deal architect

Control your own destiny when it comes to EOL of your packages

A recent Rimini Street survey says that in spite of the announced 2025 end of life for core applications in SAP Business Suite 7 ERP product and older versions, "Of the IT leaders surveyed, two-thirds state they either have no plans to migrate to S/4HANA (35%) or are undecided about moving to S/4HANA (32%) "

IDC, on the other hand, surveying 300 of its clients concludes "it’s not a matter of if companies will adopt SAP S/4HANA anymore, but when."

Steve Miranda of Oracle tells Diginomica "We're pretty comfortable with our strategy of supporting customers who are on-premise and want to stay that way (with support from Applications Unlimited) until the time is right for them to make a move. I feel good about that."

UpperEdge, on the other hand, argues that under pressure from Wall Street "So ready or not, Oracle will be trying to force migrations according to their own timeline."

Who to believe? In my recent book, SAP Nation 3.0 I had profiled several risk-takers, modernizers and diversifiers in the SAP customer base who have been refreshing their application portfolio. The biggest segment is still what I called Bystanders which are not moving - they make up about 60% of the base of over 400,000 customers. I had a whole chapter where I provide guidance to SAP to "tilt the bell curve" and energize the Bystanders.  

Others make similar points in the book

"Mueller of Constellation said, referring specifically to ECC and moves to S/4:

“The next two or three years will show if SAP can create the value proposition. We’ll see how much customers push back. SAP could say, ‘We listened to our customers and we will give you another two or three years (beyond 2025), but you have to pay not 18%, but 21% or 25% or maybe even 30% in annual maintenance.’

However, the writing has been on the wall and for years now. It should have been clear to every CIO that the innovation is happening on the S/4 side. Do you want to be in 2030, 11 years from now, with an ERP system that cannot run machine learning, which doesn’t have a good IoT story and so on?”

Or as Wright of Accuride and Howlett of diginomica have pointed out, it’s tough enough today to recruit younger talent to an ECC and ABAP shop. Can you imagine what it will be like in 2025 or 2030?"

By all means, listen to all these perspectives, but in the end make your own hard-nosed decision. Actually decisions. Revisit them every year. The market is changing rapidly.

As I show in the book, the SAP world has dramatically changed in the last few years. So many new products - not just S/4, C/4, SCP, SAC, Qualtrics, AIN, BCP. So many cloud flavors. You should also get clarity on upcoming releases, especially around vertical and geographic functionality that keeps growing.

Oracle has an even more acute Bystander issue - by my estimate 80% of their customer base is in the Bystander category, and they have not been as forthcoming about their next-gen products. They keep talking about their financials, hr and crm - not so much about the rest of the enterprise. So, they have an even bigger challenge - and opportunity - to tilt their bell curve. As a customer, use it to your advantage.

Also take advantage of the market bounty. These are not either/or options. We live in multi-vendor, multi-cloud worlds.  In my book, EBSCO which went with Rimini for third party maintenance, describes how they continue to buy new products from SAP. I have talked to other Rimini customers who are moving to next-gen applications over a few years, and in the meantime move their legacy apps with significant customizations to Rimini.

Don't wait for a vendor-driven EOL date and then have to fight a crowd of your rushed peers. Plan how and when at your own terms. You should be deciding the EOL of your legacy applications.  

A dream team to negotiate with SAP

Geoff Scott, CEO of ASUG, wrote this in his foreword to SAP Nation 3.0

"For many years, licensing was a “third rail” topic: look at it, discuss it among yourselves but don’t ever collectively — as a customer contingent — touch it. That all changed in 2017, when SAP customer anxiety peaked due to several high-profile lawsuits against SAP customers over IA. ASUG’s involvement started with a proactive letter from the global user groups, led by ASUG, to SAP’s Executive Board. What followed next was a series of intense but productive discussions — real back-and- forth between SAP customers, user group leaders and SAP executives that soon expanded to customer concerns around sales and audit practices. There were many trips to Walldorf and meetings in Newtown Square."

So, I was pleased to be invited to be with Geoff and others at SAP HQ in Newtown Square this week. The others included Gartner analysts - not those that come up with MQs. Those that reminded me of my time there in the 90s. Buyer advocates who help in vendor negotiations. There were independent analysts like me. This was a dream team anyone negotiating a big contract with SAP should aspire to bring together to represent them.

Of course, SAP was represented by an even more formidable team. Their top attorneys and licensing experts, some of who have shaped its deals for over two decades.

We did not represent any particular named customer. We were there for SAP’s "first-ever" Pricing & Licensing Analyst Day.

We covered wide ground including

- why is SAP not making consumption of SCP a lot easier?

- when is SAP going to start delivering cloud price reductions like the 60+ Amazon has delivered over a decade?

- how does SAP expect to police rogue salespeople who dream up their own policies?

- who thought up the user-to-document count conversion ratios that are being proposed in Indirect Access scenarios?

- does SAP realize every time it tries to simplify an area, it actually adds more nuances and makes it more complex?

- does SAP realize it has lost control of product messaging to its SI partners and licensing messaging to user groups?

- when is SAP going to clarify EOL dates and implications for ECC?

SAP did not have definitive answers for many of the topics, but to their credit they only had a few slides under NDA so allowed for discussion around a wide range of its old and new products. And yet we just scratched the surface when it comes to its portfolio of products.

Oracle, Salesforce, Microsoft and other vendors came up often during the day. Not as positive examples SAP should emulate. But reflective of market reality. SAP is taking a lot of grief for Indirect Access and other licensing practices.  But other vendors have their own bag of tricks. And many of them pretend to be lily-white pure when it comes to such behavior.

Will other vendors have the courage to similarly open up to analysts? I would hope so but not counting on it any time soon. All the more reason to compliment SAP for convening the day. Hopefully our input will shape more positive behavior in the field.

In the land of the blind.......the one-eyed man is King

I only half-jokingly proposed that to my editor as the sub-title for SAP Nation 3.0. One of the reasons the book comes out, on balance, positive to SAP is because it is developing, acquiring, releasing a new generation of enterprise applications. Most other vendors are content to peddle their financial, HCM, CRM applications. They are enamored with infrastructure and platform markets. Let someone else develop applications. After 20 years of cloud applications, if you look at a grid by country, by industry, by business process, we barely cover 20%.

So, nothing against Tableau, but I would have invested in a variety of new industry applications. Instead, Salesforce keeps hoping its partners will develop them on its platform. And it has invested over $ 20 billion (including that in Mulesoft) in the last couple of years without growing its functional footprint.

But why just pick on Salesforce? Oracle and Microsoft are teaming up to take on Amazon. I would love to see them develop new industry applications. Microsoft continues to let its resellers verticalize its applications. The end result usually is small extensions not major operational functionality. Oracle made a number of industry investments like Retek and i-flex a decade ago but in recent times has mostly been talking about its horizontal applications.

The white space won't stay white for ever. I met a couple of Fintech execs in London last week. Plenty of similar execs in New York, Shanghai and Singapore. At the Workfront conference, conversations were about product design and creative agencies. Recent conversations with Cognizant have been about packaged applications in healthcare and insurance markets. Those with Plex have been about automation on the shop floor. Those with Zoho have been how they target markets like the UAE, Brazil and Nigeria. At Sapphire, Hasso Plattner told me several executives asked him about vertical operational functionality in the cloud.

Here's the irony. Most vendors covet Amazon's cloud infrastructure. Most customers on would also love them to develop the applications that run Amazon - its eCommerce, its fulfillment, its R&D, its logistics.

The time is ripe for a new generation of applications - and likely a new generation of vendors.

    

Teflon SAP?

In the ASUG Executive Exchange on Monday morning at Sapphire I joked that it was fitting that we had yet another rumor floating - would Bradley Cooper show up with Lady Gaga at her concert later in the week? I cannot remember a Sapphire with so much rumor and speculation in the build up to the event. I was impressed how SAP executives handled much of it during the event. In one on ones, however, several of them were hurt and even angry about the coverage. Even more striking was how little customer execs had heard about or cared about the chatter.

Some of the topics about which there has been some wild speculation

Qualtrics

Yes, it was an expensive acquisition - a "high-beta" one. I am not a big fan of M&A in software. But in my new book, I point out several trillion dollar markets SAP, Oracle, IBM and others missed out on in the last couple of decades - digital advertising, smart products, cloud infrastructure etc. So I cannot fault Bill McDermott for betting a pile of chips on his view that the "experience economy" is going to be a massive one. Not only will it differentiate SAP's CX offering it is already opening up product design, employee engagement and other new opportunities for SAP. It also allows SAP to benchmark and reshape its own product ideation and customer relations. And it has brought a new breed of impressive, high energy execs into the SAP ranks.

HANA

There was some really irresponsible "HANA is dead" speculation. I told several journalists and analysts weeks ago I was baffled by the talk. So it was nice to hear Hasso Plattner after lowering expectations that his was an "old-style", "low-cost" keynote then proceed to announce “SAP HANA is too good a database just to lock it inside SAP enterprise applications,” Watch this keynote where along with Gerrit Kazmaier, he set ambitious new goals for HANA and for the broader portfolio of SAP's analytical offerings. 

Layoffs

There has also plenty of talk about layoffs including some of my colleagues asking for more "openness" from SAP on the topic. I was in Salt Lake City with several of the execs as they were being announced and I could see the hushed conversations. I chose not to pry given the legal and HR considerations that surround such moves. Besides, as I write in my book, SAP has to evolve to a much more cloud, open-source, machine learning savvy culture. So do its systems integrator partners. So do its customers. Continuing with legacy customizations is a growing security and compliance risk. Much worse, it is a recruiting liability when trying to attract younger technical talent. The transitions at SAP are just a start. The ripple effects will be felt throughout SAP Nation. The sooner we start planning for them the better, and we should not just hammer SAP for kicking them off.

Management changes

Nick Tzitzon, EVP of Marketing and Communications had told me "we have individuals in some cases who collectively have worked for SAP for 100 years, and who decided that it was time to try something else in their career. Does this not happen in every company?" Hasso Plattner was even more emphatic when he told a few of us that several customer executives have marveled at the smooth transition. He told us SAP is much "younger" now and he has never been more proud of the company. Watch this keynote and see the energy of execs like Christian Klein, Ryan Smith, Jen Morgan and others

Elliott investment

Geoff Scott, CEO of ASUG had to explain to an audience of customers who exactly Elliott is. That calm struck me as radically different from the panic I have heard from of my media colleagues. Yes, Elliott is a feared force as an activist investor but I am familiar with at least a few executives who have worked collaboratively with them. I liked Bill McDermott's comments during a Q&A “I’m very confident in our top- and bottom-line development,” McDermott said, and that he and the Elliott reps were “psyched” by SAP’s prospects. As I write in my book, there is a huge opportunity in "tilting the bell curve" - transitioning ECC and customizations, BW, S/1 to the new portfolio of S/4, C/4, SAC, SCP, Qualtrics, SuccessFactors, Ariba and many other products SAP now has to offer.

My book

Finally, I am bracing for potshots about my book. I had a chance to give my book to both Hasso Plattner and Bill McDermott. I warned them both it had many sections which would make them cringe. They were both gracious in their thanks - can I dare say they are mature enough not to expect a puff piece from me? But if hear some of my colleagues who have clearly not read the book, you would conclude it is an unqualified endorsement of SAP. I had a chance to sign several copies for SAP customer executives this week. Trust me they are not looking for fawning support of SAP when they talk to me.

No, Bradley Cooper did not show at the concert. But Lady Gaga was amazing on her own. I did not know much about her music prior to the concert but you have to admire her amazing pipes, incredible energy and her body of work. More importantly you have to acknowledge the sheer admiration she got from the audience. SAP is not everyone's cup of tea, but you have to similarly admire its wide body of work and the fact that it is the backbone for over 400K customers.     

I heard an executive say this week media attention on any topic lasts about 5 days. You wait that long and any PR crisis will blow over. That is not a compliment to our analyst/media side of the fence. We have to take the much longer customer view points when they invest in technology.

From my side, this week made me resolve to be even more careful in my reporting and to continue to validate my viewpoints with even more customer conversations.  

"I have never been so proud to be part of this company"

Said Hasso Plattner as we were wrapping up our annual Sapphire meeting with him. He told us he thought Bill McDermott's keynote this morning was the best he has delivered (I had walked up to Bill a few hours earlier and told him roughly the same thing, for different reasons as I describe below). He raved about Jen Morgan and her attention to detail. He is just as pleased with the other members of the new management team. He said customers have complimented him about the smooth executive transition over the last few weeks. He was energized and as we will see in his keynote tomorrow dispel rumors that have been swirling around HANA the last few weeks.

I liked Bill's keynote because it highlighted global companies like Apple, Under Armor, Shell, Tapestry and SAP itself tackling complex issues in product design, manufacturing, field service, joint venture accounting, retail and digital transformation. It is such a contrast to the competition which pretends that its financial and CRM cloud functionality is all that an enterprise needs.

The keynote and a sneak preview walk through we got of the show floor even as the roadies were still moving booth material in their fork lifts gave me the solid feeling that SAP is back as the dominant application vendor. There are 5 massive "neighborhoods" centered around People engagement, Network and spend management, Customer experience, Supply chain and the Digital core and a section on 25 verticals.

ASUG had invited me to present on themes from SAP Nation 3.0 to its Executive Exchange on Monday. It explained to them why on balance the book comes out positive about SAP. If I had waited till this Sapphire to finish, I have a feeling the book would have come out even more positive.

The Orange County Convention Center advertises 2.1 million square feet of exhibition space. Given the scope and ambition of SAP's application coverage, in the not too distant future, I think it will be able to use all that space.

Competitors watch out - you have one heck of an energized application vendor.  

The Oracle Enigma

Rimini Street recently conducted a survey of Oracle customers. Oracle and Rimini have long been in litigation, so I would read the results with a nuanced viewpoint, but it does not paint the picture of a very happy Oracle Nation.

As an analyst, I am particularly interested in products and competitive positioning.  One of the more intriguing sub-plots in my writing SAP Nation 3.0 was looking at why its competitors did not go for the jugular. 5 years ago, when I wrote the first volume, SAP's image suffered from the massive failures and writeoffs, it appeared distracted by HANA, its next-gen ERP, S/4 was immature. Customers were ring-fencing SAP, moving to third party maintenance and two-tier ERP. In many ways, SAP was on the ropes. 

As I say in the book

"Partly because SAP’s competitors did not target it aggressively enough, and partly because its own cloud acquisitions and developed products afforded it a shield, the company has come through the threat of the last five years relatively unscathed. In fact, when you look at the mob of strong competitors that it had to fend off, it has done remarkably well. In those five years, SAP’s customer count has actually increased by 50%. Wall Street has not been as generous to SAP as it has to cloud vendors, but the existential threat that SAP faced has passed."

The competition is not just Oracle, but as the largest application competitor to SAP, I wondered why they did not have more momentum in the last five years. It's partly because the Oracle functional scope in the cloud does has not appear to have grown significantly. I wrote recently

"In October 2018, Oracle co-CEO Hurd predicted that 80% of business applications would be in the cloud by 2025....Today, even after two decades of cloud computing, industry and geographic coverage is spotty — by my estimate, less than 20%. For Hurd’s prediction to prove accurate, it will take massive new investments in upgrading industry functionality."

Will Hurd's own products grow rapidly and get a lion share of his projected 80%? In January 2006, Oracle had confidently declared they were "Halfway to Fusion". 13 years later, Oracle still mostly talks finance, HCM and CRM. NetSuite, even after 20 years, has limited global coverage as Phil Wainewright points out here or industry coverage as I point out here."   

Beyond applications, I was excited about its autonomous database, but wondered why they had to bundle it with their IaaS. When it was introduced, I wrote this. I have also been puzzled why the Oracle IaaS had not focused on its and other on-premise customer bases. I wrote this 3 years ago.

I write this from SAP's Sapphire show. I spent yesterday at the ASUG (user  group) Executive Exchange. There was vigorous conversation on a wide range of topics, many like Indirect Access which makes SAP cringe. My schedule for the week shows small group settings with key executives. I attended a couple of sessions at the Partner summit. We got a sneak preview of the show floor even as the roadies were still setting up.  Jon Reed has polled several "Mentors" and influential developers in the SAP community. There is a definite openness to all this. The week prior Workday allowed us access to most of their product executives at their analyst summit. Next week Plex is taking us to (another) customer plant, and has several executive sessions for analysts as part of their user conference. More openness.

I have asked for Oracle for a similar, much more open analyst summit and have been told it's not likely to happen any time soon. May be it's just me with all these questions. But I suspect my analyst colleagues have other questions about the vibrancy of its database, its platforms and other products. We all want Oracle to be a strong competitor, but with so many questions, it would be nice to have much more open conversations.  In the meantime, I will have to rely on Oracle partners like OppSource to describe innovations as Mark Galloway does here.

Frankly, they can easily ignore us analysts. It's customers they need to focus on - the Rimini survey is a symptom of what they need to turn around. 

Sapphire 2019: A curtain raiser with Nick Tzitzon

As I prepare to drive to Orlando for the annual SAP conference I had a chance to talk to Nick Tzitzon, EVP of Marketing and Communications about what we can expect on the main stage.

If you think about the big picture, Vinnie, in terms of where the economy is and where our customers are, we approach SAPPHIRE with a really clear view of the challenges that we need to address and the opportunities we need to seize.

If I had to give you the top three headlines, number one is continuing to deliver on promise of the intelligent enterprise, which as you recall is something we launched last year. This was the pinnacle moment, if you will, in terms of what we always knew that the SAP HANA era would lead to for SAP. Our customers know it’s a big data world. They know that they need end-to-end connectivity in their business. They’re hungry for the exciting machine learning use cases and the new wave of industry best practices. You’ll see a lot more of this in Orlando.

Look for Bill McDermott to make the argument that we want our customers to focus on something of a cultural transformation. The idea here is “you need all people inside companies focused on people and opportunities outside of companies.” Demand chain integrates to supply chain in any truly digital business model.

This leads me to the second headline, which I think will surprise a lot of attendees in terms of the energy it creates in the SAP community. In looking openly at the same challenges facing our customers, we recognized there’s a big gap we needed to solve for. No company in our industry at scale, not SAP, not our competitors, could bring in real-time experience data to complement operational data. This goes directly to the culture change McDermott wants to hit. Nobody questions the operational heft of SAP. The question is – how can we help customers direct those systems to what their key stakeholders, customers and employees, actually feel. Experience Everything , Everyone is a Customer, Customer is Everywhere.

It's widely known that we went out to find a partner here. We found not only the market leader, but the pioneer of the experience management category with Qualtrics. SAPPHIRE will now be the largest event ever focused on experience management and helping businesses operate with greater agility in terms of knowing what's going on in their business, knowing why things are happening, being able to connect the two and personalize outcomes to a far greater degree. So while I think people have read the headlines about the Qualtrics deal, I don’t think there’s a full appreciation of the paradigm-shift that experience management on the Qualtrics XM platform will enable.

Number three, I think the consistent feedback you see, not just from reading about SAPPHIRE, but from reading about all vendor events in this industry, the customers do a better job talking about the solutions than the vendors do. Perhaps this a career-limiting admission for someone in the marketing and communications function, but I’m willing to take the risk. This year we made a concentrated effort to bring as many customers to Orlando as we can to let them tell the stories, to let them explain the experience they're having with SAP, why they chose SAP, why they're excited about the idea of experience management as the latest frontier for the intelligent enterprise.  You're going to see hundreds of customer-led sessions, and the dominant ‘red thread’ is that customer testimonials will be steering the conversation. 

Those would be, at a high level, the three things I think about.

In terms of product announcements, we're going to do a lot around SAP HANA. I can’t tell you how aggravating it is to read speculation in the media about our product strategy. Josh Greenbaum wrote a nice piece about this earlier this week. HANA remains—as Bill calls it--the intellectual foundation of SAP. You're going to see Hasso do what he does best as we blaze a new trail in the data management space with some announcements about SAP HANA, which is very exciting. 

You're also going to see some additional progress being made on the idea of combining experience management and intelligent enterprise capabilities. You have heard us talk about this as “X Data plus O Data.” You'll see some early releases, giving developers the tools to build on our platform and accentuate the capabilities of X plus O. There'll be exciting announcements on this front as well.

You have another breakout on C/4HANA?  Is Qualtrics going to be more in that? Is that its own sub-event within the big tent? 

Qualtrics is going to be everywhere, first of all. CX LIVE is the customer experience event focused on SAP C/4HANA and the five integrated clouds that run in that suite. Frankly, the interest has been so high since it was announced last year, we had to do a dedicated CX track at SAPPHIRE because we ran out of space. That’s why Alex Atzberger and his team are hosting CX LIVE as a separate but connected track in Orlando. I’m sure Alex will happily tell you that it's a bigger crowd than they anticipated, which is good news. I should also say that any registered SAPPHIRE attendee can also participate in CX Live. Bill will appear with Alex at CX LIVE.  Ryan Smith from Qualtrics will appear there. It’s going to be a fun event. 

What about all the drama over the last few weeks?  Will Bill touch on it? Are you going to let the media openly ask their questions?

Yeah, I think the media, influencers, analysts, can and should ask any questions they want.  Personally, I don't see the drama. People have been following us for years and have very high expectations for us. Bill tells us all the time – take the high interest in SAP as a compliment that people believe we’re a significant company with a lot riding on us. Having said that, I worry that much of what’s out there right now has largely been the result of speculation and not necessarily the result of facts. In the case of the executive departures, we have individuals in some cases who collectively have worked for SAP for 100 years, and who decided that it was time to try something else in their career. Does this not happen in every company?

And the other piece of those changes, we have a particularly strong bench of talent at the leadership level and at the engineering level. Names like Adaire Fox-Martin, Christian Klein, Jennifer Morgan, Juergen Mueller, Thomas Saueressig, Gerrit Kazmaier, Abdul Razack. I think these leaders and the quality work done by our engineers will be on display at SAPPHIRE. Maybe the only thing that will quiet the conspiracy theories is seeing a totally thriving SAP in action in Orlando. So I guess I’m happy it starts next week.

Vinnie, I'm normally, as you know, somebody who is pretty sensitive to what's going on across the company, and I feel like the company is going in with a full ahead steam with a pretty clear sense of what it has to accomplish.  I just don't see a lot of this so-called drama.

While I understand there is some sensational stuff in the media, we put more credibility in the facts.

If there’s any learning I have from all this, it’s that we need to do a better job over-communicating about everything. We know what our customers expect, we know what our shareholders expect, we feel motivated and excited about the future. That’s the story I personally need to do a better job getting out into the influence channels.

Any other big announcements?  Any other directional stuff?

You’ll see a re-invigoration on the industries focus from us. There's a lot of really good content we're going to have at Sapphire on the industry side, a lot of good road mapping and best practices. 

You're going to see a lot on the ecosystem. I think our partners are fired up for SAPPHIRE.  You're going to see some more detail in terms of how our partnerships with cloud infrastructure providers have matured. These are topics that we know the SAP customer base is interested in, so they will be well featured at the event. 

I also think you're going to see an increasingly good balance between the technology topics and the business topics. This is something that all vendors struggle with. We, like many, have an audience that comes from multiple perspectives, but what we really like about the intelligent enterprise, particularly now in the context of the experience economy with experience management from Qualtrics, this is a conversation that bridges the gap between business and technology.  It completely unites the value chain on what needs to be done to keep companies successful or, in cases where they're struggling, gets them back on the right track. SAP is talking end-to-end now in multiple respects and we're excited for SAPPHIRE, if for no other reason, because it's our best opportunity of the year to show people just how complete and broad our portfolio is and how complete our strategy is in terms of giving them the tools that they need to be successful.

Plus, we're going to be distributing copies of exciting, new, future best-selling books. In case you have any recommendations in that regard.

Well I know at least one person - the publisher of SAP Nation 3.0 - will enjoy that drama :)

Thanks for the sneak preview.

Workday: The Power of Focus

I kept thinking of Southwest Airlines while I was at the Workday Innovation Summit in CA this week. I had read this tribute to the legendary founder, Herb Kelleher on the flight over and it reminded me how revered he was - like Dave Duffield of Workday is in HCM circles.

Then, a walk down memory lane took me back a few decades. At business school, as part of the Corporate Strategy class, we had been assigned in groups of 3 to analyze a local company. We interviewed executives and then presented to top management about growth opportunities. I had drawn Southwest Airlines, then just a regional airline with under 5% of today's fleet and revenues.

I remember I got an A for the course, but I am pretty sure I flunked the presentation to the airline executives. They were brutal. One of our recommendations was that they set up a separate sub to service smaller cities and acquire commuter planes for those routes. Nope - we will not diversify from Boeing 737s, was the response. We also recommended they diversify to airports in Chicago and couple of other major cities. The response was along the lines of "No, too many union and weather issues".

They have stubbornly continued with the first principle. Since then, Southwest has become the largest and most experienced customer for successive generations of the 737 - gaining significant maintenance and training efficiencies from a homogeneous fleet. They have been more flexible about the second recommendation. Indeed, I felt vindicated when they started flying out of Chicago Midway in 1985 and have since blanketed most of the country. Southwest has become my preferred domestic airline especially since they offer me nonstop flights from my home airport to over 30 cities.

I saw the discipline again when in 2006 after a bad experience with Ryanair in Europe I sent Southwest executives a letter requesting them to expand internationally. Nope came the response - there is huge amount of growth left right here in the U.S. They have since started to fly to the Caribbean, Mexico and Central America, but the bulk of the revenues is still U.S.- centric.

What's been fascinating to watch is how Southwest's discipline has attracted relentless competitive attacks. There was the infamous Wright Amendment which hobbled Southwest for three decades from flying nonstop on longer routes from its home state.

In response to the success of Southwest and others like Jetblue, United tried a sub called  Ted, Delta tried Song and most airlines have since moved to offering "basic economy", highly restricted fares. In doing so, these major U.S. airlines have neglected vast chunks of global markets to the advantage of premium competitors like Emirates and Singapore Air.

Workday has shown similar discipline. Its "Power of One" strategy is like that of Southwest's commitment to the 737. No on-premise distractions. A slow diversification in the form of AWS support. Functionally, Workday has stayed focused on finance, planning and HCM.

And along with Salesforce it has similarly drawn inordinate attention from bigger competitors like SAP, Oracle and Infor. They have been chasing after accounting, HCM and CRM markets with their own acquisitions and organic products when they would have had much more traction in verticals or world geographies. As I write in my new book, we are seeing new competitors in the form of startups and even major (buyer) corporations developing products for "white spaces" in fintech and asset intensive industries that these vendors should have been focused on. Google, now with Kurian and Enslin, will likely emerge as another threat in some verticals and regions.

Can you be too focused? With Southwest you are seeing the potential risk of being dependent on the 737. The issues with the new MAX generation of the 737 are causing short term scheduling issues, but longer term if customer perceptions about safety persist they could hurt Southwest significantly. Its slow international expansion has allowed regional, cut- rate players like AirAsia and Easyjet to grow nicely across Asia and Europe.

Workday could have similar challenges. IDC is talking about "cloud repatriation" - a bit of backlash against the economics of public clouds. Let's face it, after 20 years of cloud apps, over a million SAP, Oracle, Microsoft, Unit4 and other on-premise customers have not migrated major chunks of their enterprise to the cloud.

During the summit this week I saw a somewhat superficial Workday focus on operational functionality and data. It talks about enterprise wide planning when it does not get invited to complex network planning, finite capacity or CPG assortment planning opportunities. I saw a narrow focus on automation when enterprises are trying out a wide array of telematics, wearables, robotics across the enterprise. Internationally, Workday has been slow to expand functionally or in local presence.  It has been lucky the competition has mostly tried to engage it in areas where it is strong, rather than "surround" it with operational and regional depth. That will not last for ever.  

The great news is like Southwest which has a distinctive, even quirky culture, Workday is building its own unique persona. It topped Fortune's Future 50 list this year while also cracking the Top 5 in the magazine's top places to work. It has been blazing a trail with a decade of analyst summits, when some competitors shrink away from them. CEO Aneel Bhusri promised even more openness and communication.

There is so much to like at Workday. I do want to see them continue to evolve and expand. Correction - their customers want to see them evolve and expand. And those million on-prem customers continue to wait for a compelling reason to migrate.

 

 

 

ERP: Moving Fast and Yet So Slow

A guest post from Ton Dobbe, Chief Inspiration Officer, Value Inspiration

"Every week I interview entrepreneurs and experts from around the world to share their big idea about new forms of value creation and the potential we can unlock when technology augments the unique strengths of people to deliver remarkable impact.

I got inspired by the release of the book SAP Nation 3.0, hence I invited its author, Vinnie Mirchandani to my podcast. We explored the changes in the ERP landscape over the last 5 years, in particular amongst the big 3 – SAP, Oracle and Workday. We also explored why after 20 years of ERP in the cloud today there’s still not enough traction.

The thing that triggered me most from my interview with Vinnie : "Cloud ERP has been around for 20 years now. But after 20 years, both the customers and the vendors are just not moving quick enough. Something's not right."

Vinnie’s conclusion is so true. If you compare the transformation in the ERP industry with other enterprise software categories, it’s transforming fast, but too slow. He outlined a range of reasons for that:

1)         Lack of functional coverage: ‘If you plot functional coverage by global world region, by industry, by business process only about 20% is filled. So after +20 years, the vendor community hasn’t delivered enough.’

2)         Not enough shift in value: ‘Data is one of the biggest selling points of cloud, you know, we are gathering a lot of data. That should allow us to do some really unique things that we couldn't do before. That’s simply not happening yet’

3)        The partner community is holding things up: ‘Partners are selling mostly private cloud or on-premise solutions. Partners want to continue to do what they always did: implementations, upgrades, application management.’

4)         Buyer fear. ‘The memory of the last implementation is still holding back a large number of buyers. Many of them just customized the heck out of their old ERP system and they're worried that they will lose the customizations if the functionality in the new product isn’t rich enough.’

So, it’s a chicken and egg dilemma that’s needs a breakthrough. And the breakthrough won’t come from continuing to move traditional solutions to the cloud to continue to do their traditional thing. From my perspective, there’s a large-scale opportunity in the market for any of the vendors – established or new – to shake things up but taking a fresh perspective on ERP.

We discussed a number of opportunities to unlock the status quo, here’s a summary:

1)         ‘Don't just modernize the technology, modernize the business processes.’

2)         Verticalize – what is wrong with offering claims processing or retail merchandising, or insurance billing, or utility asset management and so on. Those industries are screaming for cloud and in memory solutions for that.

3)         Get systems integrators to apply machine learning and automation to their own business. It's amazing how many systems integrators still sell bodies, when over the last 30 years they've done millions of ERP projects and millions of CRM projects. Why aren't we training machines to do configuration. Why aren't we doing automated data conversion.

In all three examples it’s data that’s the magic ingredient to unlock a large-scale and untapped opportunity to create a shift in value. As Vinnie quoted: ‘Up to now a lot of the machine learning that is showing up in the ERP space has come from the work vendors like Amazon and Google have done with image recognition, and voice recognition and so on. To me, the big, big, big payback will come when we can take enterprise data. Our own productivity, our process productivity needs to dramatically improve. It's not about it's not about replacing humans; it's making them into super workers. ‘

Listen to our interview about the evolution of the ERP space, and the large scale opportunity this leaves to creates shifts in value in a world that’s progressing, but not quite fast enough."

Drama in enterprise computing

Ray Lane, a top-notch tech executive and investor over decades, said this about my new book

"Don't be fooled by the title—the book is not just about SAP. It's about drama in enterprise computing."

I then used "drama" in the title of my recent ZDNet guest column.

Drama? That's what you get in Augusta in April. Isn't enterprise tech boring and glacially slow?

You be the judge.

My book catalogs the product launch machine SAP has become and the fact that its customer base has grown 50% in the last five years. It was on the ropes, the competition could have delivered a knockout punch but it has bounced back impressively. 

Of course,  SAP is also generating a lot of interest and emotion with its recent layoffs and executive moves. From an investor point of view, CEO Bill McDermott has created excitement by promising to double its market cap in four years

Marc Benioff of Salesforce told Jim Cramer of CNBC a few weeks ago " I see $30 billion right around the corner. In fact, we initiated a 4-year guidance today, Jim, of $26 [billion] to $28 billion."

How can that not make your heart beat faster?

Last week, in his coming-out party since he joined Google several months ago, Thomas Kurian made quite an impression.

Also last week, at a SAP Analytics event, mostly under NDA, I expected to hear plenty about coopetition with Google, Oracle and IBM. Instead I kept hearing about Microsoft with its Power BI, Surface, Azure ML, Office 365 and other products.

Oracle and IBM were similarly snubbed by the DoD as it shortlisted vendors for its $ 10 billion JEDI cloud contract. One contract should not mean that much but the twists and protests in that one certainly count as drama.

When a case ends up at the Supreme Court of the US, it usually makes for some some oohs and aahs. When all 9 justices vote unanimously on something, it certainly perks you up. That's what recently happened to Oracle in its long running litigation with Rimini Street.

One of the nice things about the Amazon Kindle is a feature called "Popular Highlights". Amazon combines the highlights marked by all Kindle customers and identifies the passages with the most highlights. For my book, this statement by Mark Hurd has already qualified for that honor. "In October 2018, Oracle co-CEO Hurd predicted that 80% of business applications would be in the cloud by 2025."

That para goes on to say "Today, even after two decades of cloud computing, industry and geographic coverage is spotty — by my estimate, less than 20%. For Hurd’s prediction to prove accurate, it will take massive new investments in upgrading industry functionality." Will Hurd's own products grow rapidly and get a lion share of his projected 80%? In January 2006, Oracle had confidently declared they were "Halfway to Fusion". 13 years later, Oracle still mostly talks finance, HCM and CRM. NetSuite, even after 20 years, has limited global coverage as Phil Wainewright points out here or industry coverage as I point out here.   

In the meantime, in China, Kai-Fu Lee, who has been called the “Oracle of AI” has funded nearly 150 AI start-ups. At Davos earlier this year, the theme was Globalization 4.0 which shows that Industrie 4.0/IoT concepts are spreading worldwide. Holger Mueller of Constellation opines about platforms "Why Open Source has won and will keep … winning.”

Augusta generates drama for 4 days. Enterprise tech takes a bit longer. But it has its share of comebacks and black horses. I will have a front row seat as I start planning for SAP Nation 4.0.

Or may be it will be titled Oracle Nation 1.0 or Workday Nation 1.0. That right there is plenty of drama.