deal architect

"Off-sourcing"

Ingres to partner with Satyam...read Tom Berquist (Ingres's CFO)'s perspective. Satyam has one of the stronger package implementation practices  in the Indian firms, so not sure how this custom development oriented alliance will play out. Besides, Indian firms are learning how to become channel leaders rather than followers, so not sure how much this will help Ingres short term.

But Tom is right to point out it is two industry trends converging.   Now that is John Naisbitt and Patricia Aburdene would likely call a "mega trend mash-up"

Another 97.5% business

Dennis Howlett showcases Severn Delta which has moved aggressively to open source applications.

Another example of a 97.5% business. The cost of "branded software" to get the additional comfort is often exorbitant.

Martyn has earned the right to be a New Florence tour guide.

Look - still the Software 500!

Software Magazine has released its annual listing of the biggest 500 software (and services companies who write tons of code) vendors.

Several comments:

- Larry Ellison will likely talk about industry consolidation next week at Oracle OpenWorld. Well, the magazine still lists 500 companies as it did last year, and the year before. And it does not begin to list the various Office 2.0, SaaS, Open Source and other companies which have been spawned in the last couple of years.

- The fastest growing segments - security - 40% growth, HR 39%, Healthcare 23%, content management 22%.

- The bigger vendors - IBM, Oracle etc are reporting single digit growth in spite of their acquisition sprees. They are actually losing overall industry market share.

Lots of interesting small to mid-sized companies doing well in various sectors and geographies. Highly recommend getting yourself a copy...

Tastes Great. Less Filling.

Think Open Source is only about a different way of selling incumbent software functionality?

InfoWorld has a special section on innovations coming out of Open Source community including

New Life into Java
Linux on newer devices
Impact on multi-media
"Wide Open", yet secure
Community Scripting and languages
Impact on enterprise messaging

The Bionic Enterprise Software 2.0

"Gentlemen, we can rebuild him. We have the technology. We have the capability to build the world's first bionic man. Steve Austin will be that man. Better than he was before. Better, stronger, faster." -The Six Million Dollar Man.

Bionic Man did not just get a nose job. He was rewired with nuclear powered limbs and implants and much more.

This weekend, several of the Enterprise Irregulars had a vigorous discussion going around Enterprise 2.0 - the impact Web 2.0, social networking, SaaS etc. are having on the enterprise.  And I kept coming back to the point that any definition of Enterprise 2.0  (or whatever we or Forrester ends up calling it) has to be fundamentally rewired. It cannot just reflect the exciting new user centric innovations but also what is happening in the middle and the back in terms of service delivery, third party maintenance, IP licensing and a whole series of other innovations we have been seeing over the last few years.

I proposed the following as additional considerations as our group (and the software industry in general) seeks to define Enterprise 2.0. While by no means comprehensive, it is my attempt  to get a broader discussion going.

a) supports choice of customer deployment of functionality as a service, and in installed mode

b) is architected and priced/sold as a series of services

c) sells maintenance broken in to support and upgrade charges and allows an ecosystem of partners, not just the publisher, to alternatively provide support.

d) largely automates bug fixes/upgrades which require little customer (or service partner) intervention

e) provides process management, configuration, conversion, integration, testing, systems management, end user training tools to minimize implementation and support labor

f) provides customers with a wide range of service partners which are audited, graded and certified each year based on product training completion, customer feedback,

g) commits to transparency to customers around product quality, customer service ticket resolution, outages (where provided in SaaS mode) etc.

h) provides a mechanism for certification of integration of third party software products, and re-certification as releases change

i) actively encourages a on-line developer/integrator community and pushes for an "open source" licensing of community intellectual property

j) Commits to sharing with each customer a "sticker" showing standard list of various components/services and various discounts and taxes

k) shares with customer base on a regular basis summary results of various implementation and support metrics from its service partner ecosystem

Most industries are seeing innovation in many facets from business models to channels. So is enterprise software.  And even within technology specific innovation, Web 2.0 is only one facet. Enterprise software is adopting telemetry, predictive analytics and so much more. 

As we innovate enterprise software, we will fix way more than the nose.

Clarification: Most of the practices I suggest above are already in use by one or more enterprise software vendor. On c)  SAP offers third party maintenance through its TomorrowNow unit to Oracle apps customers. On g) salesforce.com provides metrics on its on-line performance. And customers like these innovations - so my suggestion we generalize them across the industry.

Hurricane Enterprise

Several Irregulars contributed to a rejoinder to Guy Smith's post last week around Open Source  on sandhill.com. Mine below was more of a rejoinder to the Irregulars who were pretty mean to Guy. Guy is a a good Melbourne boy - he can tell them to go chunder -)

"Living in Florida, we are acutely aware of hurricanes. While we give them single names like Katrina and Andrew, they are really armadas of smaller destruction elements that attack with wind, flood, lighting and so on. Hurricanes move in highly unpredictable ways depending on their steering winds and pressure systems and the competing elements within them.

In spite of supercomputers, daring measurement flights in to the eye, satellites, dopplers we are still learning to predict where they will make landfall and at what speed. Today, the National Weather Center can predict a cone of likely hurricane track over the next 48 hours with a potential error of 320 miles. Does not sound too inaccurate, right" Well, each mile of coastline evacuated costs $1 million in lost wages, closed businesses and in the expense of emergency personnel and shelter openings

In the software business, we have Hurricane Enterprise coming. As Forrester recently wrote, it has 4 "horsemen" - Open Source, SaaS, SOA and Offshore Development. Reading Guy's comments and those of my Irregular colleagues I think we are similarly trying to predict the course of this storm. What we do not know is whether it will be a category 1 or 3. Or where it will land. And which of the elements will cause what damage.

The important thing to remember is the conditions are ripe. As Marten Mickos, CEO of MySQL recently said "Oracle created the market [for open source databases] by having a highly priced product..." As did IBM, as did Microsoft, as did SAP in other elements of the stack.

The hurricane is the response to the vacuum. It is the effect, not the cause. And it is a combination of many small sub-systems. Open Source is just one of the elements. The others are just as deadly."

Money is Money. Results are Results.

Toby Redshaw of Motorola, when asked at a conference earlier in year about the promise of SaaS and open source economics versus incumbent software models, said "Money is Money. The total cost matters."  As they gain in momentum, SaaS and open source vendors will do well to remember buyers typically tend to not get religious about categories - they are more interested in how the categories look in the budget spreadsheets.

By the same token, courtesy of Sadagopan I saw this CIO magazine country offshoring assessment. I have been struck  in recent months at how many clients are saying " We do not want to overlook the time zone and proximity advantage.  We realize India or China  may offer several advantages in cost and quality - but let's not ignore the "hassle factors". Let's at least consider nearshore and rural options." Like SaaS and Open Source, new country entrants have a nice opportunity, but cannot just bad mouth the incumbent leaders. Results are results.

Opening Closed Business Models is Hard Work

Two examples of how companies with legacy software models often struggle even as they make commitments to Open Source licensing. Read more at TechSpend.

The Tofflers are back

Alvin and Heidi of Future Shock fame are back with Revolutionary Wealth, a much more positive book than the future they foretold in the 70s. Lots of implications for blogging, open source etc.

"In their earlier work, the Tofflers coined the word “prosumer” for people who consume what they themselves produce. In Revolutionary Wealth they expand the concept to reveal how many of our activities—whether parenting or volunteering, blogging, painting our house, improving our diet, organizing a neighborhood council or even “mashing” music—pump “free lunch” from the “hidden” non-money economy into the money economy that economists track. Prosuming, they forecast, is about to explode and compel radical changes in the way we measure, make and manipulate wealth."

A NY Times review is here.

Booz Allen's bad advice on software

Courtesy of Sadagopan I saw this analysis of the software industry by Booz Allen consultants.

"Looking solely at the economics, software buyers will be the short-term losers from this merger activity. With fewer companies vying for sales, the industry’s traditional 80 percent discounts, which large companies can count on for volume purchases, will be a thing of the past. More commonplace will be 50 percent off list price."

Their analysis is based on the following high level industry data

"Five years ago, 11 companies controlled 90 percent of the database market; now only six do. In business applications, the trend is even more pronounced: Seventy percent of the market is now controlled by just 35 companies, compared with more than 120 companies in 2000."

I disagree. They are ignoring 5 disruptive trends I have written about in numerous areas on my blog

a) The Buy v/s Build economics are already off. Less discounting will only accentuate the disconnect and further reduce demand for packaged software.
b) There are growing SaaS vendors in many application categories
c) There are increasing BPO options in many business process application areas
d) There are growing Open Source vendors in many infrastructure categories
e) There are a number of third party maintenance options around the leading software vendors

I am certainly not going to let my clients just accept 50% discounts (unless list prices are themselves significantly revised downwards).

Booz Allen clients - feel free to call us.