deal architect

The New Polymaths – Leo and Ray at HP

Couple of years ago I would have been shocked at the announcements of today, today it merely deserved a tweet of a “wow” but little additional surprise.

You see I already profiled Ray Lane in my book for having made the transition from infotech at Oracle to cleantech at Kleiner Perkins

“The discovery process has made Lane a walking encyclopedia on fuels. He can rattle off ethanol yield from sugarcane versus that from corn and other biofuels. He can compare fuel technology innovations in Germany, Brazil, and Israel. It’s a far cry from the cash flow metrics and global operations he managed at Oracle.”

With his software and services history (Booz, EDS, decent sized Oracle Consulting) he also brings some of that perspective to HP. And if you buy into the trends I profile in my book on how GE, BASF and so many others are marrying infotech, cleantech, biotech, healthtech etc, HP could use his guidance well beyond its own current infotech focus.

Leo – let me start by complimenting him by saying that if he had been there a month ago I would not have dared used the word wimp anywhere near HP :)  We had a couple of throat clearing meetings while he was at SAP. 

While Leo does not have the diverse technology background Ray does, he makes up for it in his global reach. Last time we exchanged notes on countries visited he had me beat by 40 countries and I have been to a few myself. A definite Polymath in the geographic dimension.

So, HP is getting a  nice two-fer package.

Of course, the gossip columns will get plenty of sideline stories (Leo will try to acquire SAP, Ray would love to tangle with Oracle etc, whatever). I think more of customers and I hope Leo learned from the last few years at SAP. I think he focused too much on Oracle and his bigger SI friends, and not enough on cannibalizing them with BYD and other disruptive technologies. He will be tempted to similarly focus on IBM, Apple, Oracle, Cisco, CA, Accenture and TCS at HP when the disruptions are coming from Cartridge World, salesforce.com, Cognizant and amazon among others. In many ways HP’s core ink , software and services products are far more vulnerable than SAP’s software products were. I always thought Mark Hurd was given way more credit than he deserved for leaving HP vulnerable in those markets.

Enough analysis – here’s a cordial congratulations. Look forward to some more throat clearing sessions down the road!

The “Social” side of the Internet of Things

With so much talk about social networks, E2.0, collaboration etc, it was a nice reminder from Kim Nash about the Internet of Things - sensors , robots, RFID tags etc. As many episodes from my book extracted below show, they are helping us with an amazing range of activities and they are chattering with each other and with us in far greater volume than even the most of social humans do with each other.

• ”On YouTube, you can see a video where the employees at a Zappos
  warehouse based in Kentucky actually had a derby for their robots. The winner, not too surprisingly, was a robot named Robotariat, as in Secretariat, the thoroughbred legend who won the Triple Crown in 1973…Instead of having people walking around and looking for ordered items, the robots (from Kiva) do the running around and bring the items to the workers, who check the orders and seal them in shipping boxes.”
• “… the wearIT@work project, financed by the European
  Union,  is piloting wearable technology for aircraft maintenance among other applications. A vest allows maintenance engineers on aircraft to have hands-free access (via a head-mounted display) to data from onboard systems, repair manuals, spare parts availability, and communication with other colleagues.”
• “Cities around the world have been enthusiastic sensor adopters. The
  city of San Francisco, for example, uses sensors to alert citizens about open parking spots via displays on street signs, or on screens of their smartphones. Stockholm uses sensors to monitor peak-hour traffic. York, Pennsylvania, has sensors that monitor for gunshot sounds to alert emergency services. Cambridge, Massachusetts, has sensors to monitor air quality. Under its BioWatch program, the U.S. Homeland Security Department has been deploying air sensors in several cities to detect the presence of potential biological weapons.”
• “(Tony McCormack’s) cows (in Ireland) have transponders that help him customize the quantity and composition of feed for each one. Try doing that manually, when cows eat on average eight times a day. On large farms, farmers use GPS to apply fertilizers more precisely. McCormack gets animated when he describes how he had heard GPS tracking had helped track down stolen tractors being shipped to Poland.”
• “In 1981, the band Styx famously sang “Domo Arigato, Mr. Roboto” that’s “thank you” in Japanese. They were prescient. Japan is the world’s largest robotics supplier, but most of the robots have been for industrial uses. Japan has more recently been focusing on “service robots,” particularly for care for the aging population. The robot market is expected to total around ¥6.2 trillion in 2025, of which ¥4.2 trillion will likely be linked to day care and nursing.”
• “The (BP) CTO group worked with the maintenance facility in Houma, Louisiana. With trucks and forklifts with heavy payloads coming and going all the time, it can be a dangerous place. Serious injuries and deaths have occurred from people straying. CTO helped develop a state-of-the-art safety system using RFID and ultra-wideband
  radio technologies. Staff members and visitors wear badges that relay their locations to a computer system that checks positions against rules for authorized areas and sounds alerts if people enter restricted zones or visitors stray from escorts. Staff, escort, and visitor badges are distinct, with different rules, permissions, and interactions. If a trucker waiting in a safety zone while his truck is being unloaded decides to return to his truck, say, to retrieve his cell phone, as soon as he crosses the yellow line, he hears over a loudspeaker, “Please return to the waiting area; please return to the waiting area. . . .” “
• “Of course, the data from these billions of sensors is leading to opportunities for data mining. Sun Microsystems has developed its Yggdrasil (as in the mythical Norse ash tree whose branches extend to the heavens) framework for use with sensors and other small, wireless, embedded devices. It factors their unique characteristics: limited power, need to operate unattended under harsh environmental conditions, the fact that many devices “sleep” often to conserve energy and wake up periodically for a short time to record and/or transmit sample readings. The Yggdrasil framework is designed to make it easier for field researchers to create applications that collect sensor data over long periods of time—small bursts
  of data, but voluminous in aggregate.”

Does Oracle have a Master Plan for business applications and services?

Larry Ellison made his ambitions pretty clear at Oracle Open World last week about becoming as big and broad as IBM. But while he may well be on his way on the hardware side with Sun and Hurd in tow, what is unclear is how he competes with IBM Global Services with a limited business application and services portfolio.

A decade ago, Larry Ellison called Ariba and other web companies like CommerceOne “single feature, not single product” companies. Now he honestly needs to acknowledge his applications are "features" compared to complex, Polymath solutions many companies are increasingly bringing to market.

There is Oracle’s major customer GE which is packaging software algorithms to optimize locomotive trips,  to manage home energy usage , to run its healthcare devices and so much more . There is Oracle’s America Cup partner BMW with tens of millions of lines of software (and sensors and other tech) in its cars. There is the former Oracle president, Ray Lane presiding over a wide portfolio of cleantech applications down the street at Kleiner Perkins.  Little of  what Oracle showcased around Fusion last week would be considered a feature, let alone a product, in what GE or BMW or KP are packaging or investing in.

No disrespect to Steve Miranda or Anthony Lye and other smart folks involved with Oracle applications, but I did not hear of a Grand Strategy around applications. And hopefully, they don't believe a planned joint innovation center with Infosys will give them that. With a phone call or two they can get access to thinking at GE, BMW and KP and many others. They really should if they want to scale their application and related services business in a meaningful way over the next few years.

Gartner’s “IT Debt” Scare

Gartner made a name starting in the mid-90s forecasting the estimated cumulative cost of Y2K remediation. I was there – and the big numbers it bandied about helped focus enterprises on the core problem. But it also led to hype, panic buying (and exaggerated market declines on the other side of the peak) and many, many poor IT investments. Since then Gartner has picked on many events – such as the introduction of the Euro between 1999 and 2002 - and piled up potential costs to come up with a single, usually scary, related aggregated IT project cost forecast.

The latest is what Gartner calls the IT Debt crisis:“the cost of clearing the backlog of maintenance that would be required to bring the corporate applications portfolio to a fully supported current release state.” It estimates it to be “$500 billion in 2010, with the potential to rise to $1 trillion by 2015.” At its Symposium next month, this should draw folks to the session "Building the Compelling Case for Application Overhaul".

The problem is there are many good reasons to NOT upgrade/modernize many applications, and I believe Gartner is out of line using words like “debt” which have guilt associated with them.

Here are some realities that need to be factored in the modernization analysis:

• Many applications deserve to be consolidated, not modernized: While lots of good work has gone into data center consolidation and virtualization of servers, applications have lagged in such scrutiny. There is duplicative or minimal “effective” functionality in more applications than you think. A portfolio analysis which rigorously inventories applications by complexity, criticality, stability, usage volumes etc will show 10 to 50% of applications could be retired without skipping a beat.
• The packaged software maintenance model needs to be radically revised: Those who have moved to third party or self-support of many packaged applications – and in the process chose to stay on older releases - deserve kudos not criticism. There is little incentive for them to upgrade to the latest release especially with software vendors who arrogantly expect you to pay for arrears - years of “missed maintenance”.  Look at the track record of the software industry: Vista. Long delayed Oracle Fusion applications. Stream of Google products which never leave beta status. SAP ECC 6.0. See many companies voluntarily lining up? Usually it takes threats from the vendors (there is a term for it – “forced march” evoking brutal, hostile wartime conditions) to get the customer bases to move, when it should be business ROI.  Shockingly, those who stayed with the original software publisher on older versions are expected to pay a premium for long atrophied versions. This for minimal support as vendors have moved to automated and self-help models, break fix from much cheaper offshore locations and developer community models. The packaged software maintenance model is broken. Don’t reward software vendors for it by staying on their upgrade treadmill at their arbitrary 18 or 22% a year of software “license value”, much of it in unused shelfware.
• Application/Business Process outsourcing deserves an overhaul: Starting with Y2K, and expanding over the last decade, application maintenance in many organizations is now done by the Accentures and TCSes. They have reason to perpetuate, not retire or modernize, applications. When they at the outset take over an application inventory, most go through the portfolio exercise described in a. During the course of their contract few of them offer to refresh their portfolio analysis. Example, many organizations went to a BPO model but continued to support their own Oracle or SAP applications. Why not let the BPO provider move to their own transaction engine and retire your own? Also expect more –most outsourcing firms have mostly provided “single tenant” support when SaaS models are showing huge productivity with multi-tenant, shared service models. Even if you have to keep them in single tenant mode, challenge their metrics. Effort per ticket or enhancement should have been steadily declining. No point bragging about CMM Level 5 or Six Sigma unless it shows in continuous productivity. Finally, make them reevaluate their delivery models – wage inflation, currency impact have made India, in particular far less compelling then it was a few years ago.
• Modernization projects need to become much more agile: We have moved into a world where SaaS vendors are doing upgrades in background and bringing systems down for just 5 minutes. In contrast many enterprise upgrade projects require long weekends to execute and months of planning/preparation/ and yes prayer. Don’t attempt to modernize applications until you challenge your IT staff (and your system integrators) to dramatically rethink your change management/upgrade processes and making them massively more agile.
• “Oldies can be goodies”: Finally, let me invoke a former Gartner analyst, Erik Keller. In my book on innovation which, of course, encourages all kinds of modernization, he provides pause as he now helps special – education children and cancer victims with gardening/horticulture projects: 

“We make our kids understand that they are stewards of the environment and the success or failure of the garden is in large part due to how they take care of their plants and the soil. At the end of the season, you measure success by how much you have harvested and how well you have left the garden for next year’s farmers. In the technology business, we often don’t think about tomorrow’s impact of today’s actions. The term “legacy ” is considered a negative in technology whereas in farming it is a positive.”

By all means frequently review your application portfolio but plan your actions out of business payback and expect many efficiencies pointed out above.

But don’t do it out of guilt - you are not “indebted” to anyone.

Dennis Moore adds his perspective - may be the vendor owes you...

OOW Shoutouts

In the sea of people that is OOW, I want to call out a few people for special mention

Steve Miranda – Kudos for getting Fusion applications to the shape they are in with all the executive turmoil, rumor and innuendo around applications at oracle.

Susie Penner – always friendly face of Oracle Communications who has the thankless job of herding bloggers 

NetSuite team – for a nice, relaxed reception (with the nice tough of a harp player) around the OOW event

Ray Wang – I have seen him order oodles of food at restaurants for group dinners. This week I saw him share a power strip and MiFi with everyone.  He truly is a generous heart.

Ann Livermore of HP – this may sound like a strange choice, but while HP’s keynote on Sunday was soundly booed, it is important to step back and see she is just doing her job. She is a classy lady who takes barbs for lots of stuff.

The booth staff – Oracle and partners – standing around, smiling at strangers and scanning their cards is exhausting work. Hope you put your feet on ice at the end of each day.

Oracle – The Age of Affluence

The economy may be in turmoil, and the national mood is screaming for fiscal conservatism, but for a few days this week there were no “tea parties” in downtown San Francisco.

There was Larry Ellison invoking amazon a few times this week, but with nary a mention of how Oracle’s own Exalogic would be available on-demand with compute and storage on an hourly basis,  not massive multi-year capex.

Many of my colleagues praised Fusion applications for their look and feel and embedded analytics, but I did not hear many ask – will they be priced at $ 50 a user a month, not the amortized cost of large license plus 22% annual maintenance plus large Accenture project plus large HP infrastructure cost plus large annual Infosys application support?

I did not hear anyone go “Oracle decided to write another fork of Linux? Did they check with customers before they spent that R&D” I did not hear much on what Oracle’s lawsuit of Google means to the likely cost of Java development going forward. Oh, there were signs of protest - many keynotes at OOW had people headed for fresh air, but few threatened to walk out with their checkbooks.

Having researched for my book the speed and economics at which the Chinese are innovating in cleantech, transportation and so many other sectors, I cringe when I see so many Western dollars go into back office and infrastructure IT. Much of the $ 3 trillion in annual IT and telecom spend, in fact.

While Oracle and its ecosystem make up only a fraction of that I did ask myself a few times this week – how would the Chinese spend that money? Likely not on a pretty looking HCM or a Linux fork.

Gartner probability of less than .1

So, Karen Tillman, VP of Corporate Communications at Oracle asked to meet Dennis Howlett and me after this post about bloggers versus analysts. It could have been a screaming match or worse. Instead it was a civil drink at a nearby hotel as Dennis describes, and when she saw a NetSuite bag I was carrying she asked where I got it. When I told her at a reception a few floors above she asked to be taken there.

What happened next was the most unexpected turn I could never have anticipated. Karen was greeted with the loudest, squeezyist, longest hug I have ever seen. Wish I had have caught it on video. The hug deliverer was Mei Li, Senior VP of Corporate Communications at NetSuite. Those who know Mei know she is a wonderfully passionate person and Karen and her go back a few years. We spent the rest of the time mingling with the crowd there.  Fittingly, the NetSuite reception was “color blind” – analysts and bloggers and journalists of all stripes were there.

As Dennis elaborates in his note, Oracle could do so much to improve communications – not just with bloggers. But this evening turned out to be far more pleasant that any of us could have expected .

Two steps forward, one step backward for enterprise bloggers?

This is an awkward post to write. I am at Oracle Open World as a guest of the some very hospitable individuals at the vendor. Yet, something happened yesterday which I think is important for the social world to discuss and debate.

Dennis Howlett, Frank Scavo, a couple of journalists and I were initially allowed into a session then asked to leave because we are not “analysts”

Five years ago, I would not have even expected to score an invite to OOW. But in the last five years, we have reached a point where bloggers were given the front row seats at the salesforce.com conference, Dreamforce last year – ahead of analysts and journalists. We have a point where SAP executives carve out time to meet with groups of bloggers at every one of their conferences.

And probably, the best example of the “color blind” world I thought we are moving towards has come twice in the last month. At a Workday session, Gartner analysts sat next to ZDNet bloggers  and independent bloggers and Forrester and IDC analysts. The day, helped of course by the openness Workday employees showed, was something to behold. Rapid fire input back and forth -your affiliation did not matter, your input did.

This weekend Ray Wang hosted panels at a pre-OOW event which had an Oracle user group executive, a ZDNet blogger, an IBM executive, a CIO magazine journalist and an independent consultant (who presented data from a survey of Oracle customers his firm had recently conducted) and independent blogger like me. Again, the affiliation did not matter, your input did.

So, yesterday was a bit of a wake up call. When I pointed out to my Oracle contact that the definition of “analyst” seemed arbitrary – there are folks who only sub-contract to an analyst firm but were allowed in the room, others who run one person shops, or someone like me who is an alum from an analyst firm Gartner, the response was:

“ There many factors to how some of these things get put together – some of them obvious, some not so obvious.  “

I asked my Enterprise Irregular blogging colleagues for their reaction, and several of them felt “it’s just the Oracle way to show who’s in charge”. Couple pointed out it is also the Apple way.

One felt bloggers are snarky and just don’t agree to the sort of decorum analysts do. Surely journalists have higher standards – why exclude them from such sessions?

Others felt like product executives at Oracle would love to talk more, but the communications folks don’t allow them to.

In fairness to Oracle, they at least invite bloggers. Many vendors have not even discovered us.

May be I am naive. Maybe the Workday or Ray Wang “rainbow” is the aberration. I sure hope not.

Readers?

Fusion Confusion

The painfully long NDAs Oracle has had industry analysts under expired yesterday. Last evening was supposed to be the finally here (after “half way” was celebrated in 2006) coming out for Fusion applications.

Instead, Larry Ellison sounded tentative. Go ahead and deploy Fusion if you are “brave” and "God bless you if you do so”

It should be one of Fusion’s main selling points – that you can deploy in private or public cloud flavors. Instead there was a rambling part professor, part sniper at competitor, part cloud in a Exalogic box talk. The message got diluted in the “You can define the cloud however you want” tone. No wonder Marc Benioff, CEO of salesforce.com tweeted at the end “Beware of the false cloud”

Fusion is a transactional system. It should be focused on next-gen  collaboration, supply chain optimization, crowdsourcing, social networking and predictive analytics functionality we increasingly need. Instead the 5 minute demo focused on more traditional slice and dice with a painfully long time on a slide featuring bar charts. And the biggest selling point Larry brought out was “it is built on industry standard middleware”. What exactly does that have to do with newer models of recruiting in virtual worlds or agile implementations?

“Oh, only a sneak preview. More coming Wednesday.”  Sure - we are half way there, already. Again.

Burning Question: Is there a truly balanced IT scorecard?

A relatively new CIO asked me what top metricsI would recommend  he measure his IT organization against. I remembered what Maynard Webb, recounting his experience as CIO of eBay had written when he reviewed my book  “ “CIOs have to be masters of many disciplines—they are technology strategists, business partners, project managers, operations gurus and budget analysts."

So, I rattled off a few metrics focused on economics, service levels, customer satisfaction, innovation etc.

Then I reached out to Chris Curran who in his usually wonderful sharing attitude not only responded but shared with the world this blog post.

I also got feedback from other IT executives. Most of them cautioned – focus on a few key metrics.

But then each emphasized their own IT experiences. One I respect as very innovative highlighted IT innovation and alignment with business and customer/revenue goals. Another who is a damn good fiscal manager had SOX deficiencies as one of his key metrics. Yet another who comes from a lean manufacturing background emphasized IT process metrics. Another who works in a global, very decentralized company emphasized internal relationships and  customer satisfaction metrics. I know of a CIO whose users expect high-touch local IT support. So, his staff has a heavy component of desktop management since his customer satisfaction scores are heavily influenced by that.

Great, really thoughtful input from all.

Except…when you add them all together, you end up with 40-50 metrics and this would violate the caution each of them had about a scorecard with too many metrics .

Besides exposing me to key metrics I could not have dreamed off, the big aha from this exercise was maybe a single “balanced scorecard” that will work for very CIO is a bit too much to expect.  Better to give them a Chinese menu of key metrics and let the executive team, not just the CIO, decide on the top few areas they want to measure  the CIO and IT against. And repeat the exercise every so often as scenarios change. The key metrics would vary by culture of the company, the competitive landscape, the financial shape of the company, the regulatory environment etc.

Talk about a painful, but so critical, business/IT alignment process..and think of the even more painful SLA conversations with suppliers who want 5-7 year legally binding contracts and who are ready to draft change orders for everything.  That’s an even more critical alignment of IT and supplier goals and incentives.

And then again using the Polymath AND not OR theme of my book where may be, just may be the 40-50 metrics may soon be the reality CIOs will have to live with.

Readers?