deal architect

It’s good to be the King!

I know many analysts feel sorry for customers who appear trapped in their on-premise cages – PeopleSoft, Siebel, JD Edwards etc.

Actually, they are in the driver’s seat

a) Oracle keeps supporting them as part of its Apps Unlimited initiative

b) They can go to third party maintenance if they want to shave those costs

c) They can move away from current hosting providers to Oracle’s IaaS, and there use the managed support model if they choose

d) They can “ring fence” their core functionality with cloud extensions like Taleo, RightNow and other functionality from several acquisitions Oracle has made

e) When they are ready to move more fully into the cloud, they can choose between Fusion or competitive destinations like Workday, Salesforce, Plex and others

No wonder most of them seem content to stay where they are.  

Follow up from Larry Ellison OOW Talk

I have written before Oracle’s biggest cloud differentiation is it can play in all three layers – application, platform and infrastructure –as-a-service.  Larry Ellison’s talk last night expounded on that as he spent time on each layer. But in many ways he set the stage for several questions I hope get answered during the course of the conference

a) How deep are the vertical cloud apps?

Larry presented two slides covering various industry applications – I show one below. But he glossed over them. That’s actually more exciting than HCM, GL or SFA functionality which has been “cloudified” for a while now – as Larry pointed out Salesforce.com has been around 15 years.  I hope I hear more about vertical clouds.

b) How does SaaS leverage the IaaS?

Larry pointedly said with Oracle’s SaaS leveraging its PaaS, customers have a robust customization platform unlike competitors who he said offer just “a few buttons”. Frankly, Oracle’s just-as-big opportunity may be to pass along the economies of a massive data center cloud. Like to hear if they plan to. Like to hear if they are helping current EBS, Peoplesoft and other incumbent customers already lower their hosting costs with their IaaS

c) What migration tools is Oracle making available?

One of the big gating factors for many customers is the cost of data migration, integration, testing and user retraining that comes with the move to a new application or platform. Hopefully Oracle has thought about automation, not just opening up another market for systems integrators to sell more services.

d) How is the Buy and Build integration going?

Larry repeatedly acknowledged Oracle continues on an organic/acquired path as it has for a while now. The digestion of acquired applications takes way too long in our industry – Oracle has more experience with such integration but it still takes them years. Has Oracle learned how to speed this process?

e) What is the “pull” for incumbent customers?

I have said before Applications Unlimited was a brilliant Oracle move. But it has frozen its customers in place. What is the pull in the Oracle cloud to offset the massive appeal to just stay in place?

Look forward to learning more during the next few days.

Workday’s quiet leadership

In 2009, I wrote a blog about Parker Harris, the co-founder of Salesforce.com titled The Loneliness of a Pioneer. I wrote

“..in some ways he wishes the larger vendors would be there today. There are common engineering and plumbing challenges every competitor hits which are useful to share experiences around.  It would be good for the industry.”

At the Workday Tech Summit this week, in talking to several of its  executives, I got a very different vibe. They are not looking for such guidance from other enterprise vendors as they scale volumes not seen in cloud transaction processing world – a billion (complex financial, payroll etc) transactions a month, ledgers which scale to 200 million journal lines etc.

They are increasingly turning to the consumer web for guidance. Whether it be planning for availability zones, disaster recovery, denial of service or exabytes of data there were repeated mentions of Amazon, Google, Apple, Yahoo!, Netflix and others. Interestingly, the biggest competition for development talent is also coming from the consumer web.

There was a subtle confidence – and yet humility - when David Clarke led a session about how “complex systems are always broken”. He described simulations crews undertake on a cruiser called MS ANTWERPEN and how they react to varying degrees of emergencies.

Workday is extremely successful and  they could easily have spent the day gloating, but I quite liked the paranoia that came through in many of  the presentations and side conversations.

The reality is Workday is at a juncture. They can continue on their path of financial, HR and analytical product leadership. Or they can expand into many new industries and countries.

The temptations are many. As part of my SAP Economy book research I had several CIOs ask me if/when Workday was likely to expand into their industries. I spoke to a small sample. You can imagine the extent of requests Workday executives are getting directly.

Aneel Bhusri, CEO and his execs are being very measured. Partly, they bring some gating memories from PeopleSoft world where vertical and geographic expansion was uneven. Partly, the culture is modest – not given to hype or overreaction.

Either way – whether they stay on current path or they expand into new sectors- the effort they are putting into scaling and fortifying the infrastructure is commendable.

Unlike previous Tech Summits, this was a relatively quiet one. But it was set in the stunning setting of the Presidio. There was a “speak softly, carry a big stick” feel with artifacts of military history all around us.

Yes, Workday has matured into a thoughtful, if quiet, enterprise cloud leader.      

Low-Impact

When you write books about the technology industry you fret about the time it takes to go through the publishing and printing stage. Given the dynamic nature of the business you know job changes, M&A, product announcements are inevitable, and you have to regularly assess what to change in the manuscript and not annoy editors too much.

So you think I would be stressed by the two major announcements today.

The changes at Oracle only mean a few title changes in the manuscript. Personally, I am excited to see Ellison take over as CTO. I have enjoyed watching Hasso Plattner show off his passion for HANA in his blogs and presentations. I hope Larry does the same.

The Concur acquisition by SAP also does little to change the manuscript. Over the last few weeks, while I have waited for a SAP response to my offer to carry a column on how HANA and clouds will affect the SAP economy, I have reached out to a number of analysts. Their feedback shows an SAP in transition to a “network economy” player, but none of the moves affect much the economics of BusinessSuite, Business One, Business Objects and other legacy products. They make up the bulk of the $ 200+ annual run rate in the SAP economy in the book’s model

If anything, the integrations of SuccessFactors, Ariba, Fieldglass and now Concur are complex, and till SAP delivers mature connectors could increase customer investment demands. So much for the simplification promise SAP keeps making!

The $ 17 billion SAP has made in those four vendors is also a return to roots. In SAP’s early years, Dr. Plattner has said he wanted to work on sales and distribution functionality, but because they were unique to each industry they focused more on cross-industry financial and procurement functionality. 

Today, SAP has few such constraints. In fact, customers in many industries are disappointed it has not been focused on delivering vertical functionality where there is typically better customer value than in back office areas. These moves are more about SAP looking good to financial analysts with a larger “cloud” footprint.

In any case, I do hope SAP does not make any more major announcements in the next few weeks. Let my editors work in relative peace, please

Interview from Inforum

Dave Vellante and Jeff Kelly interviewed me for The Cube at Inforum about Infor, my book on the SAP Economy and other enterprise vendor trends.

 

Infor: Design+Value

I have written in past about Infor’s micro-vertical strategy and its quest with its internal design agency Hook +Loop to make enterprise software “beautiful”. I saw more of that at Inforum in New Orleans this week, but I also signs of the messages maturing more into a focus on efficiency and value from software.

To start with, it is good to see an application vendor talk feature/function and business process, not just platforms and speeds and feeds. I spent time at the event with customers and Infor execs from healthcare, hospitality and fashion. Transactional systems and analytics to optimize revenues and operations. The analytics focus was particularly pronounced with pretty visualizations, but even more of a focus on predictive analytics with MIT data jock class talent in  its “Dynamic Science Lab”

Not just verticals, there was more in what Infor calls “Corporate”. A  new General Ledger for the global, multi-entity, multi-calendar world we live in. Expanded HCM footprint with more analytics around workforces.

And new CRM functionality with a recent acquisition, SalesLogix. New discrete PLM functionality via a partner, Aras to add to process PLM Infor offers via its tool Optiva.

To me, it was more exciting  to see a focus on value from software – coming at the heels of my summer writing a book about the bloated SAP economy.

Infor has taken a leaf out of the SAP sales playbook and has a Value Engineering team which focuses on payback analysis. What’s different is it is also showing up in efficiency in UX. Infor talked about a paradigm it calls Clear Work and the goals are improving appeal to users, but as important to increase productivity, to decrease errors and to decrease training time. It talked about attacking the “tyranny of the super user” – simpler functionality so organizations don’t become dependent on a handful of individuals.

The Value Engineering impact is also being felt in payback analysis across vertical processes with several examples like one below:

CEO Charles Phillips has been quoted as saying “Friends don’t let friends buy data centers”. There was significant talk of Infor’s commitment to Amazon Web Services for its cloud infrastructure. Why not leverage  the biggest “super computer” with auto-scaling, Redshift, cloud trail and many other services to the benefit of your customer community?

The partner expo was full, but not ostentatious – nothing like the 2,000 square foot booths and 22 foot tall signage at SapphireNow. Many of the partners are regional and industry specific like Ciber and Stoltenberg. Most are low-hype and operationally focused.  The latter is particularly important as most Value Engineering payback is in the operational areas not as much the “corporate functions” which many services firms do better at.

Overall, Infor’s wide product, services and talent portfolio continues to grow. Many analysts find Infor difficult to categorize. Infor plays to many three letter acronyms but it is always breaking into new ones.

Charles described a call from an executive of a Commercial Real Estate company asking if he would be interested in developing functionality for their micro-vertical. At other vendors, they would be lucky to get a call back. Charles’ response “we will be glad to analyze the market and if we can find a group of charter customers, sure we will”.  

Expect more breaking of boundaries from Infor.

HANA and her siblings

As the SAP Economy book shifts to editing phase I have been looking at book covers, titles etc.

One title which will not make the cut is “HANA and her siblings”

My wife liked it, then preferred some other ones I am testing

Three (male) CIOs panned it right away. Not strong enough title for the book’s theme.  Not a statement on what they think of HANA, the product.

One male reviewer said a younger and global audience may have never heard of the Woody Allen movie it references

One female reviewer said Woody is not the most politically correct personality to invoke

So, that will definitely not be the book title.

I could tell you the leading candidate at this point, but then I would have to also have you deal with Mossad

I sense a disturbance in the enterprise Force

Starting next week I will get briefings from a wide range of enterprise players – Infor, Workday, Oracle, Rimini, Salesforce and Microsoft among them. Conference season is in full swing.

I have not been so excited in a long time. The reason is I feel a thaw in the enterprise market.

My SAP Economy book research has allowed me to talk to a range of its customers. While the book has a ways to go with publishing edits, my sample of customer interviews suggests the natives are very restless.

My case studies are organized as follows

A. The Un-adopters – outright turning off SAP, or moving to third party maintenance

B. The Diversifiers – ring fencing SAP with cloud apps, or tiering around SAP

C. The Pragmatists – changing outsourcing models, more demanding before extending SAP reach

D. The Committeds – adopting HANA, consolidating SAP instances etc.

SAP, of course, is no slouch. My book will bring out plenty of what it has done right in the last three decades. It now has a charismatic new leadership which can energize the company and the customer base.

But SAP is burdened with a bloated ecosystem with a poor delivery record and an unattractive cost base. SAP has also neglected a number of application areas with its intense focus on HANA,  NetWeaver etc, so it is also more vulnerable than it has been in a long time.

I have ordered front row seats to watch the tournament over the next couple of years. 

Play ball!

Steve Jobs’ enduring legacy

With the largest single day product launch ever in Apple history – multiple iPhones, Watch, Mobile pays – Tim Cook will likely quiet a number of his critics who have been harping Apple has forgotten how to innovate. The Watch in particular breaks the mold with the wide range of configurations of size, alloys, straps and other components. In some ways, it reflects the wide number of SKUs Cook has seen Nike introduce as a member of their board and what Angela Ahrendts has brought from her Burberry’s fashion industry background.

Nothing against Cook, but some of the credit still goes to Steve Jobs. His biggest single contribution was building a dream team as I have blogged before

“To me, Steve Jobs created a petri dish and threw in all kinds of rare elements – Tim Cook’s operational excellence, Jony Ive’s design aesthetic, Ron Johnson’s retail experience, Scott Forstall’s ecosystem vision, Phil Schiller’s marketing chops, and many others including Terry Gou, CEO of Foxconn, the contract manufacturer. It took a while to gell, and likely required all kinds of ego and conflict management, but his enduring legacy is having created and managed that dream team which even with a few changes continues to do well.”

Hasso’s Dozen

Dr. Hasso Plattner has written a long blog post about Business Suite on HANA. He has 12 reasons justifying why. His passion for the product screams through the post.

I wish he would make it a Baker’s dozen and add a 13th point: that SAP plans to change its business model around HANA.

I am writing a book on the SAP economy so dollars and euros are high on my mind. In the last couple of years, as the Big Data phenomenon has taken off,  I have been impressed with all the fresh economic models I have seen.

So, when GE announced its Industrial Data Lakes recently, I spoke to Bill Ruh there. GE is looking at exabytes of data from its aircraft engines, turbines, locomotives, medical scanners and other industrial equipment. GE’s big driver “How do we reduce by orders of magnitude the cost of managing a terabyte of data?” That led to some radical rethinking of data structure, ingestion  and management I catalog in the book.

In the last year I have talked to entrepreneurs like Nader Mikhail at Elementum,  Omar Tawakol at Bluekai and Adeyemi Ajao at Identified. They have no interest in selling software or hardware. They want to sell you supply chain, marketing and HR data, or even better insight, as a service.

I have seen communities of data scientists emerge at Kaggle and at Topcoder (part of Appirio). It is a new talent sourcing model.

In contrast, SAP still wants people to buy software. Then buy hardware and services from its partners. Beyond 4TB of memory, commodity components don’t scale, so that is not cheap. As someone pointed out “With data volumes exploding, will we need to look at IBM’s custom made 128TB Blue Gene/Q supercomputer? And have to use IBM’s traditional talent model?”

With the HANA cloud, you could argue SAP is moving to a new business model. Not quite. Sit down with two displays and open up SAP’s and Google’s data center web pages. SAP emphasizes privacy, security and data protection (all important, even more so to German and other EU customers). Google focuses on data center innovations – efficient servers, container design, carbon neutrality among other initiatives. SAP is just beginning an efficiency journey that Google has been on for over a decade.

The other challenge with the HANA cloud is customer connectivity. Amazon Web Services with its Direct Connect and Microsoft Azure with AT&T’s NetBond have tried to combat the MPLS and WAN costs carriers charge individual customers. SAP customers do not have such an option.

HANA as an OLTP platform – SAP is actually regressing its business model. To give customers database portability, R/3 kept away from stored procedures and other database specific features. To boost HANA TP performance it will have to move increasing amounts of code away from the application layer.

Over the course of my interviews I have heard many customers say HANA economics are not compelling – even the ones which are early adopters and have good use cases. The recent ASUG survey emphasized the point in spades.

Dr. Plattner don’t ignore all that feedback. Add a thirteenth point to your value proposition – a compelling business model to cover your software and your partner’s hardware and services costs.