deal architect

Infor: A Pioneer’s Trajectory

Infor hosted its annual Innovation Summit at its headquarters in NYC last week. Aesthetically it was very pleasing as I wrote here, Infor was also generous in the long list of analyst and media guests invited (and I encourage you to read posts about the event from Brian Sommer, Larry Dignan and others.) 

In some ways, though, I felt like they could have invited a few more “guests”.

a) They should have invited many of their current competitors. There is plenty Infor has pioneered in the last three years that others could emulate

- A deep focus on verticals. Fashion, hospitality, healthcare, public sector – the  day was strewn with examples from a wide range of industries. The Infor Cloud Council which they convened a couple of weeks ago reflects that diversity. Most of the newer SaaS vendors in the market are still focused on horizontal financials and hr. In announcing S4HANA, SAP has promised little when it comes to its own industry solutions

- Infor spent plenty of time talking about its growing Amzaon Web Services footprint, and leverage of Docker containers, Apache Mesos monitoring and other open source technology. It is fair question to ask SaaS vendors how their customers will similarly benefit from the massive scale and economics of a dedicated cloud infrastructure like Amazon’s or Microsoft’s . And for Oracle and SAP to answer how much capex is going into their own cloud infrastructure compared to the billions in capex Amazon and Microsoft have invested in their data centers.

- Infor has invested in a captive design agency  Hook + Loop which has over a hundred “creative” staff with credentials such as Pulitzer Prize winner for Infographics, Digital Effects Editor of the movie The Avenger and fashion designer for Kenneth Cole. The UX they present every few months shows the rapid pace at which that art is evolving with changing mobile, wearable, home device and auto interfaces.

- Infor is building a group near MIT called the Dynamics Science Lab – data analytics and pattern recognition whiz kids. It is building a diverse team which can make data as a service a reality for many industries.

- Investment in ION middleware to integrate within their products, other cloud applications and legacy applications and in a migration path, UpgradeX, a portfolio of automated tools, training, services. Most other vendors pretend integration and data conversion/training/testing is a systems integrator’s problem

- Building a next gen partner ecosystem which emphasizes micro-vertical and geographic capabilities. It is a painstaking process as the slide below shows

- A Value Engineering group which does not just create glib ROI charts for sales proposals. As Riaz Raihan, Chief Solutions Officer said “we hire folks who want to see the end of the movie”  i.e. focused on customer value realization and also a feedback loop to its R&D group on where to emphasize investment. The group also helps customers create crisp TCO analysis to contrast capex and opex flows across cloud and on-premise options.

b) Time to raise the bar. In the next wave, Infor should dramatically escalate the customer migration, the partner ecosystem build and other efforts they have started. CEO Charles Phillips commented “If we can move our 70,000-plus legacy customers at 5% a year, we have a multi-billion-dollar opportunity,". He is being realistic – realistic given most of his staff come from the enterprise software world where change is usually at snail’s pace. Which is why I wished he had a second set of guests last week. Some from consumer tech like Samsung which have moved to warp speed in their product rollout cycles and marketing. Maybe even some contractors from China who can build skyscrapers in 15 days. I want Charles and his team to be impatient and not just accept the 5% move pace. Or, in reverse to reduce the vertical and horizontal markets they focus on. 

c) In another wave, I would like to see Infor, dare I say it, evolve beyond a software company. Assets like Hook+Loop, the Value Engineering Group and the Dynamic Science Labs are designed for higher functioning activities than defining GL code blocks. Honestly, the underwhelming part of the summit was in the horizontal product sessions. Most were bland feature-function discussions on work orders and sales force automation. Worse, they kept comparing to incumbent customer needs and current market competitors as if that is the ultimate benchmark.

Infor should have had executives from GE in those sessions to talk about the  huge value they are getting from smart industrial assets – their aircraft engines, their locomotives, their MRI scanners. They are seeing massive operational efficiencies and predictive maintenance payback. That is the new EAM. And some from Coca-Cola which is blending traditional analog and newer social and other digital marketing. That is the new CRM.  

Even better they could have invited Ford CEO Mark Fields who was in town for the New York International Auto Show. Fields has launched 25 experiments across the world as part of the Ford Smart Mobility initiative. Each experiment is designed to anticipate changes in tomorrow’s transportation needs – autonomous cars, car pools, next-gen Ubers, new business models etc.

Software will be developed and consumed very differently in the near future. I hope Infor can take its initial pioneering steps and think way beyond current cloud delivery and subscription models, and certainly beyond current competitors.

Photo Credit : Infor

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.

Outsourcing: The Seismic Changes

As Nasscom kicks off its flagship Leadership Forum event in Mumbai and  seeing the vendors and analysts presenting, I am reminded of a meeting with a group of outsourcing execs last year.  I asked them who they thought was their fastest growing competitor. Several US, European and Indian firms were mentioned. When I mentioned Foxconn  and GE, the group was puzzled.

Foxconn assembles the iPhones and iPads most of them had. It has over a million employees in China alone.  GE provides data centric services to customers around its plane engines, scanners, turbines. These are captive products outside service providers can only dream of accessing as data sources

In fairness, Product Engineering and the Internet of Things are not yet a major focus for most outsourcers.  Most of their focus is still in the corporate office and the data center.

But even there new players keep emerging from left field.

• In the data center, everyone talks about Amazon. But two software vendors, Microsoft and Oracle are starting to be major Infrastructure as a Service (IaaS) providers. Most major outsourcers have shown little appetite to invest in capex for cloud computing.
• In the exciting new world of Big Data and advanced analytics, players like Mu Sigma and BGI have already scaled to thousands of staff in India and China respectively. They are not traditional outsourcers (BGI focuses on genomic analysis) but are showing clients there is a potentially different staffing model – MasterCard is a client of and an investor in Mu Sigma. Even more interesting is Kaggle’s crowdsourced data scientist model. 
• Mobile apps – just compare the well stocked shelves of the Apple iOS and Google Android stores to that in the SAP mobile store. And the major outsourcers are absent in the former, and more aligned with the latter.
• Social marketing - Many outsourcers are working out from their CIO relationships to get to marketing budgets. There they find digital Agencies like LBi are already known to most major brands and are positioning themselves as “We’re experts in SEO, PPC, affiliate marketing, usability and multi-signal search.”
• Even in the once reliable ERP services marketplace, the changes are dramatic.

I am not in Mumbai this week but I would have liked to have seen where the Richter scale at the Nasscom event shows these seismic movements in the outsourcing industry.

Multi-Tenancy: Where are the outsourcers?

I was reading Phil Wainewright’s nice note on multi-tenancy “The cloud operates within a service-oriented architecture, where providers achieve economies of scale by delivering their services in volume and operating them from pooled resources.” (italics mine)

I drifted off wondering why the outsourcing world has not aggressively pursued – and passed along to clients – the benefits of economies of scale and pooling when it comes to talent.

It looked so promising a while ago.

In 1996, at Gartner, I wrote a research note, which introduced the concept of Shared Solution Centers (SSC).

“An SSC enables consulting clients to derive economies of scale and to leverage dedicated resources. Clients can achieve this by allowing their consulting firm to perform certain phases of the project at a solution center, or by remote dial-in access by the staff at such a center…. Good candidates for SSC-based services include configuration of software parameters, writing of custom code, performance benchmarking, testing, development of reports, and documentation development. A dedicated team of testing specialists can keep up with a variety of testing tools and techniques - across multiple application vendor projects.”

I even defined a maturity model:

In Stage 1, an SSC is primarily a "showcase" for software demos and training. In Stage 2, the SSC can be used for "jump starts," while the client builds its own infrastructure. In Stage 3, certain project phases such as report development are done at an SSC. In Stage 4, more project phases including testing are done at the SSC, and the SSC reaches "scale" - at any given time 20 or more clients are being serviced from an SSC. Finally, in Stage 5, there are phase-based "factories" where testing or data conversion specialists and tools can be leveraged across multiple projects, whether on SAP, Oracle or other software.

In 1998, I described Andersen Consulting (now Accenture)’s SSCs in another research note

“AC's ERP-focused SSCs (11 in the United States, 11 around the world) have allowed its clients the following flexibility:

• A U.S. AC client used the Las Colinas SSC for R/3 Basis support, Chicago for mass-report development, and San Diego for end-user training development.
• A South American client moved its design team to a U.S. SSC. It reported improved productivity by being closer to the specialists instead of having them fly to its location.
• Several clients have outsourced "post-live" SAP operations support to the AC Cincinnati SSC.

The SAP model is being leveraged to other ERP initiatives (e.g., PeopleSoft) and for other IT services. Today, AC SSCs house a staff of 2,000, expected to grow to 8,000 by 2000.”

In the last decade I have seen the emergence of huge outsourcing campuses in Bangalore, Beijing, Budapest and elsewhere. `They would appear to be the realization of what I had described – huge economies of scale and pools of specialist resources.

But go into the buildings, and you see floors or sections of floors dedicated to individual clients. They are secured tight. Restricted access, PCs with USB ports sealed off – all in the name of protecting client specific IP.

While there are some shared economics – in training, in physical and telecom infrastructure for the staff, the big sharing opportunities I had envisioned have not happened. 

Outosurcers say clients tie their hands. Sure, if you are doing proprietary product engineering work for a client, they absolutely want it kept away from other companies. If you are supporting a custom legacy application, there are not many sharing opportunities. But when you are supporting hundreds of SAP or PeopleSoft  environments there are plenty of commonalities across the clients that can leverage pooling concepts.

I am actually surprised cloud vendors don’t use this more in their positioning against on-premise vendors. Look at how few staff Salesforce.com or Workday need to support thousands of customers. In contrast look at how many staff IBM or Infosys need to support each customer in on-premise mode.

Verizon-Terremark

So, on the $ 1.4 billion planned deal, the WSJ comments

“The acquisition could help the company secure more deals for such services—collectively known as "cloud computing"—and compete with companies like Amazon.com…”

VentureBeat on the other hand says

“The deal nets Verizon 13 data centers across the world, including a 750,000 square foot center in the U.S., Amsterdam and Brazil. While Verizon is spinning the purchase as a way to advance its cloud services, the deal really boils down to buying a lot of real estate for servers.”

I would say it is somewhere in between. I highly doubt Verizon can culturally sell much of anything which does not require a multi-year commitment and does not come with a hefty early cancellation penalty. So competing with Amazon or other cloud vendors in small units of processing/storage and small units of time is not likely.

On the other hand, Terremark does bring more than data centers. It brings decent competence in managed services, something Verizon can use as it grows its corporate business. Terremark also brings government vertical and international, particularly Latin American presence which extends Verizon’s reach in both.

Why Vineet Nayar should be at Dreamforce this week

If you have read his book Employees first, Customers second or heard him present on it, you know the CEO of HCL is an articulate fellow. But like many technology  executives who try their hand at becoming industry analysts, the results are often not pretty. In Vineet’s case, it is this rambling discourse on cloud computing.

The second part of the interview shows Vineet’s real comfort zone – customers. And that is why he should be in San Francisco this week. He would see tens of thousands of his clients and prospects lining up at Dreamforce. And many of them would actually thank him for helping them get comfortable with their journey to the clouds. After all, HCL and other offshore firms have helped them get comfortable over the last two decades with remote computing. And taught them how to do due diligence around far away teams and computing assets. And built their expectations around continuous improvements.

This would reverse the title of the book. He should talk to these customers first, and then go challenge his employees. 

Questions for his employees: These customers are getting used to 5 minute upgrades in SaaS world. How many of our application management clients can come within hours of that benchmark? Cloud vendors are building expectations of per-user per-month pricing. Why are we still pricing our contracts based on our (HCL) headcount? And pricing for software, hosting and application management will settle at less than $ 100 per user per month for most enterprise applications. At how many clients can we deliver just the application management part for less than that? Why do we persist in doing so many tasks on a dedicated, single-tenant basis? Is HCL’s work really that strategic to our customers to justify that level of segregation from that of other customers?

I hope he does show up. I would like to shake his hand and get him to sign his book for me. He has done a number of things well for HCL the last few years. Navigating it through the clouds will be fairly easy if he listens to the customers who are at Moscone this week.

Cloud Applications Grow Up

Not just "Lightly Engineered" ones any more

As Om Malik reports:

* National Geographic’s topo.com uses S3 to sell maps, download updated trail and trip information and even create trip maps to share with their friends.
* Sonian uses it for large-scale content archiving for things like email compliance.
*Indycar.com and indy500.com utilize Amazon Web Services for web hosting, live video streaming, and live timing and scoring applications.

And why not, especially if amazon continues to cut prices?