deal architect

Not your grandpa’s metrics and monikers

Charlie Wood tweeted yesterday about ARPU. And I asked him why he was using a telecom industry term and he responded it also applies to his subscription service. Byron Deeter who has several SaaS investments in his VC firm, Bessemer uses metrics like CMMR to monitor his portfolio. When it comes to social CRM, Paul Greenberg likes to talk about CRV

From the sustainability world, we now have new LEED ratings. Walmart has started scoring  its vast network of suppliers on a new set of  sustainability factors. Data Centers are measured on PUE. Professors at the Gund Institute for Ecological Economics at the University of Vermont have been touting new country level measures like GPI – arguing that traditional metrics like GDP are not measuring natural and social capital (and their depreciation). The refocus on rare earths needed for cleantech is introducing us to sections of the periodic table our forefathers only crammed for obscure class quizzes.

In medicine, genomes are creating a new language like “marker, rs6983267 on chromosome 8q24, has been linked to both colon and prostate cancer”.

Yup, it’s a new world. A world which needs translators like Sameer Patel and Oliver Marks who I spent time with them last week at Sapphire. What I like about both is in all the happy social talk of “millions of Twitter followers” and “attention currency” they keep an old-fashioned monetary view of measuring results from social investments.

Talking about metrics, I have become fascinated as do most book authors with the Amazon Ranking metric. It is an obsession similar to that of vendors who bring out their microscope to measure how many millimeters they moved in the latest version of the Gartner Magic Quadrant. It is shrouded in as much mystery. So old wives’ tales abound  “Bulk sales are reported by amazon as one unit” “You can game it by consolidating many orders on one day.”  “On certain days as few as 3 book sales could move your ranking by 50,000 places”

Yup, we could use Sameers and Olivers for getting the real skinny on the amazon ranking and how reflective the index is of book success in a world of multiple channels of brick and mortar outlets, bulk book sales to corporate buyers and residuals from international locations. Actually, we could use them everywhere as we get into a confusing new world of metrics and moikers around new medicine, energy and computing. 

SAP: Have the drugs worn off?

Asked Dennis Howlett after SapphireNow ended last week. It was quite a show. Superb logistics, great SAP hospitality, nice visits with several Mentors, bloggers, folks I seem to see each year at Sapphire.

Honestly, though, reality was all around the show:

• Rimini Street had a suite in a hotel nearby to remind us maintenance is way overpriced for a number of mature SAP customers
• NetSuite ran a truck around the event with an ad – a reminder they have been doing SaaS much longer and with 6,500 more customers than ByD
• On Tuesday, Microsoft helpfully brought salesforce.com into conversations with their frivolous lawsuit. Yes, the salesforce which has almost 70,000 more customers than ByD
• Even if you missed the 3 above, the large number of  outsourcers on the floor were a frequent reminder of the SAP TCO. My alma mater, PwC which sold its SAP (the bulk of its consulting ) practice to IBM in 2002, was back in force with a large booth. The good times are tough to keep away from.

That was the reality before Sapphire started. It still is reality we have to live with when it comes to discussing SAP. Particularly now the drugs from the show have worn off.

Dennis's own post-hangover assessment

SAP: Now get back to work!

My compliments to SAP yesterday for the logistics and the upbeat mood at SapphireNow have been widely reported. The impressive technology and logistics at the event, in particular, deserve a post on my New Florence innovation blog – SAP is helping put together the specs and videos.

What has been less reported is the exchange I had with Vishal Sikka, the CTO on Monday about how SAP just “spray paints” innovation. Dennis Howlett captured Vishal’s reaction on video here. As I left the conference, I felt even more correct about my assessment, and why SAP over the next couple of years will have to run harder than it ever has.

Let me discuss 4 areas where SAP has to really step up:

a) Partner productivity

It was surreal – it could have been 1998. The size of the partner booths and their parties at SapphireNow continue to be a vivid sign of an out-of-control ecosystem which easily adds $ 75 to 100 billion a year to the SAP customer TCO. So, ex Bearingpoint employees are now carrying Deloitte cards and ex-Deloitte employees are carrying Infosys cards but they are most adept at SAP modules like FI/CO, MM which are 2 decades old. You call that innovation? Similarly, there is little productivity on the hosting/infrastructure side. While SAP can promise them a world of reduced storage as we move to in-memory applications, for the next few years, SAP customers would do much better with cloud storage and processing costs which are often 5 to 20X lower than current on-premise costs. Shared application management that SaaS vendors can deliver can run circles around the so called lower costs offshore SAP partners can deliver. Upgrades take way long and are too chaotic in SAP world compared to 5 minute upgrades Workday and others are showing.  

In the meantime, SAP can barely get its act together about partner certification – some thing it should done a decade ago. SAP hates to be told this but whatever innovation it delivers has to be measured against an investment filter. Its partners bloat those investment needs tremendously. Have been doing for years. Aggressively pushing them to become dramatically more efficient would be one of the best “innovations” SAP can deliver.

b) ByD

I am pleased SAP is finally releasing this “prisoner”. But let’s not forget – it has primarily been shepherding 100 customers for the last two years. It needs to dramatically scale its partner channel and its cloud infrastructure to meet pent up demand in the 6 initial, but large, geographies it is going GA with the product. Frankly, I was disappointed SAP does not has appear to have paid much attention to this scaling. It somewhat naively believes it can rely on its outsourcing partners (yes the same ones covered in point a) for its infrastructure/application management growth. Sure, if it is willing to pay them $ 1,000+ a user a month (what many of its incumbent customers are paying today for SAP infrastructure and application support) while charging its customers $ 149 a month!

c) Verticals

Most SAP investment in its various vertical offerings have been around better analytics in the last last few years. There is a good reason why most non-manufacturing customers over the last decade primarily implemented SAP’s horizontal applications. Since then with industry after industry going through more regulation, consolidation and disruption after the economic meltdown of 2007-8, SAP’s vertical footprint is even less comprehensive than in the past. From what I saw SAP is planning investment in another layer of analytical and mobile extensions – but not much to the core transaction processing for most industries.

d) Sustainability

This is one area where SAP has been making plenty of noise. But while its tools help companies report carbon data, to my knowledge none of its functionality has helped any customer reduce that carbon. For an enterprise wide vendor like SAP with access to the shop floor, to the data center, to the logistics supply chain, that is a huge opportunity it needs to step up and take advantage of.

In the last year as I researched my book and interviewed 150+ executives I have an even wider view of all the innovation going on in various industries and countries. SAP only gets 10 pages out of 400 in the book. If I write a follow up in a couple of years, I hope SAP’s share in the book goes up. But to do so, it will need to make up for years of innovation under-delivery and shed the albatross of its partner ecosystem.

Till then, much to Vishal’s dislike, I will keep saying what SAP delivers in innovation is “spray-paint”

“Safra’s Top 10”

I was talking to Marilyn Pratt of SAP last night about women in technology – she is quoted on that topic in my upcoming book (excerpt here I posted on Ada Lovelace Day which celebrates women technology bloggers). She was fretting that recent stats show even less young ladies are pursuing science and tech careers.

And today a customer of Oracle pointed out Safra Catz’s recent speech at the Professional BusinessWomen of California conference. Whatever you may think of Oracle or Safra, we should compliment her if she can be a role model for more young ladies to reverse the trend Marilyn points out.

Things to compliment at SapphireNow

Ok, as we enter Day 3 of this event, let me lay out the stuff I have been impressed with/need to compliment so far

• A much more smiling Hasso Plattner than in prior years. We had a chance to spend some time with him yesterday in a breakout, and again at a press event. His beloved in-memory work is finally getting productized.
• Impressive job by Bill McDermott and Jim Snabe in their first 100 days as Co-CEOs to stabilize the ship . As 2 long-time SAP employees told me in different ways "There is more positive energy in the organization than we have seen in the last 10-12 years when Hasso and Henning were at their peak"
• A much more confident Vishal Sikka than I have ever seen before.
• Good to see ByD finally giving a chance to hit the road. Oh, it will be beaten up by existing SaaS players for the next year or two, but it is important is gets out and matures
• Nice job by Mike Prosceno to get us some of the elusive sessions with the executives above
• Awesome logistics by Stacey Fish who is helping with her first Sapphire effort
• Nice to see SAP give Jeffrey Word a chance to showcase an Innovation corner - I am looking forward to a personal tour
• The always-alert Bill Wohl - as if Sapphire was not exhausting enough he had a week's run-up handling media queries about the Sybase acquisition
• The SAP Mentors deploying their Flip cameras everywhere and subtly and not so subtly making their points to SAP executives
• The omnipresence of the blogger contingent at the event. The "Everready Bunny" Ray Wang tweeting from every corner of the massive event, Dennis Howlett taking timely videos everywhere, Larry Dignan summarizing key trends, James Governor regaling crowds. And as at every Sapphire, the chance to meet an ever new group of bloggers. Kudos again to Prosceno and Fish for keeping this vibrant group going for the last 5 years.

Are there challenges, of course - more on those later. For now, let us compliment SAP for many of the things it has done well to bring this event together.

SAP: Fox or Hedgehog?

Edward Carr, the editorial director of the Economist , is quoted in my book,  The New Polymath:

“Isaiah Berlin once divided thinkers into two types. Foxes, he wrote, know many things; whereas hedgehogs know one big thing."

Several EIs had a chance to sit down with Bill McDermott, co-CEO and Vishal Sikka, CTO of SAP (separately) during SapphireNow. I asked them both:

"How long can SAP continue as a software pure play, when Microsoft is spending billions on data centers, Oracle in buying Sun, IBM and HP continuing to expand their foot print?"

Both in different ways said the same thing

"Companies don't want stacks. They want specific functionality. Stacks are about vendor lock-in. We want to partner with best of breed hardware, outsourcing firms"

How to reconcile this comfort with partial coverage with SAP's desire to own the complete functional footprint?  Like a fox, SAP also wants to roam free across every world geography and industry.

I believe, in spite of all their protests to the contrary, SAP will similarly need to expand its presence across the stack. One of the least pleasant discussions with SAP management, year after year, is around its partner ecosystem - the costs, the overruns, the failures. Till SAP gets its hands deep into data center operations and massively scaled application management, it will continue to leave customers to the mercy of its partners.

In the meantime, McDermott tells his faithful during a press conference "In the end, suites always win". Stacks bring lock-in, suites do not? Now that's what I call crazy like a fox.

Larry Ellison makes this industry so entertaining

In this interview, Larry Ellison picks on ex Sun CEO Jonathan Schwartz for blogging. Am I the only one to find it ironic that the title of the story is his about his role in Ironman 2 and he talks of “distractions”? I guess we should not even go near America’s Cup and his other interests.

What is impressive is the vision of becoming the IBM of old.  Let’s see – that would be based on the mastery of his executives in improving the top line of the various acquisitions Oracle has done? It’s so transparent from the detail about acquired products in their quarterly numbers!

But what do I know? I am just a distracted – and very amused – blogger. He just delivered my ROI for going to see Downey Jr.!

“It’s about customer choice”

SAP executives are saying the Sybase database option is about “customer choice”

Given this customer centricity mood SAP finds itself in I am going to ask them next week at Sapphire when they plan to:

• support Zoho and Google Docs not just Microsoft Office so their customers also have desktop choices
• offer their customers Rimini’s basic maintenance at about half the price of their own
• resell NetSuite and salesforce.com to customers who want more proven SaaS alternatives to ByD

The 2 second advantage...the 2 culture disadvantage?

I had a chance to spend a couple of days at the Tibco TUCON event. In a world full of light social-this and mobile-that, this was as close to enterprise porn as you can get. Large, complex organizations from the Interpol to Deutsche Bank to Southwest Airlines described complex applications handling billions of events at lightning speed without breaking much of a sweat. Hence the 2 second theme of the conference. Sandy Kemsley has done an outstanding job summarizing many of the presentations (live blogging in keeping with 2 second time theme) and Dennis Howlett plans to post several videos of the presentations.

It was refreshing to see most of these executives talk business. In fact, the Reliance executive put up an architecture slide and said "that's my mandatory technology slide but I will not dwell on it. If you have questions on that, I will wait for you outside". A later breakout conversation I had with with Alan Harrington of Tibco was even more fascinating as he talked about smart grids and impact on utility customers, operations and assets, and sophisticated retail customer analytics. I came close a few times to calling Wiley and saying - stop the presses, I have another chapter to add to The New Polymath. I had tried to get Tibco case studies in the book, but something fell through the cracks in their marketing, and we could not to my disappointment.

In contrast, the expo hall was all about tech jargon - CEP, SOA, BPM etc. I ran into many Gartner colleagues I had not seen in a decade - yup the same culprits who unleashed those TLAs on the market:) This is classic IT I thought - little alignment with the biz talk in the main tent.

So, how do you reconcile the two very different business and IT cultures? I asked Rourke McNanamra of Tibco. Is it Accenture or another consulting firm which is the bridge? He said a few years ago, it took pioneers like Gary Loveman at Harrah's to define a strategic technology vision and guide Tibco. Starting a year ago, he said he has seen more and more IT groups comfortable talking the business talk.  You have to do a double and triple check to ensure they are not from the business side. No Accenture needed  - well at least not for the visioning. Still need them and other SIs as supplemental staff on the implementation.

That to me was the biggest aha from the conference. IT people in complex organizations (I saw others from Dow, Bank of America, Citigroup in the hallways) talking business. And Tibco, a classic messaging, middleware, IT infrastructure, TLA company able to keep up. And deliver it FTL.

I am going to miss the concert by Huey Lewis this evening as I am headed home. But Tibco may want to bribe him to sing that's the power of Love , er Loveman.

SAP-Sybase: First Take

First of all, I wish SAP had not done this. They have enough on their plate without adding another layer of complexity and chaos to distract management.

But having said that, Sybase is a nice move, if it can give its customers a choice beyond Oracle, and help Dr. Plattner with more resources to deliver on his in-memory/columnar data vision. Of course, a decade ago SAP and Sybase had religious differences over use of stored procedures and other Sybase proprietary features - which prevented the platform from blossoming as one SAP customers could reliably depend on, which led to Oracle's dominant position in the first place.

Even more impressive is John Chen's transformation of Sybase to a mobile messaging platform for most major telcos around the world. If that can be leveraged into mobile enterprise applications, it could be a nice extension to the SAP backbone.

But I seem to recall similar excitement when SAP bought Business Objects. That got much of the attention when the core needed it. The core needs it even more now. So, I still wish they had not done it - at least not now.

Sure we will hear a more nuanced viewpoint next week at Sapphire.