deal architect

Buyers and Tech M&A

Dennis Howlett does a good job summarizing what I like to say about technology buyers and their  lack of influence on M&A in the industry. At least, pre-transaction. Carl Icahn who invested a float of less than a billion for a few months has way more influence today on the future of BEA than its customers which have spent over $ 10 billion with it over the years.

But hey, that's our system...boards have to put investor interests over those of everyone else's ...and my 401K mutual funds have benefited from at least some of this M&A.

Having said that the erroneous view in a number of tech vendors is buyers do not mind tech M&A. In fact, a journalist called me earlier in week and said he had polled CIOs and they are not worried about all the M&A activity. My response: They really should not be overly concerned - because most technology markets are still reasonably fragmented as I wrote here and here. Plenty of technology companies generating revenues and shareholder value through technology magic, not financial engineering.

Post-transaction, though, buyers do get their say. And prompt statements like "Thanks for being PeopleSoft, Siebel AND Oracle licensors or Lotus, Tivoli AND DB2 licensors or WAN, mobile and voice customers...here's your volume discount."

CIOs also see much of M&A as "Mature and Aged". There is a reason why license revenues of so many acquired companies drop off after the transaction is done. CIOs know many of the transactions are financial and the parent is primarily buying maintenance streams.  And that is a cue to start negotiating lower maintenance, look for third party maintenance and start planning for sunset of the acquired company products. 

And asking louder about that volume discount.

Bravery and Astronauts

As we scare our wits out this Halloween, it is useful to remember just how brave our astronauts are.

As a reminder on how brave, I periodically go back to the  speech Nixon was prepared - but thankfully did not have - to deliver during the Apollo 11 mission.

Last month, I was on a flight with astronaut Suni Williams. I wanted to ask her all kinds of questions about her 6 months in space. But I settled for an autograph for my daughter. She graciously wrote "“Chess will challenge your mind to great heights”:

Indeed. She could have also written "great bravery"

Here's wishing the crew of STS-120 Godspeed.

Gulliver's Travels

Carter Lusher, who heads Industry Analyst Relations at HP in a recent post wrote:

"Today there are the established firms (e.g., AMR, Forrester, Gartner and IDC) that have been around since the 1980’s that on the surface have not changed all that much. Then there are the insurgents like Gartner alumni Vinnie Mirchandani at Deal Architect and James Governor of Redmonk with his Monkchips blog who claim that that they are becoming just as influential as the dinosaur firms. As a consequence, we in the AR community should pay just as much attention to them as old firms."

And I invoked Jonathan Swift in the response I left him:

"Carter, greetings. Where exactly did you see me claim I am as influential as an analyst firm? A far more accurate comparison would be small firms like mine are Lilliputs to your Gulliver. Individually you can choose to engage or not with them, but collectively they represent a growing market influence.

While I represent just one perspective, might help to explain our business model and the 3 tracks in how we interact with vendors:

a) CIO advisory services. We help clients evaluate technology solutions and negotiate various technology contracts. We derive majority of our revenues from buyers. When we work with vendors it is when they are themselves procuring technology. So very different from analyst firms which get a sizable percent of revenue from vendors. The best time to "brief" this track of our business is during a competitive evaluation with a solution customized to the client's needs or RFP. Clearly, only vendors invited to that client situation are allowed that opportunity for such a conversation.

b) I also happen to write 2 blogs - New Florence, New Renaissance, which focuses on innovation in technology and Deal Architect, which focuses on economics of technology. Our sources for blog materials vary between the two. On the New Florence blog, I welcome citations from vendors which showcase how a customer has taken advantage of something alpha or beta from their labs. I have cited HP a few times on that blog based on our own research, without a press release from you. But if you have something truly innovative which a customer can vouch for, I would welcome a ping.

c) On the Deal Architect blog, a number of topics are driven by market trends we see in our advisory business. The best way for vendors to engage there is through blog comments or through a guest column. So when I quote BusinessWeek saying HP printer ink is more expensive than like amount of Dom Perignon, make your case why you think your pricing is justified. Or when I ask why your CIO tells the world he is going to cut his IT spend in half, why your customers cannot expect similar advice around their spend with HP, debate me why what's good for HP is not good for your customers.

So across the 3 channels - our advisory business, New Florence and Deal Architect blogs - we touch a number of industry buyers. Far more in numbers and global reach than you would think a small firm could. Let's not get delusional, though - compared to Gartner, our individual influence is puny.

But many of us Lilliputs are banding together. My advisory firm goes to market with a couple of larger consulting firms. I am part of a group of bloggers called the Enterprise Irregulars. Carter, these guys are smarter than the talent we represented at Gartner and are pioneering thoughts around enterprise software, emerging web 2.0 and SaaS markets. There are other similar other groups in other technology categories.

You have to make up your mind whether it is worthwhile to engage with small firms and bloggers at all - and whether one on one, or through groups like the Irregulars. But I can tell you traditional analyst briefings do not work as well - you have to be ready for interactive and transparent conversation. And you will find most of these firms are far more independent than industry analysts."

More on UI

Must be the blog topic of the month...

Nick Carr
Khoi Vinh, Design Director at NY Times
Thomas Otter, at SAP
Jason at 37Signals
Dennis Howlett
Mine

and of course a bunch of technical posts on Leopard, Windows Live and other new UI.

Let's face it most enterprise UI "progress" is incremental and involves cute motifs, crisper edges -like the Vista Aero Interface. And a litany of gaffes.

Capturing data accurately, once at source has long being a design principle in automating business processes. Personally, I get a lot more excited when I see a vendor showing me scanners, bar code guns, sensors etc which capture data automatically. Even better a vendor with cajones to say - you know that entry process in past release which took up 3 screens - gone!

Alright, cannot blow away all screens?...at least show me a Surface Computing interface. Show me data representation like in IBM's Many Eyes

Or put a voice interface on SAP. Then instead of prettiness, we can argue about squeakiness -)

 

SAP's abstract UI

Ok, so this will make me even less popular with SAP...

...but I could not believe Thomas Otter at SAP questioned Dennis Howlett "Since when were you a UI expert too?"

Dennis admits he is not, but it would be one thing if Thomas worked at Apple...but someone from SAP questioning anybody about UI?

But SAP should be even madder with Paul Kedrosky for pointing out this quote in the WSJ from Nimish Mehta about Shai Agassi - both recent SAP alum

""I've never seen someone as skilled as Shai at selling abstract concepts."

The pretty UI must have helped in the sale -)

All the News that's fit to Analyze

Dennis Howlett analyzes Gartner's analysis of the John Wookey news at Oracle. He points to the softball analysis. He does not modestly point out - it was released 12 days after bloggers like him broke the news.

Paul Kedrosky writes about a financial analyst - Shaumo Sadhukhan - and calls him the "happiest analyst in the world" for handing out attaboys to companies he analyzes. Blame him similarly for softball analysis - but don't blame him for being tardy.

He says the stuff right there on the earnings call -)

What's wrong with an independent BEA?

Now that the Oracle offer for BEA has lapsed, Larry Dignan lays out various scenarios for the company including one where BEA stays independent.

He says : This option is arguably the worst. As an independent company BEA is now wounded."

To which I posted a response on his blog:

"As a proxy for buyers, not investors let me ask - what is wrong with an option 4 - an independent BEA? We have created this hysteria that independent sw companies are doomed. Where is most of the innovation and productivity coming from in the industry - not the big guys, but the Google's, the salesforce's. We should be pushing the guys in the middle like BEA to benchmark themselves more against the innovators, not push them to get consolidated in to the expensive laggards."

Update: Several financial analysts beat up on BEA. You would think these days the only way to increase shareholder value is to sell out. Next time I hear one of the analysts hype up the SOA and middleware market I will ask them - then how come you did not have much faith BEA could keep growing and generating value that way?

Let the Man Go

What a messy case. Illegal alien decides to go home for good. Takes all his savings - $ 59K - in cash. Airport security spots the stacks of cash and confiscates it. Over 10K in cash and you need to report it so the government can check if you are laundering drug or other dirty money.

He decides to stay in US to fight for his money. Because he is illegal, courts say he should be deported. He wanted to anyways.

I say give him his money and send him on his way. Easier said than done. Been going on for over two years now.

Going to Oracle OpenWorld

Last week, I was pretty certain I would be nowhere near San Francisco week of November 11. Oracle had invited several Enterprise Irregulars to OpenWorld, but the conversation around that had turned off several of us.

Then it hit me how petty the conversation had become. Here was a fellow blogger, Jake Kuramoto, reaching out to us (outside Oracle's community of internal and partner bloggers), and I want him to have a success. So I called him, apologized for having contributed to the pettiness of the blog conversation, and asked how I could help with the OpenWorld agenda for bloggers.

Jeff Nolan did the same and has shared quite a bit with Jake about how he facilitated blogger participation and executive access at SAP events. I also sent Charles Phillips, President of Oracle a note and requested at least some executive access to bloggers during the event. Charles acknowledged my note, but realistically given the 40K attendees vying for executive attention and only 2 weeks to go, not sure there will be much beyond a handshake.

But, with an unclear agenda, am I (and other EIs) stupid to be investing 2K in travel expenses and in 4 days in travel and the event? Maybe so. But Oracle is a significant player we all cover, and a door has been cracked open and we get a chance to encourage them to keep opening more. Oracle, I believe, will benefit from the thought leadership several EIs have provided around the Web and Enterprise 2.0 meme. Several EIs did a call with Lawson Software last week, and I think they were pleasantly surprised at the insight many of  us had on the enterprise apps market that they are not hearing from industry analysts and tech media. I hope Oracle gets a chance to also see that and continues a dialogue after the event.

Besides, it is an opportunity for me to meet many friends and fellow bloggers and hopefully, many of my readers at the event. Please drop me a note and we can try and meet up.

Oracle and Jake, thanks for the invitation. We look forward to your hospitality. In turn, as I wrote when SAP first invited outside bloggers to Sapphire  in May 06, we come in transparency.  Look forward to it.

Daylight Savings - account overdrawn

I was with a group of Europeans last week and the issue of time zones came up. The US and Canada moved to an earlier application starting this year - second Sunday in March, instead of first in April. It will also revert later - first Sunday in November, instead of last in October. The first 3 weeks caused plenty of chaos to many IT departments, and I suspect this coming week will cause some more.

Of course, a heated debate ensued around my comment that any given calendar date exists at some point on the globe for 50 hours. Discussing the vagaries of time zones with a jet lagged group whose first language is not English makes for some fine dinner conversation -)