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Research Report: Constellation’s Research Outlook For 2011

Published on January 4, 2011 by R "Ray" Wang

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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Tuesday’s Tip: Customers Seek Turnkey Applications From Their Technology Provider

Published on September 14, 2010 by R "Ray" Wang

Customers Expect Their Software Solutions To Be Turnkey

The recent Q2 2010 update to the Software Insider Vendor Selection Survey highlights some changing expectations of 401 respondents in the vendor selection process. Business technologists were asked to rate their top 5 selection criteria. Key findings demonstrate how functionality, ownership experience, and ecosystem feedback categories dominate the decision making process much more than market execution and corporate vision (see Figure 1).

Figure 1. Vendor Selection Criteria Reflect Core Insider Insights™ Categories

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Monday’s Musings: Why Next Gen Apps Must Improve Existing Activity Streams

Published on August 30, 2010 by R "Ray" Wang

Upcoming Data Deluge Threatens The Effectiveness Of Activity Streams

Activity streams, best popularized by consumer apps such as Facebook and Twitter, have emerged as the Web 2.0 visualization paradigm that addresses the massive flows of information users face (see Figure 1). As a key element of the dynamic user experiences discussed in the 10 elements of social enterprise apps, activity streams epitomize how apps can deliver contextual and relevant information. Unfortunately, what was seen as an elegant solution that brought people, data, applications, and information flow into a centralized real-time interface, now faces assault from the exponential growth in data and information sources. In fact, most people can barely keep up with the information overload, let alone face the four forces of data deluge that will likely paralyze both collaboration and decision making (see Figure 2):

Massive activity stream aggregation by enterprise apps. Every enterprise app seeking sexy social-ness plans one or more social networking feeds into their next release. The mixing and mashing of personal and work related feeds will leave users confused about context and lower existing signal to noise ratios. Yet, proliferation will continue as users seek to bring aggregated sources of information into one centralized feed.
Explosive growth in the Internet of Things (IOT). Beyond just device to device communications, the web of objects, appliances, and living creatures through wired and wireless sensors, chips, and tags will drive most of the growth in the internet in the next 5 to 10 years. With an estimated 100 billion net-enabled devices by 2020, these networks seek to discover activity patterns, predict outcomes, and monitor operational health. The massive amounts of sensing data driven into systems will not only overwhelm users, but also handicap the performance of today’s data warehouses, analytics platforms, and applications.
Flood of user generated content (UGC). User generated content continues to grow. Facebook has over 500 million users populating pages with rich social meta data. There are over 300 million blogs. Wikipedia has more than 15 million articles. Content sources will propagate at geometric rates, especially as BRIC (Brazil, Russia, India, and China) countries up their adoption.
Proliferation of social meta data. Organizations seeking a marketing edge must digest, interpret, and asses large volumes of meta data from sources such as Facebook Open Graph. Successful identification of social graphs require matching gargantuan volumes of meta data (e.g. likes, check-ins, groups, etc) through introspection across a vast array of objects. Human centric and object centric events will inevitably coexist and engulf unified activity streams.

Figure 1. Activity Streams Improve Collaboration And Deliver Dynamic User Experiences

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

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

Workday Continues To Pioneer SaaS Success In The Enterprise

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

Design Points Reflect The Principles Of Social Enterprise Apps

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

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

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

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

(Source: Workday)

Release 10 Features Move Users Closer To An ERP Suite

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

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

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

Your POV

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

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

Related resources and links

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

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

Monday’s Musings: The Hidden Value In SaaS Deployments

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

Gains In SaaS Adoption Driven By Speed And Cost Savings…

Preliminary data from Q4 earnings data show continued traction among SaaS solutions. Expect SaaS deployments to gain steam in 2010 as organizations finalize their SaaS apps strategies to take advantage of 7 key benefits:

Richer user experience – SaaS apps bring Web 2.0 usability to the enterprise world through rich internet applications using Adobe Air, HTML 5, Microsoft Silverlight, and other tools.
Rapid implementation – SaaS applications focus on configuration and integration, not hard core implementation. Users can be up in weeks, not months.
Frequent cycles of innovation - At present, most vendors introduce new functionality, enhancements, and bug fixes on frequent refresh cycles. Some vendors provide as frequent as weekly updates, others – seasonal.
Minimal upgrade hassles – Users focus on minimal testing scenarios and receive updates all at once. In applications with significant regulatory and tax updates, SaaS applications reduce the cost of compliance by as much as 77%.
Always on deployment – Organizations can expect average up-time levels at 99.95% or higher for most applications. These results often exceed existing on-premise performance.
Subscription pricing – Subscription pricing reduces the capital burden of common on-premise payment models.
Scalability – Organizations can add or subtract users as needed without worrying about procuring new hardware and other infrastructure.

Moreover, latest Information Week Analytics survey reaffirms several key benefits of SaaS adoption – time to market and cost savings (see Figure 1).

Figure 1. Information Week Analytics Survey Confirms Trends In Adoption

…Yet, Aggregated Information Provides The Differentiated Value To Clients

Despite the obvious benefits with SaaS deployments, three hidden advantages will emerge with market maturity:

Benchmarking. SaaS vendors sit on a tremendous treasure trove of data. Participating organizations could opt-in to share secure and masked information for the purposes of business optimization.
Trending. Organizations could also opt-in to identify larger market trends. Trending information could be used to help organizations with planning.
Prediction. More sophisticated organizations will take SaaS vendor trending data and design new algorithms to support predictive analytics. The richness and consistency of the data set will improve accuracy.

The Bottom Line For SaaS Vendors – Create Additional Value As An Information Broker

The end game for SaaS vendors may not be a re-creation of the on-premise world in the Cloud. In fact, those vendors with a true multi-tenant SaaS model may turn out to find additional revenue streams as information brokers. Expect demand for premium information-on-demand services to begin with benchmarking and evolve to prediction. For example, imagine the benefits gained by organizations who consume the latest buying behavior data from their CRM vendors. Organizations could turn to HCM vendors for geographical salary or hiring trends. Customers of financial vendors could better predict credit risk factors. A key requirement – customers must trust their SaaS vendor’s data ownership and privacy policies before the industry makes this transformation. With acceptance, vendors will have more reasons to move to a SaaS offense.

The Bottom Line For Organizations – Determine Your Data Rights Before You Sign The Contract

Organizations in SaaS deployments will want to preserve the their data rights and minimize their cost structures to consume aggregated information. A few key areas should be considered:

Data usage. Organizations generally assume that the data belongs to the organization while the software belongs to the SaaS vendor. To be safe, organizations will want to be clear that rights to use data will require an organization’s permission. In addition, the disposition of data should be made clear
Data access. Organizations should expect unhindered access to raw data, queries, and extraction. Access to data should not require additional fees.
Aggregated data cost. Organizations participating in aggregated data programs should be given preferential treatment not only in cost, but also access to data. The cost of this “stone soup” approach should be factored in pricing.

Your POV

Where are you in your SaaS deployment? Have you thought about these long-term benefits? Looking for assistance with crafting, validating, or reviewing your SaaS Apps Strategy? Do you have a different point of view? Please post or send on to rwang0 at gmail dot com or r at softwareinsider dot org and we’ll keep your anonymity.

Other Useful SaaS Strategy Links

20091222 Tuesday’s Tip: 10 Cloud and SaaS Apps Strategies For 2010

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

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

20081028 Tuesday’s Tip: SaaS – Integration Advice

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

20070903 Trends: What’s all the fuss about True SaaS, OnDemand, Hosting?

20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value

20091109 Monday’s Musings: SaaS, SOA, Integration and How To Make A Peanut Butter And Jelly Sandwich In The Cloud

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

Published on January 5, 2010 by R "Ray" Wang

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

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:

application extension and usability;
application life cycle management;
archiving, storage, and data management;
license management and optimization;
Microsoft Office integration;
third party maintenance; and
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.

Adobe – provides 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-Link – allows 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.
GuiXT – provides 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 Technology – assists 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.
Intellicorp – provides 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.
Panaya – delivers 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 Software – optimizes 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 Optim – delivers 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 Software – provides 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 Duet – represents 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.
Winshuttle – facilitates 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:

What’s the appropriate use case?
What other customers have used these solutions?
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.

News Analysis: Oracle Formally Announces Fusion Apps

Published on October 14, 2009 by R "Ray" Wang

Oracle’s Fusion Apps Addresses A Broad Set Of Horizontal Modules

Oracle’s co-founder and Chief Executive Officer, Larry Ellison announced the code completion of Fusion Apps in today’s late afternoon keynote. Though Ellison did not give precise guidance on general availability (GA), he did hint that the product would be available, “sometime in 2010″. The product currently undergoes extensive testing and will comprise of key modules including:

Oracle Fusion Customer Relationship Management
Oracle Fusion Enterprise Project Portfolio Management
Oracle Fusion Governance, Risk, And Compliance
Oracle Fusion Human Capital Management
Oracle Fusion Financial Management
Oracle Fusion Procurement
Oracle Fusion Supply Chain Management

Some key hallmarks of Oracle’s Fusion Applications V 1. (see Figure 1) include:

Role based design
Extensive provision for proactive reporting and alerts
Web 2.0 like usability
SOA architecture for integration of legacy applications
Multiple deployment options including on-premise, hosting, and multi-tenant SaaS

The V1 product will not deliver out of the box capabilities to support:

Discrete Manufacturing
Process Manufacturing
Public Sector

Figure 1. Fusion Apps Move Towards A Social Enterprise/Social Business Apps User Experience

(Source: Oracle Corporation )

The Bottom Line – Oracle Takes A Two Prong Strategy And Seeks Domination Of The Apps Market

Oracle’s continues to prove success in its business model. By acquiring the leading companies with significant recurring revenue streams, it can drive economies of scale to make above average R&D investments. The result – enough innovation in existing product lines to compel customers to pay maintenance and upgrade; and the time and resources to build a next generation product. Should Oracle successfully deliver on Fusion Apps to customers in 2010, SAP will have to play catch up in mind share as many sources state that there are no plans for a new product until 2013/2014. Other vendors will have to leverage or partner for middleware and PaaS options in order to sustain key Web 2.0 innovations in the enterprise.

Your POV.

Is seeing believing? As an Oracle customer will this compel you to stay on Apps Unlimited or make a move to Fusion Apps? If you aren’t a customer, will you now consider Oracle in your short lists? Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Monday’s Musings: 10 Essential Elements For Social Enterprise Apps

Published on August 24, 2009 by R "Ray" Wang

Convergent trends fuel the push for new business solutions and platforms

The future of enterprise software is evolving from web-based apps, business process platforms, and service-enabled products; to a new class of more connected, social, and collaborative business software solutions. This transformation comes from advances in the Web 2.0 world and a growing realization that business solutions must reflect how people actually perform work. These trends point to a convergence and expansion of 10 mega themes:

Evolution versus revolution
Top down versus bottom up
Reactive versus proactive
Transactional versus behavioral
Strategic versus tactical
Horizontal versus vertical
Individual versus community
Company versus customer
B2B versus B2C
Data generation versus data analysis

Future business solutions and platforms will expand beyond Enterprise 2.0 and the knowledge worker

After much digestion of what’s happening in the various Enterprise 2.0 models, (e.g. Dion Hinchcliffe’s FLATNESSES mnemonic) and studying the Social CRM market, (e.g. CRM Magazine’s June 2009 “Social Media Maturity Model”), what’s next for business solutions or enterprise apps appears to be something bigger than usability, collaboration, social media, mobility, and technologies for the knowledge worker. Enterprise 2.0. as defined by Andrew McAfee in his April 2006 MIT Sloan Management Review, touches on a world of emergent, free-form, collaboration that bring such Web 2.0 tools to the enterprise. This definition provides a solid basis for building on key concepts in this emerging class of software solutions and platforms. In fact, this new category moves beyond today’s Enterprise 2.0 definition and most certainly beyond the three letter acronym world of ERP, CRM, HCM, PBS, SCM, etc.

Ten elements define this next generation of enterprise business software solutions

Recent conversations with software vendors, industry luminaries, and customers highlight 10 elements required for future solutions (see Figure 1.). These elements include dynamic user experiences, business process focus, and community connectedness across 10 elements:

Role-based design. Software designed around how users perform work including applicable security models.
Consistent experience across channels & deployment options. Software that is agnostic to where or how that software is deployed and accessed.
Contextual & relevant delivery of information. Software which understands what information to provide users at a point in time
Configurable & adaptive. Software that can be modified to meet changing conditions.
Outcome-focused & results-oriented. Software that tracks key metrics across an end to end process.
Proactive, predictive, & actionable. Software that anticipates requests and supports decision making.
Engaging for all stakeholders. Software that opens up the system to new types of users, collaborators, networks, and communities.
Pervasive & natural collaboration. Software that embeds knowledge worker skills into existing work flows.
Self-learning & self-aware. Software that tracks preferences and identifies patterns for future correlation.
Secure & safe. Software that meets security and disaster recovery thresholds.

Figure 1. 10 Elements Of Social Enterprise Business Solutions and Platforms

Source: Software Insider’s Point of View – 10 Elements Of Social Enterprise Business Solutions and Platforms

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

Published on July 13, 2009 by R "Ray" Wang

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

Source: Forrester

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

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

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:

Reuse similar business process parts as the on-premise product

Harmonize the data model and common objects

Build a brand new RIA based UI and UX

Assume that all data sources will be heterogenous

Design the product to run stand alone

Attack white spaces of new growth in a competitor’s install base

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”

Friday’s Feature: Snapshots In Enterprise 2.0 UX/UI – Eshbel’s Priority 13

Published on May 1, 2009 by R "Ray" Wang

Usability and User Experience Matter in Enterprise 2.0 Apps

Welcome to the fifth in a series of Friday’s Features showcasing the latest and greatest in enterprise apps usability. Many ERP software vendors including Epicor, Eshbel, IFS, Infor, Lawson, Microsoft Dynamics, and Syspro have made significant progress in improving usability as they progress to Enterprise 2.0 apps. As mentioned in a December 29th, 2008 post, customer expectations for Enterprise 2.0 apps include users rich user experiences, actionable insight, and business process orientation. The impact of overall user experience and user interaction often tie back to seven key Enterprise 2.0 characteristics:

Richer user experiences - role based scenarios across various usability paradigms
Business process orientation – support for end to end business processes
Configurable change – designing with flexible models and rules instead of customizations
Actionable insight – pulling all the key information to make a decision in the context of business process and user role
Collaboration – providing secure private interactions and open and innovative connection with stakeholders
Intelligent response – responding to contextual models and business events
Hybrid deployment – deploying all models from on-premise, hosted, instance virtualization, multi-tenant SaaS, and cloud based BPO.

Part 5: Eshbel Technologies Leaps Ahead With Intuitive Usabilty and Workflow

Israeli based Eshbel Technologies delivers an update to its venerable Priority ERP product line. Priority has served over 3000 customers in the past 20 years. Built on Microsoft Visual Studio .NET 35 tools and the Windows Presentation Framework (WPF), Priority 13 WPF designs with many user roles in mind and delivers actionable insight from the beginning. The unique UI/UE provides a competitive differentiator in the highly competitive SMB ERP market. Key to the success of the product includes the deliver of many Enterprise 2.0 aspects such as:

Richer user experiences - users gain a cockpit like access to key information and navigation. Innovative layout can be personalized with configuration and takes advantage of the latest Microsoft .NET capabilties.
Business process orientation – embedded in the core product, Eshbel includes a rich business process modeling tool that gives end users the capability to modify workflows without expensive customizations.
Configurable change – most personalizations and modifications can be configured without expensive programming.
Actionable insight – Reports generated via drag and drop without intricate coding knowledge. User dashboard provide key visualization paradigms.
Collaboration – leveraging WPF, Priority improves its synchronization with Office apps and most importatnly outlook.
Intelligent response – easy to configure rich BPM modeler enables end users to set triggers and thresholds for key workflows and processes.
Hybrid deployment - users will find support for multiple deployment options such as on-premise, on-premise and web enabled, or hosted.

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

(Source: Eshbel Technologies)

Your POV.

Do you like how your apps UI currently look? Will user experience lead to cost savings for you? Is this enough to make you want to switch? What do you think of Eshbel’s approach to usability and workflow? Post your thoughts or send me a private email to rwang0 at gmail dot com .

Friday’s Feature: Snapshots in Enterprise 2.0 UX/UI

Epicor 9

Eshbel Priority 13

IFS Applications 7.5

Lawson SmartOffice 9.0x

Microsoft Dynamics AX and NAV

Next Friday’s Feature

We currently have openings for the next Friday’s Feature on UI. Send a proposal to rwang0 at gmail dot com