Microsoft Dynamics, Oracle E-Business Suite and database customers have no options.  (Note: This data may not be completely statistically significant given the sample size of 240, but hopefully it provides some directional input.)

Figure 3. Oracle And SAP Users Drive Interest In 3PM

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

Figure 4. Very Few Public Options Exist For Customers

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

The Bottom Line For Users – Users And User Groups Must Band Together To Guarantee 3PM Rights. Don’t Take These For Granted!

Although the latest surveys show a 17 point increase in the belief that 3PM is a right, this right is under fire by big vendors such as Oracle who have taken legal actions against 3PM providers for improperly (i.e. TomorrowNow) and allegedly (i.e. Rimini Street) violating intellectual property rights.  If providers have violated such laws, Oracle rightfully should defend its positions and those providers be punished.  However, there’s a lot of money at stake.  For most vendors, maintenance represents 50% to 80% of their revenue stream.  Consequently, users and user groups have a responsibility to:

  • Demand that their contracts include provisions that protect their right to 3PM
  • Require vendors to work out rules on how 3PM providers can deliver services without violating software IP provisions
  • Seek anti-trust class action with the US DOJ (i.e. Christine A. Varney) and the EU Compeition (i.e. Joaquín Almunia) against software vendors who hinder 3PM providers from providing services

Users and user groups must vigorously defend their positions in contracts and legal action or lose this right.  Failure will result in a continued software maintenance monopoly.  Success will ensure market competition and renewed innovation.  Attention: OAUG, Quest, and SUGEN leadership your members need your help!

Figure 5.  A Growing Body Of Users Believe 3PM Is A Right

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

The Bottom Line For Vendors – Proactively Address The Issue Or Expect A Groundswell Of Activism

SaaS, subscription pricing, 3PM, and the economy provide a confluence of forces that will continue to attack maintenance revenue streams.  Many legal cases have been fought over this issue including IBM vs Amdahl and Geac vs Grace ConsultingSAP’s failed attempt to convince customers on the value of Enterprise Support led to a public relations disaster and a factor in the resignation of their CEO.  The result – many vendors considering price hikes held back.  In fact, some savvy software vendors retooled and restored the client -vendor relationship by:

  • Offering more entry points and tiers to support options. The three pillars of software maintenance and support policies still apply.  However, several vendors are now offering more tiers of support as lower entry points.  Two vendors have finalized plans to offer just the bare bones legal and regulatory updates.  Other vendors have made it easier to come back with maintenance amnesty plans.
  • Providing flexible maintenance policies. Vendors who change rigid policies have experienced success among customers.  Some Both Infor through Infor Flex and Micrsoft Dynamics allow like for like swap credits to migrate between existing products.
  • Renegotiating existing terms. Some vendors are helping clients meet the realities of the current market conditions. Big on the list is helping clients address shelf ware without repricing of contracts.  For clients who paid full maintenance on software that’s at least 4 years old, some vendors are offering to reduce up to 20% of the overall licenses not in use.  This leads to lower maintenance revenue but engenders good will among key clients.  Further, several vendors have allowed clients to apply credit towards another module as an alternative.
  • Delivering amnesty programs. Several vendors have allowed customers to return to maintenance programs after years of not paying.  Such programs play a key role in helping customers upgrade but should be used sparingly as customers may become accustomed to this practice.
  • Creating better peer forums to share information. Almost every vendor surveyed has a program to improve the online support capabilities.  Applying Social CRM use cases,  user generated content in peer forums tops the list of initiatives.  Other plans focus on sharing data on benchmarks, operational metrics, and best practices.
  • Assisting with vendor financing. Clients seek access to financing, especially many in the mid-market who’s credit lines have been zapped.  Microsoft has led the charge by providing 0% financing for its Microsoft Dynamics ERP and Microsoft Dynamics CRM Customers.  Other vendors such as IBM, Infor, Oracle, SAP, Sage also offer vendor led financing programs that include hardware, implementation, training, and other services.
  • Lowering cost of usage and ownership. Though tops on the list as a conceptual practice, most vendors will need to roll out such initiatives over the next 24 months.  A few notable exceptions include Agresso with its VITA architecture which allows customers to rapidly make business and UI changes, Microsoft Dynamics customers who report back significantly lowered implementation and training costs compared to most vendors, and Epicor customers who report significant productivity gains with Service Connect.  SaaS customers already experience such gains.

Your POV

Take the new and improved survey on 3rd party maintenance and let us know if you need help with your enterprise apps strategy by:

  • Conducting an ROI on 3rd party maintenance options
  • Identifying cost reduction opportunities
  • Renegotiating your software contracts
  • Improving innovation via SaaS and other deployment options

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Related resources and links

20091008 Deal Architect – Vinnie Mirchandani “Third Party Maintenance Is Really 4 Decades Old”

20071120 News Analysis: Too Early to Call the Death of Third Party Maintenance

20090210 Tuesday’s Tip: Software Licensing and Pricing – Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20090622 News Analysis: Infor Flex Reflects Proactive Maintenance Policy

20090516 News Analysis: Rimini Street Launches Third Party Maintenance for SAP

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090428 News Analysis: SAP and SUGEN Make Progress on Enterprise Support

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090330 Monday’s Musings: It’s The Relationship, Stupid! (Part 2) – Stop Slashing The Quality Of Support And Maintenance

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20081012 Monday’s Musings: 5 Steps to Restoring Trust in the Vendor – Customer Relationship

20100114 News Analysis: SAP Revives Two Tier Maintenance Options

20091012 Research Report: Customer Bill of Rights – Software-as-a Service

20090912 News Analysis: Siemens Cancels SAP Maintenance Contract

20090910 Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090602 Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

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

Tuesday’s Tip: The SAP Optimization List – Key Ecosystem Vendors You Should Know

High Cost Of Ownership And Changing Requirements Drive SAP Users To Seek Optimization Solutions

As users await SAP to regain its mojo (see Dennis Howlett’s post) and implement it’s “Voice of the Customer” strategy in 2010, users must continue to reduce their cost of ownership and complexity (see Figure 1).  In addition, rapidly changing business requirements require some users to seek SaaS alternatives, additional point solutions, and extensions.

Figure 1.  Cost Reduction Top of Mind for SAP users

What SAP users want from SAP

Consequently, vendors providing SAP optimization and extension solutions represent one of the fastest growing parts of the $78.7B (2009 Altimeter Group estimate), 850,000 person strong SAP service partner and developer ecosystem.   SAP users already embrace many of the solutions from vendors on this inaugural SAP Optimization List as part of their business value oriented apps strategy. The living list covers seven areas including:

  1. application extension and usability;
  2. application life cycle management;
  3. archiving, storage, and data management;
  4. license management and optimization;
  5. Microsoft Office integration;
  6. third party maintenance; and
  7. virtualization

1. Application Extension and Usability

Users often complain about the poor usability of SAP solutions.  These solutions allow users to change their user experience with SAP.  In some cases, the solutions provide composite app creation capabilities in other tool sets to inter-operate with SAP.

  • Adobeprovides interactive forms for the SAP environment in both an off-line and on-line deployment.  Submitted forms are then entered into SAP.  Forms can include validations and other secure features.
  • ERP-Linkallows users to extend the SAP environment for business intelligence, document management, content management, and composite application creation using Microsoft tools.  The i_Net platform creates SAP-Microsoft interoperability.
  • GuiXTprovides users with the ability to deliver customized user interfaces in SAP applications.  GuiXT is often used by clients to simplify screens and user flows without impacting SAP code.

2. Application Life Cycle Management

Whether it may be instance consolidation, upgrades, test data management, or performance planning, these vendors ease the process of managing the SAP application life cycle.

  • Hayes Technologyassists customers with replicating production application data for dev, testing, and training environments.  Gold Client allows organizations to replicate the data sets they need in SAP configuration, master data, and transcational data.
  • Hyperformix - builds on SAP internal monitoring capability.   Organizations gain a performance monitoring tool that identifies hardware, infrastructure, and architecture optimization opportunities.
  • Intellicorpprovides an artificial intelligence based optimization solution called Live Compare that compares version of SAP for use in testing, upgrade planning, and other life cycle activities. The solution helps clients understand their pre and post environment.
  • Panayadelivers a SaaS based optimization tool for SAP upgrades, enhancement packages, and ABAP code cleansing.  Customers generate a code analysis to determine differentials between versions.  The tool proactively tells user what will break, how to fix it, and where to test.
  • Tidal Softwareoptimizes the allocation of SAP support resources through a root cause analysis methodology.  Performance, IT Process, and Workload automation solutions address both day to day and upgrade scenarios such as a system refresh.
  • West Trax – uses a benchmark tool based on over 300 clients in 13 industries to determine system optimization opportunities for upgrades and  consolidations.  KPI Scan, KPI Optimizer, and KPI QA help organizations identify opportunities, make suggestions, and assist with compliance.

3. Archiving, Storage, and Data Management

  • EMC – provides content management and archiving solutions to support compliance requirements.  Other capabilities include cloning, backup, and recovery, and information protection.
  • IBM Optimdelivers a suite of integrated data management solutions that includes data privacy, test data management, archiving, retention and E-discovery, and upgrade consolidations.

4. License Management and Optimization

Solutions in this category focus on helping clients manage their license usage.  Many large enterprises lack the understanding of how much shelfware may be in production.  In addition, the used software market provides users with opportunities to unload or acquire older releases of software.

  • Flexera (formerly Acresso, Macrovision) - helps clients with a software solution to understand usage, ensure compliance, centralize updates, predict future demand, and improve contract negotiation leverage.
  • SUSEN Softwareprovides a market place to buy and sell used software or shelfware.
  • UsedSoft - supports a market place to buy and sell used software or shelfware.

5. Microsoft Office Integration

Organizations require easy ways to leverage Microsoft Office as an interface into SAP.  Common scenarios include Outlook, Excel, Access, and Word integration.

  • SAP Duetrepresents a solution in joint partnership between Microsoft and SAP to provide interoperability.  Current users complain about the slow pace of innovation and high cost.  A new version addressing these issues will be out in 2010.
  • Winshuttlefacilitates data exchange between SAP and Microsoft Excel or Access.   Winshuttle’s data management tools automate data entry, data download, and reporting tasks for the entire SAP BusinessSuite 7.

6. Third party maintenance

Customers seeking relief from maintenance choose solutions that provide maintenance, tax updates, and regulatory changes for often half the cost of existing SAP maintenance prices.  The clear leader in the market is Rimini Street though some other system integrators have been quietly providing such services.

  • Rimini Street- delivers maintenance options for SAP customers who do not seek to upgrade but would like to keep their existing systems up to date with tax, compliance, and other break-fix issues.  Rimini Street’s charter program has met significant success with over 100 client cases for SAP customers.
  • Your System Integrator of Choice – The recent Siemens SAP maintenance contract negotiations revealed that other vendors such as IBM and HCL were bidding for the maintenance business.   Many SoftwareInsider readers have shared with us that many system integrators, especially those in Europe provide such services.

7. Virtualization

Virtualization allows organizations to consolidate server infrastructure costs for development, testing, training, and production environments.

  • EMC – provides virtualization solutions that include high availability (HA), backup and recovery (BR), and cloning.
  • VMWare -  reduces an organizations physical infrastructure footprint with its solutions.  VMWare provides additional solutions that deliver high availability (HA) and disaster recovery (DR).  In addition to cost savings, many Software Insider readers report performance improvements.

The Bottom Line – Lots Of Proven Solutions, Expect More Details In Future Friday’s Features

Over the course of the next 6 months, we will be profiling many of these vendors.  Key questions that will be answered:

  1. What’s the appropriate use case?
  2. What other customers have used these solutions?
  3. What are sample ROI’s achieved?

Meanwhile, let’s see what news, programs, and innovations develop at SAP’s Field Kickoff Meeting (FKOM 2010) the third week of January.

Your POV.

Have you worked with any of these vendors?  Feel free to share your experiences.  Am I missing anyone?  This list will be continuously updated so please share with us your thoughts.  Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Copyright © 201o R Wang and Insider Associates, LLC. All rights reserved.

Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!

Labor Day (US Holiday) traditionally marks the end of summer BBQ’s, the beginning of the fall conference season, and yes, the time to begin a review of your software maintenance contacts that expire end of year.   As clients prepare for this seasonal ritual, a few trends in 2009 should set the stage for negotiations:

  • Continued weakness in the economy. Vendor revenues continue to decline as new license sales drop and vendors become more dependent on support and maintenance revenues.  Customers looking to upgrade or commit to new apps can expect vendors to be more generous on the support and maintenance front.
  • Dated and inflexible architecture of legacy applications. Change in business models, workplace dynamics, and macro economic conditions apply new pressures to aging systems purchased pre-Y2K.  Customers seek paths to upgrade but are limited by economic pressures.
  • Vendor awareness of customer discontent with existing support offerings. Customers now seek to understand what value vendors deliver in their support and maintenance agreements.  Many vendors have proactively responded by improving service or making appropriate concessions.
  • Growing acceptance of third party maintenance (3PM) options. Vendors such as Rimini Street and Spinnaker have proven to the market that they can deliver 3PM to an array of ERP applications.  Cutting maintenance fees by 50% or more can free up funds for innovation or pay for the next upgrade.

Align your apps strategy before negotiating contracts – do your homework

Contract negotiations strategy should be planned in conjunction with an overall apps strategy.  Begin the process 2 to 3 months in advance.  Make sure the teams have the proper incentives in place.  Take the following steps as you prepare for your maintenance renewals:

The bottom line – follow the seven simple steps to successfully negotiating software contracts.

  1. Ensure that the right team is in place
  2. Identify the organization’s key business drivers
  3. Determine the product adoption plan
  4. Consider contract strategy implications of the software ownership life cycle
  5. Align contract strategy with product adoption
  6. Identify leverage points
  7. Prioritize key contract objectives

Your POV

Looking to hear your best practices with software maintenance contract renewals.

  • Is your maintenance contract up for renewal at the end of the year?
  • Do you need help putting a strategy in place?
  • Have you conducted an apps strategy assessment?
  • Would you like to break free from your vendor but don’t know what options exist?

Post your comment here or reach me direct at r at altimetergroup dot com or r at softwareinsider dot org.

Copyright © 2009 R Wang. All rights reserved.

Monday’s Musings: Why On-Premise Vendors and SI’s Should Go on the Offense with SaaS

On-premise vendors still see SaaS as a loss leader due to huge ramp up and punishing revenue recognition rules

When it comes to the topic of SaaS, many on-premise vendors appear to be living in denial, hoping that SaaS fails, and/or creating confusion in the market place.  These tactics have merit as a shift to SaaS requires plenty of work with minimal return and a destruction – disruption of the current business model.  In conversations with 61 vendors and building off of SaaS evangelist Jeffrey Kaplan’s post (July 2, 2009, Seeking Alpha – “From the Vendor’s Point of View: Why SaaS Sucks”), vendors who have made this transition or have started the investment put in heavy lifting in these activities must:

  • Re-architect apps
  • Find balance between configuration and optimization of SaaS platform
  • Design product road map and rollout strategy
  • Determine SLA’s
  • Identify a hosting strategy
  • Craft pricing and licensing policies
  • Harmonize SaaS pricing with On-premise and other models
  • Create go to market strategy
  • Alleviate channel conflict with partners, resellers, distributors

After all this work to be ready for SaaS deployments, vendors also discover that FASB SOP 97-2 software revenue recognition rules prohibit them from immediately recognizing multi-year contracts. Even worse, subscription revenue can only be recognized on a month-to-month basis – leading to a long road to profitability.  In fact, vendors such as Lawson, estimated a 7 to 10 year break even period for a full SaaS model.  No wonder Harry Debes was fired up on how SaaS could be a fad in his interview with Victoria Ho at ZD Net last year.  In private, most software executives also echo such sentiments and wholeheartedly agree with his comments about the business model challenges.

Yet, SaaS adoption moves beyond the Tipping Point in 2009

However, the confluence of recessionary forces, stalled innovation from many on-premise software vendors, and success of early SaaS pioneers such as SalesForce.com and NetSuite has put Software-as-a-Service into the mainstream.  Vendors can no longer resist the move to SaaS without negatively impacting their license sales and customer mind share.   Additional facts highlight the shift:

  • Forrester State of Enterprise Software 2009 survey results confirm significant adoption rates from 2008 to 2009. Of 1000 IT executives and decision-makers, 24% were interested/considering, 11% implemented or planning to expand, and 5% piloting SaaS solutions (see Figure 1).
  • Clients continue to vote with their budgets despite marketing FUD by many on-premise vendors on the perils of SaaS. Success Factors‘ win at Siemens for 420,000 employees, Workday‘s win at Flextronics for 240,000 employees, and Ultimate Software’s win at P.F. Chiang’s for 30,000 employees reinforces how SaaS is more than CRM and SMB.
  • Concerns over SaaS have dropped significantly over the past year. Successful deployments mitigate concerns and highlight the attitudinal shift towards acceptance.  Major decreases include integration issues (43%), total cost (31%), lack of customization (31%), complicated pricing models (30%), performance (23%), can’t find the specific application (20%), security (17%), and lock in with existing vendor (17%) (see Figure 2).

Figure 1: Users expect to increase SaaS adoption in 2009

saas-deployment-2009

Source: Forrester

Figure 2.  Concerns over SaaS have dropped significantly over the past year

2009 Enteprise and SMB Survey - SaaS Concerns Declinet

Source: Forrester

Defensive SaaS strategies by vendors miss the opportunity to take market share.

As customer’s continue to demand SaaS solutions for rapid deployment, pay-as-you-go pricing models, and timely innovation, traditional on-premise vendors without a SaaS offering must now explain, defend, or develop their own SaaS story.  Concerns about the impact of SaaS have many vendors in defensive mode.  Defensive strategies have included:

  • Creating counter marketing about SaaS and the viability of the market
  • Responding with hosting options and financing options
  • Building SaaS options for a limited set of popular SaaS solutions such as sales force automation (29%), strategic HCM (29%), and customer service and support (27%) (See Figure 3.)

At first glance, mega vendors such as SAP and Oracle have started with the first two points and are evolving to the third.  They aim to counter the success of Ariba, SalesForce.com, Success Factors, Taleo, Workday, and Ultimate Software with their own offerings.  SAP’s OnDemand for LE release and John Wookey’s ComputerWorld UK interview by Mike Simons, confirms that the strategy will include “CRM on-demand and e-sourcing, with expense management set for a 2010 release.”  Wookey’s approach appears to first shore up areas where SAP customers have been defecting and then worrying about what’s next (see Note 1).  Meanwhile, discussions with Oracle product teams also hint that a release of 5 to 9 SaaS offerings to complement Oracle Siebel CRM OnDemand offerings could be announced soon.  This defensive strategy shores up competitive SaaS solutions such as incentive comp, procurement, and strategic HCM.

Figure 3.  Rate of adoption of key SaaS solutions show significant interest in CRM and other areas

2009 Enterprise and SMB Survey SaaS Interest Areas

Source: Forrester

The bottom line -SaaS gives software vendors and system integrators an opportunity to take market share.

Instead of playing defense, vendors should look at the opportunity to take market share through SaaS.  SaaS vendors and their investors have realized they can target any install base and win by providing compelling functionality.  Why shouldn’t on-premise vendors bite the bullet and go on the offense?  To make this work software vendors would want to take advantage of their partner ecosystems and customers to extend capabilities beyond what’s being delivered in on-premise.  Vendors must make an initial investment in a SaaS/PaaS platform, agile development methodologies, and integration technologies to support hybrid deployment options.  From there, white spaces in the product road map will provide direction into the future opportunities such as vertical and other pivot points that have not been well served.  SAP’s acquisition of Clear Standards for carbon compliance, NetSuite’s acquisition of OpenAir for project based solutions, and Intuit’s acquistion of Entellium for CRM highlights examples of going on the offensive with SaaS.  Of equal importance, system integrators can shift the balance of power and deliver new IP via SaaS solutions while reducing their dependency on the mega vendors.

Recommendations: 7 best practices for crafting a SaaS strategy at an on-premise vendor

Imagine you could start from scratch and build a new software company.  That’s the question I posed to 61 software executives this year.  Most stated they would start with a SaaS deployment option for the scale and the business model.  Now what to do if you are an on-premise vendor?  Answer – build a separate SaaS software division within an on-premise software company.  This could be the next trend among the on-premise vendors for both investment and revenue recognition reasons.  What would be a good strategy:

  1. Reuse similar business process parts as the on-premise product
  2. Harmonize the data model and common objects
  3. Build a brand new RIA based UI and UX
  4. Assume that all data sources will be heterogenous
  5. Design the product to run stand alone
  6. Attack white spaces of new growth in a competitor’s install base
  7. Keep a PaaS platform in mind to attract partners and customers to extend the solution

Your POV.

Totally turned off by SaaS? In the midst of a SaaS strategy? Ready to embark on a SaaS strategy?  If you need assistance, don’t hesitate to reach out?  Please post your point of view here or send me a private email to rwang0 at gmail dot com.

Note 1: The large enterprise (LE) SaaS platform will not come from NetWeaver or SAP’s SME Business by Design (ByD) technology, but come from the acquired Frictionless platform.  While this may leave some SAP customers concerned, Wookey and product super stars Kevin Nix and Peter Lim (of Siebel fame) counter by highlighting where SAP components will be reused and highlighting the home base integration advantage.

As also seen in the July 14th, 2009 SandHill.com”Moving to a SaaS Offensive”

Copyright © 2009 R Wang. All rights reserved.

Speaking Engagement: Tenrox Webinar – Capacity Planning for Project-Based Organizations

Exclusive Webinar Invitation

Exclusive Webinar Invitation EARN 1 PDU Register Now Forrester Research

Guest Speaker : R “Ray” Wang, Forrester Research, Vice President & Principal Analyst Current economic conditions drive enterprises to shift their workforce to both a more decentralized and a free agent model. Meanwhile, economic forces are leading to the creation of more agile work models. As this pool of skilled workers increasingly becomes independent of specific corporations, real time workforce planning is now a strategic necessity especially for organizations that have increasingly collaborative project work. Today, location and availability are not the only primary drivers for capacity planning; matching skill-sets, areas of interest, past experience, and real-time staffing has emerged as important workforce planning factors to consider. Join us on March 25, 2009 to learn how these trends are playing out and how project based solutions can play a role in addressing these real-time workforce planning challenges.

We will discuss:

  • The challenges involved in managing a decentralized project-driven workforce
  • New work methods and resource-types such as project-centric, divided, and independent resources.
  • The “shared project workforce”
  • Brief introduction to Tenrox Workforce Management & Planning Software module

Register Now

Who Should Attend: Senior executives at VP, CIO, and Director levels interested in project management applications or in charge of optimizing resource deployment and sourcing.

Date: Wednesday, March 25, 2009

Time: 10 am Pacific/ 1 pm Eastern

Duration: 1 hour

Register now

Sponsored by:


Ray Wang

About the Speaker: Ray serves Business Process & Applications professionals. He analyzes trends in enterprise resource planning (ERP) for the enterprise and midmarket. He also delivers strategic guidance in software licensing and pricing, researches business processes such as the order management cycle and continuous customer management, and assesses functional areas such as customer data integration and the impact of service-oriented architecture (SOA) on packaged applications. With this understanding of the overall ecosystem of solutions, technology, and system integrators, Ray provides strategy and guidance for many clients navigating through the vendor selection process. In 2008 Ray was recognized by the Institute Of Industry Analyst Relations (IIAR) as Analyst of the Year.

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Speaking Engagement: HCL Teleconference – How To Unlock The Real Value From SAP Upgrade Investment

Upgrade Decision Maker Series Wave 2

18-Mar-2009
How to Unlock the real value from SAP Upgrade Investment

Vijay Deep
Head, Upgrade Competency Centre (UCC)
HCL AXON
R “Ray” Wang
Vice President & Principal Analyst,
Forrester Research
Event Time:
EST: 11:30 – 12:30 hrs
PST: 8:30 – 9:30 hrs
BST: 15:30 – 16:30 hrs
IST: 21:00 – 22:00 hrs

Register Here

SAP Upgrades is a necessity and has certain decision problems associated with minimizing risk, maximum reliability, reducing TCO justify ROI & above all deliver business benefits to drive competitive advantage.

HCL AXON views Investment in Upgrades as strategic – moving from a largely technology centric view of IT to a process centric one where driving measurable business benefits is a priority. The significant strategic levers from SAP Upgrades is what we describe as real value for our customers.

To learn more please join a special webinar series jointly hosted by Forrester and HCL AXON Experts.

A Step Change to realize business benefits and value from SAP ECC 6.0

Until recently, the upgrade decisions have been centered on cost reduction, staying compliant with latest version of SAP & risk mitigation. In today’s environment the cosmetic changes are not suffice to meet business objectives. The fundamental change has come with the shift of focus on business benefits realization which upgrade project delivers so that business can innovate faster, gain competitive advantages and exploit the functionalities of next generation SAP platform.

Join this thought leadership webinar to learn the significance of Upgrade to ECC 6.0 and how it enables you to stay competitive and realize your technology value and business needs.

In this Thought Leadership & Informative Session, Forrester & HCL AXON experts will discuss:

  • How to address potential challenges and identify the best approach to upgrade?
  • Best Practices to adopt for doing Upgrade Project – Assessment, Risk Mitigation, Upgrade roadmap & strategy
  • What are the business implications of Upgrades
    • Enablement for eSOA
    • Explore benefits from enterprise eSOA implementation – Innovate, quickly adapt business processes, maintain agility and reduce IT costs
    • Leverage NetWeaver – align IT with business requirements by data unification, process integration, business info mgt
    • Business value of HCM, FICO, and GRC
  • Business Case which demonstrates the business benefits realization approach from SAP Upgrades project