deal architect

An epic time for enterprise technology

Like most, I have watched many a “One more thing” announcement by Steve Jobs. While it made many run out and line up for blocks when Apple introduced that shiny new thing, it inspired the author in me to write about the birth of new products and initiatives. In my books, I have written about how the Boeing 787, Corning’s Gorilla Glass, Facebook’s breakthrough Prineville data center, Lexmark’s striking Genesis printer and how many other products were conceived and launched. It’s invigorating to talk to designers, engineers and marketers about form/factors, UX, manufacturing, packaging, launch nuances.

A frustration of mine has been there has not been major,  “moonshot” launches in enterprise world. Lots of tactical announcements and technical releases, but nothing that captured my imagination enough to profile in a long chapter.

Then suddenly,  in the last 5 months, I have witnessed three game changing events.

Larry Ellison, this week as Oracle launched 24+ new PaaS and IaaS products, summarized the sea change in the industry “It’s remarkable that we are not competing with IBM and SAP these days. Our  new competition is Amazon, Salesforce and Workday. Microsoft is the only traditional competitor we see”. Even more startling – he showed a slide where Oracle’s data centers support 700 petabytes of storage and 33 billion transactions a day. Hello, this is a software company? As I told Fortune magazine “Oracle has the biggest number of (SKUs) features in the cloud world. Not all of them sell well, and some aren’t the best, but they are the broadest. No question.”

Dr. Hasso Plattner, ringing the bell at the New York Stock Exchange in February to announce SAP’s next-gen S/4 with new elements like Fiori, HANA and private clouds. Then, for effect, telling a journalist "If this doesn’t work, we’re dead. Flat-out dead.”

Satya Nadella in his keynote at Microsoft Convergence in March barely mentioning “ERP” at a conference built around the Dynamics family. Instead he showcased “One Microsoft” – the world of Azure machine learning, Surface Hubs, Skype telephony, Cortana personal assistants, and cloud based Office 365 – and how they reshape ERP, CRM and other processes. In an org change last week, Microsoft continued what it is calling the “mainstreaming” of Dynamics.

The S/4 launch has given me a chance to write a new book over the last few weeks. It has given me a chance to also revisit other enterprise software product launches over the last two decades.

Now Larry and Satya have given me even more ideas for other books. It is an exciting time for enterprise technology. Trust me, we have waited for this for many years now but when it rains it pours. Enjoy the bounty.

How about something for what we have already invested in?

Both sides like to tweak each other. Both like to harangue customers for new revenue. Customers however fume that stuff they have paying maintenance for years cannot seem to get much attention.

So I was pleased when reader Tan Ah Beng pointed out this presentation about SAP support for various Oracle database versions (including the in-memory switch in 12c) and Engineered Systems. I am sure there is similar for IBM DB2 and Microsoft SQL Server, and for SAP’s own Sybase and MaxDB products.

SAP says 6.000+ customers are now using HANA is some form. Which means the majority of its 270,000 are still on the other databases. Many will continue to survive for years as customers have elaborate systems management and staff infrastructures built around them.

With that disproportionate mix, wish those databases would get even a fraction of the public love HANA gets from SAP. And a commitment from SAP and the database vendors they will continue to get plenty of maintenance dollars towards the "junction" where their products intersect.

SAP Nation 2.0: The Bigger Story

I am writing the sequel to SAP Nation to update it for the launch of S/4HANA. I analyze the launch and also delve into the history of next-gen products in enterprise software over two decades to provide some perspective on how S/4 may evolve and how the customer base will react to it.

That I thought would be the bulk of the book.

Actually there is a bigger story.  Seemingly out of the woodwork, in reaction to SAP Nation I started hearing from/about many SAP customers. The common thread was "wish you had talked to us when you wrote the book - here is what we (or so and so customer) are doing to optimize our (their) SAP environment"

The fragmentation in the customer application portfolio is not surprising as I had described customers trying “ring-fence with clouds”, “two-tier ERP”, “third party maintenance” “sidecar” and a variety of other strategies. Still I was taken aback to see analysis from Panaya, the tools vendor:  "More than 50% of SAP shops have 40+ satellite applications. Of these less than 10 are SAP applications". I accessed analysis of ABAP customizations at 80 major SAP customers by CAST Research Labs has - most of the customizations are sizable, and many high-risk by their benchmarks. Little chance they can be retired or modernized anytime soon.

Then there is the fragmentation in SAP’s own product portfolio. which has exploded with nearly 50 acquisitions in the last decade, many still waiting to be integrated. Mark Hurd, CEO of competitor Oracle has sarcastically commented about that "I guess we could buy a Dairy Queen."

Additionally, there is organic product growth. There are growing number of custom Fiori apps. SAP has released over 50 country-specifically localized SAP All-in-one baseline solutions on the latest SAP HANA enabled enhancement package . BusinessOne, with over 50,000 smaller customers around the world, is not exactly dead. Even BusinessbyDesign (ByD) which has suffered from a series of SAP missteps has been called "alive and kicking". At SapphireNow in May, SAP Digital announced a new set of products including a CRM solution at $ 29 a user a month. SAP announced updates to its Lumira visualization software for growing sensor and other IoT data. It showcased the "Boardroom of the Future" . Over the last few years, 9000 people have been part of SAP Code Jam events in 119 cities around the world! SAP claims 17 million Jam users. Most of these products individually contribute 1-2 % of SAP revenues but keep adding to the sprawl.

Finally, there is significant churn in the partners. There are many newer smaller Fiori and HANA focused consultants. Over 2,000 HANA startups and many new private cloud hosting providers. Application management is morphing as those providers automate and move to as-a-service business models. The acquired companies like SuccessFactors and existing products like Business One are seeing changes in their implementation/reseller channels.

The wide diversity in SAP's portfolio and its customer base is vividly on display in its advertising budget which varies from radio spots aimed at small businesses for the Concur product to SuccessFactors billboards at competitor events to corporate branding at hockey stadiums and in 3 page spreads in the Wall Street Journal.

I am a student of ecosystems so I find all this stuff fascinating. But I would be lying if I told you I understand all the cross-currents these represent.  I certainly would not call it “running simple”.

I use an analogy in the book of another country. In a few weeks you will get to see what the state of SAP Nation reminds me of.   

Radical UI

In the last few weeks, I have had a chance to visit Oracle UX design lab, talk to Infor’s design agency and interview folks about Fiori for my sequel to SAP Nation. I also had a chance to see a fabulous Microsoft demo which pulled together Skype for Business, Cortana’s voice based personal assistant, Surface Hub display, machine learning via Delve and a variety of Apple and Microsoft mobile hardware.

Enterprise UX is going through a revolution. Or so it would seem.

But then I see FastCompany take Apple to task for lagging. Apple lagging when it comes to UX?

"This year's WWDC was a tacit admission that Apple needed to play catch-up. Cupertino spent so much energy over the past five years paying attention to the surface details of their products, it ignored a seismic shift in the industry: AI is the new UI"

Then, I see John Underkoffler, who designed the gesture based interface in the movie Minority Report and is now CEO of Oblong Industries, a design studio say

"We're a digital species now—nothing short of apocalypse will change that! The health of our digital society lies, therefore, in the broadest possible distribution of agency. Agency is circumscribed mainly by the UI—the machinery through which human intent is transduced into the machine. So designing and deploying radically more capable UIs is one of the most important things we can do today.”

So, enjoy your Fiori and other enterprise UX for now but quickly prepare for many waves of gestural, voice, haptic, scanner, machine learning influenced UX in the next few years.

It will be the extension of the Sunday night/Monday morning phenomenon. What users expect at work should not trail what they are already seeing in their cars and in their homes.  Or at the movies.

The Art of the Analyst Summit – Part 2

A few weeks ago I wrote this post about how “analyst summits” keep improving.  I had previewed the contents with the Unit4 analyst team as they prepared for their first “summit” (they previously outsourced analyst relations and with significant new management talent and product news need a much fuller day of presentations, and more direct analyst contact) and I was really pleased they took what I shared and added several nice touches to the analyst day they hosted in Boston yesterday.

What stood out:

Executive Transparency: CEO José Duarte set the tone with an interactive session and every other session and mealtimes had plenty of time for q&a.

Mix of sessions: Besides the executive sessions, there was a customer and a partner session, and time for some product drilldown, including a session on a just-closed acquisition of Three Rivers Systems, a higher education vertical play. I heard at least 8 accents speaking fluent English during the course of the day – testimony to Unit4’s European roots but growing N. American and other global growth.

Polling: Unit4 polled analysts ahead of the day on what they wanted to hear, the preferred format (they were a bit surprised people did not want 1:1 sessions. I had told them most bloggers liked the interaction of group sessions) and ended the day asking for live feedback – there was a genuine desire to engage with analysts not just present to them.

Convenience: Unit4 “split” the day – in London last week, in Boston this week. The goal was to reduce travel time and effort for the majority of invitees. This of course, meant the presenters had to travel more but again it was considerate of them to focus on the analysts.

Aesthetics: The State Room atop 60 State Street provided a superb, panoramic view of Boston and its waterfront.  There was plenty of fresh air on the walk from the hotel and to the dinner. The dinner was “La Famiglia” style, shared Italian and encouraged even more banter.

Content availability: One of my pet peeves is slides from such sessions are often not available for days afterwards. Unit4 had slides available for download from a Dropbox folder at the start of the day.

Very nicely done day – will blog more about product direction in coming weeks as Unit4 removes the embargo on some of the content.

Holger Mueller has a nice Storify summary of the day.

Photo Credit above : Ivo Totev

 

The “Software Paradox”

Steve O”Grady of Redmonk has an easy to read book out.

His thesis is summarized as

“By the time Andreessen wrote those words, there were few who would disagree with the core thesis. Those who would were most likely to be employed by industries in the process of being actively disrupted by software. Software was, and still is, the new reality for most industries. Much as Amazon is now more appropriately described as a technology company than a retailer, so too are an increasing number of businesses in an ever-widening number of industries.

A curious thing was happening while software was hungrily consuming the world, however. Even as it was becoming more and more vital and disruptive, software’s commercial value was declining. Software that would have once generated billions in revenue per quarter is increasingly made available for free. Companies that once battled each other and struggled to differentiate similar proprietary products now collaborate with each other on a common platform, competing on implementations and service. Developers that solve interesting problems with software see more benefit than cost to making it available for free than attempting to charge for it.

This is the Software Paradox: the most powerful disruptor we have ever seen and the creator of multibillion-dollar net new markets is being commercially devalued, daily.”

I would recommend the book - it is a short easy read, and it’s available for free download courtesy of PayPal on the O’Reilly site 

Reading it, four things came to mind

a) High software margins of 80 to 90% – which explain high valuations - were never sustainable. In economics 101, we were taught “abnormal profits” don’t last over the long haul

b) More buyer executives are like Kent Johnson of Boeing who told Dennis Howlett “Boeing has to reduce the TCO of its aircraft by 1% every year over the product lifecycle. Why don’t software companies do the same?”

c) Most enterprise software tends to be “horizontal” -  financials, hr, call center, spreadsheets, IT infrastructure related. In the early 90s I had noticed that Computer Associates, by itself had 15 General Ledgers across its product portfolio. Since then, easily another 250 companies have written GL functionality – each with an incremental feature, or for a certain regional language support or “for the cloud” - but not significantly different. It’s demand and supply. If you want abnormal profits, you have to create a monopoly, not share space with hundreds of other companies. You have to verticalize.

d) The definition of “verticalize” is becoming much more nuanced. Auto companies which need software for their infotainment, safety and other systems increasingly write their own software – millions of lines of code. They can leverage all kinds of software development pools – offshore talent, crowdsourcing, open source communities. Or they license them from their competitors, not from software companies. It’s not  just Amazon as Stephen points out, its just about every company as they make their products and services “smarter” with software, sensor, satellite support. More of them are behaving like auto companies – developing their own.

Personally, I am excited software has become so mainstream. We may not see too many “unicorn” valuations, but its impact on our daily lives is  worth toasting. And the fact that we have people in California, Bangalore, Munich, Shanghai and elsewhere collaborating with 0s and 1s is worth a second celebratory round. 

Gartner at its best

I know people measure Gartner by its Magic Quadrants, Cool Vendor lists and Symposium presentations, but to me Gartner really shines when it triangulates

a) maturing, large markets it sees from its thousands of client queries each month

b) summarizes what it has learned from vendor presentations, client RFP analysis and other sources it is privy to

c) integrates points of view from its many silos.

I saw a very good example of that – or at least the first two elements in the recent report “Seven Ways to Compare the Enterprise HCM Suite “Big Three” by Ron Hanscome and Yvette Cameron.

There are potentially thousands of replacement deals in PeopleSoft, SAP HCM, Lawson, ADP and other HR customer bases so it’s a market ready for churn. Gartner query shows most customer short lists have Workday, Oracle HCM and SAP’s Success Factors in the mix. Those are the three the report focused on.

What I  liked was a nice summation of strengths and weaknesses for each of the three vendors. That’s what clients want – they want pointers to add to their own RFPs, scripted scenarios during demos and other evaluation and contracting processes. A Magic Quadrant with 20 vendors is often a waste of their time. So is research on very mature technologies or way too early emerging vendors.

I would love to see similar reports from Gartner in other technology markets. Focus on market segments which are maturing (“crossing the chasm”) and focus on a handful of vendors who have momentum (at least at the time of the report).

I would also like to see that them add my 3rd point above - take it a step higher with integration across a few Gartner silos. When I was writing SAP Nation, it struck me 5-6 Gartner analysts from their ERP, systems integration, application management outsourcing, hosting/cloud infrastructure, telecom groups could have pulled together what took me months to research. They could have easily pulled together 4-5 times the number of case studies I did.

That’s Gartner's strengths – multiple areas of coverage, tens of thousands of data points from customer queries, ability to cut through vendor BS and net out the good and ugly.

Hope they do more of that

The SaaS gift that keeps on giving

Over the last decade I have been a staunch supporter of the SaaS/cloud model – multi-tenancy, OpEx v. CapEx, collapsing of software license/apps management/hosting into one contract, other advantages.

But writing SAP Nation and now the sequel looking at S/4HANA and other next-gen projects in the industry over the last couple of decades, I have come to realize the single biggest advantage with SaaS, is bite sized, frequent, managed- by-the-vendor upgrades.

The on-premise model delivers cumbersome enhancement packs and other periodic upgrades, and a whopper next-gen product every 15-20 years.  The next-gen product takes 4-5 years to mature, and the customer base takes a decade to migrate because it does not want to let go of customizations, because the change management of the upgrade is too complex, the testing hell and the ROI of upgrades which just depends on speed/feed improvements or prettier look and feel is poor.

The concerning thing is many vendors are encouraging their customers to adopt “private clouds” with their next-gen products. Those lower hosting costs from previous models but do not really break the traditional upgrade cycle.

For their own sake, and for that of their customers they really should encourage them to bite the bullet and move to their public clouds. Of course, that means their public cloud versions have to be functionally richer, the migration is reasonably automated, and their public clouds are built to scale. Easier said than done.

Sequel to SAP Nation

Another week or so of research left on my sequel focused on the S/4HANA impact on SAP Nation. If production goes without a hitch, the book should be out end of July in eBook and paperback format.

I have done my usual 360 degree research:

SAP materials

Various S/4 keynotes from the New York launch and from SapphireNow

Dr Plattner and Leukert book – the In-memory revolution

openSAP course on S/4HANA

other sites and materials

SAP customers

Interviewed several on their plans for S/4

Analysts and tech media

Reviewed Gartner, Forrester, CAST, other materials on state of SaaS marketplace, ABAP, private and public clouds, 

Reviewed materials from Diginomica, Constellation, ZDNet, SCN and other sites for S/4 reports

SAP partners

Interviewed people at partners with knowledge of Fiori, HEC, other elements of S/4

Reviewed TCO and Business Case models for S/4

Other product launches

Review of launches I have written in previous books/blogs – Apple, Boeing, others to compare how SAP has done with S/4

Other industry next-gen projects

Talked to analysts and other participants on industry track record over last two decades with next-gen products and customer migrations and likely S/4 path

SAP Competitors

Feedback from them on churn they are seeing in the SAP customer base

Now need to apply my usual humor and other filters to make the book readable and not too much of a tech manual. And to relentlessly edit out the word “simple” from the draft. 

The Opportunity Cost of IT

I read two columns today which prompt this post.

The first is from Ben Pring where he invokes the Japanese art of decluttering as applied to IT. 

There has never been a culture in “big boy IT” of throwing things away when they’re past their sell by date. There have never been any brownie points for people to question the value of old systems or for dealing with the often complicated and uncomfortable (potentially career limiting) political issues around “Fred commissioned that app; I don’t want to tell him, an executive VP, that the system’s no good anymore”.

Oh there are plenty of vendors who promise “simplification” but only if you buy more of what they want to sell. Many come with monikers like “ageless” and “unlimited” – the systems which have found the eternal Fountain of Youth.

The second was by Steve Case where he describes web 1.0 he helped shaped as founder of AOL. Google and other Silicon Valley firms influenced web 2.0.

He says we are about to move to web 3.0

These third-wave companies will take on some of the economy’s largest sectors: health care, education, transportation, energy, financial services, food and government services. These third-wave sectors — all now ripe for disruption — represent more than half of the U.S. economy.

and

last year, 75 percent of venture capital went to just three states: California, Massachusetts and New York. But 75 percent of our Fortune 500 companies are located in the 47 other states, and many of them will play a pivotal role in the third wave, as a new generation of partner-friendly entrepreneurs seeks strategic alliances to gain credibility and accelerate growth.

So if you  are part of that Fortune 500, every technology dollar should be going into making your products, services and business models digital and prepared for a new wave of competition. It’s GE with smarter wind farms. It’s BMW with its I series of electric cars and UX. Its Progressive Insurance with its Snapshot telematics.

Every IT dollar decluttered could help your colleagues in R&D, channels and pricing strategy invest more in those areas.

Invest in technology in YOUR products and services – you have invested enough in technology in IT vendor products and services.  Time to virtualize more than your servers – get ruthless about tidying up and freeing up resources.