deal architect

A1S: The Economic Angle

Several of the Enterprise Irregulars are going to the SAP event around A1S later this week in New York. I am in E. Europe and disappointed cannot be with them. In our conversations over the past week, though, the EIs do not really know what to expect. SAP  has  promised detailed briefings over the past year and then only showcased dribbles about A1S at Sapphire and other events.

Clearly, I am interested in how this will change SAP  TCO at its customers. As I have written before SaaS economics are almost 1/10th of on premise TCO. Can SAP come close?

Related to SAP economics, I was forwarded this Forrester analysis on SAP pricing and licensing. But what Forrester covers just scratches the surface of SAP TCO. There is little on vertical engine pricing, which I have seen in many customers to be X times SAP core ERP pricing. Nothing on SAP's classroom training costs which can add up to a princely sum if your team has to fly every which place given its fragmented nature and delivery schedule. Nothing on SAP end user and documentation license through its partner, RWD. SAP Upgrade fees for moving to the 2005 or 6 version. SAP consulting fees. SAP partner costs - hosting, systems integration, upgrades etc. And on and on.

I suspect my EI colleagues may get a glimpse on how A1S will better control TCO around core SAP modules. But there is so much more that makes up SAP TCO. And even around A1S, not really sure what SAP is ready to discuss.

But at least a good time will be had in Manhattan while I travel across East Europe. One consolation: my beer will be better -)

An American Hero

Omar, the Iraqi translator who save ABC Journalist Bob Woodruff's life last year, has immigrated to the US. See the video of his arrival in Kentucky. While Bob and Omar are feel good stories and heroes themselves, I was struck by the passion and charity of Retired Army Sgt. John McFarlane (the balding person in the story) who fought to help Omar immigrate, saying he could not leave "one of his own" behind.

He has given Omar his son's room. As his son prepares to himself head to action in Iraq, musters the strength to say "One soldier comes home, as another goes down range..."

We can debate the war all day long, but hope we can agree John is one special guy.

Wonder if the English have adopted these hobbies?

The couple of years I spent in London in late 80s I was fascinated with the hobbies the English get in to - from heritage train spotting to pub and inn sign watching to crop circle speculation.

Circa 2007, I wonder if they are in to two more recent technology driven hobbies?

Geocaching -  I took my son to a couple of caches recently. Silly me, I thought the GPS would just get us there. The hiding places are evil.  Of course, did not help that I punched the wrong coordinates in to the GPS - I entered degrees and minutes when the GPS unit expects decimal degrees. About a 30 mile error. So I turned off the GPS and drove mano to the location in a park, and we looked and cursed and kicked. The next time I punched it up correctly, and as backup got a printout with a zoom on Google maps and went back. A nice way to show your kids different sites and technologies. There are 450,000 caches worldwide. BTW - non-cachers are also termed "muggles" in this community.

GoogleEarthChasing - this one is about finding interesting and mysterious things using GoogleEarth and Google Maps. Like why the Veep's house is de-pixelated. Or what the Tuscon airplane "boneyard" looks from high above. Or how the Google 767 will look at Moffett. Man, the tabloids could have a field day with this technology -)

I am going to try out a mashup. Use GoogleEarth to help me ferret out those pesky Geocaches. Even the second time, we could not find the cache. Any British folks want to help out?

One person's meal is another's poison

Consumerization of IT? Sure...but not without controls.

ITWorldCanada lists the 8 most dangerous consumer technologies...and what companies are doing to make them more secure or easy to support or in some cases not allow them in...

Instant Messaging
Web Mail
Portable Storage devices
PDAs and Smartphones
Camera Phones
Skype and other consumer VoIP services
Downloadable widgets
Virtual worlds

you can add wireless hotspots, stolen laptops and several other potential areas of risk and "leakage"

Update: Of course, users automatically assume IT/CIO is the bad guy. Network World has an article which shows CIOs and Chief Security Officers often have an adversarial relationship.

The Real Deal: G.B. Prabhat on "Second Generation Outsourcing"

This continues a series of guest columns from practitioners and bloggers I respect. The category - The Real Deal describes them well.

Last week I had a post on why we do not see "supplier" tiering in the outsourcing world while it is so common in most manufacturing markets. The post was triggered by an article  in BusinessWeek on a firm called Anantara, which is attempting a tiered delivery model - and on a globally distributed basis.

G.B. Prabhat, founder of this firm, read it and started a dialog. I invited him to present his POV below. He was Director, Consulting and Enterprise Solutions, Satyam Computer Services Limited before this start up. And in 1995 had launched Satyam Renaissance - so has seen many aspects of the outsourcing business. He is also a prolific writer - including a couple of fiction novels.

 “The evolution of Second Generation Outsourcing (SGO), a revolutionary model of outsourcing, is fuelled by 3 significant drivers.

Driver 1: The law of diminishing returns has started operating with first generation outsourcing. Savings from the current model of offshoring taken for granted. The second driver of change is that IT expenditure is 50% of capital spending worldwide. IT service providers, in their new role as business partners, now have to guarantee the production of reliable business outcomes in return for the client’s substantial IT investments. Driver 3: Lessons from the manufacturing supply chain. Between the early 1900s to the 1950s, makers of complex products like cars made almost everything that went into a car. In the 1950s, virtually integrated supply chain management practically replaced vertically integrated manufacturing. Now manufacturing companies outsource and buy most of the components and subsystems and focus on the principal tasks of design, assembly (integration), distribution, branding and marketing. A number of well-known advantages accrued to customers, manufacturers and their suppliers. The time is ripe for integrated supply chain management to take over vertically integrated supply chains in the IT outsourcing industry.

To make the idea of SGO unambiguous, we have defined many distinguishing markers of SGO. Some important markers are:

Marker 1 – Business Solutions

Technology solutions will have to be embedded in vastly more complex Business Solutions of which they will be but a part. A Business Solution is different from a technology solution in that it improves the business performance of the client in measurable, tangible terms such as profitability, market share, and return on capital employed. 

Marker 2 – Business Partner-enabled delivery

Anantara trusts the production of many components of it solutions to its Business Partners in its global supplier network called the Anantara Ecosystem. The Business Partner-enabled delivery model frees Anantara to focus on the client, integration, program management and business value delivery. SGO will help embed, in a democratic and secular fashion, the world’s best efficiencies in various components by a global sourcing model rather than assume large companies with offshoring in India represent the best efficiencies.

Other markers include risk-reward or equity based pricing against the now dominant time- and-materials and fixed pricing.

Progress so far

In the short period of our existence since January 2007, evidence of the effectiveness of SGO is steadily gathering. We are now servicing customers in 8 countries using the SGO model with suppliers in 4 countries: India, China, Russia and Singapore. We discovered that in many competencies smaller Indian companies and Chinese companies, for example, have startlingly higher efficiencies than large service providers.

Amidst many challenges, customers’ receptivity to SGO is gratifying. Working on the challenges of installing SGO will constitute our near-term business endeavor. “

Prabhat can be emailed at [email protected]

Dear Mr. Ballmer:

I heard my dad grumble this morning. He paid $ 160 last month for the MS Office 2007 Student edition for my new Vista machine. He mentioned something about hoping you being man enough like Mr. Steve Jobs to offer a $ 100 refund to early adopters - now that you are pricing the product at $ 60.

He grumbled last month when he installed it and found it did not include Outlook and had to install the 2003 version and hit compatibility issues. I am not that concerned. Between my IM, SMS, Yahoo email, voice mail, MySpace and cell phone I got plenty of ways to talk to my friends. Besides Word and Excel are what I really need for school work.

Ignore my cranky old man - he grumbles a lot. I am merely writing to ask for a huge favor. Can you please issue the refund usable at the Apple Store like Mr. Jobs did?

$ 100 in iTunes would really rock!

Yours sincerely,

Rita Mirchandani

Update: The $ 60 offer is only open to University students, not high school students. Dad will have to spring for that $ 100 iTunes bill -)

More New Renaissance posts

On my other innovation blog

MIT Technology Review's Young Innovators
The Mess(h) in San Francisco
Google Sky
The Facebook Economy
High end Digital Cameras
The Next Disruptors
"The Most Advanced Dorm Room ever"
Voice Recognition for the Mobile

Least I can do to honor them

Someone sent me a link to this mashup - which shows alerts and terror incidents across the world. It's enough to make you go hide in a cave.

I have 2 international trips coming up in September. My kids know better than to say it aloud, but wish I stayed close to home.

To me, though that would be admitting defeat to the bad guys. The best I can do to remember those who died today is fly without hesitation. Makes the hugs when I return so much sweeter.

The Big Stretch

Nick Carr and I agree on the concept of utility computing and how it should manifest itself in software and hardware as services. I disagree with him (like here) about the time to market. While utility/SaaS computing is the focus in his forthcoming book The Big Switch,  I see tortoise like speed in the way larger outsourcers are deploying those models.

So he sees an industry milestone when Cap Gemini announces an initiative around Google apps. Cap briefed a few Enterprise Irregulars today, and I was eager to see how a major outsourcer has embraced utility/SaaS concepts. But I heard little of that. They emphasized it was less of a cost play, more of a collaboration play especially to bring "disenfranchised" employees on the shop floor and elsewhere for who no one licensed MS Office tools for. More about "innovation" in their desktop support practice, and  expansion to handle PDAs and other devices beyond PCs.

Google Apps provide a bunch of functionality, hosting, storage all for $ 50 a user a year.  Outsourcers like Cap charge that much a month for help desk, desk side type services. I was hoping Cap would tell me how Google has inspired them to change their own delivery model. But there was little of that. Like I have written about EDS before - little overt change in their own business model.

Two of the biggest spend categories in technology are in outsourcing services and in telecomm services. Vendors in both categories do not really innovate much but instead pounce on innovations in software, hardware to sustain their large revenue streams. Till that changes, Nick's vision will remain a stretch goal for the industry.

Update: Dennis Howlett perspective. And Michael Krigsman. And Phil Wainewright. The 4 of us are the EIs Cap  presented to. 

Hill & Knowlton blogging etiquette

Hill and Knowlton apparently has a code of conduct for its bloggers.  Including "I will never publish information I know to be inaccurate" and "I will disclose conflicts of interest (including client relationships) where I am able to do so".

Nice.

Wish they would add another one: "We will not be associated with clients who do not sign up for the same code of ethics and tranparency."

Would send a very strong message to their clients in the technology world, so full of hype and conflicts. Of course, once you leave the tech industry, the world gets even murkier. H&K has its share of controversial clients.

The new world of transparency will be a significant balancing act for the firm.