deal architect

Global SIs: The Forest and the Trees

A short talk with some Cap Gemini BPO execs at SuiteWorld last week and reading Phil Wainewright's post about Cloud SIs had me thinking how the global service firms are changing - and in many ways resisting change.

Most larger firms now have units like Deloitte Digital or Acccenture Interactive that are hip to social, cloud, mobile projects. But they are islands in a sea of old which still wants to sell multi-year hosting and application management deals around on-premise software. To them, the SaaS/cloud world is still anathema.

Think about it. Would you buy additional hosting from them when it is bundled in the NetSuite subscription price? Would you buy additional application management services when Workday tunes your database, fixes bugs, does upgrades as part of its contract to you? If you were them, would you sell storage or compute at cloud prices when you would rather convince even your mother your 15 year old data center is still "state of the art"?

The business model change is even more dramatic as I heard during the Cognizant BPO day a few weeks ago. Many customers still want to buy based on some headcount/FTE based model, even as Cognizant is experimenting with results-based models. Most outsourcers don't even try -  they are comfortable with the old FTE model.  The cloud, in contrast, has been pushing consumption based models for a while now.

Recognizing that these SIs have islands of hip, surrounded by seas of legacy thinking, is key. I see many SaaS vendors enamored with the big services brands who will soon grasp this reality. Similarly, customers evaluating these providers for their cloud, mobile, social, advanced analytical projects will need to make sure they are only sourcing from the "hip" slivers of these firms, not get spary-painted legacy staff, tools and methods. There are several techniques we have applied for clients to get appropriate teams and terms, but it takes plenty of diligence.

For many of them, as Phil says, boutique firms may be the better way to go. I had identified several in my note Outsourcing: The Siesmic Changes

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Life after SAP

For the first time in a while I missed SapphireNow this year, and yet through some unplanned scheduling got to be around a bunch of SAP alums, ex-partners and ex-customers.

I was invited to present to SAP alum at the AtelierSAP event which preceded SapphireNow in Orlando. A lunch conversation with Paul Wahl, former US CEO, was about fuel cells and digital advertising. Another with Matthew Coote (son of Jeremy Coote, former US President) was about his role on the Romney Presidential campaign last year.

My own talk at that event focused on innovation in the enterprise as most companies develop smart products and services and how consumer tech has innovated and massively scaled its data centers, Big Data and other operations. Only my last slide pointed out that SAP (and other large enterprise vendors) had done little to help with either the smart products or the consumer tech operational excellence.

I did a call last Friday with Dr. Henning Kagermann, former CEO of SAP. It was about the role he is playing in helping Germany prepare for technology opportunities and challenges in the “Fourth Industrial Revolution”. Fascinating conversation – but SAP came up only in passing towards the end of the call.

I flew West to NetSuite’s event and had lunch with an SAP alum who had been there during the promising NetWeaver days a decade ago. Other than discussing that for 5 minutes the conversation was about other technology trends and Bay Area life. He certainly does not miss SAP.

At SuiteWorld I spoke to several SIs  and outsourcers many of whom had come from SAP partners. To a  person, the message was the days of massive SAP implementations and BPO contracts  had moved on.

As I wrote here, in his keynote Zach Nelson of NetSuite echoed the feelings of many SAP customers who are not signing up for its new products. More life after SAP.

My friend Jon Reed, writing from SapphireNow complimented SAP’s positioning around the Hana Enterprise Cloud “The lack of head-scratching afterwards was a big messaging win for SAP, which is usually expert at tripping on tech minutia.”

Seriously?

Read these FAQs and you decide if it qualifies as a “messaging win”. At SuiteWorld I heard an analyst call it a muddled cloud strategy. Couple of others mentioned SAP had pre-briefed them about 7 data centers when the FAQs talk about 4.

Minor detail.

To my question how SAP expected its partner and its own data centers to be as hyper-efficient as those in the Amazon Web Services cloud,  Juergen Schmerder of SAP tweeted me “how do you know we're not striving for world class when we haven't disclosed much information? “

Normally I am always eager to hear about next-gen data centers, but after the conversations of this week, I am less optimistic.

In many, many walks of life the world has moved beyond SAP.  I actually felt a tinge of sorrow for the behemoth which has dominated so much of our professional lives.

SAP by the numbers

29 million cloud users announced at SapphireNow drew snickers including a snarky comment about “that must include all the pencils ordered on the Ariba cloud” :)

More vexing is the question – does the HANA cloud have enough data center infrastructure? Since SAP is moving away from the almost infinite capacity of the Amazon cloud, it must believe its 7 data centers and capacity of its partners are enough to start off.

It would be nice if SAP shared more details:

• Their square footage and compute/storage capacity
• The Capex that has gone into the data centers (to get a comparable feel to the billions the Amazon, Google and the MS Azure clouds have seen in investment over the last few years)
• The “availability zones” and other resilience SAP has built into its this grid for high availability
• The specialists SAP has hired to architect and build out the centers/certify those of its partners (hopefully some from the highly scaled consumer cloud as at Facebook or Yahoo! or from a demanding cloud infrastructure user like Netflix)
• Given SAP’s emphasis on sustainability, the PUE (Power Usage Effectiveness) of each and the alternative fuels used to power them
• If SAP/partners expect to be as competitive as Amazon in pricing

It’s all about the enterprise apps, baby

Silver’s the new green …sang the Taco Bell TV commercial “It’s all about the Roosevelts” as it celebrated dimes to promote its sub $ 1 menu.

At SuiteWorld this week I wanted to break out in that rhyme at the celebration of all kinds of enterprise apps.

Zach Nelson, CEO of NetSuite, set the tone in his keynote by pointing out "SAP talks a lot about cloud and they're having their user group conference at same time we are. But while we'll spend a lot of time introducing a new product, NetSuite for manufacturing, SAP are talking about databases in the cloud". Perhaps he had read my post where I pointed out where SAP has been enamored with becoming a platform company for the last decade, when most of its customers signed up with it and have paid billions to it as an application provider.

Then he brought out Qualcomm CIO Norm Fjeldheim to describe a global deployment of NetSuite . Williams Sonoma CIO, John Strain followed with a discussion of  the “omni-channel” world the retailer finds itself in. Buzz Kross, SVP of Manufacturing at Autodesk then talked about their new world of “digital prototyping” and their PLM integration with NetSuite manufacturing functionality.

It was a nice way to showcase NetSuite’s “two tier” global deployment positioning (“stay with Oracle or SAP at HQ, use us for subsidiary sites”), their strong retail functionality, and their growing manufacturing functionality(for the new wave of smarter factory with agile robotics, wearable computing, OJT augmented reality worker training, 3D printing etc)

In brief conversations with each I got a perspective on emerging apps in varied markets – Qualcomm pov on mobile commerce and insight data, Williams Sonoma on their Pinterest and other social campaigns, Autodesk on the changing product lifecycle management space.

Evan Goldberg this morning showcased other apps – Vinsuite for the winery vertical, the planned Deem@Work with Rearden Commerce for expense management and others

In conversations with executives from Baker Tilly I heard about NetSuite projects in the mid-market, with executives from Cap Gemini about BPO opportunities where companies increasingly ask why their back offices need to continue to be burdened with the higher cost of on-premise applications.

In a panel I moderated with Brad Kugler (a NetSuite customer since 2006), Phil Wainewright, Dennis Howlett and Pedrag (PJ) Jakovljevic, we covered wide ground on analytics, global and vertical applications.

Yes, it was an unabashed conference about feature, function, industry and country needs. And fittingly, as the Taco Bell commercial asks “Why pay more?” resounded in every conversation about pricier solutions NetSuite is helping replace.

It’s all about enterprise apps, baby. Kudos to SuiteWorld for that timely reminder.

Even more innovation off the global beaten path

We hear so much about Silicon Valley and Bangalore and Shanghai that is refreshing to hear about innovations in unexpected places...

Mobile healthcare in Rio's slums

Pods at Abu Dhabi airport for work and sleep

DUMBO -NY's creative new hotspot

Seoul - City in Major Hurry

earlier ones in this series here and here and here

 

SapphireNow, Past and Future

In the run up to SapphireNow this week I have seen several blogs and tweets about SAP’s new (as in last five years) analytical, cloud and mobile products – HANA, SuccessFactors, BYD etc. During the course of the week every announcement around these products will get amplified.

The reality is after years of trying, these new products only contributed 6.5% of 2012 revenues.

To understand why SAP’s future is being shaped so slowly, I believe you have to look at SAP’s past.

In talking to SAP customers, I get two major areas of disappointment

a) “We signed up with SAP as an application provider, but in the past decade it has been enamored with becoming a platform company.” NetWeaver, Business Objects, Sybase, HANA are all visible signs of that desire and related investment strategy over the last few years. In the meantime, over $ 100 billion in application maintenance paid by customers has not yielded much in the way of functional leaps.

My friend and fellow Irregular, Thomas Otter is leaving Gartner to re-join SAP and writes

“In 1995 Klaus Tschira, one of the SAP founders, impressed me so much with his vision for HR technology that  I convinced my wife that we needed to move to Germany. There is much in that vision that still needs to be built, so in a sense I have unfinished business with SAP.”

There are hundreds of areas, especially around industry solutions, where  SAP could use other Thomas Otters to make up for neglected functionality over the past decade

b) The massive partner booths at each Sapphire are a vivid reminder of SAP’s poor management of its ecosystem over the past decade. Customers can see the impact in the metrics and benchmarks in their shops

• Hosting - SAP customers have paid more per unit of compute and storage to IBM, EDS etc than did customers of other legacy or packaged apps. And 5 to 10x what cloud vendors like Amazon or Rackspace increasingly charge per cycle or GB per month. Not sure why SAP has not tackled its partners and asked why its apps require gold plated arrays or chips.
• Apps management - SAP customers have paid more per user for Basis, config support etc to Infosys, Accenture etc than did other packaged or custom apps. Per end user Salesforce, NetSuite and others are showing they can deliver with X times fewer support staff. Again not sure why SAP has not pushed for multi-tenancy and shared services in its partners.
• Upgrades - SAP customers are some of the slowest in the ERP/BI world. Workday customers get upgraded 3 times a year in background and customers primarily test and integrate - much shorter projects

This did not happen overnight. But SAP and its partners have shown little willingness or ability to tackle the inefficiencies over the last decade.

So, while SAP employees, partners and fans descend on Orlando to hear about the future, they would be as well served to ask what SAP is doing to rectify the neglect of the past decade. 

Without that, many customers will continue to stay away from the newer products.  They may be too polite to say it, but the saying definitely comes to mind:  “Fool me once, shame on you. Fool me twice, shame on me”

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The New Combat Zone: Tech vendors and Digital Agencies

Microsoft spent $ 6 billion acquiring the digital agency, aQuantive way back in 2007.  Think of how much more marketing has evolved since with social media, big marketing data.

Last year Oracle spent $ 300 million acquiring Vitrue and Salesforce spent $ 700 million on Buddy.

So,  not surprising Accenture has expanded its Interactive Unit with an acquisition of the London design firm, Fjord.

In turn as I blogged here Digital Agencies are helping clients with fairly creative use of augmented reality, motion capture and other tech. They are the new systems integrators, at least for digital marketing projects.

A sign of the confidence of agencies comes in this snarky comment a reader named Bill Crandall makes

" if Accenture wants to invade our agency turf, have at it ... and good luck! A better strategic corporate move would be for Accenture to call Michael Roth and see if Interpublic wants to buy them."

I think the industry should hire a Digital Agency to map this growing battle in Ironman 3, Inception style digital glory.

Or maybe Accenture's new team at Fjord?

How Infosys lost its sheen

N.R. Narayana Murthy is a revered figure in India. So, not surprising he is hearing murmurs to return, Steve Jobs style, to Infosys, the firm he co-founded. Reading this interview with him though it struck me how little of a difference it would likely make. He primarily emphasizes financial performance - “Predictability of revenue, sustainability of revenue, profitability of revenue and de-risking of revenue”. No mention of customer focus, no innovation talk.

Unfortunately, to  me  that has defined Infosys for a while now. After Tom Friedman’s World is Flat celebrated their Bangalore campus, I saw on several visits with clients and prospects how that was emphasized in the Infosys value proposition. During one visit I had to pull the sales person out and ask him “Have you been to this customer’s own impressive HQ campus? Trust me your brick and mortar will not impress them enough to do business with you. Please focus on their specific needs”

In the last few years, Infosys has paid for a pole position at Oracle  Open World – the keynote just before Larry Ellison’s. But that has been more of an executive showcase exercise, when Infosys should be putting its most innovative customers  and projects on stage. The crowds who leave in droves don’t seem to bother Infosys.

A bit unfair, but the same reporter interviewed Francisco D’Souza, CEO of Cognizant a few weeks ago. The contrast in the two interviews is striking.  Francisco comes across global, focused on new technology markets, customer focused. Murthy comes across India centric (even though Infosys has a similar global customer base) and primarily focused on financial performance.  Restoring the polish at Infosys will need to start by changing that tone.