Infor’s continued focus on micro-verticals and deploying them in the Amazon cloud is starting to pay off. In its quarterly earnings announcement it said “it has more than 25 million users of its cloud applications, and industry-specific certifications in healthcare, aerospace & defense, and government" People will nitpick about their definition of “cloud” but to me the bigger part is they are starting to rejuvenate transaction backbones of many industries.
Vertical apps which have traditionally been the focus of ERP vendors and specialty software vendors but are starting to open up to a whole range of new players. Apple (yes!) and IBM are offering mobile apps to several industries. As Ray Wang writes they include “Advise & Grow (Banking and Financial Markets), Case Advice (Government), Expert Tech (Telecom), Incident Aware (Government), Passenger+ (Travel and Transportation), Pick & Pack (Retail), Plan Flight (Travel and Transportation), Retention (Insurance), Sales Assist (Retail), Trusted Advice (Banking and Financial Markets)”
GE’s Predix platform which allows enterprises to leverage Big Data from industrial equipment like turbines and locomotives is spawning a new generation of analytical apps for a wide range of complex industries.
Cognizant, the outsourcing firm, acquired a couple of months ago TriZetto which provides transaction processing capabilities to 16 of the top 20 U.S. health plans and four of the top five pharmacy benefit management companies. Infosys, with new executive leadership, could very well expand into software for verticals as it does with Finacle for the banking sector.
Finally, there are plenty of custom developments and niche software vendors as every industry looks at mobile, social, telematics, wearable technology and other applications in their industries.
While much of the attention today is going to cloud infrastructure and horizontal SaaS apps, the much bigger opportunity will be in industry sectors. Expect a froth of next-gen applications and a wide range of players.
Oracle is skirting with a market valuation of $ 2oo billion. Wall Street is gushing. Whatever. I am not writing this to join their praises – I have never judged companies purely on their financial performance.
I am more impressed with operational metrics which Oracle has been disclosing over the last few months but which just don’t seem to get much play in analyst/media world including:
47 industry-specific cloud applications
In the past three-and-a-half years, Oracle’s industry-specific revenues have tripled
19 Tier 4 class data centers around globe
250 new Fusion HCM customers
Pioneering Data-as-a-service via its Bluekai marketing tools
I am also writing this because for the last couple of years I have been impressed with the grace with which Oracle employees and executives seem to absorb snarky barbs. It seems like everyone thinks it is ok to take potshots at Oracle.
Example – “Larry missed his OOW keynote for a sailing event”. Hello, it was only one of the most improbable comebacks in any sports – ever. Was Larry not entitled to be excited? Thousands of sailing fans were. And it was his second keynote in a couple of days. He did not completely abandon his audience.
As I researched for my SAP Nation book, I was taken aback at how many people readily accept the perception Oracle is “evil”. Several asked me if I was focused on the “wrong vendor”.
I have a section in the book where I compare SAP to Ahab and Oracle to Moby Dick in the Melville classic. I don’t want to excerpt too many pages here but encourage you to read that section in the book which ends with
While the whale was fearsome, many readers would say Ahab was actually the villain with his relentless obsession and reckless use of his ship and crew in chasing the whale.
As part of my research for the book I had conversations with many of SAP’s competitors. Oracle executives could have easily given me all kinds of dirt on SAP. They declined to comment. Made me respect them more for taking the high road.
I cannot expect many to magically like Oracle. But it is reasonable to ask we not take needless potshots?
Amazon has SAP Nation on the Kindle and in softcover. Over the next few weeks the book will be available in other print and eBook formats. As I have done with my other books, I plan to excerpt here about 10% of the book over the next several weeks for my blog readers. Here is some from Chapter 1:
“But, this Saturday afternoon was different, and the two executives had to be totally “on message.” They were going to see Mike McNamara, the CEO of Flextronics. It sounded like an ambitious call. Flextronics was a global giant on a $20 billion revenue run rate that year. In the conservative enterprise software market, where companies wait for plenty of references andbenchmarks, surely it was too big a customer for a three-year-old start-up. At that point, Workday could not show benchmarks that it could scale above 5,000 employees. Flextronics had over 160,000 employees at the end of 2008……So, given that complexity, he took a huge risk on Workday. He told his skeptical executives there was no Plan B. They had to make Workday work. His push toward Workday was as forceful as his pull away from SAP:….“With SAP, I was afraid we would get something average, same as that at every one of their customers. Or, maybe even something mediocre. At a very high cost with one of its large services partners. We used zero external consultants on the Workday implementation. It was just us and them working hand and hand.”…The Flextronics decision in 2008 was a harbinger of change at many enterprises I describe in this book. A few years prior, it would have been considered suicidal for a global company like Flextronics to not go with safe choices like SAP and its partners. Not any more.”
“McLain is CIO and Chief Procurement Officer at Big Heart Pet Brands, one of the country’s largest pet food and treat companies. And, he shares a similar story about betting on a new breed of cloud application vendor….The payback came in the personalized attention from the vendor and the ability to influence the product development road map. Kurtzig promised (and delivered) to Big Heart PetBrands a commitment to go live with Kenandy at Natural Balance just 90 minutes after the acquisition was complete. When you consider the scope of the project covered not just back office areas, but also production, quality management, shipping, and receiving, that is quite an accomplishment. McLain says, “We had the unique experience of being able to work with Kenandy and influencing the product design, specifically around the trade management and industry-specific order to cash and financial accounting features.” As with Flextronics, Big Heart Pet Brands also leveraged professional services directly from the application vendor, rather than bringing in an outside systems integrator.”
“Over my last decade of writing about technology-enabled innovation, I have repeatedly marveled at how the small team led by Phiroz Darukhanavala, VP and CTO for IT at BP, better known as “Daru,” is constantly pushing boundaries. Ten years ago — yes, a decade ago — BP was implementing sensors and motes (sensor nodes) on tankers and in refineries, even before the term “Internet of Things” was commonly used. In 2006, it ran several advanced predictive analytics applications on rotating equipment. Back in 2010, Curt Smith in Daru’s team, described to me how BP had evaluated unmanned aerial vehicles to supplement manned Cessna flights for monitoring remote pipelines. BP is now operating the first FAA-approved commercial drones to monitor remote fields and pipelines. Like many other large oil companies, BP is a major SAP customer. So, I asked Daru how SAP fits into their vision of technology-enabled innovation….With 3D visualization, sensory analytics and massive computing power, we can enable the geologist to perform sub-surface analysis of a formation remotely and empower the corrosion planner to virtually create plans in hours versus walking around facilities or in the field for days….Having said that, as we automate the front end to release top-line value, we also expect our SAP and other back-office systems to become much more efficient. They have to continue to run robustly, but at the lowest possible cost.”
“Like BP, many other companies are finding payback in their “coal face” — and expecting much more efficiency from their SAP environments. Throughout this book, we will see other SAP “customer pivots.” We will see Embraer, the aircraft manufacturer, take the risk of third-party maintenance of the SAP software in Brazil, one of the most complex regulatory environments in the world. We will see Delta Airlines go with Microsoft technology for its in-flight point-of-sale applications even as it continues with SAP at headquarters. We will see how AstraZeneca is starting to in-source its SAP talent.”
“The customers profiled in the book are the “canaries in the coal-mine.” For every one of these risk-takers, many other customers continue with business as usual. When these customers finally get ready to optimize their environments, they will thank McNamara, Daru and other pioneers. Yes, history will recognize February 23, 2008, as a pivotal day for technology”
The soft cover, print-on-demand version of the book, SAP Nation is now available on Amazon.com here at $ 19.95. Even better, they have a 25% off promotion till December 14. Use promotion code BOOKDEAL25 towards the book.
The hardback versions of book have started printing and will be available to ship January 10. Those are only available in bulk – 25 copies or more. Through December 31, they are on sale for $ 2o plus shipping and tax. That’s 33% off list. Contact me directly for those.
Finally, for European friends, not exactly a promotion but definitely something to consider. Starting January 1, several EU countries will start to levy VAT on digital content including eBooks. That will be as much as 22% in some countries. If you want the Kindle version of the book from the amazon.co,uk or .de or .fr and their other EU sites, please consider buying it before year end.
Amazon has released SAP Nation on the Kindle. Over the next few weeks the book will be available in other print and eBook formats. As I have done with my other books, I plan to excerpt here about 10% of the book over the next several weeks for my blog readers. Here is some from the Prologue:
“Just as Orlando, Florida, starts to become uncomfortably warm around Memorial Day each year, thousands of executives fly in for the better part of a week. The lucky ones get to stay at the Peabody, where they do not have to wait for shuttle buses. Instead, they could watch the pampered house ducks march up a red carpet and waddle for hours in a fountain. Others stay a bit further away near Shamu, the killer whale at Sea World. Still others stay near the beautifully landscaped Epcot and other Disney parks. They are not there, however, for the flora and fauna.They have come to SAP’s marquee event — Sapphire Now —which takes up much of the million-square-feet of the north and south halls at the Orange County Convention Center.”
“They come to listen to SAP executives, who look both tiny on the huge stage and yet larger than life on surrounding giant screens. Dr. Hasso Plattner, one of the founders, takes the stage every year for a part humorous and part deep-dive technical talk. On occasion, Dr. Plattner also breaks out a guitar, or tells sailing and Formula One racing stories. It is a far cry from the humble beginnings of the company which took a decade to reach 100 employees with headquarters in the spargel (white asparagus) fields of Walldorf, in the Baden-Württemberg region of Germany.”
“The visitors come to mingle with peers from the Fortune 500 and beyond. They walk by booths that represent the best and brightest from every technology category — infrastructure vendors like Cisco, EMC, HP and IBM, newer cloud players like Amazon and Microsoft, and accounting/advisory firms like Deloitte and PwC. Add to that global players like TCS, HCL and L&T Infotech from India, Stefanini from Brazil, Fujitsu and NTT Data from Japan, and Atos, Capgemini and T-Systems from Europe.
The wide range of specialist offerings represented there includes benchmarking services from AnswerThink, fashion industry expertise from Attune, spatial data from Critigen and database services from Dobler.
This is the hub of corporate IT. At every turn, you are near someone who is responsible for technology that processes orders, invoices or payroll for well-known brands around the world. The power and influence is palpable. SAP advertises it as “the must-attend business outing of the year.”
“It’s tough to not be happy here. If you are a customer, you get to mingle with friends and associates at many peer companies. The U.S. user group, ASUG, hosts its annual event at Sapphire Now. In addition, a quarter of the attendees are from outside the U.S., giving the event the feel of a FIFA World Cup party. If you are a prospect, you get to evaluate the “intangibles” of meeting with SAP executives and other customers that you do not encounter in a typical software procurement process. If you are an exhibitor, you get lists of countless leads to chase. In recent years, SAP has focused on bringing more prospects to the event, even as existing customers return every year.”
“But like so much else in Orlando, Sapphire Now is kitsch, a pleasant escape from reality. When they return home, attendees realize their SAP environment is not “simple” or “minimalist,” words SAP executives frequently use. They look back and wish technology works as well as it did at the event, which supports nearly 100,000 iPads, smartphones, laptops, and the walkie-talkies and pagers of the event attendees, security staff and “roadies.” They wonder why SAP cannot extend its influence on its partners beyond the event. At the event, SAP has guidelines for exhibitors concerning every little detail: signage, dress codes, professional behavior, employment solicitation and “sensitive and/or non-complementary” materials.
As they share all the freebies they picked up at the event with their kids, it strikes the event attendees that nothing in the SAP economy is really free. They chuckle about the all-too real joke they heard in Orlando: “SAP stands for ‘send another payment’.
Most authors hate to use a word repeatedly in a sentence, or a page. Few editors allow it.
But till Sadagopan pointed it out in his Amazon review of the book, SAP Nation, I did not realize the editors and I have committed a cardinal sin of writing.
I now see the word “customer” appears 16 times in the Table of Contents, and 60 times before you even get to Chapter 1.
The book cover says
“This book brings out loudly the voice of SAP customers as they cope with this runaway economy. Twenty-five case studies showcase a spectrum of strategies.”
And my dedication in front of the book says
“This book is dedicated to customers — the underappreciated stakeholders in the IT industry”
Actually, in an initial draft, I had a quote (mis) attributed to Gandhi
“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
With that, I am fine with having sinned the linguistic Gods.
Amazon has released SAP Nation on the Kindle. Over the next few weeks the book will be available in other print and eBook formats. As I have done with my other books, I plan to excerpt here about 10% of the book over the next several weeks for my blog readers.
Let’s start with the Preface to give you some context and background to the book
“Despite those concerns, I did not write the SAP book at that time. Instead, I have written three books in the last five years, on technology-enabled innovation and the digital transformation journeys of companies. Also, I was convinced in 2009 that SAP had peaked and customer investments post-recession on their SAP projects would be much more modest.
About that, I was dead wrong.
Earlier this year, I had a chance to build a model of “SAP Nation” — as Chapter 3 details. I was shocked that post-recession customers appear to have spent over a trillion dollars around SAP. This, when SAP’s own sales and deliverables have leveled off. When you compare how nicely IT costs via software-as-a-service (SaaS) applications, cloud infrastructures and mobile broadband have dropped in the last few years, you have to ask why those in the SAP economy have not followed that trend. Likewise, when you see all the front-office technology opportunities — in product and customer-facing areas — you wonder how many are being crowded out by the SAP back office. Those vexing questions are what has convinced me to finally write this book.”
“The book is organized into five sections and four groups of customer strategies. Section I sets the stage and shows that in spite of the customer and SAP pivots, the SAP economy keeps marching to its own drumbeat. Section II documents the growth of the SAP economy over the last three decades. Section III investigates whether the huge spend in the SAP economy has yielded commensurate payback. Section IV looks at the root causes of how the SAP economy got to be so massive. Section V looks at recent SAP and customer trends. Chapter13 describes customers’ shifting IT priorities. Chapter 14 shows a glimmer of hope as SAP moves to newer business models and start-up ecosystems. Chapter 15 presents likely future scenarios for the SAP economy”
“Each of the alphabetic-section chapters describes various customer strategies — some are doubling-down and investing in SAP’s in-memory analytics, some are consolidating SAP instances, others are implementing cloud solutions around SAP, and still others are moving away from SAP. Figure 1 below shows many of the customers we profile across those four categories. We also profile strategies at companies like Big Heart Pet Brands, BP, Flextronics, GE, Lexmark and Unilever in other parts of the book. The majority of the case studies were developed from interviews with executives conducted specifically for this book. For the others, the material was collated from presentations given by their executives or from content where they are quoted.”
“In a column I wrote for InformationWeek earlier this year about The Digital Enterprise, a book I helped write for the CEO of Software AG, I noted that “I found a surprising sentiment in most of these conversations: joy. To them, IT is fun and profitable again.” A reader commented on the column “Did we just use the word “joy” in an IT article, Vinnie?”
In contrast, the emotions to describe interviewing for and writing this book would be “bittersweet” and “puzzlement.” The walk down memory lane allowed me to connect with a number of colleagues and clients from my past. But, the research also exposed a lot of pain in the SAP customer base. My interviews for innovation books tend to be excited and positive. For this book, many of the conversations were defensive and guarded.”
“As I reviewed decades of archives, I found myself admiring the architectural brilliance SAP co-founder Dr. Plattner has displayed over four decades. He was a visionary when SAP developed a real-time system in the 1970s, when most U.S. vendors were in batch mode and companies planned on month-end closing of books. He was farsighted again, in the late 1980s, when he invested in UNIX and R/3 as he saw IBM and the mainframe fading. And yet again, more recently, with HANA.
In fact, the company has had no lack of impressive leadership. You have to respect the global enterprise that SAP ex- CEO Dr. Henning Kagermann helped establish. I have had a chance to watch the even more impressive work he has done after leaving SAP at acatech, the German National Academy of Science and Engineering, as I describe in Chapter 2. Even with his short tenures as CEO at SAP and at HP, you have to respect the enduring customer relationships Leo Apotheker helped build at SAP. And, new SAP CEO Bill McDermott was an entrepreneur even as a teen, and brings a new sense of urgency and optimism.
The fact is that SAP has done many things right, and the book acknowledges those along with the many other things it could have done better.”
“SAP has a tendency to write code, and then hand it over to its partners. It fails to think enough about customer deployment issues. Worse, it lets customers fend for themselves in dealing with its partners. Many SAP customers have not done well negotiating with or monitoring hardware vendors, hosting firms, telco carriers, offshore application management vendors, etc. In fact, it has been suggested that unlike Ford, for SAP, “Partners are Job #1.” Partner interests, it would appear, trump those of its customers. The sum total of partners’ inefficiencies explains much of the excess in the SAP economy.”
“While some of the case studies in the book are reporting better than 50 percent savings, let’s aim at shaving just 10 percent from the SAP economy. What could enterprises do with $20 billion a year? My personal preference is that they use it toward innovation projects that give me fodder for future books! But, seriously, there are limitless worthwhile causes and initiatives for CEOs and boards to pursue.”
It is an honor to welcome Unit4 to the past and present gallery of innovators and disruptors who sponsor the Deal Architect and the New Florence. New Renaissance. blogs.
Unit4, headquartered in the Netherlands, specializes in business applications for service-intense businesses (i.e. professional services, local and national government, not-for-profit, financial services, education), especially those that face frequent business change. One of its core messages is “Cloud your way”, which allows its customers to freely move their deployment between public-, private cloud or on-premise. Unit 4 is known for usability and post-implementation agility. It is also a major investor in FinancialForce, which is focused on ERP solutions built on the salesforce.com platform.
Unit4 is not that well-known a brand outside Europe. But that is about to change. A Sandhill column I wrote this week is titled “There will be churn”. The research for my about to be released SAP economy book showed several customers are ready for change. Their new definition of IT risk is “missing out on the opportunity to work smarter with younger, more responsive vendors.”
In the book, I profile Middlesbrough Council in the UK which is replacing SAP with Unit4’s Agresso product. Stephen Fletcher, Corporate Program Manager, is quoted in the book as saying Agresso momentum in the UK nonprofit sector (over 110 UK local authorities and many more across Europe) was a significant factor in their decision.
To take advantage of a changing market, Unit4 has a new private equity investor, Advent International. It has also recruited a new executive team with significant enterprise software experience and is doubling R&D investment.
Should be an exciting 2015. Please join me in welcoming them.
I am honored to be part of Bill Kutik’s 7th annual videocast about trends in enterprise software, especially around HCM and Financials. Sponsored by Workday, I will join Naomi Bloom and Brian Sommer live on December 16 at 11 am pacific from Palo Alto, CA.
If you have seen the four of us on panels, you know we can be interesting, informative and sometimes, infuriating
This year there will be plenty of factoids and forecasts on cloud trends, Big Data opportunities and changing implementation models.
Look forward to your participation and questions. Registration Details here
As I release another book, I am reminded once again how relentlessly customer-friendly Amazon is.
Amazon has a growing number of detractors – investors are unhappy with its losses, Europeans about privacy and its data locations, labor groups about the automation in its logistics. As a customer advocate, let me continue to give them a major thumbs up.
My previous books have written about their Kiva robots, their “postal injections” and other warehouse and shipping innovations. They keep innovating with drones and other supply chain efficiencies to the benefit of customers.
Their Amazon Web Services relentlessly cuts storage costs every quarter, and more recently they have been focusing on cloud networking efficiencies. Helps customers by keeping the technology supply chain honest.
As I release my book on Kindle, I am impressed that Amazon actually incents me to price the eBook reasonably. Its royalties are higher if you price to the benefit of readers . And reasonably, as in even lower prices in emerging economies like Brazil and India. And btw, the royalties on each book will be higher than my royalties my previous publisher paid me at 3X the price. Amazon has cut out the inefficient middleman.
Jeff Bezos is known to have an empty seat in management meetings to remind them of the symbolic customer who is watching over them. On this Black Friday, let me salute the company even as the chorus of naysayers around it keeps getting louder.
This weekend I emailed preview copies of my new book on the SAP economy to select media around the world. I have attached below the “front matter” for my blog readers – the table of contents and the preface.
In time for Black Friday, Amazon is taking pre-orders for the Kindle version here or via their badge on left.
Softcover and other eBook formats will follow. Hardcovers are only being planned for bulk (25+) orders – if interested in that format please contact me.
As with my previous books, I will excerpt portions of the book on this blog as a way of thanking my regular readers. I look forward to your feedback over the next few weeks. In the meantime, Happy Thanksgiving!
From its humble beginnings in Germany, SAP skyrocketed to become a global powerhouse and the technology backbone for tens of thousands of enterprises. The economy around it grew even faster, and “SAP Nation” now approaches the GDP of Ireland in size. This book documents both trajectories, based on decades of research and interviews of hundreds of customers, market analysts and competitors.
SAP’s influence has declined in the last decade, as enterprises invest in cloud, social, analytical and mobile technologies and in custom development of “systems of advantage” in their products, channels and business models. Yet, shockingly, customer spending in SAP Nation remains stubbornly high. The model in the book estimates post-recession investment at more than one trillion dollars (yes!).
This book brings out loudly the voice of SAP customers as they cope with this runaway economy. Twenty-five case studies showcase a spectrum of strategies – some are “ring fencing” SAP with Workday, others are switching maintenance to Rimini Street, yet others are insourcing, while still others are evaluating newer SAP products like HANA and acquisitions like Concur.
Part root cause analysis and part strategy manual, this book is a must-read for anyone with interest in SAP – as customer, employee, partner, investor or competitor. It is a fast-paced look at decades of what SAP has done well, and what it could have done better.
Executives everywhere, even those in non-SAP settings, will benefit from the strategies described in the book to migrate inefficient back-office IT dollars to front-office innovation.”
It’s tough to miss a 3 page, full color spread in the Wall Street Journal. And if you miss it, it slaps you on the head a couple of days later. Dr Hasso Plattner’s conversation with Dennis Howlett provides more clues. Slowly but surely, SAP “Run Simple” is moving from marketing tagline to action.
It’s about time.
My book, SAP Nation, due out middle of December, shows its customers spent over a $ trillion since the recession. This when cloud, mobile and other trends and front office innovation opportunities would suggest a significant slowdown in back office IT investment. The book provides a detailed inventory of inefficiencies that SAP should tackle.
The even more positive development the book profiles is a number of “simplification” efforts at SAP customers. They have not waited for SAP and they are seeing 20, 40, 60% lighter IT budgets and agility and other benefits. I profile 12 of their strategies – some are consolidating instances, some are changing outsourcers, some are “ring fencing” SAP with clouds etc. The customers I talked to are the “canaries in the coal mine”. These early-movers will inspire other SAP customers to similarly simplify.
Between what SAP does and what its customers do, we should see a nice reduction in the $ 200+ billion a year SAP Nation. That means money for all kinds of new innovation projects – HANA and much else.
Howard Street in San Francisco on Tuesday morning looked different. The tarmac was visible and cars were actually using it. Outside Moscone Center, a local folk rock band, Blind Willies was playing. Excellent, but nowhere near the brand recognition of say, Aerosmtih or Will.i.am. Inside Moscone, the rooms had plenty of empty seats.
Welcome to Workday Rising. It was tough to miss how low-key this event was compared to Dreamforce and Oracle OpenWorld over the last few weeks.
The energy was all in the customer interaction.
An executive from Equifax gushed about the bi-annual upgrade process - how painless it is and just as importantly the comfort he got from the fact that his peers were testing the same release at the same time, and how he could benefit from the wisdom of that crowd. He echoed a phrase co-founder Dave Duffield likes to use - “The Power of One” as in having a consistent release across the customer base
An executive from HP described their HCM project which touches over 300,000 employees across the world. He described delivering that in just 14 months as the equivalent of “winning the Super Bowl”. He said he is now looking to a similar victory on a just-as-complex project as HP moves to split itself in two.
Stan Swete, CTO told analysts a few weeks ago “Customers don’t want to be bothered with the details of the infrastructure used to support their operations, but they do want the assurance that their vendor will be able to evolve and not get stuck on outdated technologies.” At Rising, Aneel Bhusri reported 99.95% uptime – deliver that and most customers will not want to be bothered with details of the infrastructure.
A customer described their relationship with Workday as “vivacious”. Have you ever heard someone describe their enterprise software vendor that way? It shows in the 97% favorable customer rating Bhusri shared with the audience.
Chapter 1 of my book on the SAP economy begins on February 23, 2008. It says “When the history of technology is written, it will, however, honor the 54th day in 2008 for a meeting which would change the trajectory of enterprise computing.”. My book will be out in a month and you can see what I mean but let me just say it has something to do with a large, early Workday customer. As I walked out of Moscone this week, I was thinking of a comment Dan Beck made in a one-on-one. He leads the Data Science team and presented on a series of Insight Apps (like on Retention Risk and Collection Scorecards) in the morning. He said a customer approached him afterwards and told him what he saw got him as excited as their early experience with cloud computing at Workday.
I am fairly confident that will be more fodder for another book in a few years. Low-key conferences are just fine.
Mike Ehrenberg, CTO for Microsoft Business Solutions was describing his new CEO Satya Nadella’s management style – the senior leadership team meets twice a week. “It plays havoc with planning international trips, but allows us to iterate rapidly as a company”
Kirill Tatarinov, EVP of the Business Solutions group says they have moved from Steve Ballmer’s “hub and spoke” management style to much more of a “connected tissue”. It’s allowing Microsoft to evolve to a “single P&L”
Sidebar conversations during the Fall Analyst Event this week showcased the evolution of “One Microsoft” that I had described here. I like to write about Polymaths and Microsoft is a formidable one with competencies in
High Value Apps
Consumer/Enterprise (comfort with both)
Of course, analysts like to carve the market into neat acronyms, and most customers still buy discrete pieces of technology, so the event mostly showcased Microsoft Dynamics ERP and CRM customers and product evolutions. In a q&a, Satya invited us to keep reminding Microsoft about the broader opportunity and under non-disclosure we heard of newer examples similar to Delta where Microsoft had pulled together retail, mobile, cloud technologies to deliver their in-flight POS
What was nice was even the ERP/CRM customers who presented during the event reflect a “New Age” economy:
Trupanion– provides pet insurance and their actuaries use Big Data to price premiums by breed, age etc. I hope to profile them on New Florence after a call with one of their data scientists
KEXP – a non-profit radio station in Seattle which invites new bands to perform live (an impressive list including Nirvana and Death Cab for Cutie to Shovels & Rope and Macklemore & Ryan Lewis) talked about how Youtube has expanded their audience and funding sources beyond just the local market.
True Blue – a temp agency described how texting and other mobile technology is reshaping blue collar work assignments
Microsoft Retail – described point of sale and other innovations they have pioneered in over a hundred stores and how that feedback has helped evolve omni-channel industry features in Dynamics
Carrefour –the grocery/retail industry is evolving with same day delivery and a new set of tech savvy competitors
Another changing marketplace is that of IT services. Microsoft showcased a spectrum of 6 partners ranging from $ 28 million in revenues PowerObjects to ABeam Consulting ( a SAP SI strong across Asia which is doing two-tier Microsoft projects) to $ 100 billion revenue-strong IBM.
Microsoft has invested significantly in lifecycle management tools around its applications and it was interesting to see the enthusiastic attitude about these tools from the smaller partners compared to that of the bigger ones.
Microsoft sells Office and other tools to white collar workforces but it has also seen massive scale efficiencies from machine learning and cloud infrastructures. Satya responded to my question saying he wants customers to “become software companies” by creating unique, differentiating code and reducing labor needed for back office functions.
That is the another major opportunity and challenge for Microsoft: to prevent a repeat of what bigger SIs and offshore firms did in creating a massive labor intensive economy in spite of SAP’s ASAP , Solution Manager and other tools and methods.
All in all, an invigorating couple of days on the shores of Lake Washington. As a dog lover, I particularly liked the Woodmark Hotel’s resident pets and Trupanion bringing two canine panelists to their session.
I hope to profile some of the newer “One Microsoft” customer examples on New Florence as soon as the non-disclosure embargo is removed.
Enterprise conference season is in full swing and it gives you a chance to catch up with so many smart people who make this industry a reality – Stan Swete at Workday, Charles Phillips at Infor, Mike Ehrenberg at Microsoft, Steve Miranda at Oracle, John Wookey at Salesforce, Seth Ravin at Rimini Street and so many others.
For me, though, I cherish the time to spend time with fellow bloggers. Hard to believe but we hardly talk about the industry. Brian Sommer and I have a standing reservation to share Hot and Sour soup at Fang’s in San Francisco. A common topic – the state of railroads. I look forward to history lessons particularly about the Civil War, from Denis Pombriant. Tales of exotic global trips from Brian Vellmure. Philosophy (Roger Bacon in particular), single malts and book publishing from Paul Greenberg. Teslas and taxes from Ray Wang. Spain and Italy from Frank Scavo. Joys of walking with Esteban Kolsky (my FitBit loves him). Photography from Michael Krigsman. Cricket from Dennis Howlett. More with Zoli Erdos, Jason Corsello, Jevon Macdonald and so many others
And when we talk about the industry, we usually argue
Next time you run into an enterprise blogger, resist the temptation to discuss your company or your competition (unless they want that on the agenda, then by all means have a crisp conversation). Engage more about their passions.
I think you will walk away realizing they are smarter than you thought. I usually do.
We are one step closer to release of my book on the SAP economy. The edit is done, the next steps are the inside layout, eBook conversion and prep for printing. Assuming all moves well, the media review PDFs should be available by Turkey Day, the eBook on Amazon and in soft cover by middle of December, and the hardbacks in January.
From book being largely written to market availability that’s about three months. Too long for bloggers like Dennis Howlett who asks me “Amazon and Kindle versions to start are your friend - no?” (and even for me - seriously, as a blogger I see how quickly we can get content out). Sure, you can upload anything quickly and make it available as an eBook, but if you want any semblance of consistency with the printed versions, the formatting and design does add time
Why bother with printed versions? Here is the unspoken truth in book world. Business books still sell largely in print. Speaking engagements, marketing campaigns etc all order 00s of copies. Fiction books are bought on an indie basis and ideal for eBook world.
Amazon still has not made bulk distribution of eBooks easy. It would be so easy for an event organizer to hand out gift cards with the book image. But Amazon will not restrict the card to the book being promoted so why would the organizer subsidize some other product? Also consider this - if you order 50 copies of a book, Amazon’s book ranking algorithms still treat it as one copy sold. Someday, Amazon or someone else will make bulk eBook delivery a reality but we are not there yet.
So, you still have to live with offset printing, warehouses, UPS deliveries. Print on demand works fine – again for small orders, and sometimes the quality of the content is compromised.
And you have to live with multiple prices. Amazon encourages eBooks to be priced under $ 10. Print on demand with soft cover does well under $ 20 and hardbacks under $ 30.
Talk about inconsistent UX across channels :)
Here is the good news – three months is a significant improvement over six months Wiley took for previous books. And in that time I have lined up another three case studies for the book.
Dreamforce this week had an even more festive feel than ever. Pennant fever gripped the town as the Giants played October ball. The Beach Boys sounded as youthful as ever during Benioff’s keynote. The many school kids invited in the keynote audience and Hillary Clinton’s talk of babies provided an even more youthful and optimistic tone.
It was good to see visions of next-gen customer service featuring Honeywell’s internet of things thinking and Coca Cola drone deliveries. Digital agencies, social marketing, customer analytics, and communities were the talk on the expo floor and in many a session.
I had excellent conversations with Salesforce partners like FinancialForce and Kenandy and their customers. It is good to see robust transactional functionality mature on the Salesforce platform.
And yet I left with a bit of an empty feeling
I am haunted by my summer research for the book on the SAP economy. So many of the SAP customers I interviewed asked me why there are not many robust cloud offerings for their industries. Not just spray painted features – deep retail merchandising, utilities billing, electronic medical records, pricing/promotions/assortments for CPG markets. insurance claims processing and on and on.
Last week, I was reminded what Bill Ruh at GE told me during one of interviews: “we are transitioning from IT to OT – as in Operational Technology”. At GE’s Minds+Machines event everywhere you walked there were constant reminders of operational metrics that companies are monitoring and optimizing - ionizing radiation doses, optimal pitches of wind turbines, granular in-flight data and on and on. It’s what CEO Jeff Immelt calls the junction of “physics and algorithms”
At Dreamforce I walked by TCS booth with reminders of its 300,000 consultants, and Deloitte Digital with its own armies. Time for them and other IT vendors to help evolve clouds beyond finance, HR and CRM functionality.
Salesforce, Workday, NetSuite, Amazon and so many others have done an amazing job over the last decade. But we need to raise the bar for clouds. Not only because thousands of SAP on-premise customers beckon, but even bigger optimization opportunities are screaming for attention in so many industries.
Rajesh Gill, Group Chief Pilot Technical and Efficiency at AirAsia, shared his version of “data visualization” at GE’s annual Minds+Machines day in New York. He expresses to fellow pilots the impact of certain maneuvers such as shutting down an engine while taxiing to the gate as savings in “pints of Guinness”. AirAsia is one of the most efficient airlines in the world (cost of 2.5c per available seat mile compared to more than 10c for most US airlines) and is constantly looking for small fuel and other improvements.
At lunch with him and several executives from GE Aviation, there was plenty of talk of our favorite and not-so-favorite international carriers and airports. But even more fascinating was the talk of analytics around continuous descents, the huge amount of flight operations data GE’s sub Austin Digital has access to, the economics of meal service on flights, the NOCs airlines run and the complex scenarios they simulate for weather and other other system-wide disruptions.
During a break I ran into Almis Udrys and talked to him about City of San Diego’s use of GE’s LightGrid technology and analytics to manage the LED street lighting. We talked about smart parking, video analytics and other apps many local governments are trying out.
On a panel, Lisa Laurent, CT Medical Director at Advocate Health described analytics around ionized radiation doses in their 280.000 annual CT scans. John Murphy, Chief Mechanical Officer at CSX talked about how much smarter locomotive operations are with GE’s TripOptimizer software. He said he would love to get to the state GE Wind is at in being able to remotely monitor and tune turbines and other assets. Matt Fahnestock, VP of IT at Columbia Pipeline Group talked about maintenance and asset management analytics around its billions of investment in compressors and pipelines. Gerrurd Wallaert, head of asset planning at E.ON Climate and renewables talked how GE’s PowerUp is increasing productivity of its wind farms. I have written about some of these technologies in previous books, but it was nice to hear these executives talk passionately about results, not just promise.
Over the summer as I have written my book on the SAP economy, I have talked to many about HANA. Over the last few weeks of “events season” I have heard about data-as-a-service, fancy visualizations and analytical clouds from a number of application vendors. The majority are focused on white collar – marketing, financial, HR, spend – data. The GE value differentiation was brought into focus when John Lizzi of its Distributed Intelligent System Lab showed off service robots which do “dull, dirty and dangerous” tasks. Actually the whole day was about dull, dirty, dangerous data from the field, the lab and the shop floor. Not only does GE sell the equipment – scanners, turbines etc – which generate much of the data, it also has deep domain talent like the aviation focused group at lunch. Most IT vendors want to sell you tools and expect others to provide the context.
Bill Ruh, head of GE Global Software, summarized it well when I interviewed him for the SAP book. He said we are transitioning from IT to OT (Operational Technology). And that means “Really Big Data” as was in display in slides and wall charts such as
146 TB of annual data from over 13,000 locomotives
340 TB of data from 25 airlines
That mass of data also forced GE, according to Bill, to focus on
a) Dramatically reducing cost of managing a TB of data
b) Dramatically reducing time to ingest data
Those two principles are in vivid display in GE’s Industrial Data Lakes thinking.
Two other design principles were woven through out the day:
GE expects thousands of analytical apps across sectors it plays in (like some we describe above) and is looking to open up its Predix platform to third party developers in an iOS like app store
Industrial security requires an exponential of IT security paranoia and controls – given the junction of what CEO Jeff Immelt calls the junction of ‘physics and algorithms”
Immelt kicked off the day with “If you went to bed thinking you are an industrial company, you woke up this morning as a software & analytics company”. The rest of the day showed a very different vision of a software & analytics company than the mainstream IT industry delivers.
Sure as the sun rises in the east, Larry Ellison tweaked SAP in his OOW keynote on Sunday. And sure as you are born, SAP fans are up in arms.
Honestly, what should bother SAP fans more is he waited so long (see 42:00 in video below) to talk about HANA. He picked on Salesforce.com and Amazon and Workday way more and way earlier. What message is that when both SAP and Oracle are emphasizing clouds?
What should bother SAP is it does not (yet) have slides which can match the 49 marketing, 113 service, 47 industry specific and many other cloud apps Larry talked about. That its own data centers have a small fraction of the 400 petabytes Oracle claims to host in its data centers. SAP is the world’s largest enterprise apps vendor – but that does not seem to bother it. But take a shot at HANA, and SAP Nation goes crazy. Shows how far SAP has pivoted even as its customers faithfully send it billions a year in maintenance dollars to invest in applications.
In another thread, John Appleby at Bluefin, a SAP partner tweeted about my forthcoming book on the SAP economy “Do you think that you can offer an objective perspective when your sponsors are SAP's competitors? Seems ethically tricky.”
He said that without access to a preview copy. He has not read the book which has perspectives from over a hundred SAP customer executives, analysts, alums and even current executives. It has data from 25 years of archives. It is balanced – explains the rocket ship that was SAP in the 1990s, and the many failures in its economy. It does root cause analysis and presents a wide range of SAP customer coping strategies.
John speculates about what SAP’s competitors may have told me. For the record, I spoke to several of SAP’s competitors for the book. Most were generous to SAP, when they could have easily thrashed it. Many I ended up quoting from press sources and events – and there where they emphasize their differentiation. They did not jump at the opportunity to give me any specific dirt about SAP. Frankly, it gave me a warm and fuzzy feeling about the industry that these executives chose to not go negative.
I wish SAP would quit being obsessed with what its competitors say. It’s success and its problems have little to do its competitors. In the book, I have a “small” section on this obsession.
You get the sense Oracle has worked its way under SAP’s skin. It’s Melville’s Captain Ahab and Moby Dick all over again. While the whale was fearsome, many readers would say Ahab was actually the villain with his relentless obsession and reckless use of his ship and crew in chasing the whale.
But that is a side bar. Most of the book is about conversations with SAP customers. After reading the book, I expect SAP fans like John will continue to question my “ethics”.
My hope is they listen to what SAP’s customers told me, not worry about what its competitors may be saying or not.
Steve Miranda led an excellent session this morning on Oracle’s growing hortizontal apps empire. Set on a stage with a sweeping view of downtown San Francisco and the Bay it reflected the expansive portfolio it has built and acquired. The session was crisp and covered wide ground in three parts – a) an update on current on-premise products b) messaging around the new cloud apps and c) a panel with four customer executives
In a) Steve comforted EBS, PeopleSoft, Siebel and JD Edwards customers there was no intention to hustle them to the cloud. It was reassuring with slides showing thousands of new features and new in-memory and mobile apps and blazingly fast performance on the in-Memory database for each of the customer bases. As I wrote yesterday, these customers are in a pole position, and Steve’s slides likely reassured them even more.
In b) he shared growing cloud customer and product volumes (see below) and three value points of its cloud apps – “Personalized” (“works as well as my teen’s apps”), “Connected” (Oracle with so many organic and acquired products better be thinking about thorny integration issues) and “Secure” ( 19 Tier 4 class data centers around globe, other benefits of its growing IaaS and private cloud footprint)
In c) he had executives on stage from BG Group, Marriott, atradius and GE. They represented complex and global challenges – GE is rationalizing over 100 ERP instances from Oracle and others, Marriott talked about social interaction with over 47 million loyalty members, atradius manages collections of over a billion in worldwide debt for its 14,500 global customers, BG Group has HR shared services across 20 countries. And in different ways they discussed speed – GE put in Fusion financials in Mexico in 48 days, Marriott has cut in half social data ingestion time it used to take its agencies with significantly better data quality and atradius talked about a rapid three month SFA project.
So, Steve could have added “Sophistication” and “Speed” to his three value points in b)
Definitely one of my favorite sessions at OOW!
Bonus - I got to meet another executive at Marriott which has been my home for 4 years of lifetime stays - seriously.
I have written before Oracle’s biggest cloud differentiation is it can play in all three layers – application, platform and infrastructure –as-a-service. Larry Ellison’s talk last night expounded on that as he spent time on each layer. But in many ways he set the stage for several questions I hope get answered during the course of the conference
a) How deep are the vertical cloud apps?
Larry presented two slides covering various industry applications – I show one below. But he glossed over them. That’s actually more exciting than HCM, GL or SFA functionality which has been “cloudified” for a while now – as Larry pointed out Salesforce.com has been around 15 years. I hope I hear more about vertical clouds.
b) How does SaaS leverage the IaaS?
Larry pointedly said with Oracle’s SaaS leveraging its PaaS, customers have a robust customization platform unlike competitors who he said offer just “a few buttons”. Frankly, Oracle’s just-as-big opportunity may be to pass along the economies of a massive data center cloud. Like to hear if they plan to. Like to hear if they are helping current EBS, Peoplesoft and other incumbent customers already lower their hosting costs with their IaaS
c) What migration tools is Oracle making available?
One of the big gating factors for many customers is the cost of data migration, integration, testing and user retraining that comes with the move to a new application or platform. Hopefully Oracle has thought about automation, not just opening up another market for systems integrators to sell more services.
d) How is the Buy and Build integration going?
Larry repeatedly acknowledged Oracle continues on an organic/acquired path as it has for a while now. The digestion of acquired applications takes way too long in our industry – Oracle has more experience with such integration but it still takes them years. Has Oracle learned how to speed this process?
e) What is the “pull” for incumbent customers?
I have said before Applications Unlimited was a brilliant Oracle move. But it has frozen its customers in place. What is the pull in the Oracle cloud to offset the massive appeal to just stay in place?
Look forward to learning more during the next few days.
“..in some ways he wishes the larger vendors would be there today. There are common engineering and plumbing challenges every competitor hits which are useful to share experiences around. It would be good for the industry.”
At the Workday Tech Summit this week, in talking to several of its executives, I got a very different vibe. They are not looking for such guidance from other enterprise vendors as they scale volumes not seen in cloud transaction processing world – a billion (complex financial, payroll etc) transactions a month, ledgers which scale to 200 million journal lines etc.
They are increasingly turning to the consumer web for guidance. Whether it be planning for availability zones, disaster recovery, denial of service or exabytes of data there were repeated mentions of Amazon, Google, Apple, Yahoo!, Netflix and others. Interestingly, the biggest competition for development talent is also coming from the consumer web.
There was a subtle confidence – and yet humility - when David Clarke led a session about how “complex systems are always broken”. He described simulations crews undertake on a cruiser called MS ANTWERPEN and how they react to varying degrees of emergencies.
Workday is extremely successful and they could easily have spent the day gloating, but I quite liked the paranoia that came through in many of the presentations and side conversations.
The reality is Workday is at a juncture. They can continue on their path of financial, HR and analytical product leadership. Or they can expand into many new industries and countries.
The temptations are many. As part of my SAP Economy book research I had several CIOs ask me if/when Workday was likely to expand into their industries. I spoke to a small sample. You can imagine the extent of requests Workday executives are getting directly.
Aneel Bhusri, CEO and his execs are being very measured. Partly, they bring some gating memories from PeopleSoft world where vertical and geographic expansion was uneven. Partly, the culture is modest – not given to hype or overreaction.
Either way – whether they stay on current path or they expand into new sectors- the effort they are putting into scaling and fortifying the infrastructure is commendable.
Unlike previous Tech Summits, this was a relatively quiet one. But it was set in the stunning setting of the Presidio. There was a “speak softly, carry a big stick” feel with artifacts of military history all around us.
Yes, Workday has matured into a thoughtful, if quiet, enterprise cloud leader.
When you write books about the technology industry you fret about the time it takes to go through the publishing and printing stage. Given the dynamic nature of the business you know job changes, M&A, product announcements are inevitable, and you have to regularly assess what to change in the manuscript and not annoy editors too much.
So you think I would be stressed by the two major announcements today.
The changes at Oracle only mean a few title changes in the manuscript. Personally, I am excited to see Ellison take over as CTO. I have enjoyed watching Hasso Plattner show off his passion for HANA in his blogs and presentations. I hope Larry does the same.
The Concur acquisition by SAP also does little to change the manuscript. Over the last few weeks, while I have waited for a SAP response to my offer to carry a column on how HANA and clouds will affect the SAP economy, I have reached out to a number of analysts. Their feedback shows an SAP in transition to a “network economy” player, but none of the moves affect much the economics of BusinessSuite, Business One, Business Objects and other legacy products. They make up the bulk of the $ 200+ annual run rate in the SAP economy in the book’s model
If anything, the integrations of SuccessFactors, Ariba, Fieldglass and now Concur are complex, and till SAP delivers mature connectors could increase customer investment demands. So much for the simplification promise SAP keeps making!
The $ 17 billion SAP has made in those four vendors is also a return to roots. In SAP’s early years, Dr. Plattner has said he wanted to work on sales and distribution functionality, but because they were unique to each industry they focused more on cross-industry financial and procurement functionality.
Today, SAP has few such constraints. In fact, customers in many industries are disappointed it has not been focused on delivering vertical functionality where there is typically better customer value than in back office areas. These moves are more about SAP looking good to financial analysts with a larger “cloud” footprint.
In any case, I do hope SAP does not make any more major announcements in the next few weeks. Let my editors work in relative peace, please
I have written in past about Infor’s micro-vertical strategy and its quest with its internal design agency Hook +Loop to make enterprise software “beautiful”. I saw more of that at Inforum in New Orleans this week, but I also signs of the messages maturing more into a focus on efficiency and value from software.
To start with, it is good to see an application vendor talk feature/function and business process, not just platforms and speeds and feeds. I spent time at the event with customers and Infor execs from healthcare, hospitality and fashion. Transactional systems and analytics to optimize revenues and operations. The analytics focus was particularly pronounced with pretty visualizations, but even more of a focus on predictive analytics with MIT data jock class talent in its “Dynamic Science Lab”
Not just verticals, there was more in what Infor calls “Corporate”. A new General Ledger for the global, multi-entity, multi-calendar world we live in. Expanded HCM footprint with more analytics around workforces.
And new CRM functionality with a recent acquisition, SalesLogix. New discrete PLM functionality via a partner, Aras to add to process PLM Infor offers via its tool Optiva.
To me, it was more exciting to see a focus on value from software – coming at the heels of my summer writing a book about the bloated SAP economy.
Infor has taken a leaf out of the SAP sales playbook and has a Value Engineering team which focuses on payback analysis. What’s different is it is also showing up in efficiency in UX. Infor talked about a paradigm it calls Clear Work and the goals are improving appeal to users, but as important to increase productivity, to decrease errors and to decrease training time. It talked about attacking the “tyranny of the super user” – simpler functionality so organizations don’t become dependent on a handful of individuals.
The Value Engineering impact is also being felt in payback analysis across vertical processes with several examples like one below:
CEO Charles Phillips has been quoted as saying “Friends don’t let friends buy data centers”. There was significant talk of Infor’s commitment to Amazon Web Services for its cloud infrastructure. Why not leverage the biggest “super computer” with auto-scaling, Redshift, cloud trail and many other services to the benefit of your customer community?
The partner expo was full, but not ostentatious – nothing like the 2,000 square foot booths and 22 foot tall signage at SapphireNow. Many of the partners are regional and industry specific like Ciber and Stoltenberg. Most are low-hype and operationally focused. The latter is particularly important as most Value Engineering payback is in the operational areas not as much the “corporate functions” which many services firms do better at.
Overall, Infor’s wide product, services and talent portfolio continues to grow. Many analysts find Infor difficult to categorize. Infor plays to many three letter acronyms but it is always breaking into new ones.
Charles described a call from an executive of a Commercial Real Estate company asking if he would be interested in developing functionality for their micro-vertical. At other vendors, they would be lucky to get a call back. Charles’ response “we will be glad to analyze the market and if we can find a group of charter customers, sure we will”.
Starting next week I will get briefings from a wide range of enterprise players – Infor, Workday, Oracle, Rimini, Salesforce and Microsoft among them. Conference season is in full swing.
I have not been so excited in a long time. The reason is I feel a thaw in the enterprise market.
My SAP Economy book research has allowed me to talk to a range of its customers. While the book has a ways to go with publishing edits, my sample of customer interviews suggests the natives are very restless.
My case studies are organized as follows
A. The Un-adopters – outright turning off SAP, or moving to third party maintenance
B. The Diversifiers – ring fencing SAP with cloud apps, or tiering around SAP
C. The Pragmatists – changing outsourcing models, more demanding before extending SAP reach
D. The Committeds – adopting HANA, consolidating SAP instances etc.
SAP, of course, is no slouch. My book will bring out plenty of what it has done right in the last three decades. It now has a charismatic new leadership which can energize the company and the customer base.
But SAP is burdened with a bloated ecosystem with a poor delivery record and an unattractive cost base. SAP has also neglected a number of application areas with its intense focus on HANA, NetWeaver etc, so it is also more vulnerable than it has been in a long time.
I have ordered front row seats to watch the tournament over the next couple of years.
With the largest single day product launch ever in Apple history – multiple iPhones, Watch, Mobile pays – Tim Cook will likely quiet a number of his critics who have been harping Apple has forgotten how to innovate. The Watch in particular breaks the mold with the wide range of configurations of size, alloys, straps and other components. In some ways, it reflects the wide number of SKUs Cook has seen Nike introduce as a member of their board and what Angela Ahrendts has brought from her Burberry’s fashion industry background.
Nothing against Cook, but some of the credit still goes to Steve Jobs. His biggest single contribution was building a dream team as I have blogged before
“To me, Steve Jobs created a petri dish and threw in all kinds of rare elements – Tim Cook’s operational excellence, Jony Ive’s design aesthetic, Ron Johnson’s retail experience, Scott Forstall’s ecosystem vision, Phil Schiller’s marketing chops, and many others including Terry Gou, CEO of Foxconn, the contract manufacturer. It took a while to gell, and likely required all kinds of ego and conflict management, but his enduring legacy is having created and managed that dream team which even with a few changes continues to do well.”
Dr. Hasso Plattner has written a long blog post about Business Suite on HANA. He has 12 reasons justifying why. His passion for the product screams through the post.
I wish he would make it a Baker’s dozen and add a 13th point: that SAP plans to change its business model around HANA.
I am writing a book on the SAP economy so dollars and euros are high on my mind. In the last couple of years, as the Big Data phenomenon has taken off, I have been impressed with all the fresh economic models I have seen.
So, when GE announced its Industrial Data Lakes recently, I spoke to Bill Ruh there. GE is looking at exabytes of data from its aircraft engines, turbines, locomotives, medical scanners and other industrial equipment. GE’s big driver “How do we reduce by orders of magnitude the cost of managing a terabyte of data?” That led to some radical rethinking of data structure, ingestion and management I catalog in the book.
In the last year I have talked to entrepreneurs like Nader Mikhail at Elementum, Omar Tawakol at Bluekai and Adeyemi Ajao at Identified. They have no interest in selling software or hardware. They want to sell you supply chain, marketing and HR data, or even better insight, as a service.
I have seen communities of data scientists emerge at Kaggle and at Topcoder (part of Appirio). It is a new talent sourcing model.
In contrast, SAP still wants people to buy software. Then buy hardware and services from its partners. Beyond 4TB of memory, commodity components don’t scale, so that is not cheap. As someone pointed out “With data volumes exploding, will we need to look at IBM’s custom made 128TB Blue Gene/Q supercomputer? And have to use IBM’s traditional talent model?”
With the HANA cloud, you could argue SAP is moving to a new business model. Not quite. Sit down with two displays and open up SAP’s and Google’s data center web pages. SAP emphasizes privacy, security and data protection (all important, even more so to German and other EU customers). Google focuses on data center innovations – efficient servers, container design, carbon neutrality among other initiatives. SAP is just beginning an efficiency journey that Google has been on for over a decade.
The other challenge with the HANA cloud is customer connectivity. Amazon Web Services with its Direct Connect and Microsoft Azure with AT&T’s NetBond have tried to combat the MPLS and WAN costs carriers charge individual customers. SAP customers do not have such an option.
HANA as an OLTP platform – SAP is actually regressing its business model. To give customers database portability, R/3 kept away from stored procedures and other database specific features. To boost HANA TP performance it will have to move increasing amounts of code away from the application layer.
Over the course of my interviews I have heard many customers say HANA economics are not compelling – even the ones which are early adopters and have good use cases. The recent ASUG survey emphasized the point in spades.
Dr. Plattner don’t ignore all that feedback. Add a thirteenth point to your value proposition – a compelling business model to cover your software and your partner’s hardware and services costs.
I love interviewing senior corporate executives for my books. The conversations are always about large problems they are trying to solve.
So, for this book, an executive talked to me about how they define Big Data. 15 gb of data for every flight. Half a terabyte of data from a turbine. Similar from other equipment. Now multiply that by thousands and thousands of units. Major consideration – how do we minimize cost of managing a terabyte of data and how to dramatically reduce data ingestion time? How do we deliver orders of magnitude improvements in each?
A oil executive told me how 3D visualization, sensory analytics and massive computing power, now enable a geologist to perform sub-surface analysis of a formation remotely and empower the corrosion planner to virtually create plans in hours versus walking around facilities or in the field for days. Much safer to humans and much, much better decisions.
A manufacturing executive told me they move 25% of their plant capacity across borders in a year so they can produce closer to emerging market demand as middle classes blossom around the world. Think of the logistical implications of such constant moves.
None of these challenges have off the shelf tech solutions. They require integration of multiple tools and lots of customizations.
That frustrates many analysts because they do not neatly fall into market categories. Consultants lose interest when they don’t recognize the vendors that provide the solutions. My books have no such constraints. The grander the challenge, the more ink they get.
I formally invited SAP to provide a 10 page, unedited column to include at end of the book I am writing - how things will be different with its new management team.
The book model shows customer spend at a run rate of over $ 200 billion a year – $ 1 trillion (yes!) since the recession while SAP’s own sales/deliverables have leveled off. That includes cost of SAP licenses and maintenance, systems integrators, hosting/infrastructure, consultant travel, application management providers, BPO firms, MPLS circuits, upgrades, SAP staff at customers etc.
The book does a root cause analysis based on 20+ years of archive data and based on interviews with SAP customers, partners and market watchers.
I thought it would give a somewhat positive ending to book to let SAP provide an optimistic (and unedited) future after all the failures and inefficiencies cataloged in the previous chapters. My model shows SAP itself accounts for only about 10% of the total cost of the economy around it. So, this would have been their chance to discuss how the ecosystem, cloud delivery model etc would be different going forward.
They thought about for a month and have declined. Not exactly surprised – I see how SAP has reacted to a recent ASUG survey on (slow) HANA adoption. This is their customers talking and yet SAP defensively brushes it off.
I have similarly interviewed plenty of customers about their SAP investment strategies and I could move one of those sections to the end, but I would like to invite alternate ending suggestions from my readers to fill at least a few of the 10 pages I had blocked off.
Please comment below or send me an email at vmirchan AT gmail DOT com.
I will contribute $ 250 to the charity of choice of the entrant with the best suggestion by August 27. Or buy them a nice dinner. Their choice.
Last week, at the grocery store checkout I overhead a man congratulate another about his new book. Curious I asked the author what his book was about. Hugh Sullivan has written about his 40 year career as a Navy Corpsman. He was awfully proud of his book Doc! as he should be. We shared publishing stories and I went home and downloaded the Kindle version.
My son home for the summer break told me last week he enjoyed his visit to the public library. How quaint I thought. On the same day, the Wall Street Journal had a story about how libraries are surviving, and in fact thriving in an age of eBooks.
Books are not dead – not by a long shot
I am finishing my 4th book so clearly I am into that channel of communication. I love to meet and encourage fellow authors.
But my blogger friends often ask me why I write books – so old-fashioned is their tone. Of course, heavy tweeters ask bloggers the same question
And when they do, I am reminded of my former Gartner colleague, Erik Keller who is now a master gardener. He had a nice quote when I interviewed him for The New Polymath
The term “ legacy ” is considered a negative in technology whereas in farming it is a positive. Because the nature of technology is not to preserve the past, it often functions in a circular, self - destructive mode.
Here’s my experience
1) A book is a very disciplining mechanism. Somebody once said “Vinnie, you can make a brown bag sound interesting”. Thanks, but I am actually picky around topics I write books about. Most times they are ahas which smack me with a 2x4. They are my ice bucket challenges that wake me up.
The New Polymath came about because I started to notice from my blogging “complex products” where companies were learning to blend infotech with biotech, cleantech, healthtech. The Digital Enterprise was Karl-Heinz Streibich’s aha – I helped him flesh it out. The SAP book came about from some modeling I did which estimates its customers have spent post-recession over a $ trillion even as SAP’sales/deliverables have leveled off.
I spend 2-3 months doing research, talk to 75-100 executives and analysts for each book. The 360 degree view challenges my original position, polishes it, nuances it. And as I cook and reduce and reduce some more, end up with 10 to 15 case studies which form the backbone of each of my books. The early weeks of research and interviews are the most enjoyable part – the back end editing, publishing chores are not much fun, but with each book, the publishing industry has evolved and they are less and less painful.
2) My audience – executives – do not have much time for much reading. Books, magazines, analyst research, blogs all fight for their attention. I don’t expect each reader to scan my books cover to cover. But I go back and periodically review an Amazon feature called Popular Highlights. It tallies sections that multiple readers have marked up on their Kindle apps. These mark ups tend to be all over my books. Same with readers I encounter on my travels. They will cite back sections they enjoyed (or some they disagreed with) that appear random. They may not have read the whole book, but I would be hard pressed to predict which 10, 30,50 pages they do read. If I did I would write 30 page eBooks. But they would be boring without case studies, and interesting anecdotes. Which means I would likely not write them.
3) The book itself is only one channel. My book research feeds my blogs, my speaking, my consulting. My books in turn benefit from my blogs, my speaking, my consulting. They make each richer as a result. If books were my sole focus I would likely be writing about Lady Gaga or iPhone 6 rumors not boring old SAP
4) Books broaden my vocabulary and personal “Wikipedia” . As part of this book I learned the term “coal-face” – not the Mary Poppins kind, but front facing – term apparently very commonly used in the UK. During the Digital Enterprise I learned all kinds of details about the German economy. From the New Polymath, I learned much about the Italian Renaissance. It’s continuing education.
This weekend I read about Rodrick Markus who travels the world seeking out exotic teas, truffles, oils and other delicacies. I hope I can continue to similarly find ahas to keep writing about for a long long time.
Pew Research has a thought provoking study on the impact of algorithms and robotics on jobs. Half the experts polled are very pessimistic, the other half just pessimistic. Definitely worth a read.
What I find fascinating about these discussions is how IT centric – as in IT and impact on white collar jobs, shop floor, logistics – the focus is. That is the world many of us live in, so it is understandable.
Sure many of these will need software, sensor, satellite support and other IT centric skills, but think how many chemists, mathematicians, engineers of all stripes, and biologists and other STEM skilled workers we will need to solve these challenges. And how many more we will need to deploy the solutions. And keep maintaining and improving them. And this is just the tip of the challenge iceberg. There are hundreds less pressing challenges our world faces which need talent to focus on.
The other thing we forget is old jobs never completely disappear. Did you know there are still over 50,000 dairy farms just in the US.? Most are family owned and continue to provide good livelihood to the family members. Sure automation has reduced the human element, but even after decades not eliminated all the jobs.
Finally, hardly anyone talks about the positive impact for consumers. Automation keeps prices affordable and quality consistent and production improvements quicker.
Way too many of us are quick to beat up on Amazon for not paying enough attention to Wall Street, or for buying up Kiva the robot maker or thinking of drone based deliveries. But Jeff Bezos has made famous “the empty chair” in meetings to remind his executives to be ever cognizant of the customer. Most automation discussions ignore the customer point of view
Once again Gartner is in the news. Its is being sued and a whole slew of blogs and articles have piled on.
My summer project researching and writing about the SAP economy has allowed me a chance to go back and review 20+ years of market research, articles, blogs and presentations.
Part of me wonders why Gartner did not break so many stories or lead challenging positions when I review
how many times DSAG has challenged the value of SAP maintenance and price increases especially on behalf of the German Mittelstand – mid sized customers who do not strain SAP support or development much
how many SAP failure stories Chris Kanaracus of IDG has broken through persistent mining of court filings and SEC and other sites
how Phil Fersht and his small firm HfS first brought to my attention how massive the SAP economy had become
how a Mentor like Jim Spath questions why SAP has broken a long established tradition of sharing – what he calls “classic” – SD benchmarks when it comes to HANA performance
But does that mean Gartner is not independent as it used to be or has become a “pay for play” firm?
Three perspectives – again from the lens of my summer research
a) The average Gartner analyst tries hard to be independent
From 1995 to 1999, I was one of the lead analysts on the SAP (and broader ERP) consultant marketplace and I repeatedly warned the market
While acknowledging that R/3 is merely an enabling tool and that their end goal is to help clients develop world-class business environments, few consulting firms have adequately documented process improvements around R/3 projects. Similarly, few could show examples of business cases or return-on-investment (ROI) analysis to justify the large investments their clients are making around R/3. Finally, a number of firms, afraid of being viewed as negative on SAP, are not objective enough when advising their clients in the evaluation, contract negotiation, and "gap analysis" phases of the projects.”
It is time to revisit the impact of consultant travel on implementation projects. Through limitations and incentives in SI contracts, creative use of telecommunication technologies and changes in attitudes, users should actively manage project team travel. Once accepted as a necessary evil, it is becoming clearer that the large amount of travel in today's consulting market is significantly impacting project economics and productivity
and and and
My alma mater, PwC asked Gartner I should not be allowed to cover them, because I knew them “too well”. And this was 3 years after I had been gone! A partner at another firm sarcastically told me “I thought you were gone from PwC” suggesting I was too nice to PwC. Needless to say, such complaints would lead to detailed reviews and audits of my research. And earned me badges of honor from my analyst colleagues.
I have a hard time believing the average Gartner analyst of today does not try just as hard to be as independent. I meet them at industry events and they remind me of younger me . Passionate, smart, may be a bit more diplomatic than I was, certainly with fuller head of hair
b) the average Gartner analyst has so much more to cover
When we first issued a detailed review of SAP SIs in 1996, we had profiles of 20 vendors. Now with the SAP services market ten times as large, Gartner still only profiles in detail 20 of the biggest firms (IDC and Forrester profile even smaller numbers).
The marketplace has changed dramatically. There are hosting firms, offshore application management firms, telcos, regional firms around world that did not have an SAP practice when I was covering the market. Many did not even exist. In turn, many of these firms have digital agencies, BPO offerings, mobile development and countless other practices.
The matrix of coverage at Gartner has grown exponentially. Gartner looks at SAP in many different “Magic Quadrants” – ERP, Sales Force Automation, Strategic Sourcing, Horizontal Portals, Master Data Management, Mobile Application Development Platform, Implementation Service Providers, Data Warehouse and many others. They cover some segments well, others not so well.
c) The average Gartner analyst is just one small market watcher
I will have a section in the book on SAP Market Watchers. It looks at how regulators, media, analysts, bloggers, user groups and academics have watched over the SAP economy. My model shows it is at a run rate of $ 220 billion a year, larger than the GDP of Ireland so clearly deserves a fair amount of attention
Such a massive SAP economy and yet, such fragmented coverage. Way too much coverage goes to SAP itself, and there much to the gossipy executive revolving door and to nationalistic stereotypes. In the meantime, gross inefficiencies in the data centers, networks, armies of talent running SAP get little attention. It reminds you of the fable of the blind men around the elephant – one who touched a leg thought it was a pillar, the one who touched the tail called it a rope and so on.
So, yes Gartner deserves scrutiny because it is the biggest analyst firm. But it is just a small and often misunderstood element of the marketwatcher community.
When I started to write the book on the SAP economy I had counted on customer, market watcher and competitor input.
What’s been surprising – and actually inspiring – is how restrained competitor executives have been in their critique of SAP.
Of course they have quotes in articles in the 20 years of archives I am mining for the book. I will use them sparingly and let the customers and the analysts I have interviewed and the data I have access to, to do more of the talking.
You have heard the expression “Fool me once, shame on you. Fool me twice, shame on me”. But if you get fooled 6-7-8 times, who do you blame?
As I go through every nook and crevice of the SAP economy for the book I am writing, it is staggering how every type of vendor has premium priced – over and over. Of course you get the usual validation – oh, it comes with better SLAs, responsiveness, Q0S etc etc.
a) SAP has made a habit of charging in different ways for “adjacencies” or repackaged functionality customers have previously paid for
b) Consultants brag about having done thousands of SAP projects, then expect a premium for that experience, when they should be passing along economies of scale and repetition
c) Consultant travel continues at staggering levels even as telepresence has improved and many project phases should be done in “factories” not at client sites
d) Indian vendors who proudly delivered continuous improvements via their CMM Level 5 and Six Sigma programs on legacy and even arcane vertical apps, seem to have forgotten that in their SAP customers
e) Any one with a credit card can buy cloud storage from Amazon at 3c a gb a month. SAP hosting partners charge 10-20-30X.
f) MPLS pricing for networks into centralized SAP sites continues to be shockingly high. Rates of $ 100 to 200 per mbps, when you and I as consumers pay $ 1-5 per month. Hey but it’s more reliable.
g) HANA hardware, being memory intensive and only certified from a handful of vendors, is off the charts compared to other server pricing.
Like I said, most customers have good validations for the spend but looking at it from the wide set of data points I have collected, you have to wonder how many of them realized they were buying a car would need premium fuel, and yet deliver low MPG, need $ 100 oil changes and $ 1,000 tires and and …
Oracle invited me to moderate a panel in their DaaS launch today. Watch the whole hour for some great perspectives on this exciting new market category, and our panel starting around 26.00.
Talking to Steve Miranda and Omar Tawakol before and after I got even more excited about the concept
a) There is a new generation of data asset entrepreneurs like Omar (whose company, BlueKai Oracle acquired) who are about separating signal from noise– under NDA I have been briefed by other entrepreneurs focused on supply chain, HR and other DaaS. Scary smart folks.
b) Watching Omar talk about all the social and other marketing data feeds, Steve talking about feeds from machines and wearables, you realize we are not anymore in the Kansas of internal, structured data so many companies are still heavily invested in
c) How rapidly business and deployment models are changing. While the old model of “buy hardware, install software, load data, clean for quality – pay for all that” is not going away the speed of getting started with and the economics of DaaS are going to be compelling
d) How effortlessly Oracle with its decades of data management experience and horizontal and vertical application knowledge could play in a wide range of DaaS categories.
As the World Cup winds down, it has been such a celebration of global diversity. Polite Japanese fans cleaning up after themselves. Crushed Brazilian fans applauding the German team.
And the reverse – way too many leaders blaming losses on the field on geopolitics. The need to have a campaign to stand up to racism.
My research for my book on SAP is exposing me to more national stereotypes. 2 decades ago, I used to hear clichés about German engineering prowess. As if hardware and design excellence applied equally to enterprise software. Or the reverse in the form of German bureaucracy and works councils and the related paralysis.
Now it is the reverse about the “Americanization” of SAP. That new CEO, Bill McDermott will be SAP’s Stephen Elop. He will gut the company and sell the IP and data to non-Germans. That it is one big, bad NSA plot.
Lost in all this nonsense is the fact that SAP’s biggest threat is its runaway economy. That Bill should be aggressively taming its ecosystem which year on year adds 8 to 10X to customer burden what SAP charges them. Rather than spending time in Walldorf convincing people he is not Elop.
My daughter came back from a European trip this summer and announced “Dad, your 50 country tally is well within reach”. At her age I had been to 2 countries!
The more we globalize, the more nationalist morons of all stripes raise their ugly head. And just paralyze progress. By the time Rita gets to 50 countries on her passport I hope we have evolved more positively.