deal architect

SAP, Innovation and Atlanta airport

"When you die and go to hell, Delta still makes you change planes in Atlanta" is an old joke among airline passengers.

Delta's storied hub is also its Achille's heel. Ditto with United and O'Hare. American and DFW. Airlines like Southwest, by offering non-stops between pairs of cities make a hub look so unattractive, other than for long, international flights. From my home town, Southwest now has nonstops to 30 cities. Hubs represent another potential point of failure and delay in an industry struggling with so many other issues. As Richard Branson says in this article "The American traveling public has proven, with their dollars, where the future lies for commercial air travel: next generation, low fare, point-to-point carriers."

But what does Atlanta have to do with SAP? Follow along with me.

For the last couple of years, SAP (and Oracle and other enterprise vendors) has been trying to paint itself as innovative. This week at TechEd in Munich, it smartly allowed its customers to show case innovations. So much better than SAP trying to market itself.

But these customers already "live in Atlanta". To them, SAP is a non-stop carrier since they live in the hub location. They have sunk so much into SAP and now are getting the incremental innovation benefits. But there are plenty of SAP customers who got fatigued or ran out of money as they tried to move to "Atlanta". Many others live nowhere near "Atlanta" (and use Oracle or whatever). If SAP can deliver point to point service - standalone applications - to them they would be interested.

The best innovation SAP should aspire for is a radical new delivery and business model - like Dayjet is trying. Small, bite-sized, affordable applications. Prettying up "Atlanta" and showing me widgets and bells and whistles cannot mask the fact that there is an ugly beast underneath. It actually makes me go gulp -  by reminding me they have not lowered my risk of being stuck in "Atlanta".

The PwC Consulting Phoenix?

Ray Wang writes about the end of the 5 year PwC non-compete with IBM. And speculates it will be a firm the larger outsourcers will need to watch. I am sure many at IBM will want to go back to the coziness and relative smallness of PwC.

But the market is so different than it was 5 years ago. The one mega-hit PwC Consulting had for the last few years before it was sold was its SAP practice which at peak had scaled to $ 3 billion a year. Today with offshore competition, and continued consolidation at top with IBM, Accenture and EDS in particular,  and with SAP license growth flattening, repeating that success would be tough.

Sure compliance consulting has been hot, but around most technology areas I see Big 5 heritage firms like Deloitte fragmented in many different markets and Bearingpoint struggling...not sure PwC would do dramatically better.

Of course, there is something to be said about quality of life at an enjoyable boutique...

Deal Architect II?

If you charge $ 11.50 for a hamburger - or the high end of these technology prices...  ...get ready to deal with this guy .

What I want to know is where the surplus is being auctioned -)

More innovation posts

On the New Florence blog

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The Hard Science of Videogames
Large Scale Thin Client Computing
Pico Projector
The Semantic Web
Spam Blockers and HIV
Peer-to-Patent

The SAP/Oracle version of the Google Home Page

Ask SAP how it would redo the barebones, overly-simple, too-much-wasted-white-space Google home page. They would start with this (page through to the end).

Next they would add another 8 steps. Reduce font size.  Replace repeated words with numeric codes and add a bunch of tables. Add Dynpro concepts.

You should end up with something like this. Of course, they would also provide 32 different language versions. 

Now bring in Oracle. They would use SmartClient design principles and PeopleTools. Add FlexFields in 30% of the fields. Drop 28 of the 32 languages. But add a bunch of stored procedures.

At this point you should be ready to bring in Lawson Software.

The Oracle "Scoop"

I have received a number of comments on the blog and in emails "congratulating" me on the Oracle "scoop" now that it has been confirmed John Wookey is leaving.

While I am grateful for the kind words, this blog is not about gossip or scoops. I write from a technology buyer POV. Product quality, project delays, economics - that's what they want to hear about. While I and a number of customers and Oracle insiders like John and think it will be a big loss, the focus of their questions is - what does this mean for Fusion apps? They can then make their assessments on whether it is worthwhile to wait or look for options. We still don't know till Oracle communicates the time line.

The other, more strategic question I would like to see answered: will Oracle slow down its rate of M&A? By now, it should be clear the pace of acquisitions outstrips the ability of the Oracle development organization (and frankly any organization's) to integrate and rationalize. Even the NASA moonshot was not this complex.

My hope is we have pried the door open at Oracle and it communicates much more detail at Oracle OpenWorld next month and on an on-going basis. Communicates keeping what the buyer, not what the investors, not the analysts want to hear. 

I would be honored if they allowed me with an opportunity to report such "scoops"

The "Fabless" Software Industry?

Has the software industry forgotten the art of writing and packaging enterprise solutions? Vista. SAP SOA. 5+ year initiatives. And still works in progress. Oracle and IBM mostly buying other software companies rather than building new product. With the promise that the M&A binge will bring shared service economies in various SG&A areas. Yet SG&A is still 5 to 10 times investments in new product development.

While those are trends which should bother every CIO, goodness is gradually happening in the form of vertical disintegration of the industry, similar to the "fabless" trend around chips over the last decade.

A slow but steady stream of software coding, testing and release management is being outsourced by software vendors. Some of the outsourcers now deliver multiple product releases a month, but the industry does not publicly acknowledge much of their role. Similarly, communities such as around open source software and others like the SAP Developer Network (SDN) are sprouting up to provide alternative support and talent channels. Finally, third party maintenance providers are showing up around many packaged software products.

So, we would end up vendors which design solutions. Others which code and test them. Still others which market and sell them. Creative, efficient specialists. Works in so many other industries. I think software is ready to also head that way.

Oracle's Blogger Overtures

This should be a moment to celebrate and congratulate Oracle for reaching out and inviting bloggers to Oracle OpenWorld in San Francisco next month. But read Dennis Holwett's post this morning and my dialog this weekend with two of Oracle's sponsors for the initiative - Justin Kestelyn and Jake Kuramoto.

Clearly, this is something very new for Oracle. Not sure how else to explain the unnecessary baiting of SAP, the weak argument that not paying travel expenses will keep us "impartial"(when their annual payments to Gartner, other analysts and advertising to various media could easily pay for flying and lodging a  thousand bloggers to the event), and the flippant explanation of anonymous blog comments by their employees (something I have written passionately about before).

But those details and language will smooth out as Oracle deals more with bloggers. There is less clarity around the big question Dennis asks: What executive access will bloggers get if we went to the conference? And my big question - what Oracle customer access would we get at the conference?

Would their execs allow an open dialogue with bloggers on Fusion, TomorrowNow, SaaS, other topics? Will they be no-shows like last year? And will they allow us to mingle with Oracle customers, not just shepherd us from one session to session? Till those big questions are answered, tough for me to invest 3 days of unbilled consulting time, and $ 2k in travel expenses.

So, here's complimenting Oracle on making a start. I am optimistic next year it will be much more compelling for me to go - expenses paid or not.

Outsourcers and Innovation

CIO Magazine has a nice, long article asking why while outsourcers talk innovation, they really cannot deliver it.

I would like to add 4 perspectives:

a) The best innovations outsourcers can deliver are in their own operations

The outsourcing supply chain is hugely inefficient. In spite of massive scale - as I point out in this note on Utility Computing - outsourcers cannot or choose not to deliver economies from that scale. In case of many western providers it is due to other inefficiencies and in case of many Indian vendors goes towards 45% gross margins and keeping Wall Street happy. Here are 5 areas outsourcers should be innovating their own operations before they offer to innovate their client's environments.

b) Most Outsourcers could not "scale down" to IT innovation projects

Outsourcers do better in big, mature IT spaces - .net, SAP etc where they can build capacity in thousands and sell to clients in units of 10, 50, 100, 500 staff. As I wrote in the MAGIC framework, IT innovation is often about small, intense teams and edgy, alpha type technology. Few large outsourcers could scale down - and forward - to consistently deliver value on such projects.

c) Most Outsourcers do not have an R&D culture

Check out income statements of outsourcing firms. R&D spend is usually a rounding error. Training is their big investment. And more often even the limited R&D applies to marketing efforts e.g. a lab set up to support a particular proposal or a "solution" center where small teams prototype and train on new solutions. They are usually just a training class ahead of client teams on new technologies.

d) CIOs should invest in their own IT and BP staff to move them away from KLO to innovation

Finally, the best IT innovation projects are about improving  specific business processes. Corporate LOB and IT staff know company and vertical specific processes much better than any outsourcer can expect to. Sure, you can get some supplemental staff from an outsourcer but get it in small doses. Besides I am a believer in allowing your own staff to evolve from transactional, keep the lights on activities to more challenging, innovation areas. Not every staff member will make that jump, but investing in re-training them on new technologies is to me far better than or investing in outsourcers - who likely trained on the new stuff a few weeks before they arrive on your innovation project.

Most CIOs are focused on squeezing their utility spend to free up innovation dollars. In the last couple of years compliance and security spend has skyrocketed. The urgency to reduce utility spend has never been greater. Outsourcers can do best by helping CIOs in that quest. Hundreds of billions of dollars at stake.

Go Bulls!

Florida has had 10 College Football National Champions in the last quarter century ...but none from its second largest city and my hometown, Tampa.

Out of nowhere, local USF is ranked 2nd in the nation. The halo effect it will likely create on the overall image of the school shows in the interest of my daughter as she thinks about college in 2 years.

2 weeks ago she knew nothing about the school, barely 10 miles from where we live. Hey, if this helps her figure out the way BCS rankings work, I am sure she will qualify for a math scholarship anywhere in the country -)