deal architect

Please, Mr. Ellison

I know you were kidding last night about having only one slide but would love that minimalism in one of your keynotes. Our industry is overrun with slides.

When I was at Gartner we unleashed 18 slides in every presentation. Dense ones with a miniature font customized for us. We then printed the speaker notes for each slide and the audience got more on the topic. Finally the analyst voiceover had usually little to do with the slides or the notes. Three for the price of one.

And consultants and outsourcers have taken that to the next level. They walk into 30 minute sessions with hundreds of slides. Please lead us back to sanity in PPT.

Another request. Please suit up.

We have become an industry of slobs. Inspire us with Attolini tailoring and Edward Green shoes.

No pressure - don't expect either in tomorrow's keynote:)

But next year? Thanks!

The Oracle enigma

It has been quite a month for cloud computing. NetSuite CEO Zach Nelson announced their “thirteenth consecutive quarter of more than 30 percent year-over-year revenue growth.” Amazon Web Services announced 78% revenue growth increase year over year. Microsoft reported 18 million Office 365 subscribers and healthy Azure growth. One of the only good bit of news to come out of SAP TechEd this week was that its BYD cloud offering, which has become a bit of a stepchild as SAP fawns over its acquisitions and HANA, is healthy.

Contrast all that to IBM’s 14th straight quarter of year-to-year revenue declines.

So, in the run up to Oracle OpenWorld next week, I would have expected to hear all kinds of as-a-service announcements and press. Instead, Oracle has let its accountants and attorneys dominate the airwaves with on-premise stories.

I sat in court during the recent Rimini trial thinking this cannot be good  for Oracle’s cloud positioning. Why is Oracle letting its attorneys talk, on public record, about IT practices from a long forgotten era when it should be talking about containers and multi-tenancy? I can only imagine the laughter in the halls of Salesforce and Workday when they heard Oracle executives brag on the stand they never lose customers. I can see Oracle customers cringe when they read how its attorneys talked condescendingly about customers who dared use their right to look at choices. Oracle seems to have forgotten these are still its customers. In SAP Nation, I profiled customers who have moved to Rimini and who continue to say nice things about SAP products. Some even talk about using the savings to buy newer SAP offerings. Ditto with Oracle customers. Bizarre as it may sound to Oracle executives, Rimini is actually keeping these customers “in the fold”. Subtlety, not hostility, to these customers will pay off much better.

The jury awarded Oracle a nominal judgment which likely is for less than it has paid in legal fees. Instead of letting the story die, Oracle continues to pursue legal action and harp about “massive theft”.

I don’t get it. At its Cloud Summit earlier this year, Oracle showcased the broadest range of SaaS, PaaS, IaaS and DaaS products in the industry. It told Fortune earlier this year, “on average on a daily basis, 62 million people log in and use our cloud for various things.” They have so much positive to talk about.

In the meantime, not a day passes by when I do not hear about a SAP or Oracle customer who is being threatened with a “compliance” review aka audit. The growing consensus is both vendors may say all the right things about the cloud but they are clinging to their on-premise past. Except that they dread an IBM-like string of quarters.   

There are many Oracle haters out there. I have never understood them. Over 20+ years I have come to meet a large number of its employees. Most are smart, likable people. Oracle, to me, is a very talented football team which just cannot seem to avoid stupid penalties and turnovers.

I am looking forward to hearing much more about various aspects of the Oracle cloud next week, and tuning out all the details of its self-inflicted wounds.

More on S/4HANA at TechEd?

Apple announced the iPhone 6s on September 9. It went on sale couple of weeks later and 3 days later it announced it had sold 13 million units – the strongest weekend sales of any product in Apple’s history. All that in less than a month!

Apple has certainly raised the bar for product launches, and I certainly did not expect SAP to come anywhere close when it launched S/4HANA in February.

Still I was excited when CEO Bill McDermott called it in New York “our biggest launch in 23 years, if not in the entire history of the company”. It prompted me to start writing SAP Nation 2.0 and while there were plenty of questions after the New York event I expected SAP would have a much better, indeed a proper re-launch of S/4 at SapphireNow in Orlando in May.

As that turned out, McDermott waited 20 minutes into his Orlando kickoff keynote speech to even mention S/4. He joked about the unwieldy product name, and after a few minutes punted it to the CTO, Bernd Leukert to cover the details on the next day. Leukert, an engineer, should probably have not been assigned the S/4 sales job. He emphasized that unique functionality for 25 industries would be included in the product release. In New York, Dr. Hasso Plattner had initially said only a handful of industries were in its scope.

More confusion.

In July, Rob Enslin, SAP’s President of Global Customer said “Yes, all of the [more than 900 S/4j deals are all on-premise. Our cloud piece for S/4, we’re taking it step- by-step for now.” S/4 was supposed to take SAP’s R/3/ECC customers into the cloud.

More confusion.

Simple Logistics, a significant portion of S/4, was supposed to be released this month, so maybe TechEd in Las Vegas this week will share some details.

In the meantime, I had gone ahead and released 2.0 in August and concluded

“Given all this, SAP needs to revisit its “circle.” That will mean changing the scope of S/4, rethinking the ecosystem and investing in more automation to help customer migrations and operations. Another area where SAP could make its “problem bigger” is in creating customer urgency. it has been pitching the time/speed dimension around HANA and should also apply that logic to S/4 adoption. The early results suggest S/4 adoption may follow a trajectory similar to the slow pace of NetWeaver, BYD and HANA adoption in the last decade.”

And in August, I had no idea Apple would have an even more impressive product launch with 6s. The bar for urgency has been raised even further.

The HRO as CDO?

Many HCM professionals are headed to HR Tech this week. I would urge them to also consider going to the MIT Sloan Sports Analytics event even if they are not big sports fans. For a decade, that event has cataloged dramatic improvements in talent scouting, performance measurement, compensation analytics, injury diagnostics. It is HCM in a world of elite employees – the best athletes in the NFL, MLB, NBA, European soccer and other sports.

Of course, even mainstream HCM has had an amazing digital run over the last decade – social recruiting, video interviewing, performance measurement, work/life apps which leverage wearable tech and on and on. The annual HR Executive Cool Tools analysis shows every aspect of the function is seeing innovation.

In many ways HCM had led the rest of the enterprise in process innovation. So here’s a puzzle: Many enterprises are creating a Chief Digital Officer title. How come more HROs are not being considered for that role? The inside track for that role is usually for executives with IT and marketing backgrounds.

Part of the challenge is HR folks live in their own bubble, whereas the CDO has to have a much broader worldview. I heard an annoyed HR analyst moan at the recent Workday Rising event how boring it was to listen to Financial and Student Administration sessions. How many HR professionals would seriously consider going to the MIT event I mention?

Still, it is a question I hope to pose in the upcoming Digital Transformation of HCM panel at Oracle OpenWorld on October 29. Mike Fauscette of IDC, Mark Smith of Ventana, Holger Mueller of Constellation and Chris Leone of Oracle will banter on a wide range of digital opportunities.

And I am sure we will touch on the other digital topics in the annual Workday Predict and Prepare vidoecast on December 8. Bill Kutik, Naomi Bloom, Brian Sommer, Ray Wang and I are participating.

I look forward to more discussion on the HRO role as enterprises accelerate their digital journeys 

Infor’s Retail Initiative

One of my frustrations with enterprise tech for the last few years is we have paid inordinate amount of attention to horizontal apps – financials, HCM, CRM – and neglected the much more operationally important industry apps.

Without hesitation, I included several pages in my latest book (with able support from Cindy Jutras who I quote extensively in that section) on what Charles Phillips and his team at Infor have been doing to buck that trend. They have focused heavily on vertical CloudSuite offerings (for a wide variety of industries such as automotive, fashion and food and beverage). They have been rationalizing and modernizing an unwieldy portfolio of applications they inherited with new UX, middleware, Amazon cloud infrastructure, machine learning and various migration tools.

One industry I have been waiting them to deliver more for is retail (they have focused on fashion with previous competencies and that certainly has a retail dimension) . Co-President Duncan Angove was previously Oracle’s GM of the Retail Global Business unit and has been itching to move the legacy retail systems world into the new realities of omni-channels, same day delivery, proximity sensors on store shelves, iPads as POS and many other innovations changing that sector. So, it is good to see this co-development effort with an innovative retailer, Whole Foods which is regularly rethinking “the store of the future”. 

As Infor says “Planning and optimizations systems are distinct and disconnected from execution systems. Traditional merchandising systems are different than ecommerce systems. Unifying these into one elegant solution will drive efficiencies, alignment, and speed.”

Talking of speed brings up another of my heartaches about enterprise tech. Frank Scavo who I also quoted in the book has highlighted how Infor’s broader customer base has cautiously adopted its newer products. Hopefully, the retail customer base, which in many ways faces existential challenges, will be different. 

Oracle, time to move on?

After plenty of name calling at the trial in Las Vegas, both Oracle and Rimini Street sent a few of us reasonable sounding emails about the jury’s verdict awarding Oracle $ 50 million in damages. Oracle had asked for close to $ 250 million, Rimini had hoped it would be less than $ 10 million.

Oracle

“This decision against Rimini Street and Seth Ravin reinforces long established rules of fairness and honesty in business and the principles protecting investments in innovation. Oracle is committed to delivering outstanding support services for our products to enable our customers' success and we look forward to the next stage of our legal proceedings with Rimini Street.”

Rimini Street

“We were pleased to finally get our day in court. As Oracle and Rimini Street agree, there is no dispute that third party support for enterprise software is permitted for Oracle licensees to purchase and for Rimini Street to offer. This case was about a good-faith license dispute regarding processes no longer in use. The global Rimini Street team remains focused on providing excellent service to our clients, innovating the enterprise support industry and expanding our worldwide service capabilities."

Oracle is probably disappointed with the lower amount in the judgment, Rimini unhappy but I think it is time to move on

a) Oracle has made significant strides as a cloud player with the broadest set of SaaS, PaaS, IaaS and DaaS offerings in the industry. I realize the wheels of justice move slowly and this trial has been years in the making, but the day I attended court it was jarring to hear Oracle attorneys talk about contract terms and IT practices from two decades ago. Oracle marketing should be associated with today’s language of  multi-tenancy, availability zones and global delivery. The longer this dispute continues, the more it associates Oracle with its on-premise past

b) In profiling Rimini customers in SAP Nation, I was struck by how many choose to move to third party maintenance not just for the economics, but for support of customized applications and for much more personalized support (not having to go through the tedious ticketing process at most vendors). The maintenance product has been ripe for redefinition for a while now – Oracle has an opportunity to replace traditional module-based maintenance with similar customized (and broader if it can include support for all the acquisitions it has made) offerings.

Larry Dignan believes the verdict will be appealed. He is likely correct – I just think it is time to move on.

The baffling phenomenon of tech M&A

I swear there is a patron saint that CIOs pray to. A common prayer is to shield some of their favorite small tech vendors from being gobbled up by larger vendors. Another prayer is to shield them from the chaos when larger vendors merge. Usually results in years of inward focus and salesforces with bulging bags of new products they cannot even pronounce. Followed in a few years by the vendor compliance groups making “offers they cannot refuse” if customers dare pass on the acquired products.

Vendors themselves know they will struggle with acquisitions. Meg Whitman of HP had some choice words about the announced Dell-EMC mega deal. She should know. The HP-Compaq merger yielded some supply chain efficiencies but the rationalization took years and plenty of rocket science as I described in The New Technology Elite. The Dell-EMC hardware rationalization will be similarly complex.  The HP-EDS deal should have led to labor efficiencies – but at significant morale cost. It certainly did not help HP prepare for the world of cloud infrastructures. HP-Autonomy – a near immediate write off.  With open source competition growing to VMware, Dell may find itself with a similar scenario.

Ditto with Oracle. Its streak of acquisitions complicated its Fusion effort, as the R&D could not keep up with the pace of its bankers. Same with SAP. A company which had massive success in the 90s reducing enterprise sprawl, now with its 50+ acquisitions has itself become a poster child for enterprise sprawl.

This does not even account for the morale issues on internal R&D when a company spends a decent chunk of money buying functionality. As Meg says “That's $2.5 billion that (Dell annually) will allocate away from R&D and other business critical activities, which will keep them from better serving their customers.”

So, why do we keep chasing acquisitions? The investors in the acquired companies get a one time pop, but time and time again we have seen well run tech companies generate far more shareholder value through revenue growth that comes from innovative product development and complementary partnerships and ecosystems.

The bankers, of course, do well. And us analysts get something to gossip about. There that’s it – keep doing those deals folks. At least a few of us benefit from them

SaaS: We ain’t seen nothing yet

Every SaaS conference this year – Dreamforce, SuiteWorld, PowerPlex, Rising – has been brimming with confidence and mostly happy customers. Things are going swimmingly well. No surprise – for a decade now, my blogs and books have been celebrating SaaS executives and customers.

And yet, when I recently wrote Chapter 4 of SAP Nation 2.0, which looked at 25 years of next-gen enterprise software – JD Edwards’ OneWorld, Microsoft Project Green, Oracle Fusion, Infor Cloudsuite and SAP NetWeaver and BusinessByDesign – I was reminded there are hundreds of thousands of those customers which have not “rip and replaced” their old software.

They have “ring fenced” their legacy apps with Salesforce CRM and Workday HRM , they have “two-tiered” NetSuite in smaller subsidiaries, they have Plexed their shop floors in spun off subsidiaries, but they persist with older products in the majority of their processes. Others have stayed with older products while moving to third party maintenance, changing infrastructure and application management providers, but stayed away from SaaS. This, in spite of fact that some of the incumbent vendors have gone out of their way to annoy customers with ill advised maintenance increases, compliance audits and other shenanigans. This when their ecosystems have stubbornly refused to deliver cloud and other efficiencies to these customers.

So is the glass half full or half empty? Do these customers continue to represent the next big opportunity or are they laggards who will take too much effort to convert? You hear both points of view, and then you also hear the third one: the SaaS value proposition needs to become more compelling. The functional footprint, especially in industry specific processes, needs to improve dramatically. SaaS vendors need to automate the migration not continue to depend on the previous generation labor intensive delivery model.

So how will the landscape look in a few years?. The incumbent vendors have been acquiring/maturing their own SaaS functionality. Customers are back to developing custom functionality as they make their products and services smarter (and sometimes licensing functionality from industry peers). As industries morph rapidly, they are exploring newer industry focused vendors.

There could be players from left-field. GE could become a vertical industry application provider. Amazon could diversify from infrastructure into applications. Apple could expand from mobile application ecosystems to broader enterprise ones.

I could go on speculating. The fact is we are moving into uncharted waters for SaaS world. It should be an exciting next few years.  

Making the SAP "circle bigger"

Neesha, in her long review at Amazon of SAP Nation 2.0 says

“One of the critiques I've heard about the author is that he's an outsider. While this may seem like a negative to some, I see it as a positive. He's essentially one of the few independent voices out there. If I was at SAP, I would call him and put him in charge of turning the company around and integrating its different parts.”

I do qualify as an “outsider” because I have not been to a SAP event in 3+ years, I don’t hang out much at SCN and I get most of my perspectives from conversations with SAP customers.

In contrast, DSAG, the user group for German speaking SAP customers, would qualify as an “insider”. This week they sent me a press release about “ERP of the Digital Future”. 

I did not know they were conducting the customer survey which is the basis of their conclusions, and I did not share with them a review copy of 2.0 (I had done so with the first book). Yet, we came to similar conclusions based on what we have seen of S/4HANA so far and what we hear from SAP customers.

DSAG says

Looking across all sectors, it is clear that the use of new technologies is merely a means to an end. It is more important for companies to develop individual strategies for the digital transformation, or to think about new business models. There are many possibilities, and companies shouldn’t allow external factors to get in the way of their thoughts and ideas.

DSAG’s encouraging it, and I can see customers "drawing their own circles". I have 9 strategies for SAP customers to get to “Postmodern ERP” – I  excerpted several on this blog over the course of the last week.

Like DSAG, I also describe how S/4 needs to evolve in industry functionality, portability across databases, integration of myriad acquisitions, cloud architectures and infrastructure and many other areas.

In the final chapter I write

Much better answers will come over the next few years as a result of the circle that SAP re-draws around S/4 and the thousands of circles its customers are drawing.

Will SAP listen to insiders and outsiders and make its own “circle” bigger? Or will the customer "circles" lead to more diversification on their part? It is a foot race that will be interesting to watch.  

GE: From IT to OT

GE’s Global Research Center, its locomotives, medical scanners and other products, even the design/content of its annual reports have been prominent in my books and blogs for a long time. It is an extremely innovative company which keeps company with innovative customers. So, I always enjoy spending time at their annual Minds+Machines event.

At the first one, in 2012, I saw a company which was embedding sensors and software to make its products much smarter, to make their performance much more predictable and to move their business model to be more outcome focused. Having one of their massive GEnx aircraft engines as a stage prop reinforced the image they are into complex products and services.

Last year, and much more this year, I have seen it blossom into an IT platform (with Predix) and security player (with its Wurldtech acquisition). With a growing ecosystem of developers, the GE “app store” keeps expanding.

But GE is so different from the average IT vendor which tends to develop horizontal products and then spray paint some industry features and expertise and market that as “verticalization”. The sessions and booths at M+M reflected sectors where GE has deep institutional and product expertise.  

Also, GE is unafraid of -  in fact relishes - what I call “dull, dirty and dangerous” data. It is more into operational technology which interacts with the shop floor, with wind turbines in the wild, and with planes in mid-flight. If you see the Wurldtech positioning, it’s about industrial and operational security, with IT security as a subset of that.

GE (and peers like Siemens, Emerson, ABB and others) are honing a distinct category – OT (as in operational technology), far removed from traditional IT. It is more demanding, more mission critical, has more national security implications. Like I said, it covers “dull, dirty and dangerous” areas, but is far more strategic and value generating for GE and for its customers.