deal architect

Workday: A billion+ in savings and counting

Workday has filed its S-1 with the SEC as part of its IPO process. For the 37 months ending January 31, 2012, total revenues were $ 227 million, accelerating year on year, so let’s round off to lifetime revenues of $ 350 million.

The whole document makes interesting reading especially if you are a lawyer or an accountant. Personally, I went into a froth thinking about the likely economics  at “325 customers, including large, global companies such as Aviva International Holdings Ltd., AIG, Inc., Flextronics International, Four Seasons Hotels, Georgetown University, Kimberly-Clark Corporation and Lenovo”

I  profiled the Flextronics Workday project in my recent book. 

“It was the meeting where our IT council gave me the green light to proceed with a major global project to consolidate 80 different HR systems across the world. We had settled on our existing ERP vendor’s software,” says David Smoley, CIO of Flextronics, one of the world’s largest electronics contract manufacturers. “I thanked them for approving such a large project and then I surprised them. I told them I may come back to them in the next month with a ‘better, faster, cheaper’ option.”

and

“The proposal from Workday saved us more than 40 percent over the life of the project, with even larger savings in the first year. By going with Workday we were able to reduce our team size by more than 60 percent.”

David saved plenty on his initial implementation project because he used a small set of Workday consultants compared to a proposal from a large outsourcer for the on-premise project alternative. But it is a a gift that keeps on giving. He has eliminated three major TCO elements going forward – hosting, application support and upgrades.

a) Many on-premise customers continue to pay IBM, HP, SunGard $ 1 to 2 a GB a month for their storage costs and even more for the compute servers and networks and data center costs.  Included in Workday’s subscription price.

b) They pay Accenture, Infosys and others for 5, 10, 15, 50 bodies to support/tune their applications after they go live. Included in Workday’s subscription price.

c) They pay a Cap Gemini or another SI to upgrade releases every 2 to 4 years. Those projects are expensive when you factor the change management chaos they create and related testing. Workday has smoothly migrated its customers in background across 16 releases so far.

By my estimate for every 1$ a customer pays to SaaS vendors it saves $ 3 to $ 5 in on-premise costs around those 3 elements. Elements a and b could be squeezed if outsourcers moved to multi-tenancy models as I wrote here, but they have not.

So while investors salivate about Workday’s IPO, I think customers owe Dave and Aneel and Stan and the entire team at Workday an even bigger hug. Workday has saved them over a billion so far, and yes, that gift will keep on giving, till on-premise vendors knock some sense into their hosting and application management partners to move to shared service models.   

A record month

Thanks to the bonus posts related to technology and innovation at the London Olympics and the Presidential Race/GOP convention in Tampa, the New Florence blog will have its most voluminous month ever – 80 entries in August. For the year, it is already up to 470 posts. At the start of the year I had set a goal of 500 for the year!

Readers, thanks for making the blog part of your daily “wow” regimen and thanks for pinging me with post ideas.  This month Jon Reed, Naomi Bloom and others sent me inspiring ideas.

Keep them rolling!

Photo Credit David Sykes who shot several professional photos of the Olympics medals at the Rio Tonto (the mining company) offices in London

The Real Deal: Charles Phillips on The End of Monolithic ERP

This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.

This time it is Charles Phillips, the CEO of Infor. I have had the honor of knowing Charles for 2 decades in his role as an influential financial analyst and even more influential executive in the enterprise software world.

“First, a level set: Infor is the third largest business applications company in the world at $2.8 bil in revenue with 13,000 employees and 70,000 customers. That’s enough scale to invest but small enough to be fast and disruptive. We have one of the largest development organizations in the world dedicated to business applications.

The applications industry is on the precipice of real change after a decade of stagnation and relative boredom. The products became as bloated as the margins and everyone seemed happy with ten year, half a billion dollar ERP projects. The only choice was a forced march toward to a monolithic suite that magically served the needs of all business units, all industries, all countries, all size companies, and all functional areas in perpetuity.

Well it turns out the world is a bit more complicated than that. Making tires is just different that processing milk. Some industries change faster than others and applications change as do the database schemas that support them. Companies make acquisitions.

The industry spent two decades trying to eliminate application diversity and fighting change. Now the same vendors are introducing it with their own acquisitions. Each acquisition replaces an existing product of their own as they slowly dismember their own suites.

So the transition from monolithic suites to loosely coupled applications is underway. Suites should automate in areas where they add value and integrate to other specialized applications where they lack depth.

Traditional integration with proprietary middleware is so complex because it pretends to understand all protocols, all versions of all applications, and all schemas and then transforms all messages, point to point, between them.

Modern integration will be simple, loosely coupled, and based on the most successful integrated application of all time: the Internet. The internet integrates data and applications at scale with simple standards like XML. That integration is durable and dynamic. The internet doesn’t break when web sites change and easily accommodate new applications.

Infor ION is modeled on that concept. Each application publishes each transaction in simple XML and then ION routes the transaction to subscribing applications. The architecture pushes the work out to the source application. Each application and schema can change as often as needed without affecting integration. The only requirement is to publish transactions in XML and ION will pick them up off the queue. ION uses standard business documents defined by the Open Applications Group. There are only 200 documents that matter for things like invoices, orders, etc. Virtually any application can export XML.

ION also keeps a copy of each transaction in a central repository called the Business Vault. In other words, you get a real time data mart with no ETL as part of the base application. The other benefit is that we can access that Business Vault to display in context business intelligence during any transaction.

We’ve expanded this modular concept across all critical areas of business applications. Change in one area should not break another area. Upgrading applications should not break reports, localizations, or mobile applications. We’ve extracted those functions from the core and deliver them on the Business Vault or in the cloud.

The era of closed, monolithic suites is ending especially as more applications reach outside of the enterprise. Monolithic and Social do not fit in the same architecture. Infor SocialSpace was easy to embed into our applications because they are wired for information exchange. More on our disruptive social strategy in a future column.”

Charles can be emailed at charles dot phillips at infor dot com

More New Renaissance

on the innovation blog

Dude, you are getting an Ultrabook!

The “Big Data” of Drought Analysis

Stars 2.0

Blueseed: “The Googleplex of the Sea”

The Garmin G1000 Glass Cockpit

Police Robots

Swedish Medical Center and Aurora shooting

More HaHa than Aha

The Pharaohs of IBM

One of the really nice things about an assignment in Saudi Arabia is its proximity to Egypt (or Misr in the Arabic/Semitic vernacular). It was a convenient weekend destination and I got to visit some of the pyramids.

You quickly realize the pyramids were long ransacked or had their contents moved to the antiquities museum in Cairo or to the Egyptian sections of the Louvre or Met. I am convinced Michael Jackson wrote the words “the funk of forty thousand years” during a dark, smelly, back-bending trip (the passages suited the much shorter ancient Egyptians) down one of the pyramids. Indeed the pharaohs of the Middle Kingdom realized the pyramids were a visible invitation to plunderers and started to bury their mummies in concealed tombs.

IBM’s acquisition of Kenexa made me realize it is so much like Egypt. So many pyramids – Corio, Informix, BowStreet, FileNet and countless others - have had their contents moved to the “museum” where IBM can continue to collect fees. Still others have been buried in catacombs which would be fascinating to explore .

I would love to put on an Indiana Jones fedora (or borrow my friend Tom Raftery’s) and go to town.

IBM, can you issue me a visa? :)

Lost in translation

An executive who was honored at the recent annual CIO 100 event was describing the privilege of being with rock stars like Rob Carter, CIO of Fedex. He then observed “I was surprised how few CIOs at the event used the term “system of engagement”. I thought that was a very hot term with you analysts and bloggers.” Thanks to Geoffrey Moore who coined the term, it certainly is a popular term in social media circles.

The comment hit me though. There are so many buzzwords – Big Data, Gamification, In-memory computing – that the vendor and influencer world speaks in.

And then there is the results oriented talk of effective CIOs. No catchy buzzwords, just stunning results:

Example 1 – Union Pacific’s firewalls reject a billion messages a year from its track side sensors. Which means many, many more billions of messages get sliced and diced for predictive maintenance of expensive railcars. They have been doing it for years, long before the term “Big Data” was coined.

Example 2 – UPS truck drivers use DIADs to guide their delivery routes and more - over 22 million packages a day during the peak holiday season. The DIAD was introduced back in 1990, way before the iPhone or the iPad was even conceived of and certainly before any mobile buzzwords were coined.

Not just gentle pokes from CIOs, this buzzword bingo will make us the butt of more jokes. Exhibit A: This episode from The Big Bang Theory which makes fun of something I wished I had coined: “Mobile Virtual Presence Device”  :)

The Calm within the Storm

I spent a few hours today at the downtown studios of Front Row Tampa Bay, a stone’s throw from the Republican convention. It is bringing together an impressive set of panelists from technology and political arenas.

I had a chance to spend a few minutes with Will Weatherford, the next Speaker of the Florida House and with Chris Herring, of the digital agency, Barkley REI which is running the Social Media Command Center of 60 reps who are monitoring social traffic with Tampa Bay related hash tags. He told me they did the same for Kansas City during last month’s Baseball All-Star game. He’s invited me to a tour of the technology like Radian6 and Spiral16 they use later in the week.

What was remarkable was I was able to get downtown this morning. The outer bands of a hurricane, especially in the northeast quadrant can spawn nasty tornadoes. They also bring heavy rains. As Isaac passed to our West, its outer bands stayed over Miami/Fort Lauderdale and other places East of us. As I left the parking lot, it was beautiful with the sun out and I left the window down, and had the cops stare as Led Zeppelin played in the car. Getting there in the morning I saw the security force outside every downtown building and emergency vehicles at every corner. Since a number of schools and government agencies were closed due to Isaac, the traffic was actually a dream.

It is a remarkable week for our community. I am excited to be part of both our storms.

What enterprise tech buyers can learn from consumer tech buyers

I suspect Dennis Howlett will get similar comments to his post comparing Workday to Apple as I did when I compared SAP and IBM to Apple. The enterprise world continues to believe it is much more complex, more secure, higher value than consumer tech.

While Dennis was penning his column last week I was presenting to enterprise audiences in TX and NJ on my book, The New Technology Elite. And on more than a couple of occasions, as I was presenting on Apple, Amazon, Google, eBay and others from my book, I was thinking how consumer tech buyers are in some ways so much more astute than enterprise buyers:

a) They are less patient

Can you imagine Steve Jobs or Jeff Bezos announcing a product then not delivering it for years? Would they hype up something like IBM’s Watson, then make interested customers run through hoops to even get a demo couple of years later?

b) They are more diligent

An executive at a product company which is embedding technology in their next version told me “Technology users are so rude…You break down new products into detailed components, you jailbreak them…”. I smiled. “Most technology users are pretty docile”. Can you imagine SAP users telling ASUG to hack into HANA to test its claims, its security weaknesses? Do you see analysts running such detailed tests?

c) They have better design taste

In my book, I have several paras for rock star product designers like Jonathan Ive of Apple, Robert Brunner who helped design Amazon’s first
Kindle and Barnes & Noble’s Nook and others. I wrote about the the Google Doodle team which manages to spice its home page even with its self-applied discipline of no more than 28 words. In contrast I have heard from CIOs for years they have a “lipstick on a pig” project to improve UI on their enterprise software. Enterprise users continue to grumble but put up with unfriendly systems.

d) They are squeakier wheels

In social networks, in Consumer Reports surveys and other ways, consumers get their product complaints heard. It could be Apple’s antenna issues, it could be Facebook privacy issues. Enterprise users tend to complain to vendor reps. Even with their attorneys involved they have far less leverage than if they reported issues to external watchdogs or to each other.

e) They are less loyal

Consumers tend to view most technology as disposable. They are not that attached to their LGs, Kindles or their mobile carriers. In a nuanced way that gives them more purchasing leverage – it’s the “I care, but not that much” mindset.

So, yes it is good to see companies like Workday behave more like Apple. Time for enterprise buyers to also emulate their consumer tech cousins.

The perfect security storm

I would love to write a case study on the security scenarios that are being played out in Tampa over the next few days

a) The RNC convention was already making the city a focus of the Secret Service, Coast Guard, countless state and local law enforcement authorities leading to many road, bridge, port restrictions. There were even rumors of drones being used for security. 

b) Cyber threats from hactivist groups like Anonymous.

c) Now, Hurricane Isaac is bringing agencies like FEMA and various emergency services into play.

I blogged about the excellent UK security during the Olympics (including frogmen, Rapier missiles and Typhoon jets). In some ways,  the Tampa security challenge is even more formidable. 

Innovations from the Presidential Race

On the eve of the Republicans coming to my hometown, Tampa a series of non-partisan posts from the New Florence blog on technology and innovations inspired by the Presidential Race

The department of PreCrime – at the GOP convention

Is this a political or technological convention?

Hurricane Isaac and the Republican convention

Welcome to The Big Guava

Tech-savvy Republicans

Obama’s Video Legacy

Campaigning in a wireless era

The Republican Convention Buildout

Budget - and Muscle Confusion

“Convention without Walls”

Paul Ryan on Science and Technology

Infographics from the Campaigns

Bringing Chicago at night to the RNC

E-Sponder at the Republican Convention

Science and technology questions for the Presidential Candidates

The most “tech-savvy” Republican convention?

Boosting mobile bandwidth at the conventions

The Education of Jim Messina

Sorry, George Clooney…

The CNN Virtual Convention

The Perception Analyzer